Contents

Regulation and Enforcement

• DOT to allow oral fluids testing for controlled substances
• FMCSA forms task force on truck leasing
• FMCSA says states may grant CDLs or CLPs to Mexican citizens under DACA program
• California mandates zero-emissions vehicles by 2042
• Comment periods closing soon on SMS changes, crash preventability program
• Propane industry denied broad HOS exemption
• Alaskan ice road school seeks skills test exemption
• FMCSA renews exemption for lighting during towing
• CVSA International Roadcheck to be held May 16-18

Legislation

• Congress likely to vote down EPA rule on truck emissions but not overturn a veto
• Cuellar bill addresses staged collisions, disclosure of lawsuit funding
• House bill would bar FMCSA from implementing a speed limiter rule

Advocacy and Comment

Regulation and Enforcement

DOT to allow oral fluids testing for controlled substances

The U.S. Department of Transportation issued a final rule that will allow employers in industries regulated by the department’s modal agencies, including FMCSA, to use oral fluid testing in lieu of urine testing for controlled substances. The goal of the rule is to give employers an option that could help combat employee cheating on urine drug tests and provide a less intrusive means of achieving the safety goals of the program.

Although DOT has cleared oral fluid testing, in practice that option will not be available until the U.S. Department of Health and Human Services certifies at least two laboratories for oral fluid testing, which has not yet been done. The Federal Register notice is available at https://www.federalregister.gov/d/2023-08041.

FMCSA forms task force on truck leasing

As mandated by the 2021 law known as the Infrastructure Investment and Jobs Act (IIJA), FMCSA has established and appointed members to the Truck Leasing Task Force (TLTF). The TLTF, which was supposed to have been established by May 2022 according to the IIJA, will evaluate lease agreements in trucking and their potential safety and financial impacts on owner-operators. The members of the TLTF are:

• Tamara Brock, Brock Logistics, LLC and Lewis & Lewis Logistics, LLC (Independent owner-operator)
• Paul Cullen, The Cullen Law Firm, PLLC (Attorney)
• Troy Hawkins, TTOH Consulting & Logistics, LLC (Independent owner-operator)
• Jim Jefferson, Owner-Operator Independent Drivers Association
• Joshua Krause, OTR Leasing, LLC (Business)
• Kaitlyn Long, International Brotherhood of Teamsters
• Steve Rush, Carbon Express Inc. (Carrier)
• Lesley Tse, Of counsel to Getman, Sweeney & Dunn, PLLC (Attorney)
• Steve Viscelli, Ph.D., University of Pennsylvania (Economic sociologist)

For more information on the TLTF, visit https://www.fmcsa.dot.gov/tltf.

FMCSA says states may grant CDLs or CLPs to Mexican citizens under DACA program

FMCSA has determined a state driver’s licensing agency may issue a non-domiciled commercial learner’s permit (CLP) or commercial driver’s license (CLP) to an individual is present in the U.S. under the Deferred Action for Childhood Arrivals (DACA) immigration policy as a citizen of Mexico subject to conditions. The two conditions specified by FMCSA are that the individual (1) meets the requirements of 49 CFR § 383.71(f)(2) and (2) has never held a Licencia Federal de Conductor issued by Mexico. For this and other FMCSA guidance documents, visit https://www.fmcsa.dot.gov/guidance.

California mandates zero-emissions vehicles by 2042

The California Air Resources Board voted in late April to finalize its Advance Clean Fleets (ACF) regulations, which would require that all medium- and heavy-duty vehicles operating in the state meet zero-emissions (ZEV) standards by model year 2042. The rule also bars truck manufacturers from selling any vehicle in the state that does not meet ZEV standards by model year 2036.

The CARB rule sets differing deadlines for fleet conversion based on the type of operation. The most aggressive is for drayage operations, which cannot add any non-ZEVs to their fleets beginning on January 1, 2024. Fleets deemed to be “high priority” – those with $50 million in revenue or 50 trucks – are subject to similar rules, although they have the option of adding diesel trucks to their fleets provided that they achieve certain milestones for the percentage of ZEVs in the total fleet. Under that option, sleeper cab trucks would have until 2042 to achieve 100% ZEVs. Day cab tractors and heavy-duty work trucks would have to be 100% ZEV by 2039. For more information, visit https://ww2.arb.ca.gov/our-work/programs/advanced-clean-fleets.

As reported last month, the Environmental Protection Agency has proposed its own phase-in schedule for ZEVs, although the proposed regulations run only through MY 2032 and do not mandate 100% ZEV compliance by then. EPA formally published its proposed rule on April 27 with a comment due date of June 16. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-07955.

Comment periods closing soon on SMS changes, crash preventability program

Interested parties have until May 16 to submit comments on FMCSA’s proposed changes regarding the Safety Measurement System. Comments are due May 16. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-02947. For supporting documents and to file or review comments, visit https://www.regulations.gov/docket/FMCSA-2022-0066. Motor carriers can view how the revisions would affect their SMS performance by logging in at https://csa.fmcsa.dot.gov/prioritizationpreview.

In a related realm, comments are due June 12 on FMCSA's proposal to broaden the scope of existing crash types within the Crash Preventability Determination Program (CPDP) and to add four new types of crashes to the program. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-07818.

Propane industry denied broad HOS exemption

FMCSA has rejected an application requested by the National Propane Gas Association (NPGA) for an exemption from various hours-of-service (HOS) requirements to enable the propane industry to prepare and respond to peak periods of consumer demand among residential, agricultural, and commercial consumers in anticipation of, during, and to recover from emergency conditions. The exemption would have applied on a per-driver, per-route basis subject to appropriate documentation to demonstrate the presence of peak consumer demand conditions within the scope of the exemption.

FMCSA said that it could not conclude that the exemption would provide an equivalent level of safety. It also said that what constitutes an emergency is a fact-specific inquiry and that the categorical exemptions sought by NPGA were not appropriate. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-08192.

Alaskan ice road school seeks skills test exemption

FMCSA is requesting comments by May 22 on an application from Alaska's Ice Road Driving School for an exemption from the skills road test portion of the behind-the-wheel (BTW) entry-level driver training (ELDT) requirements for driver trainees. The applicant contends that due to the unique road system and challenging terrain in Alaska, it is difficult to adhere to the driver training regulations. The Federal Register notice is available at https://www.federalregister.gov/d/2023-08336.

FMCSA renews exemption for lighting during towing

FMCSA has provisionally renewed for five years an exemption held by TowMate, LLC that allows motor carriers – during temporary towing operations – to operate rechargeable wireless temporary stop, turn, and tail lighting systems that do not meet the vehicle power supply requirements for all required lamps. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-08193.

CVSA International Roadcheck to be held May 16-18

As previously reported, the Commercial Vehicle Safety Alliance is holding its annual three-day International Roadcheck event May 16-18. Although any violation is subject to enforcement, CVSA each year focuses on a few specific safety issues. This year’s Roadcheck will stress anti-lock braking systems and cargo securement.

Legislation

Congress likely to vote down EPA rule on truck emissions but not overturn a veto

The U.S. Senate on April 26 passed by a 50 to 49 vote a joint resolution (S.J. Res. 11) that would disapprove a final rule published by the EPA in January that would establish new heavy-duty engine emissions standards for oxides of nitrogen and pollutants. Although Democrats theoretically control the Senate, the measure passed because Sen. Joe Manchin (D-West Virginia) voted for the resolution and an ailing Sen. Diane Feinstein (D-California) was absent.

S.J. Res. 11 now moves to the House where its passage would appear highly likely given Republican control of the House. However, the resolution of disapproval has essentially no chance of becoming law because President Biden is certain to veto it. Such a veto could be overridden only by two-thirds of the members of both the House and Senate, and Republicans do not have the votes. For more information on S.J. Res. 11, visit https://www.congress.gov/bill/118th-congress/senate-joint-resolution/11/.

Cuellar bill addresses staged collisions, disclosure of lawsuit funding

Rep. Henry Cuellar (D-Texas) has reintroduced legislation (H.R. 2936) originally introduced in 2021 that would make it a federal crime to intentionally cause a collision with a commercial motor vehicle or to arrange for another person to cause such a collision. The bill, which is co-sponsored by Rep. Mike Bost (R-Illinois) and Rep. Garret Graves (R-Louisiana) also would require that plaintiffs disclose in writing to the court and other parties the identity of any commercial enterprise that has a right to receive payment based on monetary relief through settlement or judgment. For more information on H.R. 2936, visit https://www.congress.gov/bill/118th-congress/house-bill/2936.

House bill would bar FMCSA from implementing a speed limiter rule

Rep. Josh Brecheen (R-Oklahoma) has introduced a bill (H.R. 3039) that would prohibit FMCA from implementing any rule requiring that vehicles over 26,000 pounds operating in interstate commerce be equipped with a speed limiting device set to a maximum speed. In May 2022, FMCSA published an advance notice of supplemental proposed rulemaking stating that it planned to proceed with the speed limiter rulemaking that had been proposed late during the Obama administration. The Trump administration had shelved the rulemaking but had not formally withdrawn it as it had several others. For more information on H.R. 3039, visit https://www.congress.gov/bill/118th-congress/house-bill/3039.

Advocacy and Comment

Two hot topics this month will be Comments to the Agency’s proposed changes to its existing safety management system and an industry-wide effort to address criminal fraud in trucking.

(1)  Comments Due. Comments are due on May 16th in the “Revised Carrier Safety Measurement System” referred to above. Involved is the FMCSA’s proposed changes to SMS methodology as an initial part of a new effort to revise the Agency’s safety fitness rules. This notice and comments require close scrutiny and addressing material issues of fact and law if the guidance is to be baked into a rule.  An analysis of the issues to be addressed by concerned stakeholders is attached.

Secondly, Comments are due on June 12th on the need to revise the Crash Preventability Determination Program. The proposed changes would increase the Agency’s future reliance on a revised DataQ system which raises a number of concerns which will need to be raised in that docket.

(2) Antifraud Initiative. The support for our antifraud initiative has been overwhelming. Senator Braun of Indiana and Congressman Bost of Illinois have prepared and are circulating a letter for bipartisan congressional approval. The letter would establish, within U.S. DOT’s Office of Inspector General, a special task force to investigate and prosecute supply chain fraud as a criminal matter utilizing the OIG’s existing authority and expertise.

The importance of this issue was raised on May 10th at the T&I hearing entitled, “Freight Forward: Overcoming Supply Chain Challenges to Deliver for America.” The initiative has been supported from the outset by our stakeholders and correspondence evidencing our support will be sent to the T&I Committee on May 18. Interested parties that have been victimized by fraud and wish to participate in this advocacy are welcome.

ANALYSIS OF FMCSA’S PROPOSED CHANGES TO SMS METHODOLOGY (COMMENTS DUE MAY 16)

1. What is the purpose of the Agency’s proposed changes to SMS methodology?

ANSWER: Proposals are billed as a “Notice,” but not a notice of anything in particular. Announcement on February 14 appears intended as internal guidance until the Agency can roll out the new program as a rule that might pass muster to replace safety fitness standards in 49 CFR Part 385.

2. Why is that needed?

ANSWER: Ultimately the FMCSA, after 13 years of trying, can only issue actual safety ratings to approximately 5,000 carriers per year, although there are 700,000 carriers.

3. What are the benefits of the new program?

ANSWER: It is billed as a kinder, simpler system for profiling carriers for audit at this point. Hidden agenda may be to defuse industry opposition, so that the program later could be slipped through as a revision to Part 385.

4. What is being proposed?

ANSWER: A restructure of SMS scoring to: (1) merge violations into fewer categories: (2) give dominance to “unsafe driving;” (3) establish new violation severity standards; (4) shorten the lookback period for inspections and violations from two years to one, which will only magnify the current problem of data insufficiency; (5) thus make it still more difficult to accumulate enough data for accurate profiling of small carriers. The vast majority of new and small carriers still will not be measured, but a new SMS algorithm not discussed by the Agency will ultimately be morphed into a new safety rating process.

5. What will be the effect of the new proposal on carrier scores?

ANSWER:

Small carriers will fly under the radar and will not have SMS data. Due to not meeting data sufficiency standards, they will have no scores and will be unmeasured and presumably “unrated.” Carriers profiled for audit will be based on roadside inspection and crash data for only the past year. Presumably, a conclusion that only the most recent data is a predictor of safety will undercut the value of the thousands of carriers who enjoy satisfactory ratings issued prior to the one-year lookback.

(The one-year period corresponds to the current Part 385 parameters for issuing safety ratings – which is yet another predictor that the SMS reboot is intended for use as part of a new safety fitness rule.)

6. What are likely changes in the scores of the carriers profiled under the proposed SMS reboot?

ANSWER: Carriers can use their PIN to see the comparative scores. Data experts are finding little variation in the ultimate scoring. Due to the severity and timing of particular accidents and violations, some motor carriers may receive an increased number of alerts and some carriers may receive fewer alerts.

7. How then does the reboot allow the Agency to better profile carriers and conduct more audits?

ANSWER: No answer has been provided. Apparently there will be a Phase 2 or 3 of the proposed reboot in which more reportable accidents and adverse roadside inspections can be DataQ’d, but due process concerns about data quality will continue and were not mentioned in the Agency’s reboot notice. The recently proposed changes to accident reporting and DataQ processes, if adopted, will allow for more types of crashes to be reviewed for preventability.

8. How does the reboot compare with CSA 2010?

ANSWER: The Agency acknowledges at this point that the reboot scores cannot be published because of the FAST Act. There has been no significant correction of systemic flaws noted by Congress, the National Academies of Science and U.S.DOT, including such problems as enforcement anomalies, data sufficiency, data accuracy issues, and state and local/revenue-raising biases. (See Journal of Transportation Management, Fall 2018.)

9. If most small and new carriers are left unrated, why should they be concerned?

ANSWER: No red light-green light data. Scores, like now, will be independently calculated and used as an alternative vetting standard by insurers and the plaintiff’s bar. The important “unsafe driving” basket will be used as an alternative measuring stick with no due process. Due to data insufficiency for small carriers, and the widespread utilization of these carriers by the shipping and brokerage community, it is a total crap shoot as to whether such carriers are “safe or not.” If registered for authority, the carrier will be good to go and in most cases will be under the Agency’s radar screen with respect to both safety and fraud enforcement purposes.

10. Why is there a need for a red light/green light system?

ANSWER: Shippers and brokers fear up-supply chain liability and application of state negligence laws and feel they cannot rely on “fit to operate is fit to use” when named as defendants. Although the Agency has admitted that a carrier not found unfit or placed out of service is fit to operate, its continued reliance on SMS creates a felt need for alternative vetting.

11. What is the effect of this proposal and the likely ultimate rulemaking? Why should we be concerned now?

ANSWER: Unless the record is built here, the reboot will be touted as a new standard acceptable to industry.

12. In what sense will the reboot be a self-fulfilling prophecy?

ANSWER: FMCSA auditors use SMS profiling to target carriers for audit.

13. What cost-benefit analysis and due-process consideration has been undertaken by the Agency?

ANSWER: To date, none. The DataQ appeals process cannot meet judicial standards for due process. Carriers which have enough violations to be measured will have increased costs fighting each violation to avoid being targeted. Unrated status for small and new carriers will not be the red light/green light system that shippers and brokers need.

14. What industry factors exacerbate these concerns?

ANSWER: (1) Threat to owner operator model results in carriers with advanced telematics and safety procedures needing to hire small carriers; and (2) Plaintiff’s bar can and will use non-rated carrier status and carriers’ absence of speed limiters, front and rear facing cameras, etc. as evidence that hiring carriers were negligent in retaining unrated carriers that do not meet their standards.

15. What is missing from the Notice?

ANSWER: The industry cannot be lulled by any superficial appearances that the rebooted SMS is somehow fairer or less burdensome than CSA 2010. It is not. Comments are due May 16, and must demonstrate that the reboot is pervaded by the same flaws as the original. The proposal does not satisfy the requirements of the Administrative Procedure Act for a rebooted safety scoring system which – like CSA 2010 – will affect the outcome of safety fitness assessments determining whether a carrier can operate. While the proposal effectively would operate as a rule, the current notice is a perfect example of “rulemaking lite.” It does not articulate the basis and purpose of the new scoring system, let alone analyze the effects of the proposal on small businesses and other stakeholders, nor does it evaluate the proposal from a statistical or data quality standpoint. The proposal begs most of the unanswered questions raised by the industry, the National Academies and Congress regarding the unpublished scores generated by CSA 2010, including:

(1) data insufficiency for smaller carriers,
(2) prosecutorial bias when roadside inspections are revenue-driven rather than safety-driven,
(3) disparate enforcement priorities and inspection policies between States (which the Agency’s proposal explicitly refuses to consider),
(4) the impact of bad inspections being magnified by underreporting of clean inspections,
(5) the lack of statistical support or mathematical data to validate any new algorithms being used, and
(6) the absence of cost-benefit analysis for trying to make a rule out of enforcement data extrapolations when a CDL-like objective evaluation under a uniform standard would be fairer and more efficient.

16. Is there a better answer?

ANSWER: If the Agency’s goal is a new fitness rule, that rule should include (1) a certification that each carrier deemed fit to operate is fit to use, fulfilling the Agency’s job to police the industry for the benefit of the traveling and shipping public, and (2) guardrails against fraudulent use of carrier authorities (identity theft) by persons whose fitness has not been reviewed. Every carrier who is licensed to operate should have a desktop audit which acts like a driver’s license renewal, an identity check and a certification of fitness to operate. The current desktop audit for new entrants is touted as effective and cost efficient by the Agency. With modest additional costs (recouped through fees), and additional staffing by qualified non-agency personnel (as is currently the case with brake inspectors, CDL trainers/testers, MROs, professionals conducting driver physicals, and other state personnel utilized under MCSAC), biennial desktop audits could be used as evidence that carriers have been monitored and certified as meeting the “safe to operate is safe to use” standard needed by the shipping public.

Contents

Regulation and Enforcement

• FMCSA proposes to expand scope of crash preventability review program
• FMCSA plans rulemaking on broker disclosure of transaction records
• Hearing for Labor Department nominee Julie Su set for April 20
• EPA proposes minimum levels for zero-emissions vehicles
• All-Ways Track ELD removed from FMCSA’s list of registered devices
• FMCSA to reduce UCR fees by about 9% in 2024
• Docket on proposed SMS changes open until May 16

Legislation

• House, Senate bills would authorize $755 million for truck parking
• Florida enacts lawsuit reform legislation

Courts

• Appeals court upholds preemption of broker’s negligent selection
• Court’s ruling could reopen the door to trucking claims on AB 5

Advocacy and Comment

Regulation and Enforcement

FMCSA proposes to expand scope of crash preventability review program

FMCSA proposed to broaden the scope of existing crash types within the Crash Preventability Determination Program (CPDP) and to add four new types of crashes to the program. The agency said that the changes would improve the information in the Safety Measurement System (SMS) and better position it to identify unsafe carrier and driver behaviors.

The expansion is expected to double the size of the current program and provide more data for analysis of the impacts of a carrier’s not preventable crashes on its overall safety. FMCSA said it would analyze the changes to existing crash types and new crash types for 24 months but may announce changes earlier if certain crash types cannot be consistently reviewed or there is insufficient information to make eligibility and preventability determinations.

The principal change made to existing crash types in the CPDP is to eliminate the distinction between direct and indirect strikes in a crash. For example, one of the types of crashes currently deemed not preventable is when a commercial motor vehicle (CMV) “is struck by a motorist driving in the wrong direction.” FMCSA now proposes to treat a crash as not preventable if the CMV “is struck because another motorist was driving in the wrong direction.” The agency said the changes would allow it to further refine prioritization. The new types of crashes that are eligible for review are:

• CMV was struck on the side by a motorist operating in the same direction;
• CMV was struck because another motorist was entering the roadway from a private driveway or parking lot;
• CMV was struck because another motorist lost control of their vehicle; and
• Any other type of crash involving a CMV where a video demonstrates the sequence of events of the crash.

Comments on the proposal are due June 12. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-07818.

FMCSA plans rulemaking on broker disclosure of transaction records

FMCSA has notified the Owner-Operator Independent Drivers Association (OOIDA) and the Small Business in Transportation Coalition (SBTC) separately that it plans to initiate a rulemaking to consider changes in the regulations that govern brokers’ responsibility to disclose details of transactions to parties involved in those transactions. The two separate petitions for rulemaking were filed in May 2020 after spot rates plunged in the wake of pandemic lockdowns.

Current regulations require freight brokers to disclose transactional records upon request. The OOIDA petition sought a change in the rules to require brokers to automatically disclose such records within 48 hours of the transaction. OOIDA also proposed an explicit prohibition against brokers requiring carriers to waive their right to view records as a condition of doing business. Similarly, SBTC had asked in a separate petition that FMCSA modify the current rule to bar brokers from coercing or otherwise requiring carriers to waive their right to view transaction records as a condition of doing business.

Following the OOIDA and SBTC petitions, the Transportation Intermediaries Association (TIA) filed a petition in August 2020 to eliminate altogether the requirement that brokers maintain detailed transaction records and provide them to parties upon request. TIA argued that its proposed changes “would eliminate an outdated regulation that dates back to 1980 that is not applicable to the current marketplace.” Last month, FMCSA told TIA that its petition did not contain adequate justification to initiate rulemaking. “FMCSA believes that elimination of the disclosure provision would be contrary to the stated transportation policy goals in 49 USC 13101, including promotion of fairness and efficiency in the transportation industry,” the agency said in a March 17 letter to TIA.

Hearing for Labor Department nominee Julie Su set for April 20

The Senate Committee on Health, Education, Labor, and Pensions has scheduled an April 20 hearing on the nomination of Julie Su to be secretary of the U.S. Department of Labor. Su, who has been deputy secretary since July 2021, has been acting secretary since March 11 following the departure of Marty Walsh.

Before joining DOL, Su had served as secretary for the California Labor and Workforce Development Agency. One of Su’s focuses at the LWDA was challenging what the agency considered to be misclassification of workers as independent contractors. Su’s confirmation appears to be at risk as Sen. Joe Manchin (D-West Virginia) reportedly has expressed concerns over her nomination. If Manchin were to vote against Su, she would have to receive all other Democratic votes to be confirmed.

During Su’s tenure as deputy secretary, DOL has proposed regulations to undo the Trump administration’s loosening of restrictions on use of independent contractors. A day before Su’s Senate hearing, a subcommittee of the House Committee on Education & the Workforce has scheduled a hearing entitled “Examining Biden’s War on Independent Contractors.”

EPA proposes minimum levels for zero-emissions vehicles

The Environmental Protection Agency unveiled its proposed phase 3 greenhouse gas (GHG) standards for medium- and heavy-duty vehicles, beginning with model year (MY) 2028. EPA also proposes to tighten phase 2 standards for MY 2027 specifically for vocational vehicles and day cab tractors. Under EPA’s proposal, truck manufacturers would have to meet increasing percentages of total vehicles supplied that meet standards for zero-emissions vehicles (ZEVs). The standards are performance-based, but EPA presumes they will be met primarily through a combination of battery electric and hydrogen fuel cell technologies.

By MY 2032, 50% of vocational vehicles supplied to the market would be required to meet ZEV standards. Day cab tractors supplied would need to be 34% ZEV, and 25% of sleeper cab tractors would have to meet ZEV standards. EPA presumes a mix of battery electric and fuel cell for vocational and day cab tractors and principally fuel cell technology for sleeper cabs.

EPA will publish the proposal in the Federal Register and has scheduled a two-day virtual public hearing for May 2-3. For more information on the proposal, visit https://www.epa.gov/regulations-emissions-vehicles-and-engines/proposed-rule-greenhouse-gas-emissions-standards-heavy.

EPA’s proposal came just a couple of weeks after the agency granted several waivers from federal preemption to the California Air Resources Board (CARB) for regulations related to the state’s heavy-duty vehicle and engine standards. The most significant of those is the state’s Advanced Clean Truck regulation, which would mandate a different schedule for transition to ZEVs.

All-Ways Track ELD removed from FMCSA’s list of registered devices

Effective March 27, FMCSA removed the All-Ways Track ELD from the list of registered electronic logging devices (ELDs) and placed it on the list of revoked devices due to a failure to meet the minimum requirements established in 49 CFR part 395, subpart B, appendix A. Motor carriers using revoked devices must immediately discontinue their use and replace them within 60 days of the revocation. In the interim, carriers must revert to paper logs or logging software. For a list of registered and revoked ELDs, visit https://eld.fmcsa.dot.gov/List.

FMCSA to reduce UCR fees by about 9% in 2024

FMCSA has proposed to reduce the annual registration fees that states collect from carriers, brokers, forwarders, and leasing companies under the Unified Carrier Registration (UCR) Plan and Agreement. The fees for the 2024 registration year would be reduced below the fees for 2023 by approximately 9% overall, with varying reductions between $4 and $3,453 per entity, depending on the applicable fee bracket. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-05292.

Docket on proposed SMS changes open until May 16

Interested parties have one more month to submit comments on FMCSA’s proposed changes regarding the Safety Measurement System. Comments are due May 16. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-02947. For supporting documents and to file or review comments, visit https://www.regulations.gov/docket/FMCSA-2022-0066. Motor carriers can view how the revisions would affect their SMS performance by logging in at https://csa.fmcsa.dot.gov/prioritizationpreview.

Legislation

House, Senate bills would authorize $755 million for truck parking

Lawmakers in both the House and Senate have introduced legislation (H.R. 2367, S. 1034) to establish a competitive grant program for projects that expand the availability of CMV parking. The principal sponsors of the bills are Rep. Mike Bost (R-Illinois) and Sen. Cynthia Lummis (R-Wyoming). The bills would authorize $755 million total over fiscal years 2024-2026 to build or reopen rest areas with CMV parking or to add CMV parking capacity at existing facilities, truck stops or travel plazas, or publicly owned freight facilities, such as port terminals. For more on the House bill, visit https://www.congress.gov/bill/118th-congress/house-bill/2367. For more on the Senate bill, visit https://www.congress.gov/bill/118th-congress/senate-bill/1034.

Florida enacts lawsuit reform legislation

Florida Gov. Ron DeSantis in March signed legislation (House Bill 837) that enacts numerous reforms to civil litigation in a state. The law modifies the bad faith framework, eliminates one-way attorney’s fees and fee multipliers, and bars liabilities for damages if the person suing for damages is deemed to be at greater fault. One provision of particular interest in the trucking industry is one curtailing the ability of plaintiffs’ attorneys from introducing fictitious or inflated medical bills at trial. For more information on the new law, visit https://www.flsenate.gov/Session/Bill/2023/837.

Courts

Appeals court upholds preemption of broker’s negligent selection

The U.S. Court of Appeals for the 11th Circuit has ruled that the Federal Aviation Administration Authorization Act (FAAAA) generally preempts state-law negligent selection claims against freight brokers unless they fall within one or more of FAAAA’s exceptions. The opinion, which affirmed a U.S. district court’s ruling, further determined that FAAAA’s safety exception for state action was not applicable to negligence claims against a broker based on stolen goods. The litigation in question involved a load brokered by Landstar Ranger to a thief posing as a Landstar-registered carrier. The court’s opinion is available at https://media.ca11.uscourts.gov/opinions/pub/files/202210740.pdf.

The Landstar case appears to the be second in which a federal appeals court has considered the scope of FAAAA’s preemption against freight brokers for negligent selection under state common law. The U.S. Court of Appeals for the 9th Circuit ruled in September 2020 that a state common law claim against C.H. Robinson for negligent selection in a crash resulting in injuries fell within the safety exception of FAAAA’s preemption. The U.S. Supreme Court in June declined to review the 9th Circuit decision. Although the results are different in the C.H. Robinson and Landstar Ranger cases, they are not directly in conflict given that the Landstar case involved a commercial claim – stolen goods – rather than a claim involving the safe operation of motor vehicles.

Court’s ruling could reopen the door to trucking claims on AB 5

A court ruling in a case not directly involving the trucking industry could offer the industry another avenue for challenging enforcement of California’s AB 5 law. The U.S. Court of Appeals for the 9th Circuit in March ruled that a district court erred in dismissing the claims of food delivery service Postmates and ride hailing service Uber that the authors and supporters of AB 5 unfairly targeted app-based ride-hailing and delivery services while granting wide-ranging exemptions to other types of companies.

Postmates and Uber cited statements in opinion pieces and on social media by AB 5 sponsor Lorena Gonzalez and others. The appeals court said the plaintiffs had “plausibly alleged that their exclusion from the wide-ranging exemptions, including for comparable app-based gig companies, could be attributed to animus rather than reason.” Although the appeals court sided with the district court in all other respects, it reinstated the plaintiffs’ equal protection claims for further litigation. The appeals court did not necessarily agree with the merits of the plaintiffs’ equal protection claims, only that those claims were plausible. The 9th Circuit’s opinion is available at https://cdn.ca9.uscourts.gov/datastore/opinions/2023/03/17/21-55757.pdf.

Given comments by AB 5 supporters about the trucking industry as the legislation was being advanced and debated, the appeals court ruling potentially opens the door for new equal protection claims against application of the law against trucking. Claims of preemption failed when the U.S. Supreme Court refused in June of last year to review the 9th Circuit’s ruling in the case. Since then, new challenges have been filed against application of AB 5 to trucking based on the dormant Commerce Clause.

Advocacy and Comment

This month’s update involves three of our continuing hot topics: (1) The future of the owner operator and labor issues; (2) a proposed reboot of SMS methodology; and (3) the pervasive problem of organized and unchecked criminal fraud in the interstate trucking supply chain.

1. Owner Operator / Labor Issue

The two cases cited above have an interesting but tangential effect on the owner operator model. Criticism of the 9th Circuit about the political influences in the handling of AB5 evidences the recognition of the statute’s purely political nature and the 7th Circuit decision makes clear that the safety carve-out in the FAAAA is not intended to permit the trumping of federal law where no direct nexus to safety is shown.

Arguably these decisions are of value in the ultimate reconsideration of AB5 by the Supreme Court which should find a compelling need for uniform treatment of owner operators and federal rules of commerce based upon existing statutes and federal preemption. It must be noted, though, that the Department of Labor as currently configured, offers no safe harbor for owner operators or small businesses. Although a coalition of small businesses was able to defeat the appointment of David Weil, a known pro labor advocate, as Secretary, Julie Su who has acted as the Secretary pro tem, has now been selected for appointment. Like Weil, Ms. Su’s vita portrays a pro labor bias and her nomination should be opposed in letters to the Senate.

2. SMS Reboot

Comments on the FMCSA’s proposed revisions to SMS are due May 16, 2023. While the proposal is gentler and more defensible in some respects than CSA 2010, it is offered not as mere guidance, but as part of a new rule which would have the ultimate effect of law. Accordingly, it must meet higher standards including due process and the Administrative Procedures Act which requires consideration of the effect on small businesses, a cost benefit analysis, and rulings on material facts and law which have not been addressed.

In this regard, major unanswered questions include:
(1) How does FMCSA plan to address the litany of unmentioned deficiencies such as data accuracy, data sufficiency, the law of large numbers and enforcement bias that were identified prior to the Agency’s withdrawal of SMS in 2016?

(2) How will the new rule effectively allow the Agency to issue more safety fitness ratings? Using SMS as a vetting system, it now issues only 5,000 safety ratings per year. Under its new calculations, safety performance will be based only on a carrier’s past year of operations. This begs the argument that only 5,000 of over 700,000 carriers will be vetted under current §385 standards annually.

(3) How can the Agency justify use of roadside data accompanied by an expensive extension of administrative appeals and DataQ when the data measurement standards are apparently insufficient to measure the vast majority of small carriers?

3. Momentum for Anti-Fraud Initiative

Consensus is building that additional anti-fraud measures are needed to address widespread and crippling criminal fraud, particularly in the spot market. Administrative, legislative and judicial advocacy is necessary to establish precedent, laws and effective enforcement to investigate and prosecute organized crime at the federal level. In addition, the time has come for all shippers and brokers, particularly, to establish better vetting procedures and security and supply chain protocols for identifying and preventing larceny by fraud, identity theft, and bait and switch scams. More to come on this issue in subsequent reports.

The shortcomings and problems with the FMCSA dispatch service and bond change proposals were re-emphasized in stakeholders’ filing on April 6. As a separate issue, the case must be made for a federal enforcement initiative to investigate and prosecute systemic fraud which plagues all segments of the trucking industry. The issue is not limited to bonding issues and includes produce and exempt shipments. The DOT’s Office of Inspector General has the authority and experience to investigate and enforce federal criminal fraud penalties. Supportive stakeholders should contact their U.S. Senators and representatives, share with them the gravity of the problem and urge support for congressional support and funding as necessary. Recipients of this newsletter should notify their trade association or send this monthly newsletter to register your support.

Contents

Regulation and Enforcement

• FMCSA extends deadlines in broker proceedings, sets March 31 session
• Earl Adams named FMCSA deputy administrator; Van Steenburg to retire as CSO
• Employers to be notified of drivers’ clearinghouse status changes
• FMCSA issues enforcement policy on actual knowledge of substance violations
• Pitt Ohio seeks relief from CDL requirement of younger driver program
• Autonomous vehicle firms seek relief concerning warning devices
• FMCSA denies carrier’s requested HOS relief for food product delivery
• FMCSA rejects another driver request for an HOS exemption
• Driver seeks personal exemption from multiple HOS requirements
• Driver seeks exemption to allow 5/5 split of sleeper berth time

Legislation

• Bill to repeal FET on trucks and trailers introduced in both Houses of Congress
• House bill addresses motor vehicle owners’ right to repair
• Bill would mandate video recording in federal CMV enforcement stops

Advocacy and Comment

Regulation and Enforcement

FMCSA extends deadlines in broker proceedings, sets March 31 session

FMCSA has extended or reopened the comment period in two proceedings related to brokers to accommodate a March 31 public listening session on broker-related matters to be held at the Mid-America Trucking Show in Louisville, Kentucky. In November, FMCSA had published interim guidance on the definitions of broker and bona fide agents. In January, the agency issued a notice of proposed rulemaking (NPRM) to regulate broker and freight forwarder financial responsibility as required by the Moving Ahead for Progress in the 21st Century Act (MAP-21). The comment period on the interim guidance closed January 17, and comments on the NPRM had been due March 6. Comments in both proceedings now will be due April 6.

The interim guidance, which responded to a mandate in the 2021 infrastructure law, was effective immediately. (For details on the interim guidance, see the December 2022 Regulatory Update.) The NPRM proposes regulations in five areas: (1) assets readily available; (2) immediate suspension of broker/freight forwarder operating authority; (3) surety or trust responsibilities in cases of broker/freight forwarder financial failure or insolvency; (4) enforcement authority; and (5) entities eligible to provide trust funds for BMC-85 filings. (For details of the NPRM, see the January 2023 Regulatory Update.)

Although the listening session is scheduled to address both proceedings, FMCSA has allocated only one hour to take comments. The event is scheduled for 10 a.m. Eastern in Room B104 of the Kentucky Expo Center. For registration information, visit https://www.federalregister.gov/d/2023-04720. For the Federal Register notice extending the NPRM comment period, visit https://www.federalregister.gov/d/2023-04716. For the notice reopening the comment period on interim guidance on the definitions of broker and bona fide agents, visit https://www.federalregister.gov/d/2023-04717.

Earl Adams named FMCSA deputy administrator; Van Steenburg to retire as CSO

Earl Adams, Jr., was sworn in on February 27 as FMCSA deputy administrator, filling the position that had been held by Robin Hutcheson prior to her confirmation as FMCSA administrator in September. Adams previously had been FMCSA’s chief counsel since July 2021. Prior to joining FMCSA, Adams had worked with several law firms, most recently as a litigation partner with law firm Saul Ewing LP and managing partner of that firm’s Washington, DC, office. Other experience includes a decade on the board of the Metropolitan Washington Airports Authority and chief of staff to the lieutenant governor of Maryland.

In another personnel development, Jack Van Steenburg announced his retirement after 15 years with FMCSA, including about 12 years as assistant administrator and chief safety officer. Before joining FMCSA in 2008, Van Steenburg had served with the New York State Police for 25 years. The agency recently posted the position at https://www.usajobs.gov/job/709373700.

Employers to be notified of drivers’ clearinghouse status changes

Effective March 8, employers now will be notified by email if drivers have queried has new information – a new violation, removed violation, updated return-to-duty status, etc. – recorded in their clearinghouse records within 12 months of a pre-employment or annual query. Because the agency does not know what motor carrier employs a driver at any given moment, notifications apparently will go to any carrier that conducted either a pre-employment or an annual query on the driver within the past 12 months. Moreover, employers will still be required to obtain specific consent from the driver before obtaining details of the newly reported information.

Previously, if a driver tested positive for controlled substances in a pre-employment drug test while seeking a job at a different employer, the current employer would not be aware of the change in the clearinghouse record until it completed its mandatory annual query on that driver. FMCSA said that the change is allowed as a “routine use” of driver information under the Privacy Act and is addressed in a September 2022 Department of Transportation Federal Register notice (https://www.federalregister.gov/d/2022-19779).

FMCSA simultaneously issued further guidance aimed at mitigating the potential hassle and expense of conducting both follow-on queries in response to automatic notifications and annual queries of the same drivers. Under the revised guidance, if an employer receives a notification that a driver has a change in his or her clearinghouse record and completes a follow-on query, that query satisfies the annual query requirement, and the rolling 12 months will reset to the date of the follow-on query.

Links to the updated policies on regarding notification of changes to clearinghouse records and the annual requirement for employee queries are available on FMCSA’s Regulatory Guidance webpage at https://www.fmcsa.dot.gov/guidance.

FMCSA issues enforcement policy on actual knowledge of substance violations

Drivers whose citations for driving under the influence (DUI) of controlled substances or alcohol in a commercial motor vehicle (CMV) result in a non-conviction will be able to resume driving without completing a return-to-duty (RTD) process under guidance issued this month.

FMCSA on March 8 issued a national enforcement policy (NEP) regarding situations where a commercial driver’s violation is based on an employer’s “actual knowledge” of a traffic citation for DUI. If the citation later results in a non-conviction, FMCSA will not (1) prohibit the driver from driving based on his or her failure to complete the RTD treatment and testing process; (2) cite employers for using such drivers who have not completed the RTD process following non-conviction; or (3) enforce related reporting requirements for employers of such drivers.

The NEP states that “non-conviction” means that the charge of a DUI in a CMV is dismissed without the imposition of any fines, court costs or other punitive action or that there is an unvacated adjudicated finding of not guilty. However, the term does not include pleading guilty to a lesser charge, such as reckless driving.

Links to the NEP and FAQs concerning the policy are available on FMCSA’s Regulatory Guidance webpage at https://www.fmcsa.dot.gov/guidance.

Pitt Ohio seeks relief from CDL requirement of younger driver program

FMCSA is requesting comments by March 27 on an application from Pitt Ohio Express to exempt its drivers from one of the requirements in the agency’s Safe Driver Apprenticeship Pilot (SDAP) program. Specifically, Pitt Ohio believes it would have less trouble recruiting drivers for the program if it could use drivers under age 21 that have a commercial learner’s permit (CLP) to operate CMVs in interstate commerce. FMCSA currently requires that an apprentice already hold a CDL prior to enrolling in the program. If granted, Pitt Ohio estimates that 25 CLP holders would operate under the exemption per year. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-03783.

Autonomous vehicle firms seek relief concerning warning devices

FMCSA has requested comments by April 10 on an application from Waymo LLC and Aurora Operations, Inc., for an exemption from several requirements related to warning devices for stopped CMVs. The exemption would provide relief from the requirements that dictate placement of warning devices around stopped CMVs and that require warning devices to be steady-burning. The exemption also would allow use of a warning device for stopped vehicles not currently allowed by agency regulations. If approved, the exemption would allow CMVs operated by Level 4 automated driving systems (ADSs) to be equipped with warning beacons mounted on the truck cab in lieu of traditional warning devices placed around a stopped autonomous CMV.

FMCSA initially published a notice of the exemption application on March 3, but a March 9 notice clarified that the firms were seeking the relief on behalf of all motor carriers operating ADS-equipped CMVs and not just for Waymo or Aurora. That notice also extended the comment period to April 10. For the initial Federal Register notice, visit https://www.federalregister.gov/d/2023-04385. For the notice clarifying the scope and extending the comment period, visit https://www.federalregister.gov/d/2023-04841.

FMCSA denies carrier’s requested HOS relief for food product delivery

FMCSA has denied an exemption requested by Flat Top Transport LLC, a nine-truck carrier based in Holland, Michigan, for a four-month exemption from the hours-of-service regulations for “immediate and emergency delivery of dry and bulk food grade products to locations that supply stores and distribution centers nationally.” FMCSA said that supply chain issues alone are not a sufficient basis for exempting motor carriers transporting dry bulk food grade products from HOS regulations. The agency said that the carrier provided no basis on which it could conclude that granting an exemption from the HOS regulations would provide an equivalent level of safety. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-03564.

FMCSA rejects another driver request for an HOS exemption

FMCSA has rejected an application from truck driver Wayne Moore, Jr., for an exemption from four provisions in the HOS regulations: (1) the 10 consecutive hour off-duty time requirement; (2) the 14-hour “driving window”; (3) the 30-minute break requirement; and (4) the 70 hours-in 8-days limit. FMCSA said that an exemption would not achieve a level of safety equivalent to, or greater than, the level that would be achieved without the exemption and that approval “could open the door for a huge number of similar exemption requests.” For the Federal Register notice, visit https://www.federalregister.gov/d/2023-03688.

Driver seeks personal exemption from multiple HOS requirements

FMCSA is requesting comments by April 3 on an application from truck driver John Olier for exemptions from the 11-, 14-, and 70-hour rules withing the hours-of-service regulations along with all mandatory rest periods, including the 10-hour and 30-minute breaks. Olier contended in his application that “current forced work/rest periods force me to drive outside my body’s healthy Circadian Rhythm,” creating “unsafe conditions not only for me but for other drivers and the general public.” FMCSA has rejected several similar requests. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-04384.

Driver seeks exemption to allow 5/5 split of sleeper berth time

FMCSA is requesting comments by March 27 on an application by truck driver Matthew Killmer for an exemption that would allow him to split his sleeper berth time into two 5-hour periods. Killmer argued in his exemption application that the exemption would allow him to be more alert and rested and would facilitate finding a safe place to park his CMV. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-03780.

Legislation

Bill to repeal FET on trucks and trailers introduced in both Houses of Congress

Legislation to repeal the 12% federal excise tax (FET) on heavy trucks and trailers was introduced in both the House and Senate in March. Sens. Todd Young (R-Indiana) and Benjamin Cardin (D-Maryland) introduced S. 694 while Rep. Doug LaMalfa (R-California) and three co-sponsors introduced H.R. 1440.

The legislation, called the “Modern Clean and Safety Trucks Act of 2023,” is essentially the same as bills that have been introduced but not advanced during the past several Congresses. The findings section of the bill states that the FET disproportionately affects electric and alternative-fueled trucks that have a higher upfront cost. For more information on S. 694, visit https://www.congress.gov/bill/118th-congress/senate-bill/694. For more information on H.R. 1440, visit https://www.congress.gov/bill/118th-congress/house-bill/1440.

House bill addresses motor vehicle owners’ right to repair

Rep. Neal Dunn (R-Florida) and eight co-sponsors have introduced a bill (H.R. 906) that would bar motor vehicle manufacturers from withholding data, critical repair information, or diagnostic or repair tools from vehicle owners or their designated repair facilities. Also, except for recall and warranty repairs, manufacturers would be prohibited from requiring vehicle owners from using any particular brand of parts, tools, or equipment. Although the bill does not specifically address CMVs it would establish a Fair Competition After Vehicles Are Sold Advisory Committee that would include a representative of the trucking industry. For more on H.R. 906, visit https://www.congress.gov/bill/118th-congress/house-bill/906.

Bill would mandate video recording in federal CMV stops

Rep. Eleanor Holmes North (D-District of Columbia) has introduced legislation (H.R. 843) that would require federal law enforcement officers to use body and in-car video cameras in numerous contexts, including CMV stops. In the context of CMV stops, the bill only addresses requirements for patrol vehicles equipped with in-car video cameras. For more on H.R. 843, visit https://www.congress.gov/bill/118th-congress/house-bill/843.

Advocacy and Comment

Several of the hot topic issues covered this month and in prior months are proceeding through the notice and comment phase.

1. Comments were submitted on the Agency’s proposal to alter the broker’s bond requirement and to more readily assure continuing bond availability. Although generally supportive of these changes, our coalition pointed out that the broker’s bond is no panacea for fraud and does not address the need in both regulated and deregulated commodities for federal investigatory and policing power. Comments were filed at https://www.federalregister.gov/d/2022-28259.

Our stakeholders believe that the extent and cause of the problem is unpoliced fraud which is particularly injurious to the use of the spot market in the booking of shipments. Left out of the bond issue is the felt need across the industry to avoid piecemeal treatment of the issue and address fraudulent schemes regardless of the commodities handled, including embezzlement of freight charges, bait and switch of carriers, identity theft and hijack by unauthorized reconsignment. The Agency has extended the time for filing comments until April 6, 2023, and the matter will be taken up in an open forum at the Mid America Trucking Show at the Kentucky Expo Center on March 31, 2023 from 10 am to 11 am ET. See https://www.regulations.gov/document/FMCSA-2022-0134-0114. The issue has become both chronic and acute and begs for federal enforcement remedy not currently available.

2. SMS Reboot. The FMCSA has made no systemic changes to SMS methodology in the past 7 years. While some of the flaws of the CSA 2010 algorithms have been removed in the recent proposal, the Agency’s goal seems unclear with respect to the Agency’s ultimate responsibility of assigning actual safety fitness determinations to the over 700,000 carriers it permits to operate.

In its first of three question and answer sessions, the Agency acknowledged that the FAST Act precluded it from presenting an ultimate safety fitness system without rulemaking and noted the new reboot calculations would be unpublished by the Agency but presumably readily calculable and available to plaintiff’s bars and insurers. In this regard the new proposal would not remedy the “fit to operate but not certified as fit to use” conundrum nor would it remedy a major cause of nuclear judgments and up-supply chain liability to plaintiffs’ bar’s delight. If the Agency’s unsupported conclusion that safety fitness data is only usable if less than a year old were adopted, unless shown to be more effective, only 1 out of every 140 carriers would actually be assigned a safety rating each year.

In the next two listening sessions, the Agency should address how the reboot affects the industry’s ability to rely on the “fit to operate is fit to use” standard and what, if any, effect the reboot would have on the Agency’s ultimate task of assigning safety ratings.

Taken together, the pending guidance issues noted above offer no remedy to the industry’s need for Agency vetting of carriers and brokers. The dispatch service and the bonding changes as proposed do not address the need for better monitoring and enforcement of federal anti-fraud statutes, particularly with respect to exempt as well as regulated shipments. The SMS reboot does not address how the changing criteria would affect the tens of thousands of new carriers applying for authority each year and how the proposed reboot would affect the shipping public’s intended use or consideration of the modified data in their carrier selection process.

Contents

Regulation and Enforcement

• FMCSA proposes to revamp SMS, rejects IRT as ‘overly complex’
• FMC judge rules in favor of motor carriers on intermodal chassis choice
• Further input sought on regulating autonomous trucking operations
• Three ELDs are removed from FMCSA’s list of registered devices
• CVSA International Roadcheck scheduled for May 16-18
• FMCSA rejects driver’s requested exemption from HOS, ELD requirements
• Multiple carriers seek exemptions to use pulse lighting systems

Legislation

• Bill reintroduced to establish a carrier selection standard
• House bill could allow heavier trucks in many situations
• Bill would allow younger drivers for intrastate port drayage

Advocacy and Comment

Regulation and Enforcement

FMCSA proposes to revamp SMS, rejects IRT as ‘overly complex’

FMCSA has proposed substantial changes to the Safety Measurement System (SMS), but the agency decided against incorporating a sophisticated statistical model based on item response theory (IRT) as recommended by the National Academy of Sciences in 2017. Although FMCSA developed an IRT model, it found it to be “overly complex” and less transparent than SMS without improving safety.

Proposed changes

FMCSA is proposing major changes in how SMS is organized and operates. Key changes include:

• Reorganizing the Behavior Analysis and Safety Improvement Categories (BASICs) by eliminating a stand-alone Controlled Substance/Alcohol BASIC, creating a separate Vehicle Maintenance BASIC for violations that drivers might observe during a pre- or post-trip inspection or while operating the vehicle, and segmenting Driver Fitness and HM Compliance into combination and straight vehicles;
• Consolidating violations into a much smaller number of groups in each BASIC to mitigate disparities resulting today from inspectors citing different violation codes for essentially the same violations;
• Greatly simplifying violation severity weights to eliminate the inherent subjectivity of the current 1 to 10 scale, adopting instead a severity of either 1 or 2 for each consolidated violation group;
• Adopting “proportionate percentiles” to eliminate sudden jumps in percentiles that can occur now when a carrier moves into a different safety event group;
• Raising the intervention thresholds for the Driver Fitness and HM Compliance BASICs, which have the lowest correlation with crash risk, according to FMCSA;
• Assigning percentiles to a carrier in a BASIC (HOS Compliance, Vehicle Maintenance, and Driver Fitness) only if it had at least one relevant violation in the past 12 months rather than 24 months currently;
• Extending the utilization factor in the Unsafe Driving and Crash Indicator BASICs to 250,000 vehicle miles traveled (VMT) per power unit (PU) per year, up from 200,000 currently.

Considered but rejected

FMCSA’s Federal Register notice acknowledges several potential changes that the agency considered but ultimately chose not to propose. For example, the agency considered removing severity weighting of crashes but found doing so had a minimal impact on the group of carriers identified for intervention. FMCSA also considered raising the minimum number of crashes required to assign a percentile in the Crash Indicators BASIC from two to three, but the agency’s analysis showed that carriers with exactly two crashes have a future crash rate that is more than twice the national average future crash rate.

One frequent complaint about SMS is that differences among states in inspection and violation rates are unfair to carriers operating in states with higher-than-average enforcement rates. FMCSA said it that during the IRT model design, it explored a statistical model to account for enforcement variation among states. Ultimately, FMCSA concluded that incorporating such a model would neither improve its ability to identify high risk carriers nor square with the goals of the Motor Carrier Safety Assistance Program (MCSAP).

“States face varying challenges to reducing crashes due to different road types, congestion, topography, and weather conditions, among other factors,” FMCSA said. “Applying a model that de-emphasizes enforcement in certain States would disincentivize FMCSA’s MCSAP partners from undertaking enforcement initiatives that are intended to address particular safety issues in their States.”

IRT model

The largest change FMCSA considered but rejected clearly is IRT. NAS had recommended that the agency develop and IRT model and replace SMS with it if it was demonstrated to perform well in identifying carriers for alerts. The agency’s work developing IRT model revealed “many limitations and practical challenges.”

One drawback with IRT is that it “is heavily biased towards identifying smaller carriers that have few inspections with violations and limited on-road exposure to crash risk,” FMCSA said. The safety event groups and data sufficiency standards used in SMS produced similar results. Also, IRT does not use VMT or PUs to adjust for differences in on-road exposure in the Unsafety Driving BASIC, so it identified carriers with much lower crash rates in that BASIC compared to SMS, the agency said.

Other problems with IRT were less about the model’s statistical efficacy. “IRT modeling is not readily understandable by most stakeholders or the public,” FMCSA said. Results are difficult for the public to interpret and for motor carriers to compute for their own operations, the agency concluded. “A carrier would not be able to identify how specific violations or areas of regulatory noncompliance impacted its prioritization status or how it could improve its status.” Another issue with IRT is its inflexibility as the IRT model takes four weeks to run as compared to two days for SMS.

Comments on the proposal, which is not a formal rulemaking proceeding, are due May 16. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-02947. For supporting documents and to file or review comments, visit https://www.regulations.gov/docket/FMCSA-2022-0066. Motor carriers can view how the revisions would affect their SMS performance by logging in at https://csa.fmcsa.dot.gov/prioritizationpreview. FMCSA also said it would hold a series of question-and-answer sessions for the industry and public to be announced later.

FMC judge rules in favor of motor carriers on intermodal chassis choice

A Federal Maritime Commission judge ruled that chassis agreements requiring motor carriers to use specific chassis providers violate the Shipping Act of 1984 in situations when an entity other than the ocean carrier is paying for use of the equipment. The initial decision of Chief Administrative Law Judge Erin Wirth might not be the last word on the matter, however, as an appeal to the FMC itself would appear likely.

The judge’s order responded to a complaint filed in August 2020 by the Intermodal Motor Carriers Conference of the American Trucking Associations against the Ocean Carrier Equipment Management Association (OCEMA), Consolidated Chassis Management LLC, and 11 ocean common carriers. IMCC argued that requiring motor carriers to use OCEMA-member default chassis providers for merchant haulage movements was an unreasonable practice in violation of the Shipping Act.

The ruling represents a notable victory for motor carriers, but they did not get quite everything they requested. IMCC had also asked that the judge invalidate the concept of a default chassis agreement whereby motor carriers would be assigned to a presumptive chassis provider in the absence of a preference otherwise. “The assignment of a default provider where a motor carrier does not have another preference may serve the interests of the shipping public by ensuring that a system is in place to efficiently assign chassis to containers and incentivizing the efficient flow of cargo,” Judge Wirth said. The initial order and other document in the case are available at https://www2.fmc.gov/readingroom/proceeding/20-14.

As required by Congress in last year’s Ocean Shipping Reform Act, FMC in conjunction with the Transportation Research Board has begun to study and develop best practices for intermodal chassis pools. Congress required FMC to publish those best practices by April 2024.

Further input sought on regulating autonomous trucking operations

FMCSA is requesting comments by March 20 regarding factors the agency should consider in amending the Federal Motor Carrier Safety Regulations (FMCSRs) to establish a regulatory framework for automated driving systems (ADS)-equipped commercial motor vehicles (CMVs) operations. The supplemental advance notice of proposed rulemaking (SANPRM) follows a May 2019 ANPRM on the topic.

The latest document poses additional questions in three specific areas: (1) a potential requirement for motor carriers to notify FMCSA if they are conducting Level 4 or Level 5 autonomous operations; (2) oversight of remote assistants who might monitor autonomous CMVs; and (3) issues surrounding vehicle inspection and maintenance. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-02073. For comments on the May 2019 ANPRM, visit https://www.regulations.gov/docket/FMCSA-2018-0037.

Three ELDs are removed from FMCSA’s list of registered devices

In separate actions, FMCSA recently removed three devices from the agency’s list of registered electronic logging devices (ELDs) and placed them on the revoked devices list due to their failure to meet minimum requirements. Motor carriers using revoked devices must immediately discontinue their use and replace them within 60 days of the revocation. In the interim, carriers must revert to paper logs or logging software. The revoked devices and dates of revocation are: (1) TMS One’s ELD ONE, January 31; (2) Nationwide Technologies Inc’s Nationwide ELD, February 3; and (3) ONE PLUS ELD’s ORS device (n/k/a 1 PL Logs), February 8. For a list of registered and revoked ELDs, visit https://eld.fmcsa.dot.gov/List.

CVSA International Roadcheck scheduled for May 16-18

The Commercial Vehicle Safety Alliance has scheduled this year’s International Roadcheck inspection event for May 16-18 with a focus on anti-lock braking systems (ABS) and cargo securement. ABS violations are not out-of-service violations, but they play a critical role in reducing collisions, CVSA said. Improper or inadequate cargo securement accounted for 10.6% of all vehicle OOS violations during the 2022 International Roadcheck.

FMCSA rejects driver’s requested exemption from HOS, ELD requirements

FMCSA has denied an application from truck driver Ronnie Brown III for an exemption from five provisions of the federal hours-of-service (HOS) regulations as well as the ELD mandate. Brown is a driver with Waterloo, Iowa-based Gray Transportation and has 15 years’ experience as a driver. Brown argued that the HOS regs create safety concerns because they do not always coincide with his natural sleep patterns. The agency said that Brown had failed to establish that he would maintain a level of safety equivalent to, or greater than, the level achieved without the exemption, adding that exempting one individual from the HOS regulations "could open the door for a huge number of similar exemption requests.” For the Federal Register notice, visit https://www.federalregister.gov/d/2023-00975.

Multiple carriers seek exemptions to use pulse lighting systems

In separately published notices, FMCSA has requested public comment on exemptions sought by seven individual motor carriers that would allow them to use a pulse lighting system module manufactured by Intellistop, Inc. for rear clearance, identification, and brake lamps. Current regulations require that such lighting be steady burning. The exemption applications were filed by

• Meiborg Brothers, Inc. (https://www.federalregister.gov/d/2023-02048);
• Gemini Motor Transport (https://www.federalregister.gov/d/2023-02053);
• DJS Fundraising, Inc. (https://www.federalregister.gov/d/2023-02049);
• JM Bozeman Enterprises, Inc. (https://www.federalregister.gov/d/2023-02054);
• Polytech Plastic Molding (https://www.federalregister.gov/d/2023-02050);
• Brent Higgins Trucking, Inc. (https://www.federalregister.gov/d/2023-02052);
• Encore Building Products (https://www.federalregister.gov/d/2023-01602);

Comments on all applications are due March 3 except for Encore Building Products, which are due February

Legislation

Bill reintroduced to establish a carrier selection standard

Reps. Mike Gallagher (R-Wisconsin) and Seth Moulton (D-Massachusetts) have introduced legislation (H.R. 915) that would establish an interim carrier selection standard for shippers, brokers and others until FMCSA completes a rulemaking to revise current safety fitness determination standards. FMCSA would be required to complete the rulemaking within 18 months of enactment. Gallagher and Moulton introduced the same bill in the prior Congress, but it did not advance beyond the introduction stage.

Under the legislation, until FMCSA finalizes a safety fitness rule, selection of a motor carrier shall be considered reasonable if the contracting entity verifies no earlier than 45 days prior to the date of the shipment that the carrier is licensed, registered, and insured and is not deemed unfit under existing standards. For more on H.R. 915, visit https://www.congress.gov/bill/118th-congress/house-bill/915.

House bill could allow heavier trucks in many situations

Rep. Dusty Johnson (R-South Dakota) introduced legislation (H.R. 471) that would allow states to issue permits for overweight vehicles and loads in a wide range of situations defined under the bill as emergencies. In addition to typical natural disasters leading to loosening of restrictions on trucking operations, H.R. 471 could apply if the Secretary of Transportation declares that supply chains in the U.S. “are functioning in a suboptimal manner in a State or regionally or nationally, either in terms of slow overall movement, freight traffic congestion, or otherwise.”

The bill also includes a pilot program to allow states to permit six-axle vehicles to operate on interstate highways and would expand regulatory relief for agricultural and livestock haulers. The bill would allow truck drivers to apply for Workforce Innovation and Opportunity Act grants and incentivize drivers to enter the workforce through targeted and temporary tax credits. Other provisions would loosen requirements for third-party administration of CDL tests and provide grants for truck parking and rest facilities for commercial drivers. For more on H.R. 471, visit https://www.congress.gov/bill/118th-congress/house-bill/471.

Bill would allow younger drivers for intrastate port drayage

Rep. Brian Mast (R-Florida) introduced legislation (H.R. 267) that would treat the transportation of goods from a port of entry to another location within the same state as intrastate transportation for purposes of CDL requirements. Under current law, port drayage is deemed to be interstate even if the final destination or distribution center to which the goods are hauled are located in the same state. The practical effect of H.R. 267 is to allow younger drivers to conduct drayage operations. For more information on H.R. 267, visit https://www.congress.gov/bill/118th-congress/house-bill/267.

Advocacy and Comment

Based on this month’s update, the regulatory and legislative agenda for the next two years is becoming more clear. The key issues to be addressed in trucking can be identified, but the outcomes cannot be predicted. They include:

• (1) The owner operator issues and Department of Labor related initiatives.
• (2) FMCSA’s proposed reinstitution of a modified SMS methodology and industry’s response to up-supply chain liability when using licensed, authorized and insured carriers.
• (3) The lack of standard service terms and conditions, pricing freight in the spot market, allocating risk between shippers, carriers and brokers commensurate with risk acceptance and insurability issues
• (4) The need to address systemic fraud in the spot market allocation of freight with better security and supply chain protocols.

Upcoming dates for submission of comments related to these issues are quickly approaching:

• (1) Broker and Freight Forwarder Financial Responsibility (Comments due March 6). See https://www.federalregister.gov/documents/2023/01/05/2022-28259/broker-and-freight-forwarder-financial-responsibility
• (2) SMS revisited – FMCSA has proposed repurposing of SMS methodology as prerequisite to reform of safety rules. See https://www.federalregister.gov/d/2023-02947. Comments due May 16, 2023.
• (3) Owner operator issues and DOL issues – Cases involving enforcement of AB5 in California and new appeals pending. Coalition comments made in DOL joint employer and Interim Guidance docket awaiting rulings. See https://www.regulations.gov/comment/NLRB-2022-0001-11601 and https://www.regulations.gov/comment/FMCSA-2022-0134-0103
• (4) Standard service terms and agreements – FMC ruling against predatory steamship pricing.

The recipients of this monthly update and the trade associations which provide it to members represent a broad-based cross section of the trucking industry including carriers, brokers, forwarders, shippers, and allied industries that share a common commitment to advocacy for limited but effective rules of commerce. Any recipient of this newsletter who wishes to participate in advocacy concerning one or more of the issues above should contact their sponsoring organization or send an email to info@transportationlaw.net.

Contents

Regulation and Enforcement

• FMCSA proposes changes in broker and forwarder requirements
• Exemption rejected for including hair testing results into drug clearinghouse
• FMCSA implements 10-year refresher training and certification for medical examiners
• DOT modal agencies adjust civil penalties for inflation
• FMCSA to begin work on vehicle crash causation study
• Stevens Transport receives CDL-related exemption
• FMCSA grants two driver training exemptions, denies three

Legislation

• Congress passes fiscal 2023 appropriations law

Advocacy and Comment

Regulation and Enforcement

FMCSA proposes changes in broker and forwarder requirements

FMCSA has issued a notice of proposed rulemaking (NPRM) related to establish financial responsibility requirements for brokers and freight forwarders as required by the 2012 law known as Moving Ahead for Progress in the 21st Century Act (MAP-21). The NPRM proposes regulations in five areas. The following is a summary of those provisions.

Assets readily available – The NPRM proposes allowing brokers or freight forwarders to meet the MAP-21 requirement to have “assets readily available” by maintaining trusts that meet certain criteria, including that the assets can be liquidated within seven calendar days of the event that triggers a payment from the trust, and that do not contain certain specified assets.

Immediate suspension of broker/freight forwarder operating authority – The NPRM proposes that “available financial security” falls below $75,000 when there is a drawdown on the broker or freight forwarder’s surety bond or trust fund. This would occur when a broker or freight forwarder consents to a drawdown or does not respond to a valid notice of claim from the surety or trust provider, causing the provider to pay the claim. It also would happen if the claim against the broker or freight forwarder is converted to a judgment and the surety or trust provider pays the claim. FMCSA also proposes that if a broker or freight forwarder does not replenish funds within seven business days after notice by FMCSA, the agency will issue a notification of suspension of operating authority.

Surety or trust responsibilities in cases of broker/freight forwarder financial failure or insolvency – FMCSA proposes to define “financial failure or insolvency” as bankruptcy filing or state insolvency filing. The NPRM also would require the surety/trustee to notify FMCSA and initiate cancelation of financial responsibility if it is notified of any insolvency of the broker or freight forwarder. The agency also proposes to publish immediately a notice of failure in the FMCSA Register immediately.

Enforcement authority – FMCSA proposes that to implement MAP-21's requirement for suspension of a surety provider’s authority, the agency would first provide notice of the suspension to the surety/trust fund provider, followed by 30 calendar days for the surety or trust fund provider to respond before a final agency decision is issued. The agency also proposes to add penalties in 49 CFR part 386, appendix B, for violations of the new requirements.

Entities eligible to provide trust funds for BMC-85 filings – FMCSA proposes to remove the rule allowing loan and finance companies to serve as BMC-85 trustees.

The MAP-21 mandates for regulations on broker and forwarder responsibility have been incomplete for over a decade. FMCSA in 2013 implemented one element of the MAP-21 requirements by increasing the financial security amount for brokers to $75,000 and extending that minimum to freight forwarders, which previously had not been subject to financial security requirements. The agency issued an advance NPRM regarding further implementation of the MAP-21 requirements in September 2018 after having held an informal roundtable of stakeholders in May 2016.

Comments on the NPRM are due March 6. To view the January 5 Federal Register notice, visit https://www.federalregister.gov/d/2022-28259.

Exemption rejected for including hair testing results into drug clearinghouse

FMCSA has denied an exemption requested by The Trucking Alliance – a group representing 11 mostly large trucking companies – to amend the definition of actual knowledge of drug use to include the employer’s knowledge of a driver’s positive hair test. Because the Department of Health and Human Services (HHS) has yet to clear hair testing as an alternative to urine testing, hair test results cannot be reported to the drug and alcohol clearinghouse.

The agency had already indicated in its notice seeking comment that it lacked statutory authority to grant the exemption but that it also was required by statute to publish the exemption application. In denying the application, FMCSA confirmed that the agency lacked the authority to grant it as statutory law states that hair testing is not authorized as an alternative to urine testing until HHS establishes federal standards. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-27849.

FMCSA implements 10-year refresher training and certification for medical examiners

FMCSA announced implementation of the regulatory requirement that all medical examiners certified and listed on the agency's National Registry of Certified Medical Examiners maintain their certification by completing refresher training 4 to 5 and 9 to 10 years after certification and passing a recertification test 10 years after certification. The 5-year refresher training had already been implemented and FMCSA is now proceeding with the 10-year training and testing mandate. For the Federal Register notice, visit https://www.federalregister.gov/d/2023-00385.

DOT modal agencies adjust civil penalties for inflation

As required by law, the Department of Transportation (DOT) has issued a rule implementing an annual inflation adjustment for civil penalties levied by DOT modal agencies, including FMCSA. Due to soaring inflation in 2022, the adjustment is much larger than typical at about 7.7%. For more information, including a civil penalty schedule, visit the Federal Register notice at https://www.federalregister.gov/d/2022-28580.

FMCSA to begin work on vehicle crash causation study

In a preliminary step toward conducting a Congressionally mandated study of commercial vehicle crash causation, FMCSA announced plans to collect certain information from states and local jurisdictions. The study was required by the 2021 Infrastructure and Investment Jobs Act. The agency said that in order to plan and execute the study, it needed to collect information on state and local jurisdictions’ interest and ability to participate in the study. It also plans to obtain information on the jurisdictions’ existing crash data collection processes, systems, and resources and their commercial motor vehicle enforcement funding mechanisms and sources. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-28045.

Stevens Transport receives CDL-related exemption

FMCSA has granted an exemption to Stevens Transport, Inc. to allow a commercial learner’s permit (CLP) holder who has passed the skills test but not yet received the CDL document to drive a Stevens commercial motor vehicle accompanied by a CDL holder who is not necessarily in the passenger seat. Exempted drivers must provide documentation of passing the skills test. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-28235.

FMCSA grants two driver training exemptions, denies three

In separate actions published in January and December, FMCSA has granted exemptions from portions of the entry-level driver training regulations in two situations but denied three other applications for exemptions. The exemptions that were granted were to the State of Alaska (https://www.federalregister.gov/d/2022-28242) and Railsback HazMat Safety Professionals, LLC (https://www.federalregister.gov/d/2023-00444). The exemptions rejected had been requested by the National Ground Water Association (https://www.federalregister.gov/d/2023-00445); Western Area Career and Technology Center (https://www.federalregister.gov/d/2022-27848); SBL Truck Driving Academy, Inc. (https://www.federalregister.gov/d/2022-27775).

Legislation

Congress passes fiscal 2023 appropriations law

Shortly before the end of the 117th Congress in December, Congress passed the consolidated appropriations act (H.R. 2617), which funds the federal government through September 30, 2023. President Biden signed the bill into law on December 29. As it applies to FMCSA, the law makes no changes in law that were not already included in prior appropriations acts. The law continues the exemption from electronic logging devices held by livestock haulers and the requirement for annual underride guard inspections as recommended by the Government Accountability Office. The law also requires FMCSA to use certified or registered mail to notify new entrants placed out of service under expedited action. For more information on the legislation, which is now Public Law 117-328, visit https://www.congress.gov/bill/117th-congress/house-bill/2617.

On Tuesday, January 17, a group of 13 Stakeholders filed a response in the FMCSA’s “Notification of Interim Guidance: Definitions of Broker and Bona Fide Agents” at https://www.federalregister.gov/d/2022-24923.

While endorsing the Agency’s decision to make no new ruling on dispatch services, Stakeholders pointed out that the Agency’s piecemeal addressing of broker malfeasance does not address the major issue – the lack of any policing, investigation, and prosecution of double brokerage scams and frauds which is victimizing the industry. Stakeholders pointed out that FMCSA has acknowledged it lacks the resources or the mandate to address this major problem.

Stakeholders pointed out that at the DOT level, the Office of Inspector General has the mandate and personnel to establish a task force and has, in fact, recently investigated and prosecuted a major systemic fraud and won a conviction against its principal which involves substantial jail time, restitution and a fine. Stakeholders expressed their willingness to work with the Department and the Agency to implement this proposal and to seek additional earmark funding from Congress as needed.

Otherwise, this holiday month has been relatively quiet as the above summary of events shows. The new year will obviously result in treating unresolved issues including: (1) The Agency’s effort to reboot SMS and the use of data to issue safety ratings; (2) Efforts to promote increased on-truck technology to reduce crashes and insurance premiums; (3) New litigation aimed at overturning AB5 based upon the dormant Commerce Clause – an argument not previously made in the California trucking case; (4) Increased activity before the U.S. Department of Labor and state agencies concerning the future viability of the owner operator model; (5) New efforts to increase minimum BIPD insurance requirements and the potential adverse effects on the cost to small carriers; and (6) Legacy supply chain issues and in particular, the cost of uncompensated detention.

Contents

Regulation and Enforcement

• FMCSA issues interim guidance on definitions of broker and bona fide agents
• FMCSA plans to narrow scope of emergency declaration relief
• ‘Interpretive rule’ clarifies applicability of regulations to passenger carriers
• Withdrawal of passenger inspection rulemaking confirmed by FMCSA
• Livestock stakeholders are denied broad HOS exemption
• FMCSA rejects owner-operator’s exemption from various HOS provisions
• Driver seeks broad exemption from HOS regulations
• New Hampshire Inmate seeks exemption from two driver training provisions
• Rosco Vision receives exemption for camera system to replace mirrors

Legislation

• Senate bill would fund truck parking expansion

Advocacy and Comment

Regulation and Enforcement

FMCSA issues interim guidance on definitions of broker and bona fide agents

In response to a mandate in last year’s infrastructure law, FMCSA has issued interim guidance regarding the agency’s definitions of “broker” and “bona fide agents” in the context of transportation by motor vehicle. Although the interim guidance was effective immediately, FMCSA requested comments on it by January 17 and said it might issue updated guidance if comments demonstrate a need. The agency in June had requested comments on various issues related to the topic.

Regarding brokers, FMCSA said that the prevailing view among commenters is that the current definition of “broker” is adequate, it clarified that definition in one area: The relevance of an entity's handling of funds in a transaction between shippers and motor carrier. FMCSA said that handling money exchanged between shippers and motor carriers is a factor that strongly suggests the need for broker authority, but it is not an absolute requirement for a person or entity to be considered a broker.

Regarding bona fide agents, FMCSA said an area of debate was whether representing more than one motor carrier required broker authority. FMCSA said that representing more than one motor carrier does not necessarily mean one is a broker rather than a bona fide agent. Determinations will be highly fact specific and will involve determining whether the person or company is engaged in the allocation of traffic between motor carriers, FMCSA said.

The more complicated area in the guidance was the role of “dispatch services,” when they are brokers or bona fide agents, and even how they are defined. FMCSA said that while there is no commonly accepted definition of a dispatch service, such services appear to have certain common features: (1) they work exclusively for motor carriers, not for shippers; (2) they source loads for motor carriers; and (3) they perform additional services for motor carriers that are unrelated to sourcing shipments.

FMCSA’s interim guidance states that when a dispatch service does not participate in the arrangement of freight, or when it represents only one motor carrier, it is not a broker. If a dispatch service arranges transportation on behalf of multiple motor carriers and engages in the allocation of traffic, however, then it is not a bona fide agent and must obtain broker operating authority registration. The agency noted, however, that this analysis is often highly fact specific and must be made on a case-by-case basis.

The analysis of whether a dispatch service is a bona fide agent is based on whether the service falls within the definition in 49 CFR 371.2(b), FMCSA said. However, if the dispatch service allocates traffic between two motor carriers, by definition it cannot be a bona fide agent, it added. The interim guidance further lists the situations in which a dispatch service would or would not require broker authority.

For the interim guidance in the Federal Register, visit https://www.federalregister.gov/d/2022-24923. To view comments in response to FMCSA’s June request for information along with other documents, visit https://www.regulations.gov/docket/FMCSA-2022-0134.

FMCSA plans to narrow scope of emergency declaration relief

FMCSA is requesting comments by February 6 on a notice of proposed rulemaking (NPRM) to narrow the scope of regulations from which relief is provided automatically for motor carriers providing direct assistance when an emergency has been declared. The agency also proposed revisions to the process for extending an automatic emergency exemption where circumstances warrant.

Federal regulations (Part 390.23) automatically create a 30-day exemption from 49 CFR parts 390 through 399 when a president, governor, or FMCSA issue a declaration of an emergency and a motor carrier or driver provides direct assistance to state and local emergency relief efforts. In the Federal Register notice, FMCSA said it believed that most emergencies justify relief from the normal hours-of-service (HOS) limits but that other safety regulations “often have no direct bearing on the motor carrier's ability to provide assistance to the emergency relief efforts.”

Under the NPRM, a presidential declaration of an emergency would continue to trigger a 30-day exemption from all Federal Motor Carrier Safety Regulations (FMCSRs) in parts 390 through 399, but the duration and scope of existing automatic relief would be limited in the case of regional declarations by FMCSA or governors. The automatic relief would apply for only five days and would exempt commercial motor vehicle drivers only from the HOS regulations in Parts 395.3 and 395.5. FMCSA said five days was appropriate in most actual emergencies. “Any emergency relief efforts extending beyond that time are typically geared to rebuilding and not to the emergency response scenarios envisioned when this rule was first issued.”

FMCSA also proposes to modify the definition of an emergency in the regulations to clarify that automatic relief does not apply to economic conditions that are caused by market forces, including shortages of raw materials or supplies, labor strikes, driver shortages, inflation, or fluctuations in freight shipment or brokerage rates, “unless such conditions or events cause an immediate threat to human life and result in a declaration of an emergency.” One exception would be states of emergency declared by governors due to a shortage of residential heating fuel. That relief is statutory under the Reliable Home Heating Act.

For the Federal Register notice, visit https://www.federalregister.gov/d/2022-26506.

'Interpretive rule' clarifies applicability of regulations to passenger carriers

FMCSA issued an “interpretive rule” that adds appendices to the FMCSRs to explain existing statutes and regulations FMCSA administers related to the applicability to passenger carriers of the regulations related to safety, financial responsibility, and registration. Under certain conditions, motor carriers performing intrastate movements of passengers may still be operating in interstate commerce and – unless otherwise exempt – are subject to applicable FMCSA statutory and regulatory requirements, FMCSA noted.

Although the rule was effective November 15, FMCSA is requesting comments by January 15. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-24089. To comment or view comments, visit https://www.regulations.gov/docket/FMCSA-2021-0188. (Note: The original Federal Register notice contained an error regarding the docket number. The correct docket number is FMCSA-2021-0188.)

Withdrawal of passenger inspection rulemaking confirmed by FMCSA

FMCSA has confirmed its May 2017, decision to withdraw an April 2016 advance notice of proposed rulemaking (ANPRM) concerning the establishment of requirements for states to implement annual inspection programs for commercial motor vehicles (CMVs) designed or used to transport passengers. Last year’s infrastructure law had directed the agency to solicit further comment on the ANPRM. After doing so in June, FMCSA said that it had determined that there is not enough data and information available to support moving forward with a rulemaking action. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-24708.

Livestock stakeholders are denied broad HOS exemption

Nearly four years after publishing the application for comment, FMCSA has rejected an HOS exemption requested by several associations with members involved in the production and distribution of livestock and insects. The requested exemption would have allowed drivers to drive through the 16th consecutive hour after coming on duty and to drive for a total of 15 hours during that 16-hour period. Although the groups did not receive the exemption, they have received some of the requested relief through federal legislation.

FMCSA noted that livestock haulers are entirely exempt from all HOS regulations under the agricultural commodities exemption, which covers a 150 air-mile radius from the source of the commodity. Moreover, last year’s infrastructure law – enacted several years after the groups filed their application – exempted drivers transporting livestock from HOS regulations within a 150 air-mile radius from the final destination of the livestock. The agency also noted that livestock haulers are exempt from the requirement to use electronic logging devices. The exemption would allow drivers six or more hours driving time within the 150 air-mile exempt zones in addition to 15 hours of driving time outside the zone, FMCSA noted. “The Agency finds that allowing 21 or more hours of driving during a work shift would not likely achieve a level of safety that is equivalent to, or greater than, the level that would be achieved absent the exemption.” For the Federal Register notice, visit https://www.federalregister.gov/d/2022-25999.

FMCSA rejects owner-operator’s exemption from various HOS provisions

FMCSA has denied an application from a leased owner-operator for an exemption from five provisions of the federal hours-of-service (HOS) regulations. The application was submitted by Leland Schmitt, Jr., who was leased to Clearwater, Minnesota-based D&E Transport and had 30 years’ experience. Schmitt had requested a five-year exemption from (1) the 10 consecutive hour off-duty time requirement; (2) the 14-hour “driving window”; (3) the 30-minute break requirement; (4) the 60 hours-in-7-days limit; and (5) the 70 hours-in 8-days limit. Schmitt had told FMCSA that the mandatory 10-hour off-duty break goes against his natural sleep patterns and that his normal nighttime sleep while in the CMV is between five to seven hours.

The agency said Schmitt had failed to establish that he would maintain a level of safety equivalent to, or greater than, the level achieved without the exemption. “The Agency concurs with commenters that if it exempts one individual from the HOS regulations, it could open the door for a huge number of similar exemption requests,” FMCSA said. “Such a result would be inconsistent with a primary goal of the HOS regulations.” For the Federal Register notice, visit https://www.federalregister.gov/d/2022-24383.

Driver seeks broad exemption from HOS regulations

Several days before FMCSA denied a similar request from owner-operator Leland Schmitt, Jr., the agency requested comments by January 3 on an application from Wayne Moore, Jr. of Shelbyville, Indiana, for an exemption from four provisions in the HOS regulations: (1) the 10 consecutive hour off-duty time requirement; (2) the 14-hour “driving window”; (3) the 30-minute break requirement; and (4) the 70 hours-in 8-days limit. FMCSA summarized the request as wanting the ability to split off-duty time into periods that are more conducive to proper rest and sleep without having to comply with the HOS regulations. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-26127.

New Hampshire Inmate seeks exemption from two driver training provisions

FMCSA requested comments by January 3 on Robert Towle’s application for an exemption from two requirements in the entry-level driver training regulations related to use of instructors who meet the definition of theory instructors and to the requirement for use of a provider listed on the Training Provider Registry. Towle, an inmate of the New Hampshire State Prison, wants to use a CDL training class provided by a special school district operated by the New Hampshire Department of Corrections. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-26129.

Rosco Vision receives exemption for camera system to replace mirrors

FMCSA has granted a limited five-year exemption to grant a limited 5-year exemption to Rosco Vision, Inc. (Rosco) to allow motor carriers to operate CMVs with the company’s CV Digital Camera Monitor System installed as an alternative to the two rear-vision mirrors required by the FMCSRs. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-25983.

Legislation

Senate bill would fund truck parking expansion

Sens. Cynthia Lummis (R-Wyoming) and Mark Kelly (D-Arizona) introduced a bill (S. 5169) that would authorize $755 million over five years to build additional commercial truck parking facilities. The bill not only would cover construction of commercial truck parking spaces at rest areas and weigh stations along highways but also would cover expansion of parking adjacent to truck stops and travel plazas, at publicly owned freight facilities such as port terminals. S. 5169 is a companion bill to H.R. 2187, which was approved in July by the House Transportation & Infrastructure Committee. For more on the Senate bill, visit https://www.congress.gov/bill/117th-congress/senate-bill/5169.

Advocacy and Comment

Three end of the year issues forecast an interesting new year on the regulatory scene.

(1) Dispatch Services Interim Rules. The FMCSA, in initiating these interim rules, failed to address the significant issue of fraudulent double brokerage and identity theft which affects carriers, shippers and brokers and which ultimately allows the perpetrators of the fraud to steal millions and go unpunished.

In this interim rule, the Agency tries to reinterpret the broker regulations to create a carve-out for third parties which arrange for transportation but do not handle the funds or act as third party sales agents working for a single carrier only. This finding would exacerbate the problem, setting no reliable registry for determining the third parties’ bona fides or bringing the “dispatch service” within the MAP-21 and Section 14704 self-help provisions for enforcement purposes.

If third parties can claim to be a dispatch service operating for a sole carrier to book freight, simply bypassing its alleged principal in a bait and switch scheme, this ruling makes it simpler for identity theft to occur. Clearly, the Agency has no budget or appetite for enforcing rules of commerce, yet verification of licensed intermediaries and bonding information via its website is essential in the spot market.

Actually, the OIG, a division of U.S. DOT, has jurisdiction to police and prosecute fraud in interstate commerce. The time has come to seek funding for enforcement of the rules by the OIG using the full breadth of MAP-21 which extends liability for broker abuse automatically to any party who aids and abets a fraud.

(2) NLRB Joint Employer Rule. As presented, the rule could have far reaching effects across industries, particularly undercutting the use of contracted labor. With respect to trucking it can be viewed as an attempt to facilitate the unionization of truck drivers and owner operators serving customers, particularly in closed shop states. Our coalition of stakeholders filed comments in support of SBA’s opposition and explained that trucking has unique attributes which have not been examined. See https://www.regulations.gov/comment/NLRB-2022-0001-11601

(3) DOL Employee Misclassification NPRM. Finally, The Department of Labor’s Wage and Hour Board has re- tabled its employee misclassification initiative as proposed guidance for the courts in evaluating misclassification. The standard it proposes acknowledges that the decision is ultimately up to the courts where there is an existing “economic realities” test that the owner operator independent contractor meets.

Yet once again, the DOL fails to recognize the need for a carve-out for the owner operator model based on the unique economic realities of trucking and of Federal Laws which provide a blueprint for owner operator compliance under the truth in leasing regulations. Other than to suggest that independent contractors across industries need and deserve employee wage and hour treatment, DOL offered no analysis of the effect of possible reclassification of owner operators. Its unweighted multi-factor guidance offered less clarity.

While acknowledging that adoption of the AB5 structure was beyond its authority and the courts ultimately had the last word based on precedent, no analysis on the reclassification’s possible effect or cost of the proposal on small businesses or the trucking industry in particular were presented.

In filings made on the December 13th, 11 stakeholders pointed out that the owner operator / independent contractor model is a unique creation of federal transportation law designed (1) to provide contract protection against abuse and (2) to encourage blue collar entrepreneurship with flexible wage and hour compensation designed to facilitate productivity and use of the federal hours of service rule to trump overtime. See https://www.regulations.gov/document/WHD-2022-0003-0001/comment

The Stakeholders’ position which is shared by others as well, is that the owner operator / independent contractor model and the federal transportation statutes and regulations which support it cannot be ignored and deserve a carve-out from any new guidance or rule. Our point with the DOL, which it has yet to address is that a “one size fits all” approach applicable to shift workers does not fit the economic realities of the owner operator model.

In a Release dated December 14, a number of Republicans have urged DOL to not move forward with any proposed rule due to its negative impact on workers and businesses across industries, its lack of clarity and the devastating consequences on the U.S. economy.

DOL’s proposal is an attack on the independent contractor model and affects more than just trucking. This is clearly a ripe issue for Congress and political action.

Contents

Regulation and Enforcement

• DOL proposes to reverse Trump-era rule on worker classification under FLSA
• FMCSA’s COVID-19 emergency declaration ends
• FMCSA rejects SBTC exemption related to the language skills requirement
• School bus group receives CDL testing exemption regarding engine compartments
• FMCSA renews UPS exemption from certain ELD requirements
• FMCSA renews ELD exemption for motion picture-related drivers

Legislation

• House bill would repeal entry-level driver training rule
• Bill would allow workers to choose independent status with certain protections

Advocacy and Comment

Regulation and Enforcement

DOL proposes to reverse Trump-era rule on worker classification under FLSA

The U.S. Department of Labor’s Wage and Hour Division last month proposed a rule to revise WHD’s analysis of determining worker classification under the Fair Labor Standards Act (FLSA). The notice of proposed rulemaking (NPRM) does not directly address trucking-specific issues, but it noted that a “high incidence of misclassification of employees as independent contractors has been documented in agriculture, construction, trucking, housecleaning, in-home care, stagecraft, and ‘sharing economy’ companies.”

The NPRM’s principal objective is to undo the final rule issued by WHD in January 2021 during the waning days of the Trump administration. That rule’s goal generally was to make it easier for employers to classify workers as independent contractors than had been the case under prior guidance and court precedent. WHD’s stated goal is to return to prior interpretations of the so-called economic reality test, which includes the following six factors:

• The opportunity for profit or loss depending on managerial skill;
• The investments by the worker and the employer;
• The degree of permanence of the work relationship;
• The nature and degree of employer control;
• The extent to which the work performed is an integral part of the employer’s business; and
• The worker’s use of skill and initiative.

One example of how the Trump and Biden administrations differ on classification relates to the question of whether the work is integral to the business. The Trump rule interpreted that to mean that the worker himself or herself was integrated into the day-to-day business process. Even under the Trump rule, some owner-operators in trucking might fail that factor. However, the Biden proposed rule looks at the question more broadly – i.e., whether the work performed is critical, necessary, or central to the employer’s business. This approach is closer to that in the ABC test codified in California’s AB 5 law. However, AB 5 essentially disqualifies independent contractor classification if the work is central to the employer’s business while in the economic reality test it is but one of multiple considerations.

Another issue relevant to trucking relates to the control issue. The January 2021 rule had stated that employer mandates that workers comply with safety and health standards were not to be considered an indicator of control. Moreover, on the final day of the Trump administration, WHD issued an opinion letter concluding that a motor carrier’s mandate that owner-operators use certain safety management technology or practices did not indicate control under FLSA.

The new Biden administration promptly rescinded that opinion letter, saying that it was premature since the January 2021 rule had not taken effect. The new NPRM states that safety and health standards are relevant to the analysis of control. However, it also notes that such standards would be only one consideration for the control issue and that control itself is just one of multiple factors and would not necessarily thwart or ensure an independent contractor relationship.

The NPRM had been expected for months and followed public forums in June on the issue. The Biden administration had tried to withdraw the Trump-era rule early in 2021, but a federal court earlier this year ruled that its process for doing so was invalid, thus requiring WHD to conduct formal rulemaking to reverse the Trump-era rule.

Comments on NPRM are due December 13 following an extension of the original November 28 deadline. For the NPRM, visit https://www.federalregister.gov/d/2022-21454. To comment on the proposal or review comments filed by others, visit https://www.regulations.gov/docket/WHD-2022-0003.

FMCSA’s COVID-19 emergency declaration ends

Without any formal announcement, the Federal Motor Carrier Safety Administration’s emergency declaration that had been in place since mid-March 2020 granting enforcement relief in transportation related to COVID- 19 relief ended October 15 when the latest extension expired. In September, the agency had requested comment by later that month concerning the extent to which motor carriers currently rely on the declaration to deliver certain commodities and whether there has been any impact on safety. FMCSA received 379 comments. To view comments, visit https://www.regulations.gov/docket/FMCSA-2022-0189.

FMCSA rejects SBTC exemption related to the language skills requirement

FMCSA denied an exemption requested by the Small Business in Transportation Coalition (SBTC) for an exemption that would allow carriers to use drivers who are not capable of reading and speaking the English language sufficiently to communicate with the public, understand highway traffic signs in English, to respond to official inquiries, etc. FMCSA concluded that SBTC has presented insufficient evidence to establish that not complying with the driver qualification regulations relating to the English language proficiency requirements for CMV drivers would meet or exceed the level of safety provided by complying with the regulations. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-23891.

School bus group receives CDL testing exemption regarding engine compartments

FMCSA has granted an application from the National School Transportation Association (NSTA) for an exemption from the “under-the-hood” testing requirement for commercial driver’s license (CDL) applicants seeking a school bus endorsement. Drivers issued a CDL under the exemption are restricted to intrastate operation of school buses only. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-23346.

FMCSA renews UPS exemption from certain ELD requirements

FMCSA has renewed for five years an exemption requested by United Parcel Service, Inc. (UPS) from various provisions of the mandate to use electronic logging devices (ELD). The exemption allows (1) all motor carriers and drivers that use portable, driver-based ELDs to record engine data only when the driver is in a CMV and the engine is powered, and (2) all motor carriers to configure an ELD with a yard-move mode that does not require a driver to re-input yard-move status every time the tractor is powered off. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-23312.

FMCSA renews ELD exemption for motion picture-related drivers

FMCSA has renewed for five years the exemption requested by the Motion Picture Association that exempts from the electronic logging device (ELD) requirements all commercial motor vehicle (CMV) drivers providing transportation to or from a theatrical or television motion picture production site. Drivers instead are allowed to complete paper records of duty status (RODS). For the Federal Register notice, visit https://www.federalregister.gov/d/2022-23889.

Legislation

House bill would repeal entry-level driver training rule

Citing a shortage of truck drivers, Rep. Bob Good (R-Virginia) and five co-sponsors introduced legislation (H.R. 9153) to repeal the entry-level driver training (ELDT) rule that was finalized in 2016 and took effect earlier this year. A recently introduced Senate bill (S. 4861) does not go as far as a full repeal, but it waives the ELDT requirements for employees of small businesses as defined in the bill. For more information on H.R. 9153, visit https://www.congress.gov/bill/117th-congress/house-bill/9153.

Bill would allow workers to choose independent status with certain protections

A bill (H.R. 8442) introduced in July by Rep. Henry Cuellar (D-Texas) and two Republican co-sponsors would authorize use of a “worker flexibility agreement,” which would be a hybrid arrangement combining features of independent contractor and employee status. Workers and entities retaining them could declare the worker an independent contractor status for tax, wage, and overtime purposes while retaining worker rights typically offered to employees, such those related to privacy and nondiscrimination, workplace safety, and Family and Medical Leave Act protections. Under such an agreement, a worker would be free to reject offers of work from the entity and could perform the same services for competing businesses unless otherwise agreed to in a bargained-for non-solicitation sales agreement. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8442.

Advocacy and Comment

We delayed sending this month’s update awaiting the outcome of the midterm elections and a Small Business Administration Roundtable with the Department of Labor to discuss its proposed new independent contractor rule mentioned above. Neither event provided any clarity. The results of the midterm elections are not likely to either exacerbate or improve the pending issues affecting trucking.

Our efforts at the SBA Roundtable were aimed at highlighting the distinct importance of the owner operator / independent contractor model to the trucking industry, the need for special treatment and a carve-out from any rule of general applicability DOL proposes. We highlighted the importance of the independent contractor model as a small business opportunity, pointing out that under a one-size-fits-all “control test” the safety obligations of hiring carriers are baked into Federal Regulations and do not count against finding independent contractor status.

We emphasized the importance of the independent contractor model as the backbone of long haul trucking, the dray industry and other niches and emphasized that under rulemaking requirements, the Department of Labor is required to consider the economic effects of any new rule on small businesses and, under the National Transportation Policy, on the shipper and broker community as well.

These issues are not adequately addressed in the Agency’s rulemaking for which comments are now due on December 13. Over 19,000 comments have already been filed, most of which are anecdotal complaints by disgruntled workers in other industries. It is important that we set the record straight and file a coordinated presentation which makes the case for recognition of the owner operator / independent contractor model as a unique essential small business and transportation issue which cannot be ignored.

Owner operators, affected motor carriers both large and small, and shippers and brokers which foresee supply chain interruption if the independent contractor model is lost should contact the sponsors of this newsletter for further information.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through October 15, 2022. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Regulation and Enforcement

• NLRB proposes joint-employer rule to undo Trump-era rule
• Trucking Alliance seeks exemption for including hair testing results in clearinghouse
• FMCSA seeks comments on use and benefits of COVID enforcement relief
• ELDorado ELD removed from list of registered ELDs
• FMCSA names members of Women in Trucking Advisory Board
• Community colleges receive funds to train veterans as truck drivers
• Small carrier seeks HOS exemption to deliver dry and bulk food grade products
• FMCSA reaffirms denial of driver training exemption for UPS
• ELD exemption renewed for short-term truck rentals

Courts

• Court formally dissolves AB 5 injunction; case to proceed on other grounds

Advocacy and Comment

Regulation and Enforcement

NLRB proposes joint-employer rule to undo Trump-era rule

The National Labor Relations Board has issued a notice of proposed rulemaking that would make it easier for workers to claim joint employment, reversing a February 2020 rule that made it more difficult for workers to make such a claim. The current rule states that employees could only claim to be employed by companies holding “substantial, direct and immediate control” over their employment. The proposal would loosen that standard to include employers that exercised such control over essential terms and conditions “directly or indirectly.”

Under the proposed rule, two or more employers would be considered joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment,” such as wages, benefits and other compensation, work and scheduling, hiring and discharge, discipline, workplace health and safety, supervision, assignment, and work rules. The NLRB proposal, therefore, would make it easier for employees of contractors or staffing firms. In announcing the proposal, NLRB said the proposal would ground the joint-employer standard in established common-law agency principles consistent with board precedent and guidance from the U.S. Court of Appeals for the District of Columbia Circuit. The proposal was advanced by a 3-2 vote of the board.

Comments on the NLRB proposal are due November 7. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-19181. Comments replying to comments submitted during the initial comment period must be received by the Board on or before November 21.

Trucking Alliance seeks exemption for including hair testing results in clearinghouse

FMCSA is requesting comments by September 23 on an application from The Trucking Alliance – a group representing 11 mostly large trucking companies – for an exemption to amend the definition of actual knowledge of drug us to include the employer’s knowledge of a driver’s positive hair test. Because the Department of Health and Human Services has yet to clear hair testing as an alternative to urine testing, hair test results cannot be reported to the drug and alcohol clearinghouse. In the Federal Register notice, FMCSA declared that it lacks statutory authority to grant the Trucking Alliance’s requested exemption until HHS amends its mandatory guidelines, but the agency said it is requesting public comment on the application as required by statute. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-18257.

FMCSA seeks comments on use and benefits of COVID enforcement relief

FMCSA is seeking comments by September 21 on the extent to which motor carriers currently rely on the COVID-19 emergency declaration and whether there has been any impact on safety. The agency has extended the emergency declaration through October 15, but it has signaled that it is at least questioning whether the declaration is still necessary.

Last September, FMCSA has asked carriers to report on the number of trips conducted under the declaration and the commodities transported. Based on a review of the carriers’ self-reported information, the primary categories transported are (1) food, paper, and other groceries for emergency restocking of distribution centers or stores; and (2) livestock and livestock feed. Meanwhile, two categories that have seen usage drop by almost 50% between October 2021 and July 2022 were (1) medical supplies and equipment related to the testing, diagnosis, and treatment of COVID-19; and (2) supplies and equipment necessary for community safety, sanitation, and prevention of community transmission of COVID-19. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-19304.

ELDorado ELD removed from list of registered ELDs

FMCSA has removed ELDorado ELD from the list of registered electronic logging devices (ELD) and placed it on the revoked devices list do to the company’s failure to meet the minimum requirements. The revocation is effective September 7. Carriers most immediately discontinue using the ElDorado ELD and revert to paper logs or logging software to record hours of service and must replace the device with a compliant ELD by November 7. The list of registered devices is available at https://eld.fmcsa.dot.gov/List.

FMCSA names members of Women of Trucking Advisory Board

FMCSA in late August announced the appointment of members to the Women of Trucking Advisory Board (WOTAB), which was established by last year's infrastructure package to encourage the recruitment, retention, support, and safety of female commercial motor vehicle (CMV) drivers. The WOTAB will provide recommendations to FMCSA. For the list of WOTAB members, visit https://www.fmcsa.dot.gov/advisory-committees/wotab/wotab-members.

Community colleges receive funds to train veterans as truck drivers

FMCSA has awarded $3.1 million to community colleges and training institutes through the Commercial Motor Vehicle Operator Safety Training (CMVOST) grant program. Grants will assist current and former members of the Armed Forces who want to pursue careers in trucking to get commercial driver’s licenses (CDLs) and the training they need to enter the profession. Changes to the program in fiscal 2022 allowed educational institutions to apply for funds without providing a local match. For a list of colleges receiving grants, visit https://www.fmcsa.dot.gov/mission/grants/cmvost-grant-recommendation-summaries.

Small carrier seeks HOS exemption to deliver dry and bulk food grade products

FMCSA is requesting comments by October 3 on an application from Flat Top Transport LLC, a nine-truck carrier based in Holland, Michigan, for a four-month exemption from the hours-of-service regulations for “immediate and emergency delivery of dry and bulk food grade products to locations that supply stores and distribution centers nationally.” The carrier said that its main focus would be food-grade flour, corn meal, and salts used for the production of cereals, baked goods, canned goods, and meat processing. It said tight availability of those products is threatening food chain supply and producing shutdowns. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-18935.

FMCSA reaffirms denial of driver training exemption for UPS

FMCSA on reconsideration has again denied an application by United Parcel Service for an exemption from a provision in the entry-level driver training rule that requires two years of experience for training instructors. UPS argued that its process of preparing driver trainers exceeds any skill set gained merely by operating a tractor-trailer for two years. FMCSA said it has determined that the application lacked evidence that UPS’ alternative would ensure that an equivalent level of safety or greater would be achieved. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-19133.

ELD exemption renewed for short-term truck rentals

FMCSA has renewed, subject to conditions, the Truck Renting and Leasing Association’s exemption from the ELD installation and use requirements in situations where driver of property-carrying CMVs are rented for 8 days or less, regardless of reason. Drivers remain subject to the standard hours-of-service limits and must maintain a paper record of duty status (RODS) if required. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-19556.

Courts

Court formally dissolves AB 5 injunction; case to proceed on other grounds

U.S. District Judge Roger Benitez on August 29 officially implemented the U.S. Court of Appeals for the Ninth Circuit’s mandate overturning his preliminary injunction against enforcement of AB 5 against motor carriers. The order was a formality after the U.S. Supreme Court declined to review the appeals court’s decision.

Although the California Trucking Association and other plaintiffs in the case no longer can argue that the Federal Aviation Administration Authorization Act (FAAAA) preempts AB 5, they originally had argued other grounds for the law’s application to trucking. Because the judge had granted the preliminary injunction on FAAAA grounds, he did not consider the plaintiffs’ argument that California was barred from enforcing AB 5 due to their dormant Commerce Clause claim. The court now will consider that claim, giving plaintiffs until October 11 to file a renewed motion for a preliminary injunction. However, nothing prevents California from enforcing AB 5 on trucking in the interim.

Advocacy and Comment

NLRB’s proposed new rule could increase liability for carriers using fleet owners

Under the new proposed National Labor Relations Board rule, companies across industries could be held responsible for their contractor’s violation of labor laws. The proposed rule could have a far-reaching effect on franchisees, agents of all types and in particular fleets and owner operators which employ their own drivers and in turn lease their equipment with drivers to licensed carriers under the truth in leasing regulations.

The proposed “Co-Employer” rule could be used to facilitate collective bargaining and eliminate any barrier to tagging mega carriers with employee taxes and benefits in the event their independent contractors fail to comply or otherwise default.

Unfortunately, this new proposed rule tracks other pending administrative actions before the Department of Labor which evidence a partisan agenda that affects the opportunities currently available to small businessmen, and in our industry, owner operators in particular. ATRI’s recent studies show an overwhelming preference of independent contractors for the freedom of dispatch and entrepreneurial opportunities the independent contractor model provides.

As noted before, trucking is a unique industry which has traditionally enjoyed a carve-out for independent contractors under federal regulation. Changes in labor laws could de-incentivize entrepreneurial opportunities and result in less, not more, trucks and drivers, as the ATRI study suggests. Under the administrative process, small businesses have the opportunity to be heard and must be considered in promulgating any new rule. Now, before the mid-term elections, is the time for the industry to make clear to regulators that eliminating the independent contractor model and facilitating collective bargaining is against public policy and will exacerbate, not facilitate, the recruitment of more drivers.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through August 31, 2022. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Courts

• Appeals court upholds the latest changes to HOS rules
• Appeals court overturns ruling for Schneider in classification case

Regulation and Enforcement

• Registration now open for younger driver apprenticeship program
• FMCSA denies ELD exemption for elevator maintenance firm
• School bus association seeks CDL testing exemption regarding engine compartments
• FMCSA proposes to incorporate CVSA procedures into hazmat permit regs

Legislation

• Clean energy law includes tax credits for electric trucks
• T&I Committee approves bill to fund truck parking expansion
• Rep. Mast introduces a package of bills to loosen restrictions, taxes on trucking
• Senate bill would loosen requirements for VA funding of commercial driver training

Advocacy and Comment

Courts

Appeals court upholds the latest changes to HOS rules

The U.S. Court of Appeals for the District of Columbia Circuit late last month rejected a challenge to the September 2020 changes in the federal hours-of-service rules for truck drivers. Three truck safety advocacy groups and the Teamsters Union had challenged two of the revisions. The parties argued that FMCSA had failed to adequately explain its conclusion that the new short-haul exemption was safety neutral with respect to collision risk and driver health and would not negatively impact regulatory compliance. They also argued that the agency had insufficiently explained how the modification to the 30-minute break requirement was safety neutral and would not impact driver health. The parties did not challenge other rule changes, including the split options for split rest and increased flexibility afforded drivers when operating in adverse conditions.

Although the 43-page appeals court opinion goes into much more detail, the fundamental ruling was simple. “Because the modifications to the hours-of-service rules were sufficiently explained and grounded in the administrative record, we deny the petition,” the court said. For the opinion, visit https://www.cadc.uscourts.gov/internet/opinions.nsf and search 20-1370 under “Quick Search.”

Appeals court overturns ruling for Schneider in classification case

The U.S. Court of Appeals for the 7th Circuit has reversed a U.S. district court ruling in favor of Schneider National in a worker classification case and sent it back to the lower court for further proceedings. The district court had granted Schneider’s motion to dismiss all claims, which were that the carrier (1) violated minimum wage requirements under the federal Fair Labor Standards Act and Wisconsin law; (2) unjustly enriched itself under Wisconsin law; and (3) violated federal Truth-in-Leasing regulations.

The appeals court ruled that the district court had erred by giving decisive effect to the terms of Schneiders contracts. “In many areas of the law, the district court’s approach would be sound, but not under the Fair Labor Standards Act,” the appeals court said. “As explained below, in determining whether a person is an employee under the Act, what matters is the economic reality of the working relationship, not necessarily the terms of a written contract.” The appeals court concluded that the plaintiff’s allegations about the economic reality of his working relationship state a viable claim under FLSA and the other laws relies upon. For the opinion in the case, visit http://media.ca7.uscourts.gov/opinion.html and search for case No. 21-2122.

Regulation and Enforcement

Registration now open for younger driver apprenticeship program

About six months after publishing the requirements for the program, the Federal Motor Carrier Safety Administration has opened the Safe Driver Apprenticeship Program for carriers to apply for participation. The program, which was established by last year’s infrastructure legislation, allows 18- to 20-year-old individuals to drive commercial motor vehicles in interstate commerce under certain conditions. At any given time, FMCSA can allow only 3,000 drivers to participate. For more information and a link to the carrier application portal, visit https://www.fmcsa.dot.gov/safedriver.

FMCSA denies ELD exemption for elevator maintenance firm

FMCSA has denied an application submitted in 2019 by Harris Companies, Inc. for an exemption from the electronic logging device (ELD) rule for all its employees who are required to prepare records of duty status (RODS). The exemption would have included elevator technicians, electricians, other general laborers, and welders who operate commercial motor vehicles in interstate commerce. FMCSA said that the applicant has not demonstrated that it would likely achieve a level of safety that is equivalent to, or greater than, the level that would be achieved absent the requested exemption. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-15224.

School bus association seeks CDL testing exemption regarding engine compartments

FMCSA is requesting comments by September 12 on an application from the National School Transportation Association (NSTA) for an exemption from the “under-the-hood” testing requirement for commercial driver’s license applicants seeking a school bus endorsement. Drivers issued a CDL under the exemption would be restricted to intrastate operation of school buses only. For the Federal Register notice https://www.federalregister.gov/d/2022-17228.

FMCSA proposes to incorporate CVSA procedures into hazmat permit regs

FMCSA is requesting comments by September 7 on a proposal to incorporate by reference into the hazardous materials safety permit regulations the updated Commercial Vehicle Safety Alliance (CVSA) handbook containing inspection procedures and Out-of-Service Criteria (OOSC) for inspections of shipments of transuranic waste and highway route-controlled quantities of radioactive material. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-16510.

Legislation

Clean energy law includes tax credits for electric trucks

President Biden has signed into law the so-called Inflation Reduction Act (H.R. 5376), which includes various measures related to clean energy and health care. Among the legislation’s clean energy provisions is a “qualified commercial clean vehicle credit,” which provides a tax credit of up to $40,000 for qualified heavy commercial electric vehicles, or up to $7,500 for qualified commercial electric vehicles weighing less than 14,000 pounds. A separate provision provides a tax credit of up to $100,000 for installation of charging stations needed to support those vehicles.

For details of the legislation, visit https://www.congress.gov/bill/117th-congress/house-bill/5376. The provisions outlined above are Sections 13403 and 13404.

T&I Committee approves bill to fund truck parking expansion

The House Transportation & Infrastructure Committee has advanced legislation (H.R. 2187) that would authorize $755 million over five years to build additional commercial truck parking facilities. The bill not only would cover construction of commercial truck parking spaces at rest areas and weigh stations along highways but also would cover expansion of parking adjacent to truck stops and travel plazas, at publicly owned freight facilities such as port terminals. For more information on the bill, visit https://www.congress.gov/bill/117th-congress/house-bill/2187.

Rep. Mast introduces a package of bills to loosen restrictions, taxes on trucking

Rep. Brian Mast (R-Florida) has introduced five bills that to address the supply chain crisis by reducing regulatory burdens and taxes on the trucking industry, linking them as steps to address the ongoing supply chain crisis. The tax-related bills include one (H.R. 8413) that is similar to bills that have been introduced by others in Congress over the years. H.R. 8413 would repeal the 12% federal tax on truck chassis, which Mast says would “lower the cost of entry for aspiring truckers and get more trucks on the road.” For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8413. The other tax-related bill (H.R. 8413) would repeal the 24.3-cent excise tax on diesel fuel. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8414.

The other three bills address issues that are more controversial, even within the trucking industry itself. H.R. 8411 would extend the permissible length of each twin semitrailer from 28 to 33 feet to allow truck combinations to haul more cargo. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8411. The idea of allowing longer doubles became a big issue about seven years ago and sharply divided truckload and LTL carriers.

H.R. 8412 would increase the permissible weight of a semitrailer from 80,000 pounds to 97,000 pounds. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8412. While generally supported by shippers and some major private fleets, the idea of allowing heavier trailers has been controversial within the truckload industry because many carriers fear that customers would pressure them into replacing existing trailers without adequate compensation and also while rendering the prior trailers obsolete.

The final bill, H.R. 8417, would permanently repeal the hours-of-service regulations, although it would require carriers to allow truck drivers to take at least 10 hours off duty “when such driver informs the motor carrier or motor private carrier that such driver needs immediate rest.” For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8417. This bill is most controversial of all, although Mast argues that FMCSA’s actions to rescind HOS rules during the height of the pandemic demonstrate that the regulation is unnecessary.

Senate bill would loosen requirements for VA funding of commercial driver training

Sen. Deb Fischer (R-Nebraska) has introduced legislation (S. 4766) that would exempt commercial driver training from some of the requirements governing allocation of funds for veterans educational assistance by the Department of Veteran Affairs (VA). For details on the legislation, visit https://www.congress.gov/bill/117th-congress/senate-bill/4766.

Advocacy and Comment

Dispatch Services

Exhaustive comments were filed by 13 stakeholders in the FMCSA’s open docket considering the future of “dispatch services.” Most commenters supported the retention of the existing definition of “Broker” which includes third parties who arrange for transportation for compensation and are not exclusively representing one carrier.

The 13 areas of inquiry presented by the Agency opens the door for an analysis of DOT’s obligations to enforce the National Transportation Policy and prevent identity theft, larceny by fraud, and double brokerage scams, all of which are serious demonstrative problems that are currently unaddressed. Unlike the Federal Maritime Commission which exercises its regulatory authority over unreasonable practices in ocean freight, other than record industry complaints, the FMCSA does not actively investigate and police fraudulent and felonious conduct notwithstanding statutory and regulatory authority to do so.

The explosive growth in spot market booking of freight has increased the opportunity for “catfishing” where the internet persona of the potential logistics partner cannot be trusted.

At the Department level it is DOT’s responsibility to enforce the National Transportation Policy and ensure that all stakeholders can rely on a competitive marketplace in which properly licensed, authorized and insured brokers and carriers can be identified and used. Maybe the dispatch service docket will afford the industry the opportunity to demonstrate a more active policing of the industry, not less in the public’s interest and that a special appropriation and task force should be set up by DOT to readdress these issues.

AB5 Goes Viral – Infects New Jersey

As predicted, the Supreme Court’s decision not to hear the appeal of AB5 has already resulted in increased virulence. In the past week, the State of New Jersey has issued two unfavorable decisions. In one, its Department of Labor has refused to apply a decade old carve-out from employee status for independent contractors which are paid based on productivity (i.e., either by the mile or on percentage). This legislation, which was intended to track the federal owner operator leasing rules, has been declared ineffective because the carrier augmented the owner operator’s base pay with pass through payments and deductions contemplated by the very federal rules the carveout was intended to facilitate.

The same week, the New Jersey Supreme Court, in a rush to facilitate the ABC Test, ruled that there would be no court appeal of a New Jersey DOL ruling in favor of application of the ABC test in an unrelated industry.

Wow! So much for due process and judicial appeal in New Jersey. By now, it should have become obvious that the ABC test endorsed by CA in AB5 is a killer of small business opportunities and that there is no easy way to contain its spread. Isn’t it ironic that two states, California and New Jersey, with among the highest state tax burdens and great dependence on the owner operator model for intermodal port traffic should be the first in line to stifle blue collar entrepreneurship.

Unfortunately the decision of the 7th Circuit in the Schneider case may be a harbinger of things to come. Hopefully the Court’s remand will not encourage a renewal of vexatious class action suits alleging that retention of owner operators under the federal leasing regulations somehow violates well established precedent.

Stay tuned! Clearly there is more to come on this issue.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through August 31, 2022. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Courts

• Leased owner-operator model outlawed in California as Supreme Court denies cert
• Supreme Court refuses to consider preemption of broker negligent selection lawsuits

Regulation and Enforcement

• FMCSA removes Arion Tech Inc’s ArionT ELD from list of registered ELDs
• Comment period ends on broker, bona fide agent definitions
• Comment period on speed limiters closes July 18
• SBTC seeks exemption from language skills requirement
• FMCSA seeks comments on several bids for driver training exemptions
• Stevens Transport seeks CDL-related exemption as FMCSA renews two others
• FMCSA denies HOS exemption for pipeline contractors
• Minnesota loses bid for reconsideration of CDL skills test exemption denial
• FMCSA renews towing group’s tie-down exemption

Legislation

• House bill would repeal excise tax on trucks and trailers
• House panel approves DOT funding bill

Advocacy and Comment

Courts

Leased owner-operator model outlawed in California as Supreme Court denies cert

The legal battle over whether trucking companies can use leased owner-operators ended June 30 when the U.S. Supreme Court chose not to disturb a federal appeals court decision overruling an injunction against enforcement of AB 5 against motor carriers. U.S. District Judge Roger Benitez, who had issued the injunction in January 2020, on July 8 acknowledged the mandate of the U.S. Court of Appeals for the Ninth Circuit, thereby formally allowing the state to enforce the law. The California Trucking Association, which had led the legal challenge to AB 5, estimates that the Supreme Court’s denial of a writ of certiorari affects approximately 70,000 owner-operators in the state. See Advocacy and Comment below for discussion of important issues.

Supreme Court refuses to consider preemption of broker negligent selection lawsuits

The U.S. Supreme Court on June 27 declined to consider an appeals court ruling that state common-law tort liability claims against brokers for negligent selection are not preempted by federal law. As was the case with the California Trucking Association’s challenge of AB 5, the U.S. Court of Appeals for the Ninth Circuit case, which involved C.H. Robinson, revolved around the scope of the Federal Aviation Administration Authorization Act (FAAAA) in preempting state action. FAAAA explicitly exempts from preemption acts of “safety regulatory authority of a State with respect to motor vehicles.” The appeals court had concluded that state common-law tort claims were exempt from preemption. See Advocacy and Comment for Discussion

Regulation and Enforcement

FMCSA removes Arion Tech’s ArionT ELD from list of registered ELDs

Carriers relying on Arion Tech Inc.’s ArionT electronic logging device (ELD) have until August 24 to replace those devices with another registered device. Effective June 24, FMCSA placed the ELD on its list of revoked devices due to the company’s failure to meet the minimum requirements established in 49 CFR part 395, subpart B, appendix A. In addition to switching to a new device by the deadline, carriers must stop using the revoked device and revert to paper logs or logging software to record required hours-of-service data until the ArionT ELD is replaced. For a list of registered and revoked devices, visit https://eld.fmcsa.dot.gov/List. For other ELD resources, visit https://www.fmcsa.dot.gov/hours-service/elds/electronic-logging-devices.

Comment period ends on broker, bona fide agent definitions

The comment period closed July 11 on FMCSA’s request for input into the guidance the agency is required to issue clarifying the distinctions between brokers and bona fide agents. Under a provision in the Infrastructure Investment and Jobs Act, FMCSA’s guidance must consider the extent to which technology has changed the nature of freight brokerage, the role of bona fide agents, and other aspects of the freight transportation industry.

In joint comments, a group of 13 stakeholders agreed that there were serious problems surrounding intermediaries, they argued that what was needed was stronger enforcement, not more regulation. “There is no effective cop on the block protecting shippers, brokers and carriers against unauthorized operations, frauds, scams, and identity thefts involving the abuses of intermediaries in regulated truck transportation, the stakeholders said. FMCSA and DOT “have the unique authority to enforce uniform rules of commerce, police the industry, and prosecute fraud involving intermediaries.” Among other things, they recommended that DOT and/or the agency should establish and staff a permanent task force to monitor complaints and establish a proactive prosecutorial staff to enforce existing rules.

Groups involved in the joint comments were the Air & Expedited Motor Carriers Association (AEMCA), Airforwarders Association (AfA), Alliance for Safe, Efficient and Competitive Truck Transportation (ASECTT), Auto Haulers Association of America (AHAA), American Home Furnishings Alliance (AHFA), Apex Capital Corp, National Association of Small Trucking Companies (NASTC), PFA Transportation Insurance & Surety Services, Sompo International, Transportation & Logistics Council (T&LC ), Specialized Furniture Carriers, The Expedite Association of North American (TEANA), and the Transportation Loss Prevention and Security Association (TLP&SA). For comments filed in response to FMCSA’s notice, visit https://www.regulations.gov/docket/FMCSA-2022-0134.

Comment period on speed limiters closes July 18

After having been extended from its original closing date in early June, comments are due July 18 on FMCSA’s advance notice of supplemental proposed rulemaking concerning the potential mandate that motor carriers use speed limiters installed on their trucks. To view the advance notice, file comments, or view comments, visit https://www.regulations.gov/document/FMCSA-2022-0004-0001.

SBTC seeks exemption from language skills requirement

FMCSA is requesting comments by July 15 on an application by the Small Business in Transportation Coalition (SBTC) for an exemption that would allow carriers to use drivers who are not capable of reading and speaking the English language sufficiently to communicate with the public, understand highway traffic signs in English, to respond to official inquiries, etc. SBTC does not actually support such a policy but rather argued in a March 18 letter that if FMCSA continues to allow states to administer knowledge tests in languages other than English, it might as well repeal the requirement altogether. SBTC requested the exemption on behalf of all motor carriers in North American Industry Classification System (NAICS) category 484230 (long-distance specialized freight trucking except used goods) with revenues under $30 million. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-12874.

FMCSA seeks comments on several bids for driver training exemptions

In separate notices published on different dates in June, FMCSA has requested comments on various applications for exemptions from portions of the entry-level driver training (ELDT) regulations. Entities applying for exemptions include the Western Area Career and Technology Center (https://www.federalregister.gov/d/2022-12873); State of Alaska (https://www.federalregister.gov/d/2022-14446); Railsback HazMat Safety Professionals, LLC (https://www.federalregister.gov/d/2022-14509); and the National Ground Water Association ( https://www.federalregister.gov/d/2022-14507.

Stevens Transport seeks CDL-related exemption as FMCSA renews two others

FMCSA seeks comments by July 14 on an application by Stevens Transport, Inc. for an exemption from the requirement that a commercial learner's permit (CLP) holder to be accompanied by a commercial driver's license (CDL) holder with the proper CDL class and endorsements seated in the front seat of the vehicle while the CLP holder performs behind-the-wheel training on public roads or highways. The exemption would allow a CLP holder who has passed the skills test but not yet received the CDL document to drive a Stevens CMV accompanied by a CDL holder who is not necessarily in the passenger seat, provided the driver has documentation of passing the skills test. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-12810.

Meanwhile, the agency separately has renewed for five years two similar exemptions held by New Prime Inc. and C.R. England. For the New Prime notice, visit https://www.federalregister.gov/d/2022-13709. For the C.R. England notice, visit https://www.federalregister.gov/d/2022-12921.

FMCSA denies HOS exemption for pipeline contractors

FMCSA has rejected an exemption requested by the Pipe Line Contractors Association (PLCA) from certain hours-of-service (HOS) regulations for drivers of a variety of CMVs employed by its member companies. FMCSA said it analyzed the exemption application and public comments and determined that the application lacked evidence that would ensure a level of safety equivalent to, or greater than, the level that would be achieved absent such exemption. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-12872.

Minnesota loses bid for reconsideration of CDL skills test exemption denial

FMCSA has denied the State of Minnesota’s request for reconsideration of the agency's 2017 denial of an exemption from the regulations governing the commercial driver's license (CDL) skills testing procedures and practices. Minnesota had sought relief from the requirement to use the American Association of Motor Vehicle Administrators' (AAMVA) 2005 Test Model Score Sheet and from the requirement that skills tests be conducted in three parts. FMCSA said that it finds no additional information to persuade it to allow a two-part skills test. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-12875.

FMCSA renews towing group’s tie-down exemption

FMCSA has renewed for five years the exemption held by the International Institute of Towing and Recovery that allows CMV operators to secure automobiles, light trucks, and vans using a total of four tiedowns – two fixed and two adjustable – instead of two tiedowns, both of which need to be adjustable. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-12739.

Legislation

House bill would repeal excise tax on trucks and trailers

Rep. Doug LaMalfa (R-California) introduced legislation (H.R. 8116) that would repeal the 12% excise tax on the retail sale of heavy-duty trucks and trailers. As has typically been the case with similar proposals, the bill states that the excise tax discourages the replacement of older, less environmentally friendly, and less fuel-efficient vehicles. For more information on the bill, visit https://www.congress.gov/bill/117th-congress/house-bill/8116.

House panel approves DOT funding bill

The House Appropriations Committee has approved legislation (H.R. 8294) that funds the Department of Transportation, including FMCSA, for the fiscal 2023, which begins October 1. The bill does not include any controversial legislative provisions related to FMCSA, but the committee report (H Rept. 117-402) address several notable policy issues, including the 2016 hours-of-service rule; the large truck crash causation study; FMCSA’s antiquated information systems; unlawful brokerage activities; hair testing for controlled substances; the safety driver apprenticeship pilot program; the motor carrier safety fitness determination rulemaking; and commercial zone boundaries. For more on H.R. 8294, including a link to the committee report, visit https://www.congress.gov/bill/117th-congress/house-bill/8294.

Advocacy and Comment

The Owner Operator Model and Up-Supply Chain Liability

The decision of the Supreme Court to not consider overturning California’s AB 5 legislation and the separate decision not to consider conflicting Circuit decisions on the application of state law negligent standards in accident litigation have serious consequences for the trucking industry. California’s AB 5 legislation will become the law in that state and carriers and owner operators are scrambling to find alternatives which will save the small carrier independent contractor model. With the defeat of C.H. Robinson’s Appeal, the question of up-supply chain liability will remain unsettled and premiums for truckers will remain unabated.

Both cases were appealed on the basis of a single issue, the application of the Federal Aviation Administration Authorization Act (FAAAA) restrictions on state law. The Supreme Court in its recent reversal of Roe v. Wade demonstrates a high value placed on the exercise of state rights when the issues are not specifically in the province of the federal government under the U.S. Constitution. Hence, any possible further court challenge to preserve the owner operator model or establish uniform federal selection standards in litigation must refocus the issue on the Commerce Clause and the over-arching need for uniformity in the regulation of interstate commerce.

he Constitution makes clear that interstate commerce is an area in which Congress has the power “to regulate commerce … among the several states.” See U.S. Constitution Article I, Section 8, Clause 3. On both the issues of the future of the independent contractor owner operator model and the enforcement of a uniform federal standard, implicit and explicit exercise of its preemptive power can be demonstrated.

There is ample support in the statutes and regulations governing both independent contractors and the federal government’s exclusive obligation to certify carriers as safe to operate to continue opposition to reclassification of owner operators as independent contractors and the application of state law to the implicit reliance on the FMCSA’s safety fitness determination in carrier selection issues.

The future of the owner-operator independent contractor model

“Gasoline has been poured on the fire that is our ongoing supply chain crisis,” CTA said in a statement on the day of the Supreme Court order. “We are disappointed the Court does not recognize the irrevocable damage eliminating independent truckers will have on interstate commerce and communities across the state. The Legislature and Newsom Administration must immediately take action to avoid worsening the supply chain crisis and inflation.”

The crux of the case was AB 5’s so-called ABC test for worker classification, specifically language stating that a worker can be treated as an independent contractor only if he or she “performs work that is outside the usual course of the hiring entity’s business.” Given that a leased owner-operator inherently has an ongoing relationship with the trucking company performing the same work – i.e., transporting freight by truck – it has been widely acknowledged that AB 5’s ABC test outlaws the model. The Ninth Circuit’s ruling did not really dispute that point but rather argued that AB 5 was a generally applicable labor law that did not interfere with carriers’ rates, routes, or services. CTA had contended that AB 5 was preempted by the Federal Aviation Administration Authorization Act (FAAA), which bars states from adoption laws or regulations related to motor carriers’ prices, routes, or services.

Weighing options
The focus now shifts to how trucking companies will comply. Carriers certainly can simply stop operating in California, but that alternative clearly is extreme for operations that are based there or are intrinsically linked to the state, such as drayage operations serving the nation’s largest port complex in Southern California. Converting owner-operator drivers to employee drivers – either using company owned equipment or under an “two-check” arrangement whereby the carrier pays the truck owner separately for use of the equipment – is another option, of course. However, many carriers will find that approach financially undesirable while many owner-operators will find it contrary to their desires to be their own bosses.

One alternative that could preserve entrepreneurship and an arm’s length relationship between truck owners and entities engaging them would be to transition to a brokerage model. Leased owner-operators could obtain their own truck insurance and satisfy other requirements to obtain for-hire operating authority and accept individual loads tendered to them without an ongoing relationship. Some carriers began shifting to such a model at least for California operations even before AB 5 was enacted. However, the cost of insurance premiums and the expense and hassle of regulatory compliance currently handled by the larger operation in a lease agreement likely would be overwhelming for many single-truck operators.

In theory, another option would be to comply with the “business-to-business exemption” within AB 5 itself. The exception specifies that a worker and hiring entity can establish an independent contractor relationship based on satisfying all of 12 specified conditions. Indeed, the U.S. government’s brief before the Supreme Court opposing cert argued, among other things, that the court’s review of the Ninth Circuit opinion would be premature because the trucking industry had not tested in court whether the exemption offered a viable alternative.

In its reply brief before the Supreme Court, CTA called the business-to-business exemption “a red herring.” The association argued that at a minimum an owner-operator could not realistically hold itself out to the public as available to provide the same or similar services it offers to carriers. First, owner-operators do not advertise to the public at all, CTA said. Moreover, truck drivers cannot provide services to the general public without holding a motor carrier license, which would mean that they are no longer owner-operators in the sense that they are today, it said.

Beyond California
Although the Supreme Court’s denial of cert technically does not represent a ruling on the merits of CTA’s challenge, other states surely will interpret it as such. Various states already use ABC tests for classifying workers, but they typically have not required all three prongs of the test to be satisfied as California does. That situation might change now. New Jersey already has pursued essentially the same approach as California and appeared to be waiting until the AB 5 issue is resolved before proceeding.

Even if California’s approach does not spread at the state level, the industry could face federal action that accomplishes much of what AB 5 does. For example, the Protecting the Right to Organize (PRO) Act (H.R. 842), which has passed the House, includes an ABC test that is essentially the same as California, and it does not even include a business-to-business exemption.

The PRO Act is highly unlikely to pass in the current Congress, and passage seems even less likely after mid-term election. However, that is not the end of the story. The Department of Labor already has begun working on a regulatory proposal to reverse a Trump administration rule on worker classification. A Biden administration rule on the matter certainly would attempt to undermine use of independent contractors.

Dispatch Services

Ironically, while the Supreme Court’s recent decisions demonstrate the importance of the supremacy clause in the context of a federal regulations and statutes, the Agency is soliciting comments aimed at creating a whole new class of intermediaries which would be exempt from the broker regulations and presumably exempt from the duties, rights and remedies imposed on brokers and forwarders.

If the future of the owner operator model and up-supply chain liability are the biggest issues facing trucking, clearly the unheralded third issue is the unabated fraud resulting from scams which result in stolen freight, carriers cheated out of promised payment, identity theft, and carrier safety fitness issues.

At Congress’ direction, the FMCSA put out a request for comments on allowing commissioned sales agents to work for multiple carriers without obtaining a broker’s bond and complying with the broker regulations. Among the questions asked was whether state law remedies were available and whether the sole purpose of the broker rules was to ensure proper transmission of freight charges if a third party agent billed and collected the funds.

Many comments were filed. In the comment filed by 13 stakeholders including shippers, brokers, carriers, a factor and two bondsmen, the point was made that the broker regulations clearly apply to dispatch services which are not bona fide agents under the existing regulations. This filing also makes the case that rather than changing the existing regulations, the FMCSA should recognize the magnitude of the problems and exercise its statutory and regulatory power to address multi-state scams. The sheer volume of spot market freight, the increasing number of new carriers and the vetting problems caused by real time load matching have exacerbated this problem which includes an increase in collection agency activity to proliferate litigation against up-supply chain victims of fraudulent double brokerage.

Hopefully the Agency will leave the existing rules in place and be proactive in their enforcement.  The comments of the 13 stakeholders points out that only the DOT and FMCSA have the delegated power and duty to enforce relevant statutes and regulations and the policing power to address this serious issue. For more information see https://www.regulations.gov/document/FMCSA-2022-0134-0001.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through August 31, 2022. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Regulation and Enforcement

• Labor Department sets forums to explore misclassification issue
• FMCSA seeks comments on broker, bona fide agent definitions
• Comment period on speed limiters extended until July 18
• Senate panel holds nomination hearing for Hutcheson
• CVSA sets August 21-27 for Brake Safety Week
• FMCSA issues emergency declaration for baby formula, extends COVID declaration
• Owner-operator seeks exemption from various HOS provisions
• FMCSA renews CDL exemption for transporting certain RVs
• Truck driving school seeks exemption from instructor qualification requirements
• Oak Harbor Freight Lines obtains exemption on instructor qualifications

Courts

• Supreme Court set to decide whether to hear AB 5, broker cases

Advocacy and Comment

Regulation and Enforcement

Labor Department sets forums to explore misclassification issue

Having recently suffered a loss in the courts over its undoing of a Trump administration rule, the U.S. Department of Labor (DOL) plans a rulemaking on determining employee or independent contractor status under the Fair Labor Standards Act (FLSA). To start that process, the department is scheduling separate public forums this month for employers and workers.

Late in the Trump administration, DOL published a rule adopting an economic reality test that considers whether a worker operates his or her own business or is economically dependent on an employer for work. The Biden administration’s DOL first delayed that rule and then withdrew it in May 2021. However, in March, a federal district court vacated those actions, so the rule stands as of today and is retroactively effective to the original March 8, 2021, effective date.

The employer forum will be held 2:30 p.m. to 4:30 p.m. Eastern on June 24. To register, visit https://www.eventbrite.com/e/employer-open-forum-registration-349987621397. The worker forum will be held 5 p.m. to 7 p.m. Eastern on June 29. To register, visit https://www.eventbrite.com/e/worker-open-forum-registration-356311426067.

FMCSA seeks comments on broker, bona fide agent definitions

The Infrastructure Investment and Jobs Act (IIJA) requires FMCSA to issue guidance by November 15 clarifying the distinctions between brokers and bona fide agents, so the agency is seeking responses to various questions to inform that guidance. FMCSA noted that over the past decade it had received numerous inquiries and several petitions related to the definition of a broker.

Under the IIJA provision, FMCSA’s guidance must consider the extent to which technology has changed the nature of freight brokerage, the role of bona fide agents, and other aspects of the freight transportation industry. At a minimum, FMCSA also must (1) examine the role of a dispatch service in the transportation industry; (2) examine the extent to which dispatch services could be considered brokers or bona fide agents; and (3) clarify the level of financial penalties for unauthorized brokerage activities under 49 U.S.C. 14916, applicable to a dispatch service.

Comments are due July 11. For the Federal Register notice, which includes 13 specific questions for which FMCSA seeks answers, visit https://www.federalregister.gov/d/2022-12574.

Comment period on speed limiters extended until July 18

FMCSA has extended through July 18 the comment period on its advance notice of supplemental proposed rulemaking concerning the potential mandate that motor carriers use speed limiters installed on their trucks. Comments originally had been due June 3, but the agency had received requests for extensions from the American Trucking Associations and the Owner-Operator Independent Drivers Association. (For more on FMCSA’s advance notice, see the May 2022 Regulatory Update.) For the Federal Register notice extending the comment period, visit https://www.federalregister.gov/d/2022-11490. To view the advance notice, file comments, or view comments, visit https://www.regulations.gov/document/FMCSA-2022-0004-0001.

Senate panel holds nomination hearing for Hutcheson

The Senate Commerce Committee on June 8 heard testimony from and questioned Robin Hutcheson, President Biden’s nominee to be FMCSA administrator. Hutcheson currently is deputy administrator and acting administrator, having replaced Meera Joshi in that role in January. Joshi had been nominated for the post and had completed a hearing, but the Senate never confirmed her, and her nomination was returned according to standard procedures at the end of the congressional session.

Hutcheson faced few challenging questions. A majority were related in some way to the supply of drivers, and several related specifically to the younger driver initiative. Sen. Roger Wicker (R-Mississippi) questioned the Biden administration’s decision to limit participation in the congressionally mandated younger driver pilot program specifically to apprenticeship programs registered with the Labor Department. Wicker suggested that the Senate might not have agreed to the compromise apprenticeship program had that limitation been included in the provision. Sen. Todd Young (R-Indiana) also pushed Hutcheson to take faster action on allowing younger drivers to operate in interstate commerce.

Sen. Deb Fischer (R-Nebraska) pushed Hutcheson for faster progress in completing work to implement the recommendations of the National Academies of Sciences in addressing issues with safety measurement data. Fischer also said she plans to reintroduce her bill from the last Congress that would establish a standard of care for the selection of motor carriers by shippers, brokers, and others.

Hutcheson received several questions related to regulation and enforcement for livestock haulers and to hair testing as an alternative to urine testing. To view the June 8 hearing, visit https://www.commerce.senate.gov/2022/6/nomination-hearing. Hutcheson’s responses to written questions are available at https://www.commerce.senate.gov/services/files/421B6F1E-12C8-4A4D-BAE5-36DF4C22C42A.

CVSA sets August 21-27 for Brake Safety Week

The Commercial Vehicle Safety Alliance has announced Aug. 21-27 as the dates for this year’s Brake Safety Week. During week, inspectors will conduct their usual North American Standard Level I and V Inspections and capture and report brake-related data to CVSA. The results will be released in the fall.

FMCSA issues emergency declaration for baby formula, extends COVID declaration

FMCSA has issued an emergency declaration relieving carriers of certain regulatory requirements in order to expedite the delivery of baby formula and the ingredients needed for its production, including whey, casein, corn syrup, and hydrolyzed protein, as well as necessary containers and packaging. The declaration is in effect through June 30 unless revoked earlier or extended. For more information, visit https://www.fmcsa.dot.gov/emergency/emergency-declaration-under-49-cfr-ss-39023-no-2022-005.

Owner-operator seeks exemption from various HOS provisions

FMCSA is requesting comments by July 11 on an application by a leased owner-operator for an exemption from five provisions of the federal hours-of-service (HOS) regulations. The application was submitted by Leland Schmitt, Jr., who currently is leased to Clearwater, Minn.-based D&E Transport and has 30 years’ experience. Schmitt requested a five-year exemption from (1) the 10 consecutive hour off-duty time requirement; (2) the 14-hour “driving window”; (3) the 30-minute break requirement; (4) the 60 hours-in-7-days limit; and (5) the 70 hours-in 8-days limit. Schmitt told FMCSA that the mandatory 10-hour off-duty break goes against his natural sleep patterns and that his normal nighttime sleep while in the CMV is between five to seven hours. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-12467.

FMCSA renews CDL exemption for transporting certain RVs

FMCSA is provisionally renewing a 2017 exemption from the federal CDL for drivers who deliver certain newly manufactured motorhomes and recreational vehicles (RVs) to dealers or trade shows before retail sale (driveaway operations). The exemption applies when transporting RVs with gross vehicle weight ratings of 26,001 pounds or more provided that they do not have actual gross vehicle weights or gross combination weights that equal or exceed 26,001 pounds. It also applies when transporting RV trailers that weigh 10,000 pounds or less at the time of transportation. For the Federal Register visit, visit https://www.federalregister.gov/d/2022-10762.

Truck driving school seeks exemption from instructor qualification requirements

FMCSA requests comments by June 24 on an application from SBL Truck Driving Academy, Inc. to exempt two of its current employees from the theory and behind-the-wheel instructor qualification requirements contained in the entry-level driver training regulations. Specifically, SBL seeks an exemption from the requirement that instructors have at least two years of experience driving a CMV requiring a CDL of the same or higher class and/or the same endorsement necessary to operate the CMV for which training is provided. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-11271.

Oak Harbor Freight Lines obtains exemption on instructor qualifications

FMCSA has granted Oak Harbor Freight Lines, Inc., an exemption from the qualification requirements pertaining to entry-level driver training theory instructors. The exemption allows the company’s safety supervisor to conduct classroom training for entry-level drivers who intend to operate CMVs used in hazmat transport. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-10763.

Courts

Supreme Court set to decide whether to hear AB 5, broker cases

The U.S. Supreme Court likely will decide by the end of June on whether it will consider the California Trucking Association’s claim that California’s AB 5 law is preempted by federal law as it applies to motor carriers. The court last fall had invited the Justice Department to weigh in. The government’s brief, which was submitted late last month, argued that the Supreme Court should let stand the ruling of the U.S. Court of Appeals for the Ninth Circuit, which had held that AB 5’s ABC test for employment status is a labor law of general applicability that does not regulate rates, routes, or services substantially.

Justices are scheduled to discuss the case on June 23, and an order on whether to grant the petition for a writ of certiorari is likely on June 27 before the end of the current term. If the court decides to hear the case, the stay on AB 5’s enforcement on motor carriers will remain in place until the court issues an opinion. However, if the court denies cert, the state of California will be free to enforce AB 5 immediately.

In its May 24 amicus brief, the Justice Department said that the appeals court petitioners were unlikely to succeed on their claim that the Federal Aviation Administration Authorization Act (FAAAA) preempts applying the ABC test to owner-operators. Nor does the Ninth Circuit’s decision conflict with any Supreme Court decision, it said. The government’s brief further argued that while other circuits have reached different outcomes on the issue, “those case-specific decisions do not create a conflict warranting this Court’s review.” The Justice Department also contended that the case was not ripe for Supreme Court consideration anyway because of a need to resolve a threshold issue – whether motor carriers and owner-operators may fall within the business-to-business exemption under California law.

In a response filed on June 7, CTA quipped that the government’s brief “calls to mind the question famously posed by Chico Marx: ‘Who you gonna believe, me or your own eyes’?” Contrary to the claim that AB 5 might ultimately not apply to carriers and owner-operators, CTA stated that “in fact, AB 5 was designed to, and surely will, upend the operation of the trucking industry.” Moreover, CTA said that the government’s contention that the different outcomes do not represent a conflict is contradicted by the Ninth Circuit’s own opinion, which acknowledged that the Massachusetts ABC text invalidated by the First Circuit was “identical” to California’s law.

The CTA case is not the only FAAAA-related case that the Supreme Court has under consideration. The court also is set to consider on June 23 a case presenting the question of whether a state common-law tort liability claim against a freight broker for alleged negligent selection of an unsafe carrier constitutes an act of “safety regulatory authority of a State with respect to motor vehicles.” Such actions are exempted from federal preemption under FAAAA.

The U.S. government’s brief – filed the same day as the one in the AB 5 case – agreed with the Ninth Circuit’s ruling that FAAAA does not preempt a state’s authority to regulate motor carrier safety through imposition of common-law duties, including by imposing safety requirements on freight brokers in the selection of motor carriers. C.H. Robinson, which is seeking Supreme Court review, responded June 7 that the government is fixating on its view of the merits but “cannot dispute the substantiality of the legal question (as evidenced by the deep disagreement among district courts) or the importance of the issue to the industry (as evidenced by the many amicus briefs).”

Advocacy and Comment

At least three of the issues covered above are worthy of comment.

1) The Department of Labor’s notice of listening sessions comes as no surprise. The first two meetings appear to be of general application and signal the Agency’s intention to reboot its reclassification efforts across all industries through rulemaking. We will be reminding the Agency that the owner operator / independent contractor model deserves a carveout and should not be considered as part of a one size fits all new regulation. We have laid the groundwork for this in previous submissions to the DOL which will be resubmitted in next month’s listening sessions.

The Small Business Administration has announced that after a rule is submitted it will hold a transportation round table to discuss its impact on small businesses and owner operators in particular. Interested parties need to be assimilating data showing the number of owner operators involved in their respective segments of the industry, the economic consequences of the elimination of the model, and the adverse effect on the supply chain. Recent press articles demonizing the motor carrier industry fail to recognize the value of the model and the small business protections built into the truth in leasing regulations.

(2) Dispatch Services. The FMCSA’s request for comments mentioned above is the result of Congressionally directed action. Most of the questions are peripheral in nature and do not address the real issues. Identity fraud, “double brokerage,” cargo theft, uninsured losses, and vicarious liability issues predominate the spot market. Although the FMCSA is given policing powers to address both carrier and broker malfeasance, the problem of intermediary abuse remains systemic and major frauds have been identified but not prosecuted.

In this context, so-called dispatch services fit the broker definition. Former Acting Administrator Jim Mullen’s Opinion settles the matter. The problem with “deregulating” broker services because the “dispatch service” does not handle the billing and paying misses the point. Any party claiming to act as a sales agent for multiple carriers can easily exceed its apparent authority, utilize its agent status to credential reputable carriers and book loads which are devoted to unvetted carriers or ghost recipients.

Changing the broker regulations is not necessary. What is needed is Agency enforcement action and exercise of its broad authority to prosecute felonious breaches of the broker regulations consistent with the National Transportation Policy and the existing regulations and statutes the FMCSA is required to enforce.

(3) Pending Supreme Court Cases. The pending California Trucking and the Mueller cases are both important to the industry and are on similar appellate tracks. Both are on appeal to the Supreme Court which asked the Solicitor General to opine on whether the cases should be accepted for review. The Solicitor General has said that the existing decisions should stand. If the Supreme Court follows this decision, state law will trump the Federal Government’s use of preemption to establish uniform rules of commerce. Both cases are awaiting the Supreme Court decision to hear the appeal and the appellate grounds are limited.

With deregulation of routes, rates and services, Congress passed an Act intended to trump state law and it has been used as the basis for appeal in both California Trucking and Mueller. What’s missing is the fact legislative history shows Congress intended to wield the force of the commerce clause to create and protect the owner operator model decades before the F4A legislation. Unchanged and precedent federal safety rules and the broker regulations make clear Federal law trumps state law on both issues. It is unfortunate but these compelling arguments are not positioned for review and are not likely to be heard any time soon.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through May 31, 2022. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Regulation and Enforcement

• FMCSA resurrects plan to require speed limiters on heavy trucks
• FMCSA revisits state inspection programs for passenger carriers
• Final rule implements HHG working group recommendations
• Steel company receives relief for scrap metal haulers
• FMCSA denies CDL exemption for driveaway carriers transporting empty vehicles
• FMCSA rejects exemption for bus company’s Mexican-licensed drivers

Legislation

• House bill would eliminate overtime exemption for regulated truck drivers

Advocacy and Comment

Regulation and Enforcement

FMCSA resurrects plan to require speed limiters on heavy trucks

As recently as December, the Federal Motor Carrier Safety Administration had labeled speed limiters for heavy commercial vehicles as a long-term priority and not imminent, but it has now indicated that it will move forward with a plan to require carriers to use such devices. In the May 4 Federal Register, the agency published an advance notice of supplemental proposed rulemaking.

Late in the Obama administration, FMCSA and the National Highway Traffic Safety Administration jointly issued a notice of proposed rulemaking (NPRM) that would have required vehicle manufacturers to program a maximum speed as determined by further rulemaking into truck engines’ electronic control units (ECUs) and would have required motor carriers to maintain the speed limiting devices for the service life of the vehicle. The proposed rule would have applied to new vehicles with gross vehicle weight ratings of more than 26,000 pounds.

Although the Trump administration withdrew several Obama-era rulemakings in 2017, it did not withdraw the proposed speed limiter rule but rather shelved it by labeling it as a “long-term action” in the unified regulatory agenda. Nearly a year into the Biden administration, the Department of Transportation still lists speed limiters as a long-term action, and NHTSA has not signaled any action.

FMCSA now plans to move forward with a supplemental notice of proposed rulemaking (SNPRM) that would require motor carriers to use available speed-limiting technology on their trucks’ ECUs, which is within its authority. The advance SNPRM seeks comments by June 3 on various technical issues involved in speed limiters, including what skills or training are needed to adjust or program ECUs to limit speed, what equipment is needed, how long it takes, etc. FMCSA also is seeking input on whether there should be a retrofit requirement for engines that were not manufactured with speed limiting capabilities built into the ECUs and whether the upcoming rule should be expanded to include Class 3 to 6 vehicles.

For the Federal Register notice, visit https://www.federalregister.gov/d/2022-09443.

FMCSA revisits state inspection programs for passenger carriers

As directed by the Infrastructure Investment and Jobs Act (IIJA), FMCSA is soliciting additional comment on an advance notice of proposed rulemaking (ANPRM) concerning potential requirements for states to establish annual inspection programs for CMVs designed or used to transport passengers. The agency had issued the ANPRM in April 2016 during the Obama administration, but it was one of several rulemakings withdrawn by FMCSA in 2017 as part of the Trump administration’s regulatory review, which determined that there was not enough data and information available to support moving forward with a rulemaking.

Comments are due June 9 on a series of questions posed in FMCSA’s May 10 Federal Register notice. For that document, visit https://www.federalregister.gov/d/2022-09657.

Final rule implements HHG working group recommendations

FMCSA has amended the federal regulations for transportation of household goods to incorporate the recommendations of the Household Goods Consumer Protection Working Group, which was established by the FAST Act in late 2015. The agency’s rule amends regulations to reflect aspects of the recommendations that require a rulemaking to implement and are within FMCSA’s authority. The rule also makes additional minor changes to the HHG and broker regulations intended to increase clarity and consistency.

The final rule is effective June 27. For the rule, visit https://www.federalregister.gov/d/2022-08808. The report of the working group is available at https://www.fmcsa.dot.gov/fastact/fast-act-hhg-working-group-report-recommendations.

Steel company receives relief for scrap metal haulers

FMCSA has granted an exemption to Cleveland-Cliffs Steel, LLC (Cliffs) that would allow its employee-drivers with CDLs who transport scrap metal on two trucks between their production and shipping locations on public roads to work up to 16 hours per day and to return to work with less than the mandatory 10 consecutive hours off duty. The exemption is similar to the hours-of-service (HOS) exemption that applies to Cliffs’ drivers transporting steel coils. However, unlike the steel coil exemption, the scrap metal trucks would comply with the heavy hauler trailer definition, height of rear side marker lights restrictions, tire loading restrictions, and the coil securement requirements in the FMCSRs. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-10129.

FMCSA denies CDL exemption for driveaway carriers transporting empty vehicles

FMCSA has rejected an exemption sought by a group of affiliated driveaway motor carriers from the requirement that drivers transporting certain empty passenger vehicles hold a CDL. The exemption would have covered drivers delivering commercial motor vehicles (CMVs) with seating capacities of 16 or more, including the driver, but with a gross vehicle weight rating (GVWR) of less than 26,001 pounds. FMCSA determined that the application provided no evidence that the exemption would ensure a level of safety equivalent to or greater than that achieved absent such exemption. For more information, visit https://www.federalregister.gov/d/2022-08936.

FMCSA rejects exemption for bus company’s Mexican-licensed drivers

FMCSA has denied an exemption from several regulations related to CDL/CLP testing that was requested by Tornado Bus Company for certain drivers who currently hold a Mexican Licencia Federal de Conductor. The exemption would have covered drivers who have been granted permanent resident status from the Department of Homeland Security (DHS) and have more than two years’ experience driving in the U.S. and Mexico. FMCSA determined that the application does not demonstrate that the exemption would likely ensure a level of safety equivalent to or greater than would be achieved absent such exemption. For more information, visit https://www.federalregister.gov/d/2022-08934.

Legislation

House bill would eliminate overtime exemption for regulated truck drivers

Rep. Andy Levin (D-Michigan) and seven co-sponsors – all but one of them Democrats – introduced legislation (H.R. 7517) that would repeal the overtime exemption in the Fair Labor Standards Act that applies to commercial drivers subject to federal hours-of-service regulations. In announcing the introduction, which is only a sentence (not including the title of the bill), Levin cited DOT’s report on potential steps to address supply chain challenges. That report, which was released in February, suggested that eliminating the exemption could help increase the number of truck drivers.

Levin also announced that H.R. 7517 is endorsed by the Owner-Operator Independent Drivers Association, Teamsters, Institute for Safer Trucking, Truck Safety Coalition, Parents Against Tired Truckers, and Citizens for Reliable and Safe Highways (CRASH). For more information on H.R. 7517, visit https://www.congress.gov/bill/117th-congress/house-bill/7517. For the February 2022 DOT report on supply chain issues related to freight and logistics, visit https://www.transportation.gov/supplychains.

Advocacy and Comment

As the above summary indicates, regulatory and legislative issues facing the trucking industry have changed from safety to economic issues. SMS methodology is still around and results in higher nuclear verdicts and insurance rates, but the FMCSA has no clear plan of action to rectify the issue.

Supply chain disruption and economic issues involving drivers and driver pay now occupy center stage. Key issues which are not the fault of carriers or drivers include supply chain disruption, escalating fuel cost, dramatic increase in both new and used trucks and trailers, and parts shortages.

The key administrative and legislative agenda of the new Administration appears to be to blame the so-called “driver shortage” on carrier abuse of both drivers and owner operators. The apparent solution is to eliminate incentive pay, whether by the mile or percentage, and endorse AB5 at the federal level to ensure that all truck drivers are treated as employees. This agenda being proposed at the Legislative and the Administrative level would eliminate independent contractor treatment of owner operators and make truck driving an hourly pay job. The argument that government protection and mandatory pay will solve the supply chain disruption and create more truck driving jobs is a government knows best answer which requires close inspection it has yet to receive.

Under the truth in leasing regulations, 49 C.F.R. 376, blue collar professional drivers have been granted small business independent contractor status for four decades. Protected by regulations that address carrier abuse, drivers and other small businesses who own or lease to own their own equipment have traditionally received independent contractor treatment and the opportunity that goes with it.

The argument is often made that owner operators are forced to accept toxic contracts when the numbers suggest otherwise. Vital segments of the trucking industry, including over-the-road truckload, intermodal dray operations and others are dependent upon independent contractors who could easily obtain regular wage and hour jobs as employees if they did not want the freedom and opportunities to accumulate wealth which the model presents. In fact, recent statistics prove that the threat of AB5 and loss of independent contractor status in California has resulted in owner operators either quitting or feeling forced to file for their own authority to keep independent contractor status otherwise intended and carved out for them in federal regulation.

The nanny state legislation which kills the model will further exacerbate the loss of skilled drivers which cannot be made up by higher taxes. What is needed is to consider how to stimulate the creation of both employees and owner operators to abate the driver shortage in light of escalating costs.

Clearly, the nature of truck driving straightjackets the use of drivers and equipment and necessitates compensation for inordinate, uncompensated delays regardless of how the driver owner operator is otherwise compensated. Action at the Federal Maritime Commission and past precedent at the ICC suggests that this is a proper area for inquiry and regulation to stem this abuse. To be sure, the day-long backups frequently photographed by the press at the California ports are not caused by the waiting truckers but by the inability of the ports and their hourly employees to address the backup.

The above summary of Administrative activity shows that interdisciplinary teams are being established to examine some of these issues including DOL and DOT. Missing, though, is any participation by SBA or the suggestion that, just maybe, stimulus in the form of SBA loans to owner operators and small carriers is obviously going to be necessary for the small business model to continue to flourish in the trucking industry with the otherwise unsustainable predicted costs.

While we are forgiving student loans to the college educated elite, maybe greater consideration should be given to encouraging the ability of small carriers and owner operators to compete in light of the tidal wave of increased costs and access to capital which otherwise will severely limit their viability contrary to the National Transportation Policy.

Clearly, the cost of trucking is going up and small carrier operators will be the most effected. Remember, over 95% of the licensed carriers have less than 10 units and there are as many as 800,000 owner operators who are endangered species if the small business opportunities resulting from independent contractor status is lost. In this context, the cost of new and used equipment is sky rocketing. Fuel now costs as much as $1.00 per mile. The threat of technology eliminating the need for drivers, higher financing charges, and balkanized state-by-state regulations effecting the independent contractor model are bipartisan issues that Congress and the current Administration should be addressing. The trucking industry brought stability to the supply chain chaos resulting from COVID and international disruptions. The new issue ahead for trucking is how to encourage and not stifle blue collar entrepreneurship in trucking.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through May 31, 2022. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Regulation and Enforcement

• Biden administration suffers setbacks on independent contractor policies
• FMCSA seeks applications for task force on lease agreements
• Hutcheson nominated to serve as FMCSA administrator
• DOT inspector general reviews FMCSA grants of authority to Mexican carriers
• Soaring inflation means bigger civil penalties from DOT agencies
• Werner obtains exemption for drivers who have passed the CDL skills test

Legislation

• Senate passes Ocean Shipping Reform Act, sends measure to House
• Sen. Lee, Rep. Fischbach introduce revised port relief bills

Advocacy and Comment

Regulation and Enforcement

Biden administration suffers setbacks on independent contractor policies

The Department of Labor (DOL) in March lost battles in both the courts and Congress in its efforts to reverse Trump administration policies regarding use of independent contractors. On March 14, a federal judge in Texas ruled that DOL had violated the Administrative Procedure Act (APA) when it rescinded a January 2021 rule that sought to clarify the definition of “independent contractor” under the Fair Labor Standards Act (FLSA).

The rule was to take effect March 8, 2021, but after President Biden took office, the DOL rule was one of many regulations that were held in abeyance pending a review. DOL then proposed first to delay the rule 60 days under a 19-day comment period and later proposed and then finalized a rule to withdraw the Trump administration rule after a 31-day comment period.

In her opinion, Judge Marcia Crone of the Eastern District of Texas, ruled that by refusing to consider alternatives to the total withdrawal of the rule, DOL failed to consider important aspects of the problem before it, which was the lack of clarity of the economic realities test and the need for regulatory certainty.

“As a practical matter, in the absence of a uniform regulation that is consistent throughout the nation, a worker’s classification as an independent contractor or an employee is dependent on the happenstance of geography, i.e., the judicial circuit in which the worker resides or works,” Judge Crone ruled. “This outcome falls short of providing clarity to the workforce of the United States or to those who compensate them.”

The Biden administration’s second defeat came on March 30 when the U.S. Senate failed to stop a filibuster of the nomination of David Weil to be administrator of DOL’s Wage and Hour Division. Although cloture on filibusters of nominations require only a majority vote (as opposed to the 60 votes needed to invoke cloture on legislation), the motion to end debate failed to garner the support of even all Democrats. The motion failed 43 to 57, and President Biden formally withdrew the nomination on April 7.

The failure of Weil’s nomination is significant because Weil had held the same post for three years under the Obama administration and had pursued a policy hostile toward use of independent contractors. For example, in July 2015, Weil issued an interpretation concluding that most workers were employees under FSLA. One of the goals of the Trump administration’s January 2021 was to thwart use of such interpretations to undermine use of independent contractors.

FMCSA seeks applications for task force on lease agreements

FMCSA is accepting applications until May 6 for membership in the agency’s Truck Leasing Task Force (TLTF), which was mandated by last year’s infrastructure act. The TLTF will evaluate the impacts of commercial motor vehicle (CMV) lease agreements and discuss best practices for future agreements. As established by the legislation, the TLTF will cover many areas related to truck leasing arrangements, including:

• Exploring predatory truck leasing arrangements in coordination with DOL and the Consumer Financial Protection Bureau;
• Evaluating common truck lease agreements and their terms, identifying and reviewing those that are potentially inequitable in the motor carrier industry;
• Reviewing agreements available to drayage drivers at ports;
• Studying the impact of truck leasing agreements on the net compensation of CMV drivers;
• Examining truck leasing arrangements and financing arrangements among motor carriers, entry-level drivers, driver training providers, and others involved in the industry; and
• Assessing resources that assist CMV drivers in reviewing the financial impacts of leasing agreements.

The TLTF will include a maximum of 10 members representing labor organizations, motor carriers, consumer protection groups, legal professionals, owner-operators, and other relevant businesses. The task force, which is chartered through February 11, 2024, will examine those issues and submit a report to FMCSA and DOL. In announcing the TLTF, FMCSA said it encourages “diverse, non-traditional representatives, especially women and people of color” to apply. For more information, visit www.fmcsa.dot.gov/tltf.

Hutcheson nominated to serve as FMCSA administrator

President Biden has nominated Robin Hutcheson as FMCSA administrator. DOT Secretary Pete Buttigieg named Hutcheson deputy FMCSA in January, replacing Meera Joshi, who had departed the agency to become a deputy mayor of New York City. As deputy administrator, Hutcheson, who previously served as DOT deputy assistant secretary for safety policy, also serves as acting administrator. Prior to joining DOT in January 2021, Hutcheson was director of public works for the City of Minneapolis. Before that post, she had served as transportation director for Salt Lake City.

DOT inspector general reviews FMCSA grants of authority to Mexican carriers

As directed by the United States-Mexico-Canada Agreement (USMCA) Statement of Administrative Action, the DOT Office of Inspector General is conducting a review of FMCSA grants of operating authorities to carriers for conducting operations beyond border commercial zones.

Pursuant to the USMCA Implementation Act, in August 2021, FMCSA submitted a report to Congress on all existing grants of operating authority to, and pending applications for operating authority from, all Mexico-domiciled and Mexican-owned or -controlled motor property carriers with authority to operate beyond border commercial zones. The objectives for this review will be to determine whether FMCSA (1) met requirements in authorizing Mexico-domiciled and Mexican-owned or ‑controlled motor carriers to conduct long-haul trucking operations beyond border commercial zones and (2) monitored those carriers to ensure they are operating safely. For more information, visit https://www.oig.dot.gov/node/38918.

Soaring inflation means bigger civil penalties from DOT agencies

The Department of Transportation in March published its mandatory annual update of civil penalties for the department and its modal agencies to reflect inflation, and the surge in pricing during the pandemic means that the adjustment is much larger than typical. The rule, which was effective March 21, reflects an increase of 6.222%, which was the 12-month change in the Consumer Price Index between October 2020 and October 2021. In recent years, the adjustment frequently has been less than 2%. For the revised schedule of civil penalties, visit https://www.federalregister.gov/d/2022-04456.

Werner obtains exemption for drivers who have passed the CDL skills test

FMCSA has granted an application from Werner Enterprises, Inc. for an exemption allowing commercial learner's permit (CLP) holders who have successfully passed the commercial driver's license (CDL) skills test but who have not received the CDL document to drive a CMV without having a CDL holder seated beside them in the CMV. Under the exemption, the CDL must be present in the truck, but not necessarily in the passenger seat. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-06796.

Legislation

Senate passes Ocean Shipping Reform Act, sends measure to House

The U.S. Senate on March 31 passed legislation (S. 3580) that would increase the authority of the Federal Maritime Commission (FMC) to intervene in order to promotive the competitiveness of the ocean transportation system. The requires the FMC to investigate complaints about detention and demurrage charges charged by common ocean carriers and to determine whether those charges are reasonable. If charges are found to be unreasonable, FMC would order refunds. S. 3580 also prohibits common ocean carriers, marine terminal operators, or ocean transportation intermediaries from unreasonably refusing cargo space when available or resorting to other unfair or unjustly discriminatory methods. For more information, visit https://www.congress.gov/bill/117th-congress/senate-bill/3580.

Senate passage sends H.R. 3580 to the House, which in December passed its own version (H.R. 4996) of ocean shipping reform. The next steps for the legislation are unclear. For more information on the House version of the bill, visit https://www.congress.gov/bill/117th-congress/house-bill/4996.

Sen. Lee, Rep. Fischbach introduce revised port relief bills

Sen. Mike Lee (R-Utah) and Rep. Michelle Fischbach (R-Minnesota) have introduced legislation (S. 3807, H.R. 7456) aimed at relieving the port congestion that has contributed to supply chain challenges. The bills, which are mostly the same as those (S. 3252, H.R. 6028) Lee and Fischbach introduced in November, would grant several temporary regulatory waivers and actions to help alleviate some of the stress in freight networks.

Several provisions of the bills are specific to trucking. One would require FMCSA to temporarily waive hours-of-service requirements for truck drivers and motor carriers who are transporting cargo directly to or from a U.S. port. Another would require the agency to temporarily allow 18-year-old drivers to receive a temporary commercial driver’s license for (1) the transportation of cargo to or from a U.S. port or (2) to assume the commercial operations of a truck driver who has been re-routed to a U.S. port. Other provisions would make Department of Defense intermodal equipment available to trucking companies and would expedite applications for Transportation Worker Identification Credentials (TWIC) for workers needed to provide direct assistance to a U.S. port. For more information, visit https://www.congress.gov/bill/117th-congress/senate-bill/3807 and https://www.congress.gov/bill/117th-congress/house-bill/7456.

Advocacy and Comment

In addition to the Truck Leasing Task Force discussed above, another administration created group will consider driver compensation and detention issues. See https://www.transportation.gov/tags/biden-harris-trucking-action-plan.

To understand the politics surrounding these driver related initiatives, you may wish to watch the following YouTube video entitled, “John Oliver Explains How Truck Drivers Get Paid, How Often They Don’t, And How Companies Exploit Them To Increase Profits.” This video has almost 4 million views, 113,000 likes, and no negative comments - https://youtu.be/phieTCxQRLA.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through February 28. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Regulation and Enforcement

• FMCSA removes x-ray exam from definition of ‘medical treatment’
• FMCSA drops mandate that drivers disclose traffic violations to employers
• FMCSA withdraws proposals related to CDL testing flexibility
• EPA proposes tighter NOx, GHG standards for heavy trucks
• CVSA schedules International Roadcheck for May 17-19
• FMCSA adopts rule on mounting of safety devices on windshields
• Three states win exemption to continue revised CDL testing process
• FMCSA rejects HOS relief or helicopter firm’s ground support operators

Legislation

• Congress passes final fiscal 2022 appropriations bill
• Bills would exempt foreign drivers from COVID vaccination mandate

Advocacy and Comment

Regulation and Enforcement

FMCSA removes x-ray exam from definition of ‘medical treatment’

The Federal Motor Carrier Safety Administration (FMCSA) has revised its regulatory guidance concerning the use of the term “medical treatment” for the purpose of accident reporting. The revised guidance explains that an x-ray examination is a diagnostic procedure and should no longer be considered “medical treatment” in determining whether a crash should be included on a motor carrier's accident register. For the Federal Register notice containing the revised guidance, visit https://www.federalregister.gov/d/2022-03997.

FMCSA drops mandate that drivers disclose traffic violations to employers

FMCSA has eliminated the requirement that drivers operating commercial motor vehicles (CMVs) in interstate commerce prepare and submit a list of their convictions for traffic violations to their employers annually. The agency said the requirement largely duplicates a separate rule requiring each motor carrier to make an annual inquiry to obtain the motor vehicle record (MVR) for each driver it employs from every state in which the driver holds or has held a CMV operator’s license or permit in the past year. To ensure motor carriers are aware of traffic convictions for a driver who is licensed by a foreign authority rather than by a state, FMCSA amended the rule to provide that motor carriers must make an annual inquiry to each driver’s licensing authority where a driver holds or has held a CMV operator's license or permit.

The final rule is effective May 9, 2022. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-04930.

FMCSA withdraws proposals related to CDL testing flexibility

FMCSA has withdrawn two notices of proposed rulemaking (NPRMs) published during the Trump administration that would have allowed flexibility in the testing of commercial driver’s license (CDL) applicants for knowledge and skills. One NPRM would have allowed states to permit third-party skills test examiners to administer the skills test to applicants to whom the examiners had also provided skills training. FMCSA said that it was persuaded by numerous comments that the NPRM had the potential to undermine the integrity of the CDL testing process. For the Federal Register notice withdrawing the third-party CDL testing NPRM, visit https://www.federalregister.gov/d/2022-04968.

The other NPRM would have allowed driver applicants to take the CDL general and specialized knowledge tests in a state other than the applicant's State of domicile. It also would have required the applicant’s state of domicile to accept knowledge test results from the testing state. In this case, the issue was not one of regulatory policy but rather one of process and technology. States had told the agency that security and operational concerns over out-of-state knowledge testing would have required significant changes that they were not feasible in the near term. For the Federal Register notice withdrawing the NPRM related to out-of-state knowledge tests, visit https://www.federalregister.gov/d/2022-04966.

EPA proposes tighter NOx, GHG standards for heavy trucks

The Biden administration announced a long-expected proposal to cut emissions of oxides of nitrogen (NOx) and greenhouse gases (GHGs) from commercial vehicles. The Environmental Protection Agency had announced in August that it planned to change NOx and GHG requirements, and even the Trump administration’s EPA in January 2020 had signaled further NOx reductions.

Under EPA’s proposed rule, changes in the heavy-duty emission control program would reduce NOx by at least 47% by 2045. The agency floated a more aggressive option that would reduce NOx by more than 60% by 2045. The proposal would change standards, test procedures, useful life, warranty, and other requirements.

The GHG portion of the proposal would accelerate for certain classes of commercial vehicles the existing standards set to be phased in beginning with model year 2027. Those standards had been set at the end of the Obama administration in 2016 when emerging technologies like electric propulsion for commercial vehicles were still only in the development or early adoption phase. EPA now looks to leverage the more rapid development of electric vehicles by revising fleet GHG standards for several vehicle categories, including short-haul tractors and delivery trucks as well as electric school buses and transit buses.

The agency has yet to formally published the notice of proposed rulemaking for comment. The draft document is available at https://www.epa.gov/regulations-emissions-vehicles-and-engines.

CVSA schedules International Roadcheck for May 17-19

The Commercial Vehicle Safety Alliance (CVSA) has announced this year’s International Roadcheck dates as May 17-19 with a focus on wheel ends. Commercial motor vehicle inspectors in Canada, Mexico and the U.S. will conduct North American Standard Inspections of commercial motor vehicles and drivers at weigh and inspection stations, on roving patrols, and at temporary inspection sites. CVSA said that violations involving wheel end components historically account for about one quarter of the vehicle out-of-service violations discovered during International Roadcheck.

FMCSA adopts rule on mounting of safety devices on windshields

Having granted numerous exemptions to current regulations to suppliers of safety systems, FMCSA has adopted a final rule that increases the area of on the interior of a CMV where certain vehicle safety technology devices may be mounted. The rule also adds examples of vehicle safety technology that had not been included in the prior version of the regulation in Part 393.5. The rule is effective May 6. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-03996.

Three states win exemption to continue revised CDL testing process

FMCSA has granted the exemption request of the American Association of Motor Vehicle Administrators (AAMVA) to allow state drivers licensing agencies in Maryland, New Hampshire, and Virginia to continue using revised CDL pre-trip vehicle inspection and revised control skills test procedures following the completion of field tests conducted under an FMCSA waiver. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-04255.

FMCSA rejects HOS relief or helicopter firm’s ground support operators

FMCSA has denied an application from Mountain Blade Runner Helicopters, LLC’s (MBR Helicopters) for an exemption from two provisions of the hours-of-service (HOS) regulations for its ground support equipment operators. The requested exemption would have allowed MBR Helicopters’ ground support equipment operators a 16-hour window within which to complete all driving and allow them to use an eight-consecutive hour off-duty break, combined with at least two other off-duty hours during the 16-hour window within which driving would be completed, in lieu of taking 10 consecutive hours off duty. FMCSA said the application lacked evidence that the exemption would ensure a level of safety equivalent or greater than the that absent the exemption. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-04073.

Legislation

Congress passes final fiscal 2022 appropriations bill

After several short-term extensions to keep the federal government open, the House and Senate have passed the final fiscal 2022 consolidations appropriations act (H.R. 2471), which funds the government through September. The legislation includes nothing controversial related to trucking and merely continues three administrative provisions related to FMCSA that have been part of previous appropriations acts. For more information on H.R. 2471, visit https://www.congress.gov/bill/117th-congress/house-bill/2471.

Bills would exempt foreign drivers from COVID vaccination mandate

Sen. Rick Scott (R-Florida) and Rep. Carlos Gimenez (R-Florida) have introduced identical bills (S. 3701, H.R. 6809) that would exempt commercial truck drivers from Canada or Mexico who are seeking to temporarily enter the United States for business through a land port of entry from any COVID–19 vaccination requirement. The Department of Homeland Security in January imposed such a requirement. For more information, visit https://www.congress.gov/bill/117th-congress/senate-bill/3701 and https://www.congress.gov/bill/117th-congress/house-bill/6809.

Advocacy and Comment

The Administration’s regulatory and legislative agenda is becoming clearer. Issues affecting the motor carrier industry and the customers they serve have been identified. The two most important issues are the reintroduction of SMS methodology and the future of the owner-operator independent contractor model.

1. SMS methodology and its systemic flaws have been clearly identified and rejected as fit for use in the FAST Act and subsequent decisions by the National Academies of Science and by the DOT itself. Yet it still has its supporters. The systemic flaws have not been rectified nor has the unmodified methodology been shown to be fair to the hundreds of thousands of small carriers who lack sufficient data to even be measured.

As opponents of SMS we must reboot our combined efforts to challenge the Agency's effort to revive the use of this flawed safety measurement system in a soon to be filed notice of new rulemaking. A fairer and more effective auditing procedure patterned after the successful new carrier audit should be proposed. Stakeholders must ensure any proposed use of SMS does not further exacerbate nuclear judgments and higher insurance costs for small carriers. This is particularly important in view of the increasingly large numbers of skilled owner operators seeking their own authority as refugees from the prospects of AB5 and efforts to kill the independent contractor model.

2. Competing with the reintroduction of SMS as the most lethal initiative affecting trucking is the concerted effort to reclassify owner operators who have traditionally enjoyed independent contractor status as employees. The California legislation known as AB5 is pending a U.S. Supreme Court decision on whether to consider a pending appeal. Secondly, the Democratic majority in the House supports the PRO Act which would eliminate the independent contractor model at the federal level. Finally, the administrative agenda of the Biden Department of Labor suggests that the owner operator model must be vigorously defended as an important carve-out to any wholesale pro labor reclassification efforts at the Administrative Agency level.

With respect to the defense of the independent contractor model, our ad hoc group of diverse carrier associations, shippers, brokers, and forwarders has presented a united industry front on behalf of retention of the owner operator model based upon past precedent and the importance of the model. The driver shortage only further exacerbates the need for retaining the model.

Two other issues are of increasing importance. First, there is a need for more active federal enforcement of rules of commerce and policing the industry against fraud, double broker scams, identity theft and cargo losses.

Secondly, the number of new entrants has reached over 100,000 per year largely in response to AB5 and threats to the independent contractor model. Yet shipper and broker procurement contracts typically require that small and new carriers assume uninsurable cargo risk, unilateral offset, delayed payments and waiver of all carrier rights and remedies under applicable law. In light of the acute driver shortage there is palpable need for a return to standard terms and conditions which permit maximum competition by all properly licensed, authorized, and insured carriers.

Readers of this newsletter are urged to reply to their organization expressing their views and interest in these issues.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through February 28. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Regulation and Enforcement

• Safety fitness procedures apparently are next on FMCSA’s regulatory agenda
• FMCSA adopts new vision standards for commercial drivers
• FMCSA guidance allows third-party tests to administer all CDL knowledge tests
• Use of registered training programs now mandatory for new, upgraded CDLs
• DOT’s roadway safety plan includes several motor carrier elements
• Robin Hutcheson becomes acting FMCSA administrator
• FMCSA plans to reduce UCR fees by 27%

Legislation

• Bills would make permanent several pandemic-related CDL waivers
• Bill would streamline credentialing for transportation workers

Advocacy and Comment

Regulation and Enforcement

Safety fitness procedures apparently are next on FMCSA’s regulatory agenda

The Federal Motor Carrier Safety Administration plans this spring to revisit use of data to determine safety fitness. The agency intends to issue an advance notice of proposed rulemaking (ANPRM) in May seeking information on how it might use data and resources more effectively to identify unfit motor carriers. The brief description and ANPRM target date were included in the Department of Transportation’s January 2022 report on significant rulemakings, which is the first such report issued since February 2020 – presumably because the pandemic changed short-term priorities drastically.

In the January report, FMCSA said it would “seek public comment about the use of available safety data, including inspection data, in determining carrier fitness to operate.” The agency also said it would “seek public input on possible changes to the current three-tier safety fitness rating structure.” FMCSA also plans to review the list of Federal Motor Carrier Safety Regulations (FMCSRs) that the agency uses in its safety fitness rating methodology.

FMCSA has been down this road before. Despite various restrictions on use of Safety Measurement System (SMS) data imposed by the FAST Act in December 2015, the agency in January 2016 issued a proposed rule that would have used SMS data alone to determine safety fitness for carriers in certain situations. FMCSA never finalized the rule and instead said it would consider the issue further in a supplemental NPRM. However, after President Trump took office, the agency withdrew the rulemaking in March 2017, saying the proposal was premature given that the National Academies of Science (NAS) had yet to issue a report on its review of SMS and the Compliance, Safety, Accountability (CSA) program. NAS’ report in June of that year recommended various changes, including development of a complex statistical model based on a concept known as Item Response Theory. Nearly five years after the NAS report, FMCSA still has not executed reforms based on the NAS study as required by the FAST Act.

The January report on significant rulemakings lists several other potential FMCSA proceedings, but only in a couple of cases has the agency identified a next step with a target date for accomplishing that action. Those are NPRMS on broker and freight forwarder financial responsibility, slated for December 2022, and safety integration of automated driving systems-equipped commercial vehicles, planned for November 2022. The report also includes a few National Highway Traffic Safety Administration (NHTSA) rulemakings related to trucking, including an NPRM planned for April to require automatic emergency braking on heavy trucks and a joint NPRM with the Environmental Protection Agency to revise current fuel efficiency and greenhouse gas standards for medium- and heavy-duty engines and vehicles. For the DOT rulemakings report, visit https://www.transportation.gov/regulations/report-on-significant-rulemakings.

FMCSA adopts new vision standards for commercial drivers

FMCSA issued a final rule allowing individuals who do not satisfy with the worse eye the existing distant visual acuity standard with corrective lenses or the field of vision standard – or both – to be physically qualified to operate a commercial motor vehicle (CMV) in interstate commerce under specified conditions. Currently, FMCSA allows many visually impaired drivers to operate if they obtain an exemption. The new alternative vision standard replaces the current vision exemption program as the basis for determining the physical qualification of these individuals. The rule is effective March 22. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-01021.

FMCSA guidance allows third-party tests to administer all CDL knowledge tests

FMCSA has amended its regulatory guidance to explain that FMCSA’s current statutory authorities and regulations do not prohibit third-party testers from administering the commercial driver's license (CDL) knowledge tests for all classes and endorsements. Under the revised guidance, state licensing agencies may accept the results of knowledge tests administered by third-party testers in accordance with existing knowledge test standards and requirements. FMCSA also said it is working on a proposed rule that will more fully address states’ use of third-party knowledge testers.

The guidance tracks with an exemption FMCSA granted to the Virginia Department of Motor Vehicles (VA DMV) early in the pandemic to allow third-party testers to administer knowledge tests without a state examiner present. VA DMV had requested the exemption in response to the closing of its service centers due to the pandemic.

The flexibility granted by the new guidance was among various measures cited by the White House in December in its plan to increase the supply of truck drivers. (See Regulatory Update, January 2022.) For the Federal Register notice, visit https://www.federalregister.gov/d/2022-02165.

Use of registered training programs now mandatory for new, upgraded CDLs

FMCSA has launched the Training Provider Registry (TPR), which was the final step in implementing new entry-level driver training standards for individuals seeking to obtain a new or upgraded CDL or certain endorsements. The TPR is an online database that maintains the list of registered training providers that have self-certified they meet federal training requirements and retains a record of all individuals who have completed the required entry-level driver training. Effective February 7, drivers subject to the entry-level driver training (ELDT) regulations now must complete the required training from a registered training provider before obtaining a CDL or specified endorsement. For more information, visit https://tpr.fmcsa.dot.gov.

DOT’s roadway safety plan includes several motor carrier elements

DOT Secretary Pete Buttigieg on January 27 announced a National Roadway Safety Strategy (NRSS) aimed at sharply reducing highway fatalities, and the plan includes several provisions relevant to motor carriers. Some of the measures were mandated by Congress in last year’s infrastructure act, including automatic emergency braking systems on heavy trucks and stricter rear impact guards on trailers. The plan also includes measures already finalized but not yet implemented, such as rules issued last year directing states to take licensing action against drivers barred by the drug and alcohol clearinghouse and to develop systems for the electronic exchange of driver history record information. The NRSS is available at https://www.transportation.gov/NRSS.

Robin Hutcheson becomes acting FMCSA administrator

DOT Secretary Pete Buttigieg has named Robin Hutcheson deputy FMCSA, replacing Meera Joshi, who had departed the agency to become a deputy mayor of New York City. As deputy administrator, Hutcheson, who previously served as DOT deputy assistant secretary for safety policy, also serves as acting administrator. Prior to joining DOT in January 2021, Hutcheson was director of public works for the City of Minneapolis. Before that post, she had served as transportation director for Salt Lake City.

Although President Biden had nominated Joshi to become FMCSA administrator, the Senate never confirmed her, and her nomination was one of many returned to the White House at the end of the last congressional session. FMCSA has not had a Senate-confirmed administrator since Raymond Martinez departed in October 2019.

FMCSA plans to reduce UCR fees by 27%

FMCSA has proposed cutting annual Unified Carrier Registration (UCR) fees by $16 to $15,350 per entity depending on fleet size – a reduction of 27%. Comments on the proposal are due February 23. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-01022.

Legislation

Bills would make permanent several pandemic-related CDL waivers

Legislation (S. 3556, H.R. 6567) introduced in the Senate and House would make permanent several waivers related to CDLs that FMCSA had issued in response to the pandemic. The bill would:

• Allow state and third-party examiners who have maintained a valid CDL test examiner certification and have previously completed a CDL skills test examiner training course to administer the CDL knowledge test without completing a CDL knowledge test training course;
• Remove the requirement that CDL holders who accompany commercial learner’s permit (CLP) holders be seated in the front seat if they are elsewhere in the cab; and
• Allow states to administer driving skills tests to applicants from other states.

For more information, visit https://www.congress.gov/bill/117th-congress/senate-bill/3556 and https://www.congress.gov/bill/117th-congress/house-bill/6567.

Bill would streamline credentialing for transportation workers

Reps. Adam Smith (D-Washington) and John Katko (R-New York) have introduced legislation (H.R. 6571) to standardize the enrollment process for individuals applying for multiple Transportation Security Administration (TSA) security threat assessment programs. The bill would apply to programs such as the Transportation Worker Identification Credential (TWIC), Hazardous Materials Endorsement (HME), and TSA PreCheck programs. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/6571.

Advocacy and Comment

SMS to be revisited

Uh-oh, here we go again. The FMCSA has announced reinvigorating the comatose SMS methodology is high on its regulatory agenda. See above. With supply chain bottlenecks, severe driver shortages, escalating fuel and equipment costs, one would think the tyranny of the immediate would be controlling.

Remember, SMS methodology is the inspection based, peer grouped algorithm the Agency promised to deliver as part of CSA 2010. When that did not work, dozens of changes were made over the following five years.

Yet the system was shown to be so unfair and arbitrary, Congress in the Fast Act of 2015 required the scores to be removed and the program submitted for review by the National Academies of Science, The FMCSA tried to launch a rulemaking in January of 2016 but withdrew it after systemic flaws in the system were demonstrated in responsive comments.

When the National Academies of Science issued its report it concluded SMS could only work if new data was collected and an entirely different statistical formula was implemented. This idea gathered no traction and DOT failed to approve SMS as required by the FAST Act.

For the past five years, SMS methodology has run in the background and to plaintiff’s bar’s delight, it still affects nuclear judgments, access to freight and insurance premiums. Now, the Biden Administration has put SMS back at the top of its agenda. Yet even now, it praises the use of the objective desktop audit which critics of SMS proposed as an objective and fairer way to assign an actual satisfactory safety rating to carriers at a reasonable cost.

From the Agency notice discussed above, it appears no lessons have been learned about the systemic flaws of using peer grouping ,use of roadside data and a fancy algorithms to replace an objective audit.

It is time to move on and unite under three principles: (1) the FMCSA is the ultimate arbiter of highway safety; (2) carriers it finds to be safe to operate and properly “licensed, authorized and insured” are hence fit to use; and (3) the politics and rhetoric surrounding safety may change but after 15 years of development, it is time to permanently pull the plug on SMS.

In this context. the well-intentioned Gallagher-Moulton bill pending in the House would reintroduce possible use of SMS in return for legislative clarity on up-supply chain liability for shippers and brokers. With insoluble data sufficiency, data accuracy and statistical problems, allowing the return of SMS as any kind of ultimate measure of carrier fitness in an untenable "compromise" no carrier group can support.

The FMCSA now openly advocates use of the remote audit as an economical and fair tool for evaluating carriers in need of a compliance review. This idea was suggested to the FMCSA, the MCSAC and DOT years ago. Why revisit a system that does not work when the successful new entrant desktop audit procedure suggests there are better answers?

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through February 28. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Regulation and Enforcement

• Supreme Court blocks vaccination/testing mandate on larger employers
• Canadian vaccine mandate for U.S. truck drivers takes effect January 15
• FMCSA announces younger driver pilot program
• White House sets strategy to recruit and develop more truck drivers
• FMCSA’s Joshi leaves agency for New York City post
• FMCSA again denies exemption from $75,000 broker bond requirement

Legislation

• Bill would allow COVID relief funds to relieve supply chain challenges

Advocacy and Comment

Regulation and Enforcement

Supreme Court blocks vaccination/testing mandate on larger employers

The U.S. Supreme Court on January 13 stayed an emergency temporary standard (ETS) that generally would have required employers with 100 or more employees to ensure that all employees are either vaccinated against coronavirus (COVID) or undergo weekly COVID testing. A federal appeals court in December had lifted a stay that another court had imposed on the ETS, but the Supreme Court expedited a review of that decision. Supply chain stakeholders, including trucking industry groups, had sounded alarms over the effect of a vaccine mandate on the supply of workers.

Key to the Supreme Court’s decision was a conclusion that COVID is not a workplace hazard within the jurisdiction of the Occupational Safety and Health Administration (OHSA). “Permitting OSHA to regulate the hazards of daily life – simply because most Americans have jobs and face those same risks while on the clock – would significantly expand OSHA’s regulatory authority without clear congressional authorization,” the court ruled. For the Supreme Court opinion, visit https://www.supremecourt.gov/opinions/21pdf/21a244_hgci.pdf. Technically, the court’s action only blocks the mandate pending further litigation, but given the 6-to-3 decision, the Biden administration apparently has accepted the stay as the final word on the ETS.

Earlier on the day of the Supreme Court action, the trucking industry had secured a small victory regarding the mandate. OSHA issued guidance to the effect that solo truck drivers generally would not be subject to the ETS provided that their indoor interaction with others was minimal. However, that guidance is now moot now that the Supreme Court has blocked the ETS entirely.

Canadian vaccine mandate for U.S. truck drivers takes effect January 15

Although U.S. employers will not have to deal with a vaccine/testing mandate in the U.S., cross-border trucking operations face a vaccine mandate beginning January 15 for drivers entering Canada. U.S. drivers unable to establish full vaccination status will be denied entry into Canada. Unvaccinated Canadian truck drivers returning to Canada from the U.S. will be subject to testing and quarantine requirements but will not be denied entry. Meanwhile, effective January 22, the U.S. plans to require that foreign nationals, including truck drivers, entering the U.S. provide proof that they are fully vaccinated. For more information on the Canadian requirements, visit https://bit.ly/Border-COVID.

FMCSA announces younger driver pilot program

FMCSA announced in the January 14 Federal Register that it has established the Safe Driver Apprenticeship Pilot Program, which would allow individuals aged 18 to 20 to drive commercial vehicles interstate subject to various restrictions. The program was mandated by the Infrastructure Investment and Jobs Act (IIJA), which was signed into law in November. During the Trump administration, FMCSA in September 2020 had proposed a younger driver pilot program that was not finalized. FMCSA’s notice implementing the pilot program is in the same docket and responds to public comments submitted in response to the September 2020 proposal.

The IIJA apprenticeship legislation and FMCSA’s implementation of it closely track the so-called DRIVE-Safe Act, which had been introduced in Congress several times in recent years. Like the DRIVE-Safe Act, the pilot program mandates a certain program of training with minimum on-duty and driving hours and conducted in trucks equipped with specified safety technologies. The apprenticeship program involves two tiers of specified experience with minimum durations that total 400 hours on duty, including 280 hours of time behind the wheel. The IIJA established limitations not included in the DRIVE-Safe Act, however. For example, the apprenticeship program is temporary (three years) and is limited to 3,000 apprentices at any given time.

The FMCSA program requires that motor carriers participating in the program register their apprenticeship programs with the Department of Labor. Registered apprenticeship programs are a major part of a “trucking action plan” for increasing the supply of truck drivers that the White House announced in December. (See article below.)

FMCSA’s Federal Register notice outlines the requirements, qualifications, and reporting obligations that motor carriers and apprentices must satisfy and accept in order to participate in the program. The agency is not yet accepting applications, but it plans to announce that step on its website soon. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-00733. For the September 2020 proposal and comments, visit https://www.regulations.gov/docket/FMCSA-2018-0346.

White House sets strategy to recruit and develop more truck drivers

As part of its efforts to address supply chain disruptions, the White House in December unveiled a “trucking action plan” to increase the supply of truck drivers. The plan outlines efforts the Biden administration plans to launch through early 2022.

The initial step in the plan was FMCSA guidance to state driver’s license agencies on ways to expedite issuing commercial driver’s licenses (CDLs). According to a White House fact sheet, new CDLs and commercial learner’s permits were running about 20% higher in 2021 year than in 2019 and 72% higher than in 2020. Another piece of the White House strategy is a 90-day challenge to accelerate expansion of registered apprenticeships in trucking. The initiative is hosted at https://www.apprenticeship.gov/90-day-trucking-apprenticeship-challenge.

The action plan also involves steps aimed at recruiting many of the estimated 70,000 veterans who likely have certified trucking experience in the past five years. The Department of Transportation and Department of Labor also are launching a joint “Driving Good Jobs” initiative aimed at gathering feedback on how to make driving a truck a more attractive career.

The White House cited other initiatives that were included in the recent Infrastructure Investment and Jobs Act (IIJA), including the pilot program for younger interstate drivers truck drivers published in the January 14 Federal Register. (See article above.) The plan also cites other measures included in that law, including studies of driver pay and detention time and a task force to study truck leasing arrangements.

DOT on January 13 announced further details of steps to implement the plan. For more information, visit https://www.transportation.gov/tags/biden-harris-trucking-action-plan.

FMCSA’s Joshi leaves agency for New York City post

Meera Joshi, who had been leading FMCSA as deputy administrator and acting administrator since the beginning of the Biden administration, has returned to New York City to serve as deputy mayor for operations. Joshi had been appointed FMCSA deputy administrator in January 2021 after holding several positions in New York, including head of the New York City Taxi and Limousine Commission.

President Biden formally nominated Joshi as FMCSA administrator in April 2021. The Senate Commerce Committee advanced her nomination in November, but the full Senate never confirmed her. As is routine for unapproved nominations during a congressional session, Joshi’s nomination was one of dozens returned to the White House in January at the beginning of the current session of Congress. Had Joshi been formally renominated she would have had to go through the entire hearing and approval process again. FMCSA has not had a confirmed administrator since Raymond Martinez departed in October 2019.

FMCSA again denies exemption from $75,000 broker bond requirement

FMCSA has rejected an application from the Small Business in Transportation Coalition (SBTC) seeking reconsideration of the agency's March 31, 2015 denial of the Association of Independent Property Brokers and Agents’ (AIPBA) application for an exemption from the $75,000 bond requirement for all property brokers and freight forwarders. FMCSA treated the SBTC request as a new exemption application. After reviewing SBTC's application and public comments, FMCSA concluded that the exemption request should be denied because it does not meet the statutory factors for an exemption. For the Federal Register notice of the denial, visit https://www.federalregister.gov/d/2021-27220.

Legislation

Bill would allow COVID relief funds to relieve supply chain challenges

Rep. Josh Gottheimer (D-New Jersey) has introduced legislation (H.R. 6360) that would allow establish a “supply chain czar” to coordinate a national response to supply chain disruptions. The bill also would allow states to use unobligated COVID relief funds for measures to address supply chain disruptions. Among activities that could be funded through such funds are promotion of employment in trucking and logistics; establishment of apprenticeship programs to recruit more women and military veterans to be truck drivers; and undertaking port and shipping infrastructure projects. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/6360.

Advocacy and Comment

The issues addressed above evidence administrative action to address the driver shortage in the form of a younger driver pilot program and a “trucking action plan” to encourage new drivers and recoup veterans as drivers. Unaddressed are two issues which most truckers believe exacerbate the alleged driver shortage. As noted before, there are approximately 100,000 new applicants for authority which is largely traceable to mature owner operator drivers who fear the demise of the independent contractor model due to pending state and federal legislation and the court challenge to AB5. The most troubling question is how many of these new applicants can afford the high cost of insurance and compliance as small motor carriers and to what extent the failure rate will result in additional retirements and attrition.

The second issue results from a serious productivity problem caused by uncompensated detention and inordinate loading and unloading delays at ports, railheads and shippers’ docks. MIT, no less, suggests that its studies prove that with 15 minutes per day per unit, truck productivity could be raised to the level to eliminate the existing shortage.

ddressing dock and port inefficiencies and abusive detention practices, particularly in the dray foodstuffs industry, is in the public interest. In the days of the ICC, those of us who are old enough to remember saw the imposition of mandatory detention rules which made shippers and receivers financially accountable for failing to load or unload trucks within allotted free time. Not only do loading and unloading delays frustrate driver productivity and discourage productivity pay based on mileage or percentage, such inefficiencies also require more trucks and trailers which now command skyrocketing prices.

It seems apparent that addressing the causes of the bottlenecks and providing for compensatory waiting time is a proper way to allocate costs and retain otherwise frustrated drivers while encouraging greater productivity.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through February 28. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Legislation

• House passes ocean shipping reform bill
• House passes Build Back Better Act
• House bill would federalize major crash lawsuits, criminalize staging of crashes
• Proposed legislation seeks to relieve supply chain crunch
• Bills would set the stage for a shared chassis pool in Memphis

Regulation and Enforcement

• Vaccination/testing mandate still on hold pending Sixth Circuit review
• AAMVA seeks CDL test exemption for three states

Advocacy and Comment

Legislation

House passes ocean shipping reform bill

The U.S. House of Representatives on December 8 passed by a 364 to 60 vote legislation (H.R. 4996) that would require ocean carriers or marine terminal operators to certify that any detention or demurrage charges comply with federal regulations. The legislation, which is among several measures pending in Congress aimed at addressing issues at ports, also would shift the burden of proof regarding reasonableness from the invoiced party to the ocean carrier or marine terminal operator. Moreover, the bill would also authorize the Federal Maritime Commission to investigate on its own initiative ocean carriers’ business practices and apply enforcement measures as appropriate. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/4996.

More than a year ago, the American Trucking Associations filed a complaint with FMC 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. Adjudication of that complaint is slowly working its way through the FMC process. For the ATA complaint and other documents related to the proceeding, visit at https://www2.fmc.gov/readingroom/proceeding/20-14.

House passes Build Back Better Act

By a highly partisan vote of 220 to 213, the House on November 19 passed legislation (H.R. 5376) – known as the Build Back Better Act – that funds programs in a wide range of areas, including education, labor, childcare, health care, immigration and the environment. The bill, which is a priority of progressive Democrats, had been linked politically with the infrastructure bill until House Democrats decided to move forward with that legislation separately in the wake of unfavorable electoral results in November. (For details of the infrastructure package, see the November 2021 Regulatory Update.) The bill now goes to the Senate where its prospects for passage in its current form are uncertain.

H.R. 5376 does not directly relate to trucking, although provisions promoting electric vehicles might indirectly encourage electric propulsion in heavier vehicles. Although not directly involving trucking, the bill also promotes labor unions. For example, contractors used in installing “green energy” fixtures and systems must pay employees prevailing wage rates as determined by the Labor Department.

House bill would federalize major crash lawsuits, criminalize staging of crashes

Reps. Henry Cuellar (D-Texas) and Garret Graves (R-Louisiana) have introduced a bill (H.R. 6151) that would establish federal court jurisdiction over litigation involving commercial motor vehicles under certain conditions. The bill also would establish criminal penalties for staging collisions with CMVs – a problem that has grown in recent years – and would require disclosure of any party other than the plaintiff or plaintiff’s counsel that has a right to receive payment contingent on a settlement or judgment. Third-party financing of crash litigation recently has raised concern in the trucking industry.

The bill would assign lawsuits involving CMVs operating in interstate commerce to a federal district court in situations where the claim exceeds $5 million and where the plaintiff is a either a citizen of a state that is different from any defendant or a citizen of a foreign country.

Under the proposed legislation, an individual who intentionally causes a collision with a CMV or arranges for another person to do so is subject to a fine, imprisonment for up to 20 years, or both. If such an action results in death or serious bodily injury to another person, the penalty escalates to not less than 20 years in prison as well as a fine.

Proposed legislation seeks to relieve supply chain crunch

Sen. Mike Lee (R-Utah) and Rep. Michelle Fischbach (R-Minnesota) have introduced bills (S. 3252, H.R. 6028) aimed at relieving the port congestion that has contributed to supply chain challenges. The bills would several temporary regulatory waivers and actions to help alleviate some of the stress in freight networks.

Several provisions of the bills are specific to trucking. One would require FMCSA to temporarily waive hours-of-service requirements for truck drivers and motor carriers who are transporting cargo directly to or from a U.S. port. Another would require the agency to temporarily allow 18-year-old drivers to receive a temporary commercial driver’s license for (1) the transportation of cargo to or from a U.S. port or (2) to assume the commercial operations of a truck driver who has been re-routed to a U.S. port.

The bill also would require the Department of Defense (DoD) to take an inventory of intermodal equipment (including truck chassis) and permit trucking companies to use the equipment provided that the use does not affect national security and that trucking companies agree to reimburse DoD for any damage.

Another provision that would affect truck drivers would expedite applications for Transportation Worker Identification Credentials (TWIC) for workers needed to provide direct assistance to a U.S. port. Other provisions would provide flexibility for maritime vessels and designate plots of federal land that could be used to store and transfer empty cargo containers. The DoD could impose a fee for truckers’ use of DoD intermodal equipment, and the funds could be used only for remediation of federal land used for container storage.

For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/6028 and https://www.congress.gov/bill/117th-congress/senate-bill/3252.

Bills would set the stage for a shared chassis pool in Memphis

U.S. lawmakers representing the greater Memphis area have sponsored identical House and Senate bills (H.R. 6081, S. 3268) that would direct the Department of Transportation to issue a request for a private company to develop an operating model for a shared chassis pool at or near the rail ramps in Memphis, Tennessee. The consultant would identify a suitable location or locations and consult with relevant stakeholders. For more https://www.congress.gov/bill/117th-congress/house-bill/6081 and https://www.congress.gov/bill/117th-congress/senate-bill/3268.

Regulation and Enforcement

Vaccination/testing mandate still on hold pending Sixth Circuit review

The Occupational Health and Safety Administration’s emergency temporary standard (ETS) that would require most employers with 100 or more employees to ensure that their employees are either vaccinated against the coronavirus (COVID) or undergo weekly testing remains on hold after the U.S. Court of Appeals for the Fifth Circuit imposed a stay on November 12. Multiple lawsuits were filed in multiple circuits, but the U.S. Court of Appeals for the Sixth Circuit has now been assigned jurisdiction.

In the interim, OSHA has extended the comment period on the ETS and on whether it should be adopted as a permanent standard. Comments are due January 19. For more information, visit https://www.regulations.gov/document/OSHA-2021-0007-0900.

AAMVA seeks CDL test exemption for three states

FMCSA is requesting comments by January 10 regarding a multi-year exemption requested by the American Association of Motor Vehicle Administrators (AAMVA) that would allow the state driver licensing agencies (SDLAs) in Maryland, New Hampshire, and Virginia to continue using revised commercial driver’s license (CDL) pre-trip vehicle inspection and revised control skills test procedures. The three states are currently conducting field tests of revised procedures as part of a pilot program under an FMCSA waiver. AAMVA states that the requested exemption would allow states to continue operating under the pilot model without the burden of reverting to the older CDL test model. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-26641.

Advocacy and Comment

This month’s update is heavy on pending legislation. Supply chain disruptions, intermodal bottlenecks, and shortages highlight our dependence on overseas production and the importation of cheap goods. Our attenuated foreign supply chain, our trade imbalance and the “build back better” initiative all create a toxic stew for predicting 2022 inflation and increased labor costs.

Further distribution changes are foreseeable as inventories and production sourcing are redomesticated. Jobs, warehousing, technology, trade, and energy policy are all wildcard issues. With shifting transportation demands, increasing transportation costs and driver retention issues involved, next year may be “the best of times, the worst of times” and the times that try men’s souls.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through November 30. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Legislation

• Senate version of infrastructure bill becomes law
• Senate bill would revise hours-of-service rules, lower CDL age to 18
• House bill would pay carriers to assist during port congestion, national emergencies

Regulation and Enforcement

• OSHA issues vaccination/testing mandate for employees of larger companies
• FMCSA requires annual inspections of rear impact guards
• MCSAC to resume consideration of supply chain issues, regulation of small vehicles
• FMCSA allows armored car operation to weld front doors shut

Courts

• Supreme Court seeks Justice Department thoughts on AB 5 case
• Appeals court throws out federal GHG rule as it applies to trailers

Advocacy and Comment

Legislation

Senate version of infrastructure bill becomes law

President Biden on November 15 signed into law the Senate version of the infrastructure bill (H.R. 3684), which the House passed without amendment on November 5. The new law includes various provisions related to trucking, including a three-year pilot program to allow individuals aged 18 to 20 to drive commercial vehicles in interstate commerce subject to restrictions.

Although the law includes various other trucking provisions – including mandates for automatic braking systems on new vehicles and tighter rear underride guard standards – it does not include some highly controversial measures that were in the House-passed bill. For example, the final statute does not increase minimum liability insurance coverage for motor carriers. Nor does it mandate screening for sleep apnea or order a prompt restoration of public Compliance, Safety, Accountability (CSA) metrics.

The younger driver pilot apprenticeship program closely tracks the so-called DRIVE-Safe Act, which has been proposed several times in recent years. The program mandates a certain program of training with minimum on-duty and driving hours and conducted in trucks equipped with specified safety technologies. The apprenticeship program involves two tiers of specified experience with minimum durations that total 400 hours on duty, including 280 hours of time behind the wheel.

The apprenticeship program as enacted differs from the DRIVE-Safe Act in several notable ways, however. First, it is limited to three years. Also, at any given time the program will be limited to 3,000 trainees. The program is tighter in other respects. For example, driver trainers must be at least 26 years old and have at least five years’ experience. Finally, the hauling of hazardous materials is excluded – a restriction that was in some early versions of the DRIVE-Safe Act that was omitted in the bills currently introduced in Congress.

It is unclear when the apprenticeship program will begin. The Federal Motor Carrier Safety Administration (FMCSA) will need to issue some type of guidance to implement the program. However, the largest hurdle to quick action might prove to be the 3,000-participant cap as FMCSA would have to devise a process and information system to monitor the number of participants and to replace those who graduate or wash out of the program.

Because the rate at which apprentices will complete the program will vary widely, it is unknown how many new drivers will be added over the three-year period. The theoretical maximum per year if all drivers completed the program in the fastest time allowed by the hours-of-service rules and were immediately replaced with new apprentices when they exit would be about 32,000, according to an estimate from freight data analysis firm FTR Transportation Intelligence. However, in practice the number probably will be a fraction of that figure.

Aside from the braking and rear underride guard provisions, most of the trucking-related provisions are relatively non-controversial. Other provisions:

• Direct DOT to issue guidance to clarify the definitions and roles of brokers and bona fide agents and require DOT to consider the impact of technology and the role of dispatch services in the freight transportation industry;
• Require DOT, in consultation with the Department of Labor, to establish a Truck Leasing Task Force to examine common truck leasing agreements available to truck drivers, including port drayage drivers specifically. The Task Force would examine the impact of leasing agreements on the net compensation of drivers and the resources available to assist drivers in assessing the impacts of leasing agreements;
• Mandate a study of large commercial vehicle crash causation;
• Establish a grant program to help states with the immobilization or impoundment of passenger-carrying vehicles that are determined to be unsafe or fail inspection;
• Require a final rule on state inspection of passenger-carrying commercial vehicles;
• Mandate a report analyzing the cost and effectiveness of electronic logging devices and detailing the processes used by FMCSA to review logs; protect proprietary and personally identifiable information; and to provide the opportunity for a challenge or appeal to a violation notice related to an ELD;
• Order a review of FMCSA’s National Consumer Complaint Database; and
• Extend the authorization for the Motor Carrier Safety Advisory Committee through fiscal 2026 and add small carriers among those required to be represented on the committee. For complete information on the final infrastructure bill, visit https://www.congress.gov/bill/117th-congress/house-bill/3684.

Senate bill would revise hours-of-service rules, lower CDL age to 18

Sen. Mike Lee (R-Utah) has introduced still pending legislation (S. 3054) that would require FMCSA to change hours-of-service regulations for property-carrying commercial motor vehicles to provide more flexibility and would lower the minimum age for obtaining a commercial driver’s license (CDL) to 18. The bill would have the agency skip the rulemaking process and make various changes within 90 days of enactment. As introduced, the legislation would change HOS rules to:

• Increase the maximum driving time to 12 hours;
• Establish a maximum on-duty time of 14 hours during any 24-hour period;
• Allow 8 hours of consecutive off-duty time to satisfy mandatory rest requirements provided that the driver takes two to four rest breaks of 30 minutes each, depending on the number of hours driven; and
• Allow drivers to continue to their destinations if they are within 150 miles of it when they reach their driving or duty-time limits.

The bill also would require FMCSA to report to Congress on its processes for reviewing electronic logging device (ELD) logs and to protect proprietary information and personally identifiable information obtained from ELD logs. The report also would detail the process through which operations could challenge or appeal violations related to ELDs. Finally, S. 3054 would require a Government Accountability Office report on the costs and effectiveness of ELDs.

For information on S. 3054, visit https://www.congress.gov/bill/117th-congress/senate-bill/3054.

House bill would pay carriers to assist during port congestion, national emergencies

Similarly, Rep. Tracey Mann (R-Kansas) and 10 co-sponsors have introduced pending legislation (H.R. 5846) to establish a grant program to pay for-hire and private motor carriers to transport goods from ports during national emergencies or periods of high port congestion. The transport could be from the port to a final destination or “to a point that is easily accessible by another form of transport.” The grant program would apply during times when the president has declared a national emergency or when the Secretary of Transportation has determined that a port is congested by at least 50%. In the latter case, grants would cease once congestion at a port is less than 49% for at least 60 consecutive days. For information on H.R. 5846, visit https://www.congress.gov/bill/117th-congress/house-bill/5846.

Regulation and Enforcement

OSHA issues vaccination/testing mandate for employees of larger companies

As expected, the Occupational Health and Safety Administration on November 4 issued an emergency temporary standard (ETS) that generally requires employers with 100 or more employees to ensure that their employees are either vaccinated against the coronavirus (COVID) or undergo weekly testing. The rule was to be effective immediately, and compliance was required by January 4.

Almost immediately, however, the U.S. Court of Appeals for the Fifth Circuit stayed the mandate pending further litigation. Then on November 9, the American Trucking Associations, the state trucking associations for Texas, Louisiana, and Mississippi, and various other organizations involved in the supply chain filed suit in the Fifth Circuit challenging the ETS.

Even though trucking organizations are challenging the ETS, there are questions as to whether it applies to the largest single group of workers in trucking. Nowhere in the rule is any exemption for drivers mentioned. Moreover, one table in the final rule indicates that of nearly 880,000 total employees in for-hire trucking that work for carriers with 100 or more employees, nearly 740,000 are covered. However, a footnote indicates that the number of covered employees reflects only the total minus those who work exclusively outdoors. In addition to employees who work only outdoors and to those who work from home, the ETS excludes employees who do not report to a workplace where other individuals such as coworkers or customers are present.

Even stronger evidence came in a statement from the head of the cabinet department within which OSHA resides. A news report aired by a Philadelphia television station included a video clip of Labor Secretary Marty Walsh stating, “If you're a truck driver and you're outside, you're in a cab driving by yourself, this doesn't impact you.” For more information on the ETS, visit https://www.osha.gov/coronavirus/ets2.

FMCSA requires annual inspections of rear impact guards

FMCSA has issued a final rule adding rear impact guards to the list of items that must be examined as part of the required annual inspection for each commercial motor vehicle. CMV. The agency also amended the labeling requirements for rear impact guards and excluded road construction controlled (RCC) horizontal discharge trailers from the rear impact guard requirements. The final rule responds to rulemaking petitions and a Government Accountability Office recommendation. (See https://www.gao.gov/products/GAO-19-264.) Congress also mandated annual inspections of rear underride guards as recommended by GAO Congress in the fiscal 2020 appropriations act.

The final rule is effective December 9. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-23796.

MCSAC to resume consideration of supply chain issues, regulation of small vehicles

FMCSA’s Motor Carrier Safety Advisory Committee is slated to meet December 6-7 to resume consideration of two topics it has already discussed: (1) support for supply chains related to the transportation industrial base and (2) potential regulation of the package and small goods delivery sector. The virtual meeting is open to the public, but advance registration is requested at www.fmcsa.dot.gov/mcsac.

FMCSA allows armored car operation to weld front doors shut

FMCSA has granted the application from Loomis Armored US, LLC for an exemption to allow the driver and passenger doors of the cabs of its specialized armored vehicles to be welded shut and two new doors to be added behind the cab. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-22615.

Courts

Supreme Court seeks Justice Department thoughts on AB 5 case

The U.S. Supreme Court on November 15 asked the U.S. solicitor general – the Justice Department’s representative to the court – to file a brief expressing the views of the United States regarding the California Trucking Association’s challenge of California’s AB 5 law as it applies to motor carriers. Earlier this year, the U.S. Court of Appeal for the Ninth Circuit ruled that AB 5 is a law of general applicability that is not preempted by the Federal Aviation Administration Authorization Act of 1994 (F4A). However, the appeals court also stayed the effectiveness of that decision pending a resolution at the Supreme Court.

Seeking the views of the U.S. government was one of three courses of action the Supreme Court generally would take when presented with a petition for review. Had the Supreme Court decided to let the Ninth Circuit decision stand, the state of California could have immediately to enforced AB 5 on motor carriers, which would mean that leased owner-operators would no longer be allowed to operate in the state. Had the court agreed to hear the case, the status quo would have remained in place pending a final ruling. Ultimately, the court will take one of those two courses of action, so one of the consequences of its November 15 action is to delay the final resolution, perhaps by months.

In early October, the Supreme Court asked the acting solicitor general to file a brief in another case involving F4A. That case, which involves C.H. Robinson, concerns whether a state tort liability claim filed after a highway crash qualifies under F4A’s “safety exception,” which allows state regulation.

Many observers expect the court to take the CTA case as the Ninth Circuit decision conflicts with a 2016 First Circuit ruling that invalidated a restrictive ABC test in Massachusetts. However, the Supreme Court last month declined to review a case that involved application of California’s ABC test to motor carriers. The court’s latest action, however, strongly suggests that it considers the CTA case to be one it might ultimately consider. The Supreme Court on November 15 also asked the solicitor general for views involving two airlines’ challenge of California’s application of its meal and rest break rules to flight attendants. Both cases involve the extent to which the prohibition against state regulation of rates, routes, and services prevents states from requiring federally regulated carriers to abide by laws and regulations that apply generally to all employees.

Appeals court throws out federal GHG rule as it applies to trailers

The U.S. Court of Appeals for the District of Columbia Circuit has invalidated all portions of a 2016 Environmental Protection Agency rule on greenhouse gases in commercial vehicles that apply to trailers. The court noted that the Obama administration rule was based on a statute that authorized EPA to regulate “motor vehicles.” In the same rule that was issued jointly with the National Highway Traffic Safety Administration, NHTSA issued fuel efficiency standards for trailers based on a statute allowing it to regulate “commercial medium-duty or heavy-duty on-highway vehicles.”

The appeals court decision rested on quite a simple premise. “Trailers, however, have no motor,” the court concluded. “They are therefore not ‘motor vehicles.’ Nor are they ‘vehicles’ when that term is used in the context of a vehicle’s fuel economy, since motorless vehicles use no fuel.” For the appeals court opinion, visit https://bit.ly/GHG-Trailers.

Advocacy and Comment

Cheer up! We may be in better shape than we feared

As the above report shows, we finally have a highway infrastructure bill. Importantly, omitted from the finished product were troublesome issues like increasing insurance minimums, federal adoption of AB5 and resurrection of CSA 2010 which were feared as possible amendments to the appropriations bill.

As noted, the future of the independent contractor model remains in doubt. The split in the Circuits and the stay pending the Supreme Court’s decision on cert. has shifted the fight to the courts and is the only thing precluding enforcement of California legislation and similar acts in other states which will destroy the model and greatly exacerbate the driver and equipment shortage. This month’s publication was delayed awaiting the Court’s decision on the appeal of AB5 and a CH Robinson case. Both were referred to the Solicitor General for an opinion, leaving these issues in limbo and yet to be determined.

If the Supreme Court does not decide to ultimately determine the future of the owner operator independent contractor model, the debate will default to the Department of Labor and other administrative agencies where the importance of the small business issue, the supply chain problems and driver shortages will be important.

Supply chain disruption and the causes or the effect of the perceived driver shortage are hot topics which will be considered by FMCSA’s MCSAC in December. As was done in a response to DOT’s request for comments by 9 trade associations, the case must be made that the attenuated overseas supply chain, port bottlenecks and uncompensated waiting times exacerbate the driver shortage. These supply chain issues, and threats to the owner operator model are precipitating the driver shortage which is not the cause of the problem.

The MCSAC is taking up the gap in federal safety regulations between vans and sprinters on the one hand and straight trucks and semis on the other is of particular importance.

The difference between safety regulations governing vehicles less than 10,001 gvw creates inconsistencies and confusion in the application of federal versus state laws which results in the characterization of the “home delivery model” as the “Wild West” – a new and apparently lawless territory. While MCSAC has no authority to implement new rules, these meetings may shed light on the chronic and systemic problems of this growing segment of the supply chain.

Finally, the infrastructure bill creates administrative forums for addressing a number of issues important to the industry and provides opportunities for small business which warrants greater participation.

Contents

Regulation and Enforcement

• DOT seeks input on ‘supply chain resilience’ in freight and logistics
• FMCSA rule to link clearinghouse data to CDL
• Reporting requirement for FMCSA COVID declaration kicked in October 1
• FMCSA renews steel company’s exemptions from HOS and securement rules
• Oak Harbor Freight Lines seeks exemption on driver training instructors
• Keep Truckin seeks windshield exemption

Legislation

• Infrastructure bill remains in limbo
• Senate bill would bar vaccination mandate for interstate passenger travel

Courts

• Supreme Court acts in two cases related to trucking

Advocacy and Comment

Regulation and Enforcement

DOT seeks input on ‘supply chain resilience’ in freight and logistics

The U.S. Department of Transportation is requesting comments by October 18 on ways to address near-term and future constraints in the transportation sector, especially for ports, rail, and trucking. The information request is part of the Biden administration’s efforts to strengthen the nation’s supply chains and is more specifically linked to the Supply Chain Disruptions Task Force established by the White House in June. DOT is one of several departments that have issued such requests in response to the White House efforts regarding supply chain disruptions.

Although the request is broad, DOT asked for input on various specific topics, including infrastructure and operational bottlenecks; shortages of essential cargo-handling equipment (such as chassis and containers); warehousing capacity and availability; challenges and opportunities related to technology; and workforce development.

The information request presumes some key Biden administration priorities, such as addressing climate change and promoting unionization. For example, one of the specific topics DOT seeks input on is “the effects of climate change on transportation and logistics infrastructure and its implications for supply chain resiliency.” The document also requests input on “key opportunities and challenges with respect to the existing and future workforce to ensure a well-functioning freight and logistics supply chain and achieve the President's goal of increasing good-paying jobs with the choice of a union.”

For the Federal Register notice, visit https://www.federalregister.gov/d/2021-19974. To view comments, visit https://www.regulations.gov/document/DOT-OST-2021-0106-0001.

FMCSA rule to link clearinghouse data to CDL

FMCSA issued a final rule that will require states to take action to downgrade a commercial driver’s license (CDL) or commercial learner’s permit (CLP) if they receive notice from the agency that a driver is barred due to a violation in the drug and alcohol clearinghouse. The rule also will require states to query the drug and alcohol clearinghouse before issuing, renewing, upgrading, or transferring a CDL or CLP and to block such actions if the driver is barred. The rule is effective November 8, but compliance is not required until November 18, 2024.

The rule aims to minimize a blind spot under current regulations. Today, a motor carrier cannot hire a CDL driver unless the carrier queries the clearinghouse and confirms that the driver has no drug and alcohol violations for which the driver has failed to complete a return-to-duty protocol. However, a driver who tests positive in a pre-employment drug test for another employer might be able to drive for up to a year in the most extreme cases until his or her current employer conducts a required annual clearinghouse query. Or a driver who tested positive arguably could obtain operating authority and fail to comply with the drug testing consortium requirements under the regulations. Although this latter situation would be a severe violation, enforcement might prove difficult until FMCSA conducted the new entrant safety audit.

The new rule adds another layer of enforcement by eliminating commercial driving privileges if FMCSA notifies the state of a violation or if a prohibited driver seeks to renew, upgrade, or transfer a CDL. The change also will permit all traffic safety enforcement officers – not just those operating under the Motor Carrier Safety Assistance Program – to readily identify prohibited drivers by conducting a license check during a traffic stop or other roadside intervention, FMCSA said.

One change that surprisingly did not generate any opposition from driver groups is a clarification of how employers’ reports of “actual knowledge” of prohibited drug or alcohol use would be maintained in the clearinghouse. The final rule states that reports of actual knowledge based on a citation or other document charging driving under the influence in a CMV would remain in the clearinghouse for five years or until a driver completes a return-to-duty process regardless of whether the driver is ultimately convicted of the offense.

For the Federal Register notice of the final rule, visit https://www.federalregister.gov/d/2021-21928.

Reporting requirement for FMCSA COVID declaration kicked in October 1

The most recent version of the emergency declaration concerning relief from certain regulatory requirements for trucking operations that directly assist coronavirus (COVID) relief efforts included a new reporting requirement. As of October 1, motor carriers that voluntarily operate under the terms of the declaration must report within five days after the end of each month concerning their reliance on the declaration. To report, motor carriers will access their portal account at https://portal.fmcsa.dot.gov/login, log in with their FMCSA portal credentials, and access the Emergency Declaration Reporting under the Available FMCSA Systems section of the page. For more information on the emergency declaration and other guidance and relief related to COVID, visit https://www.fmcsa.dot.gov/COVID-19.

FMCSA renews steel company’s exemptions from HOS and securement rules

FMCSA has renewed the exemption granted Cleveland-Cliffs Steel, LLC (Cliffs), formerly ArcelorMittal Indiana Harbor, LLC, from certain hours-of-service (HOS) and cargo securement rules and requests public comment by November 1 on the renewal. The exemptions apply to drivers who transport steel coils less than a mile on public roads between the company’s production and shipping locations. For more information, visit https://www.federalregister.gov/d/2021-21233.

Carrier seeks exemption on driver training instructor qualifications

Oak Harbor Freight Lines, Inc., has applied for an exemption from the qualification requirements pertaining to entry-level driver training (ELDT) theory instructors. The exemption would allow the company’s safety supervisor to conduct classroom (theory) training for entry-level drivers who intend to operate commercial motor vehicles (CMV) used in the transportation of hazardous materials (HM). The company states the exemption is warranted due to the safety supervisor’s experience and expertise related to the transportation of HM. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-19440.

Keep Truckin seeks windshield exemption

FMCSA requests public comment by October 22 on an application for exemption from Keep Truckin, Inc., to allow its AI Dashcam system, which is equipped with cameras, to be mounted lower in the windshield on commercial motor vehicles than is currently permitted. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-20469.

Legislation

Infrastructure bill remains in limbo

Congress has yet to resolve the political conflicts – mostly within the Democratic Party itself – that would be needed to move forward with an infrastructure bill (H.R. 3684) that includes several notable provisions related to motor carriers. The legislation is linked politically with a proposed $3.5 trillion budget reconciliation bill that includes numerous spending priorities of progressive Democrats. Some liberal House Democrats are refusing to support final passage of the Senate infrastructure bill until they have assurances that their priorities within the budget bill will remain intact.

Although the fate of the infrastructure bill is up in the air, if the bill passages, it probably will be the Senate version, which is significantly less controversial within the trucking industry. Rep. Peter DeFazio (D-Oregon), chairman of the House Transportation & Infrastructure Committee, in late September offered a motion that the House agree to the Senate amendment. If passed, that motion would send the Senate version of H.R. 3684 to the White House for President Biden’s signature. However, the Democratic majority in the House is razor thin and enough Democrats have objected so far to stall House passage.

The Senate-passed version of H.R. 3684 includes a number of notable provisions related to trucking, including a three-year pilot program to allow interstate operations by drivers under 21 under terms that are very similar to what is called for in the so-called DRIVE-Safe Act. (For details of the Senate-passed bill, see Regulatory Update, August 2021.)

Although several relatively non-controversial provisions of the House-passed bill also are in the Senate version, the Senate bill does not include some highly controversial measures that the House had passed. Those include increased minimum insurance coverage for trucking companies, a near-term restoration of public Compliance, Safety, Accountability metrics; a rulemaking on screening drivers for sleep apnea; and a comprehensive review of hours-of-service regulations, including last year’s final rule. (For details of the House-passed bill, see Regulatory Update, June 2021.)

Senate bill would bar vaccination mandate for interstate passenger travel

Sen. Mike Lee (R-Utah) introduced legislation (S. 2847) that would prohibit the federal government from mandating vaccination against COVID-19 for interstate passenger travel. The bill would apply to common carriers in all modes, including motor passenger carriers. For more information, visit https://www.congress.gov/bill/117th-congress/senate-bill/2847.

Courts

Supreme Court acts in two cases related to trucking

As it convened for a new term, the Supreme Court on October 4 issued orders in two cases related to scope of federal preemption of state action related to trucking. Regarding Cal Cartage Transportation Express vs. California, the court decided not to review a California state court’s ruling that the California Supreme Court’s interpretation that essentially bars independent contractor drivers in trucking does not run afoul of the preemption established in the Federal Aviation Administration Authorization Act of 1994 (F4A).

Although the Cal Cartage case fundamentally rests on the same question – whether F4A preempts a restrictive state ABC test for worker classification in trucking – it is different in various respects from the case in which the California Trucking Association is seeking Supreme Court review of an adverse ruling from the U.S. Court of Appeals for the Ninth Circuit concerning the application of the state’s AB 5 law to motor carriers. For example, the Cal Cartage case does not directly address AB 5 and – perhaps more important – it was an appeal from a state court that was not even the highest California state court.

So while the Supreme Court’s refusal to hear the Cal Cartage case certainly is not good news for the trucking industry, it might not indicate that the CTA case also is headed for the same fate. Many observers believe the Supreme Court likely will hear the case because the Ninth Circuit decision directly contradicts the 2016 ruling from the U.S. Court of Appeals for the First Circuit in a case involving a Massachusetts ABC test that was essentially the same as the AB 5 test.

The State of California is scheduled to respond October 12 to CTA and the various transportation-related organizations that have filed in support of CTA’s appeal. A Supreme Court decision on whether to hear the case could come within weeks after that filing. If the court declines to hear the CTA case, California would be free to impose the requirements of AB 5 on motor carriers immediately. If the court agrees to hear the case, it could be next year or potentially even 2023 before it renders a decision, depending on when the court schedules arguments.

Another trucking-related case in which there was an order on October 4 was C.H. Robinson Worldwide vs. Miller. The issue in that case is somewhat similar in that it involves federal preemption of state action, but in this case the issue is whether state common law negligence claims against freight brokers are preempted by F4A. The key question is whether a lawsuit against a broker filed after a highway accident qualifies under F4A’s “safety exception,” which preserves the “safety regulatory authority of a State with respect to motor vehicles.” The Ninth Circuit had ruled that the lawsuit in question did qualify and was not preempted.

No guarantee that the Supreme Court will hear the case, the request indicates that the court is seriously considering a review.

Advocacy and Comment

As noted above, comments are due on October 18, 2021, in response to the President’s administrative agenda and questions outlined for discussion. Clearly, the administration is trolling for support of its progressive pro-labor union agenda. The proposals, which have been tabled on the administrative and legislative level, ignore the fact that the highway infrastructure is being held hostage yet again and that the big government idea of unionization is being touted as a panacea for the driver shortage.

The key issues facing trucking in the supply chain infrastructure as a whole are not addressed and could be exacerbated by the proposed administrative agenda. The creation of an "Infrastructure Czar" to make multi-modal policy decisions is contrary to the National Transportation Policy and the commitment to insure fair competition in a competitive marketplace.

While filing comments by the current due date will probably not change federal administrative policy, it is important to our industry that supply chain issues, the driver shortage, and the pending independent contractor issues be accurately discussed and that the pitfalls of proposed administrative and legislative changes be debated.

Contents

Regulation and Enforcement

• FMCSA seeks feedback on Part 379 records retention requirements
• FMCSA extends COVID enforcement relief, seeks carrier reports on its use
• CVSA policy adopted as certification standards for driver/vehicle inspections
• Comments due September 23 on MRB report regarding alternative vision standard
• FMCSA plans to renew consumer complaint database
• FMCSA seeks approval for information collection related to waivers and exemptions
• Werner seeks exemption for drivers who have passed the CDL skills test
• Steel company seeks HOS relief for scrap metal haulers

Legislation

• House bill seeks to tighten regulations on ocean shipping

Courts

• California to respond to CTA’s Supreme Court petition next month

Advocacy and Comment

Legislation

FMCSA seeks feedback on Part 379 records retention requirements

FMCSA is requesting comments by September 23 on the necessity and appropriateness of records retention requirements in Part 379 of the Federal Motor Carrier Safety Regulations (FMCSRs). The agency noted that Appendix A to Part 379 provides a generalized listing of retention times for records required to be prepared or compiled by certain for-hire motor carriers and brokers subject to the commercial regulations. However, only a few of the FMCSRs refer to the record-keeping requirements in Part 379, it said. FMCSA’s Federal Register notice poses several questions related to retention times and the numbers and costs of records retention. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-18169.

FMCSA extends COVID enforcement relief, seeks carrier reports on its use

FMCSA has extended through November 30 emergency regulatory enforcement relief for motor carriers directly supporting coronavirus (COVID-19) relief efforts. As modified several times since originally granted in March 2020, FMCSA’s emergency declaration applies to commercial vehicle operations providing direct assistance in support of emergency relief efforts related to COVID-19 and is limited to transportation of:

1. livestock and livestock feed;
2. medical supplies and equipment related to the testing, diagnosis, and treatment of COVID-19;
3. vaccines, constituent products, and medical supplies and equipment including ancillary supplies/kits for the administration of vaccines, related to the prevention of COVID-19;
4. supplies and equipment necessary for community safety, sanitation, and prevention of community transmission of COVID-19 such as masks, gloves, hand sanitizer, soap, and disinfectants;
5. food, paper products and other groceries for emergency restocking of distribution centers or stores;
6. gasoline, diesel, jet fuel, and ethyl alcohol; and
7. supplies to assist individuals impacted by the consequences of the COVID-19 pandemic (e.g., building materials for individuals displaced or otherwise impacted as a result of the emergency).

FMCSA continues to stress that direct assistance does not include non-emergency transportation of qualifying commodities or routine commercial deliveries, including mixed loads with a nominal quantity of qualifying emergency relief added to obtain the benefits of this emergency declaration. To be eligible for the exemption, the transportation must be both of qualifying commodities and incident to the immediate restoration of those essential supplies. For full details of the emergency declaration, visit https://www.fmcsa.dot.gov/COVID-19.

Meanwhile, FMCSA last month submitted for immediate Office of Management and Budget approval a proposed information collection under related to the emergency COVID-19 declaration. The agency noted that neither the emergency declaration nor regulations covering emergency declaration require that carriers or drivers operating under it report their operation to FMCSA.

"Given the unprecedented period that the expanded modified Emergency Declaration No. 2020-0022 has now been in place, FMCSA has determined that it is necessary to seek information on the number of motor carriers and drivers relying upon Emergency Declaration No. 2020-002, and any subsequent extension currently in effect, to evaluate the need for future extensions or modifications if that Agency determines that additional extensions are needed,"" the agency said in its Federal Register notice. For FMCSA’s notice of the proposed information collection, visit https://www.federalregister.gov/d/2021-18442.

CVSA policy adopted as certification standards for driver/vehicle inspections

As required by the Fixing America's Surface Transportation Act (FAST Act), which was enacted nearly six years ago, FMCSA has incorporated by reference into its regulations the Commercial Vehicle Safety Alliance's (CVSA) “Operational Policy 4: Inspector Training and Certification.” The CVSA policy provides the current policy and practices for FMCSA employees, State or local government employees, and contractors to obtain and maintain certification for conducting driver or vehicle inspections. Previously, it was Attachment A to FMCSA's “Certification Policy for Employees Who Perform Inspections, Investigations, and Safety Audits.” For the Federal Register notice, visit https://www.federalregister.gov/d/2021-18474.

Comments due September 23 on MRB report regarding alternative vision standard

FMCSA is requesting comments by September 23 on a report from the agency’s Medical Review Board (MRB) that recommends changes in the alternative vision standard that was proposed in January. The proposed rule, which was issued in the final days of the Trump administration, would allow individuals who cannot meet either the current distant visual acuity or field of vision standard, or both, in one eye to be physically qualified to operate a commercial motor vehicle (CMV) in interstate commerce.

In May, FMCSA asked MRB to review and analyze comments from medical and professionals and associations on the proposal and to make recommendations to FMCSA. The MRB Task 21-1 report is available at https://www.regulations.gov/document/FMCSA-2019-0049-0117. For the Federal Register notice seeking comment on the report, visit https://www.federalregister.gov/d/2021-17850.

FMCSA plans to renew consumer complaint database

FMCSA is seeking comments by November 2 on a plan to submit the National Consumer Complaint Database (NCCDB) to the Office of Management and Budget for renewal of its approval. The NCCDB allows consumers, drivers, and others to file complaints against “unsafe and unscrupulous companies” and/or their employees, including shippers, receivers, and transportation intermediaries, depending on the type of complaint. Complaints may cover a wide range of activities, such as driver harassment, coercion, movement of household goods, financial responsibility instruments for brokers and freight forwarders, Americans with Disability Act, electronic log devices, medical review officers, and Substance Abuse Practitioners. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-19079.

FMCSA seeks approval for information collection related to waivers and exemptions

FMCSA has determined that it now receives enough waiver and exemption requests per year to require OMB approval for recordkeeping and reporting requirements associated with them. The agency is requesting comments by October 15 on the agency’s proposed information collection related to waivers and exemptions. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-17418.

Werner seeks exemption for drivers who have passed the CDL skills test

FMCSA is requesting comments by September 17 on an application from Werner Enterprises, Inc. for an exemption that would allow commercial learner's permit (CLP) holders who have successfully passed the commercial driver's license (CDL) skills test but who have not received the CDL document to drive a commercial motor vehicle (CMV) without having a CDL holder seated beside them in the CMV. Under the exemption, the CDL would have to be present in the truck, but not necessarily in the passenger seat. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-17690.

Steel company seeks HOS relief for scrap metal haulers

FMCSA requests comments by September 27 on an application for exemption submitted by Cleveland-Cliffs Steel, LLC (Cliffs) that would allow its employee-drivers with CDLs who transport scrap metal on two trucks between their production and shipping locations on public roads to work up to 16 hours per day and to return to work with less than the mandatory 10 consecutive hours off duty. The exemption is similar to the hours-of-service (HOS) exemption that applies to Cliffs’ drivers transporting steel coils. However, unlike the steel coil exemption, the scrap metal trucks would comply with the heavy hauler trailer definition, height of rear side marker lights restrictions, tire loading restrictions, and the coil securement requirements in the FMCSRs. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-18330.

Legislation

House bill seeks to tighten regulations on ocean shipping

Reps. John Garamendi (D-California) and Dusty Johnson Sen. Todd Young (R-Indiana) have introduced legislation (H.R. 4996) that would represent the first major update of federal regulations concerning the ocean shipping industry in more than 20 years. The bill, which is supported by several organizations related to trucking, would require ocean carriers or marine terminal operators to certify that any detention or demurrage charges comply with federal regulations and would shift the burden of proof regarding reasonableness from the invoiced party to the ocean carrier or marine terminal operator. The bill would also authorize the Federal Maritime Commission to investigate on its own initiative ocean carriers’ business practices and apply enforcement measures as appropriate. For more information on H.R. 4996, visit https://www.congress.gov/bill/117th-congress/house-bill/4996.

A little over a year ago, the American Trucking Associations filed a complaint with FMC 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. Adjudication of that complaint is slowly working its way through the FMC process. For the ATA complaint and other documents related to the proceeding, visit at https://www2.fmc.gov/readingroom/proceeding/20-14.

Courts

California to respond to CTA’s Supreme Court petition next month

The date for a key U.S. Supreme Court decision regarding whether to review California’s AB 5 as it applies to motor carriers will be pushed off a bit as the court has granted California’s request delay its response by a month. In August, the California Trucking Association (CTA) asked the U.S. Supreme Court to review the ruling of the U.S. Court of Appeals for the Ninth Circuit that California’s restrictive ABC test for worker classification contained in the law known as AB is not preempted by federal law. (For details, see Regulatory Update, August 2021.) The original deadline had been September 10.

In a letter to the Supreme Court, the state said an extension “would allow for adequate time for internal review and would better enable preparation of a response that respondent believes would be most helpful to the Court.” California also noted that it had consented to the filing of multiple amicus briefs, so the extension would allow time to review and respond to those briefs. So far, three organizations – the Washington Legal Foundation and the National Motor Freight Traffic Association, Inc., and the Minnesota Trucking Association – have filed amicus briefs, both in support of CTA. For CTA’s petition and subsequent filings in the docket, visit https://bit.ly/CTAvBonta.

The Supreme Court already has at least two other petitions seeking review of decisions related to the scope of Federal Aviation Administration Authorization Act (F4A) preemption. The Supreme Court already has at least two other petitions seeking review of decisions related to the scope of F4A preemption. One also involves preemption against California’s worker classification regulations. See https://bit.ly/Cal-Cartage. The other case involves whether the “safety exception” to federal preemption under F4A includes common law damage claims against brokers. See https://bit.ly/CHRvMiller.

Advocacy and Comment

Several topics mentioned above require highlighting:

1. Efforts by the FMCSA to roll back record retention requirements are misplaced. The recordkeeping burden is not significant. By retaining existing recordkeeping requirements, parties seeking self-help and enforcing causes of action for fraud and misfeasance can avoid the “dog ate our homework” defense when put to their burden to provide incriminating documents.
2. The Federal COVID relief declaration which as noted has been modified several times is somewhat restrictive in scope and inconsistent with some state emergency orders . The extent of the pandemic in interrupting the supply chain causing plant shutdowns, food shortages and port congestion justifies broader emergency relief from hours of service compliance, particularly with respect to the logging of loading and unloading times.
3. The bipartisan legislations to address ocean shipping detention and demurrage abuse should be supported by all industry segments. The Federal Maritime Commission has jurisdiction over steamship line practices. Port congestion and delays are systemic problems faced by draymen which have been exploited by steamship lines by establishing limited free time and exorbitant daily late fees. Placing the burden on ocean carriers and marine terminal operators to certify detention and demurrage charges is an excellent way to curb these abuses.

The Insurance Crisis Revisited

As discussed in the July update Congress considering more than doubling the BMC 91X minimum insurance requirements. Although this is lost in the regulatory fog because of recent nuclear verdicts and market changes, this topic remains a top issue.

An astronomical $100 million verdict in Florida and the bankrupting of an Arkansas carrier who attempted to hire a third party carrier for power only service have frightening implications and toxic potential consequences. Clearly the courts and the jury system do not understand the traditional transportation law – that the FMCSA is the policing agency which decides which carriers are fit to operate on the nation’s roadways.

In the absence of direct negligence or coercion the customer should not be liable as a defendant for the acts or omissions of the licensed, authorized and regulated carrier which it hires. These cases will only further alarm the fragile insurance market resulting in higher, if not totally prohibitive, costs especially for small and new entrants.

As previously noted, the number of new applicants for authority is off the charts. This is largely attributable to the rush of owner operators to the power only model in response to AB5 and similar legislation aimed at destroying the independent contractor model.

The marketplace discrepancies as reflected in the cost per unit for large and small carriers is already a high hill for a new entrant to climb. With new entrant premiums of approximately $25,000 per year, a new entrant can easily pay four or five times the coverage amount paid by large carriers. If the federal minimum is raised to $2 million, a new entrant could easily pay 40% more or $35,000 per unit per year. In this context, large Wall Street backed carriers enjoy distinct advantages by being able to post higher self-insured retention reserves and gain easier access to insurance markets based on volume.

A recent study of insurers posting BMC-91Xs for for-hire carriers is telling. Although there are 481 insurers writing for-hire liability policies, one company (Progressive) writes over 50% the carriers. The next largest insurer underwrites only 2.7% of the policies. These statistics make clear that the vast majority of truck underwriters simply have little or no appetite for writing small carriers. This indicates that the insurance market is in precarious shape and is ill equipped to handle an influx of experienced new drivers seeking to change their status from owner operators to small carriers.

When interstate trucking was deregulated starting in 1980, it was with the intent to encourage competition and small business entrepreneurship. Approximately 95% of the for-hire carriers subject to Federal Regulation are small businessmen whose future is in real jeopardy as a consequence of the nuclear verdict scare and the resulting insurance crisis.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through August 31. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19.

Legislation

• Senate passes bipartisan infrastructure bill with motor carrier provisions
• House passes fiscal 2022 funding for DOT
• Senate bill would repeal excise tax on trucks and trailers

Courts

• California Trucking Association asks Supreme Court to review AB 5 ruling

Regulation and Enforcement

• EPA eyes further regulation on NOx and greenhouse gases
• FMCSA deletes ‘on-site’ from definition of a compliance review
• FMCSA codifies statutory mandate for electronic exchange of CDL driver info
• Proposes rule would implement HHG working group recommendations
• FMCSA seeks medical records missing due to registry outage
• ATA seeks exemption to allow TMC training to establish inspector qualification
• Bus company seeks exemption for Mexican-licensed drivers
• Driveaway carriers seek CDL relief in transporting certain empty vehicles

Advocacy and Comment

Legislation

Senate passes bipartisan infrastructure bill with motor carrier provisions

The U.S. Senate on August 10 passed by a 69-30 vote the bipartisan compromise legislation (H.R. 3684) known as the INVEST in America Act. The bill is significantly different from the House-passed version of H.R. 3684 and does not include some of the more controversial motor carrier provisions that are in the House version. For example, the Senate-passed bill does not increase minimum insurance coverage for trucking companies to $2 million. Nor does it mandate a near-term restoration of public Compliance, Safety, Accountability metrics; require a rulemaking on screening drivers for sleep apnea; or order a comprehensive review of hours-of-service regulations, including last year’s final rule.

Some of the motor carrier provisions in the Senate bill were included in legislation (S. 2016) approved in June by the Senate Commerce Committee. Because the committee’s membership – like the membership of the Senate itself – is equally split between Democrats and Republicans, few controversial provisions could make it into the Senate bill. Some of the more significant or broadly relevant trucking-related provisions in the Senate-passed bill would:

• Establish a three-year pilot program to allow interstate operations by drivers under 21 under terms that are essentially the same as what is included in the DRIVE-Safe Act (S. 659, H.R. 1745);
• Direct DOT to issue guidance to clarify the definitions and roles of brokers and bona fide agents and require DOT to consider the impact of technology and the role of dispatch services in the freight transportation industry;
• Mandate a motor vehicle safety standard and accompanying performance requirements for newly manufactured heavy-duty commercial motor vehicles to be equipped with an automatic emergency braking system and require that systems installed in such vehicles be in use during operation;
• Require the strengthening of rear underride guard standards within a year, periodic inspections of rear impact guards, and additional research on both rear and side underride guards;
• Require DOT, in consultation with the Department of Labor, to establish a Truck Leasing Task Force to examine common truck leasing agreements available to truck drivers, including port drayage drivers specifically. The Task Force would examine the impact of leasing agreements on the net compensation of drivers and the resources available to assist drivers in assessing the impacts of leasing agreements;
• Mandate a study of large commercial vehicle crash causation;
• Establish a grant program to help states with the immobilization or impoundment of passenger-carrying vehicles that are determined to be unsafe or fail inspection;
• Require a final rule on state inspection of passenger-carrying commercial vehicles;
• Mandate a report analyzing the cost and effectiveness of electronic logging devices and detailing the processes used by FMCSA to review logs; protect proprietary and personally identifiable information; and to provide the opportunity for a challenge or appeal to a violation notice related to an ELD;
• Order a review of FMCSA’s National Consumer Complaint Database; and
• Extend the authorization for the Motor Carrier Safety Advisory Committee through fiscal 2026 and add small carriers among those required to be represented on the committee.

Although the Senate version passed by a strongly bipartisan vote that even included Senate Minority Leader Mitch McConnell, that coalition might not hold if the final version changes much. House Speaker Nancy Pelosi’s responded to the Senate bill’s passage positively, but she hardly endorsed it as a final product. Pelosi said the bipartisan package “helps rebuild the middle class as it rebuilds our infrastructure,” but she also said that the House “will continue to work with the Senate to ensure that our priorities For the People are included in the final infrastructure and reconciliation packages in a way that is resilient and will Build Back Better.”

Rep. Peter DeFazio (D-Oregon), who chairs the House Transportation & Infrastructure Committee, praised the progress but complained that “this package falls short when it comes to addressing climate change like the existential threat it is.”

Aside from some subsequent amendments unrelated to trucking, the motor carrier provisions of the Senate bill are contained in Senate Amendment 2137, which is the bipartisan Senate substitute legislation for the bill. SA 2137 is available at https://bit.ly/SA2137-HR3684. For more information on the INVEST in America Act, visit https://www.congress.gov/bill/117th-congress/house-bill/3684.

House passes fiscal 2022 funding for DOT

The U.S. House of Representatives on July 29 passed legislation (H.R. 4502) to fund various U.S. departments and agencies, including DOT, through September 2022. Unlike recent funding bills under the Democratic-controlled House, the fiscal 2022 does not include any controversial legislative provisions related to trucking The bill includes only three legislative measures related to FMCSA, and all three were included in the funding measure that expires at the end of next month. Those measures exempt livestock haulers from ELDs, require FMCSA to update annual inspection regulations related to truck underride guards, and requires FMCSA to notify carriers subject to expedited enforcement action to notify carriers using a manner that records receipt of the notice by the persons responsible for the violation. For the text of H.R. 4502, visit https://www.congress.gov/bill/117th-congress/house-bill/4502.

Senate bill would repeal excise tax on trucks and trailers

Sen. Todd Young (R-Indiana) has introduced a bill (S. 2435) that would repeal the 12% federal excise tax on new heavy trucks and trailers. Similar bills have been offered in several recent Congresses without success. The findings section of the bill states that the tax discourages truck owners from replacing older, less fuel-efficient equipment with newer, more efficient trucks and trailers. It also discourages electric and alternative-fueled trucks, which have a higher upfront cost, the bill states. For more information on S. 2435, visit https://www.congress.gov/bill/117th-congress/senate-bill/2435.

Courts

California Trucking Association asks Supreme Court to review AB 5 ruling

As expected, the California Trucking Association has asked the U.S. Supreme Court to review the ruling of the U.S. Court of Appeals for the Ninth Circuit that California’s restrictive ABC test for worker classification contained in the law known as AB is not preempted by federal law. A split three-judge panel in late April overturned a lower court’s preliminary injunction of AB 5 as it applies to motor carriers, but the court ultimately granted CTA’s request for a stay in that ruling pending action by the U.S. Supreme Court.

In its petition for a writ of certiorari, CTA said the question presented is whether the Federal Aviation Administration Authorization Act of 1994 (F4A) preempts the application to motor carriers of a state worker-classification law that effectively precludes motor carriers from using independent owner-operators to provide trucking services. CTA argued that the Ninth Circuit’s view that F4A preempts only laws that “bind, compel, or otherwise freeze into place a particularly price, route, or service” conflicts with the Supreme Court’s prior decisions. The Ninth Circuit ruling also conflicts with a First Circuit ruling regarding a Massachusetts ABC test that is essentially the same as California’s test.

CTA’s petition was docketed on August 11, and the state’s response is due September 10. For the petition and subsequent filings in the docket, visit https://bit.ly/CTAvBonta.

The Supreme Court already has at least two other petitions seeking review of decisions related to the scope of F4A preemption. One involves a decision out of the California Court of Appeal that is largely the same issue as that in play in the CTA case except that its litigation predates enactment of AB 5 and is based instead on California Supreme Court precedent. See https://bit.ly/Cal-Cartage. The other case involves whether the “safety exception” to federal preemption under F4A includes common law damage claims against brokers. See http://bit.ly/CHRvMiller. Cert petitions for both considered by justices in a September 27 conference. Given that briefs in the CTA case could be completed before September 27, it is possible that justices would consider that petition then as well.

Regulation and Enforcement

EPA eyes further regulation on NOx and greenhouse gases

The Environmental Protection Agency has outlined steps it was taking regarding vehicle emissions for heavy trucks as well as for passenger cars and light trucks. Regarding heavy trucks, the agency said it is working on a series of major rulemakings over the next three years. The first rulemaking, which EPA said would be finalized next year, would apply to heavy-duty vehicles starting with model year 2027 and would set new standards for NOx emissions well as upgrades to current Phase 2 greenhouse gas emissions standards for that year. A second rule would set more aggressive greenhouse gas standards for heavy-duty vehicles as early as model year 2030 and beyond.

In a fact sheet about the strategy, EPA did say that one of its focuses in NOx emissions will be on what is known as “low loads” – i.e., not at highway speeds. That would include situations like idling or stop-and-go traffic where EPA says current NOx controls are not effective. Regarding its plans for changes in the greenhouse gas rules for heavy trucks, EPA was less specific. It said that in recent years zero-emissions heavy duty trucks have begun entering the market in numbers not foreseen when the agency established Phase 2 greenhouse gas standards. EPA said it would assess the impact of zero-emissions technologies and whether “targeted adjustments” to the 2027 greenhouse gas standards are warranted.

For the next phase, EPA said that heavy truck manufacturers already are signaling a “large scale migration” away from gasoline and diesel engines to zero-emissions technologies. EPA suggested that as soon as model year 2030 its standards would reflect this migration. For more on the plan, visit https://www.epa.gov/regulations-emissions-vehicles-and-engines/clean-trucks-plan

FMCSA deletes ‘on-site’ from definition of a compliance review

FMCSA in July issued a final rule making various technical corrections and minor revisions that it said mostly correct inadvertent errors and omissions, remove or update obsolete references and improve the clarity and consistency of certain regulatory provisions. Among those changes was removing the word “on-site” from the definition of a compliance review in Part 385.3.

“This amendment recognizes the technological advances that allow FMCSA to perform the compliance review remotely in some cases,” FMCSA said, adding that the amendment does not alter the Safety Fitness Rating Methodology (SFRM) in part 385, appendix B or eliminate FMCSA’s ability to conduct onsite examinations. “From the point of view of the regulated entity, the same safety performance metrics are being evaluated, so there is no change,” the agency said. However, the change clarifies that a safety investigator may – in some cases – perform all the investigative functions of the compliance review remotely when the motor carrier uploads its business records for review to FMCSA’s online system.

The final rule makes about two dozen revisions int the Federal Motor Carrier Safety Regulations (FMCSRs). In addition to corrections and clarifications, the rule makes some nondiscretionary changes that are statutorily mandated and other changes that align regulatory requirements with the underlying statutory authority, FMCSA said. For more information, visit https://www.federalregister.gov/d/2021-13888.

FMCSA codifies statutory mandate for electronic exchange of CDL driver info

FMCSA has issued a final rule to require that states implement a system and practices for the exclusively electronic exchange of driver history record (DHR) information through the Commercial Driver’s License Information System (CDLIS). The change was mandated by the 2012 authorization act known as MAP-21. States must achieve “substantial compliance” with this requirement “as soon as practicable,” FMCSA said, but certainly not later than three years after the August 23, 2021, effective date of the rule. Because all States currently have the technical capability to send DHR information – including convictions, withdrawals, and disqualifications – electronically through CDLIS, the rule should not result in incremental costs or benefits to the states, FMCSA said. For more information, visit https://www.federalregister.gov/d/2021-15693.

Proposes rule would implement HHG working group recommendations

FMCSA is requesting comments by October 12 on a notice of proposed rulemaking (NPRM) to incorporate into regulations recommendations from the Household Goods Consumer Protection Working Group, which was established by the FAST Act in late 2015. One proposed change would be to remove the ability of the motor carrier or individual shipper to revise a binding or non-binding estimate. Instead, FMCSA would require the preparation of a new binding or non-binding estimate when the shipper tenders additional items or requests additional services. The NPRM would allow for virtual surveys of household goods and would replace the requirement for a freight bill with an invoice. For all changes proposed in the NPRM, visit https://www.federalregister.gov/d/2021-13889.

FMCSA seeks medical records missing due to registry outage

FMCSA has requested that medical examiners submit by September 30 results of physical qualification examinations that were conducted between December 1, 2017, and August 13, 2018 – a period during which the National Registry of Certified Medical Examiners was offline. During the outage, FMCSA encouraged MEs to continue conducting exams and to upload results when the registry’s upload functionality was restored, which occurred on August 13, 2018. However, a significant number of healthcare professionals have not uploaded those results, FMCSA said. For more information, visit https://www.federalregister.gov/d/2021-16955.

ATA seeks exemption to allow TMC training to establish inspector qualification

The American Trucking Associations is seeking an exemption from the FMCSRs that would allow an individual who completes a training program consistent with a set of Recommended Practices (RPs) developed by ATA’s Technology and Maintenance Council (TMC) to be considered a qualified inspector for purposes of the periodic inspection rule, or a qualified brake inspector, for purposes of the brake system inspection, repair, and maintenance requirements. For more information, visit https://www.federalregister.gov/d/2021-14979.

Bus company seeks exemption for Mexican-licensed drivers

Tornado Bus Company has requested an exemption for its drivers who currently hold a Mexican Licencia Federal de Conductor from the following provisions of the FMCSRs: General entry-level driver training, CDL knowledge test required to obtain a commercial learner’s permit (CLP); the skills test required for CLP holders to obtain a CDL; and the knowledge and skills test requirements for a CDL passenger endorsement. Tornado specifically requests the exemption for its drivers who have been granted permanent resident status from the Department of Homeland Security (DHS) and have more than two years’ experience driving in the U.S. and Mexico. For more information, visit https://www.federalregister.gov/d/2021-14981.

Driveaway carriers seek CDL relief in transporting certain empty vehicles

A group of affiliated driveaway motor carriers have applied for an exemption from the requirement that drivers transporting certain empty passenger vehicles hold a CDL. The exemption would cover drivers delivering commercial motor vehicles (CMVs) with seating capacities of 16 or more, including the driver, but with a gross vehicle weight rating (GVWR) of less than 26,001 pounds. The application was submitted by Dealers’ Choice Truckaway System, Inc. dba Truckmovers; Irontiger Logistics, Inc.; TM Canada, Inc.; and Victory Driveaway, Inc. The applicants transport minibuses from points of manufacture or distribution to school districts around the country. They argue that the current shortage of CDL drivers threatens to leave bus manufacturers without sufficient means to move their minibuses to customers. For more information, visit https://www.federalregister.gov/d/2021-14982.

Advocacy and Comment

This month’s update involved a delayed release. Nothing significant happened during the month and release was held pending the Senate treatment of the infrastructure bill discussed above. Fortunately, the skinny Senate bill did not include any major troubling provisions. It did allow Congress to go home for recess indicating some ability to push through a bipartisan bill in the Senate. Hopefully, the Senate version of the infrastructure bill will pass unscathed and the appropriations to fix the highways can finally be addressed.

Yet, the major issues remain. Remember, the new Administration rolled back the “Economic Reality Test” at the Department of Labor and removed the Department of Transportation’s administrative due process rules promulgated by the Trump administration.

The economic realities of the driver shortage, climate change, and the effect of technology and use of fossil fuels in transportation all are unresolved issues which must be addressed. As indicated above, these issues will be rolled out not only in Congress but also in pending judicial decisions and administrative actions in the months ahead

Stay tuned.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through August 31. The latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19.

Courts

• Enforcement of AB 5 on trucking is on hold pending Supreme Court action
• Supreme Court set to decide whether to review broker preemption case

Legislation

• House passes transportation bill in narrow partisan vote
• Senate panel advances transportation bill with motor carrier provisions

Regulation and Enforcement

• MCSAC to consider supply chains, aging drivers, and regulation of delivery operations
• CVSA’s Operation Safe Driver Week set for July 11-17
• FMCSA extends compliance date on medical examiner certification provisions
• FMCSA proposes changes in its regulations on windshield-mounted devices
• Firm seeks exemption for pulse lighting system

Advocacy and Comment

Courts

Enforcement of AB 5 on trucking is on hold pending Supreme Court action

The California Trucking Association (CTA) failed to persuade the U.S. Court of Appeals for the Ninth Circuit to grant an “en banc” rehearing of an unfavorable ruling regarding California’s AB 5 law, but it did get the court to agree to hold the status quo in place at least until the U.S. Supreme Court decides whether to hear the case.

Having anticipated the denial of an en banc rehearing, CTA on the same day filed a motion to stay a mandate to overturn the preliminary injunction against enforcement of AB 5 against motor carriers.

In the petition for a stay, CTA argued that it will present to the Supreme Court question of law on which there is an acknowledged split among federal circuits: Whether the Federal Aviation Administration Authorization Act (F4A) preempts the application to motor carriers of a state worker classification rule that effectively prohibits motor carriers from engaging truck drivers as independent contractors. Moreover, CTA said its members would suffer irreparable harm unless the court grants a stay because they would have to restructure their businesses and would risk sanctions or failure due to an inability to purchase equipment and hire employee drivers.

The appeals court’s four-sentence order does not acknowledge any of CTA’s arguments. It merely states that a mandate is stayed to allow for the filing of a petition for writ of certiorari in the Supreme Court. “Should the Supreme Court grant certiorari, the mandate will be stayed pending its disposition of the case,” the court said. “Should the Supreme Court deny certiorari, the mandate will issue immediately.”

The Supreme Court already has before it at least two other cert petitions related to the scope of F4A. One centers on whether F4A preempts common law damage claims against brokers (see article below). The other – Cal Cartage Transportation Express v. California – resembles the CTA case in that it involves a lawsuit against carriers who treated their owner-operators serving the ports of Los Angeles and Long Beach as independent contractors. One difference between the Cal Cartage case and the CTA case is that the former is based on California Supreme Court precedent, not on AB 5, which later codified that precedent. For more on the Cal Cartage cert petition and filings of support by other entities, visit https://bit.ly/Cal-Cartage.

Supreme Court set to decide whether to review broker preemption case

The U.S. Supreme Court is scheduled to discuss on September 27 whether it will hear C.H. Robinson’s appeal of a federal appellate court’s ruling that the “safety exception” to federal preemption under the Federal Aviation Administration Authorization Act of 1994 (F4A) includes common law damage claims against brokers. The U.S. Court of Appeals for the Ninth Circuit last year reversed a lower court’s ruling that a common law negligent selection claim against C.H. Robinson did not fall within the safety exception. C.H. Robinson had petitioned the Supreme Court for a writ of certiorari in April, and several organizations and companies have filed “friend of the court” briefs in support of C.H. Robinson’s request. (For more information, see Regulatory Update, June 2021.) For links to C.H. Robinson’s petition, other briefs, and more information, visit http://bit.ly/CHRvMiller.

Legislation

House passes transportation bill in narrow partisan vote

LegislationThe U.S. House of Representatives on July 1 passed narrowly in a highly partisan vote the infrastructure bill (H.R. 3684) known as the Investing in a New Vision for the Environment and Surface Transportation in America Act, or INVEST in America Act. The bill includes several controversial provisions related to trucking, including an increase in minimum insurance coverage from the current $750,000 to $2 million; restoration of public Compliance, Safety, Accountability scores and a new process for issuing safety fitness determinations; and a rulemaking to establish screening criteria for obstructive sleep apnea among commercial vehicle drivers. (For a more extensive list of provisions, see Regulatory Update, June 2021.)

One section added to the bill after consideration by the House Transportation & Infrastructure Committee relates to motor carriers and labor law. One provision of that section requires the Federal Motor Carrier Safety Administration to determine that a motor carrier seeking to obtain operating authority is willing and able to comply with “applicable labor and employment laws and regulations, including wage and hour and workplace safety laws and regulations, relevant to the safe operation of a motor carrier.”

The new section also would require the Department of Transportation (DOT) and Department of Labor (DOL) to review the relationship between labor and employment laws and regulations and motor carrier safety laws and regulations, including hours of service rules. The departments would assess the feasibility of using available data – including data on violations of labor and employment laws and regulations – to improve DOT’s safety oversight of motor carriers.

For more on H.R. 3684, visit https://www.congress.gov/bill/117th-congress/house-bill/3684 or http://bit.ly/HR-3684, which includes a link to a section-by-section summary.

At this point, H.R. 3684’s fate rests with action by the Senate that presumably would lead to a conference to settle differences. Transportation legislation has advanced at the committee level (see article below), but the status of that legislation is unclear given the deal struck last month between the Biden administration and a bipartisan group of senators. The deal would increase infrastructure spending by $579 billion over five years for a total of $973 billion, including $109 billion more money for roads and bridges beyond what would be provided just by extending current law.

Senate panel advances transportation bill with motor carrier provisions

The Senate Commerce Committee last month approved legislation (S. 2016) known as the Surface Transportation Investment Act that includes several provisions related to trucking. Unlike the marathon 19-hour markup in the House Transportation & Infrastructure Committee a week earlier, S. 2016 advanced past the Commerce Committee with little controversy.

A key factor in the relatively smooth consideration of S. 2016 is the fact that membership on the Senate Commerce Committee is split equally among Democrats and Republicans, so legislation inherently must be drafted to gain a consensus. Democrats are technically in the majority on the committee as they are in the entire Senate by virtue of Vice President Harris’ tiebreaking Senate vote, but that distinction matters little in handling committee business.

S. 2016 was introduced as a bipartisan bill, and its provisions and amendments generally are not controversial. For example, the bill is silent on contentious issues included in the House bill such as increased minimum insurance coverage, public availability of safety metrics, or sleep apnea. However, the Senate bill does include some safety technology measures that are similar to those in the House bill, including a requirement for automatic emergency braking systems in newly built commercial vehicles and stricter standards for trailer underride guards. Also like the House bill, S. 2016 would establish a Truck Leasing Task Force to examine common truck leasing arrangements.

Another significant provision, which was adopted as an amendment during the committee’s markup, is a three-year pilot apprenticeship program for individuals aged 18 to 20 to drive commercial motor vehicles interstate. In essence, the legislation is the DRIVE-Safe Act (H.R. 1745, S.659) except that it is a three-year pilot program rather than a permanent change in law.

The Commerce Committee ordered S. 2016 reported on June 16, but no report has been filed. Given that the bill’s provisions already are generally noncontroversial, they might be acceptable as part of any bipartisan legislation that moves through the Senate. The real fight would take place in the negotiation between the House and Senate as the House bill includes numerous measures – some of which are related to trucking – that are likely to be highly objectionable to some Senate Republicans. For more information on S. 2016, visit https://www.congress.gov/bill/117th-congress/senate-bill/2016.

Regulation and Enforcement

MCSAC to consider supply chains, aging drivers, and regulation of delivery operations

FMCSA’s Motor Carrier Safety Advisory Committee is scheduled to meet July 19-20 via videoconference in a session open to the public. MCSAC will begin consideration of workforce skills needed for the motor carrier industry as part of the broader investigation of supply chain issues in transportation recently ordered by the White House. The advisor committee also will continue work that it began last year looking at the impact of the aging driver demographic on trucking and at potential federal regulation of the package and small goods delivery sector. For the Federal Register notice announcing the MCSAC meeting, visit https://www.federalregister.gov/d/2021-14214.

CVSA’s Operation Safe Driver Week set for July 11-17

The Commercial Vehicle Safety Alliance has scheduled Operation Safe Driver Week for July 11-17 with an emphasis on speeding. During the week, law enforcement personnel will be on the lookout for commercial motor vehicle drivers and passenger vehicle drivers engaging in risky driving behaviors in or around a commercial motor vehicle.

FMCSA extends compliance date on medical examiner certification provisions

FMCSA has extended the compliance date from June 22, 2021, to June 23, 2025, for several provisions of its April 23, 2015, Medical Examiner's Certification Integration final rule. FMCSA previously extended the compliance date in 2018, but that extension expired June 22, 2021. In April, FMCSA published a supplemental notice of proposed rulemaking (SNPRM) that proposed further extending the compliance date. FMCSA said the final rule will give FMCSA time to complete certain information technology system development tasks for its National Registry of Certified Medical Examiners and to provide state driver’s licensing agencies (SDLAs) sufficient time to make the necessary IT programming changes when the new National Registry system is completed and available.

FMCSA proposes changes in its regulations on windshield-mounted devices

Having issued numerous exemptions in recent years regarding the mounting of safety-related devices on windshields, FMCSA now is proposing to amend the Federal Motor Carrier Safety Regulations (FMCSRs) to increase the area within which certain vehicle safety technology devices may be mounted on the interior of commercial motor vehicle windshields. The agency also proposes to add items to the definition of vehicle safety technology. The notice of proposed rulemaking responds to a rulemaking petition from Daimler Trucks North America. Comments on the NPRM are due August 5. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-14040.

Firm seeks exemption for pulse lighting system

FMCSA has invited comments by July 14 on an application from Intellistop, Inc., for an to allow motor carriers to operate all commercial motor vehicles, including flatbed trailers and straight trucks, equipped with Intellistop’s module, which pulses the rear clearance, identification, and brake lamps from a lower-level lighting intensity to a higher-level lighting intensity four times in 2 seconds. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-12379.

Advocacy and Comment

Among the plethora of issues facing the trucking industry are four tipping point problems that are teed up for action by all three branches of government at both the state and federal level. They are:

1. The future of the owner-operator/independent contractor model
2. Federal preemption of state employment and safety laws
3. Nuclear verdicts and prohibitive insurance costs
4. Reform of federal motor carrier safety regulations and the future of SMS methodology

1. The owner-operator/independent contractor model

The owner-operator/independent contractor model has long been under attack by organized labor and blue state legislatures. The industry fully supports independent contractor treatment of so-called owner-operators, which are an indispensable portion of truckload capacity. Owner-operators are protected by existing federal regulations. Reclassification at the federal and/or state level eliminates choice, will discourage entrepreneurship, and could greatly constrict needed capacity.

As noted above, the sides and issues have been clearly drawn. California AB 5, which effectively precludes independent contractor treatment under the so-called ABC test, is making its way to the Supreme Court on a petition of certiorari. Legislation similar to AB 5 is contained in the union-sponsored PRO Act, which has passed the House as it did in the last Congress but has not advanced further. The Biden administration in an action before both the Department of Labor and in proposing a study the FMCSA of equipment leasing has signaled this issue remains a key priority of the new administration.

2. Federal preemption of state employment and safety issues

Federal preemption is the term that describes the federal government’s right under the Commerce Clause of the U.S. Constitution to trump the application of state law where Congress decides that uniformity is necessary to avoid a burden on interstate commerce. Preemption can take one of three forms: (1) express preemption where state interference is specifically precluded in a federal statute; (2) implied preemption, in which – by setting a single national standard – a permissible inference can be made that state laws with a contrary effect cannot be enforced; and (3) field preemption, in which a federal statute makes clear that the involved area of regulation is the exclusive province of the federal government statutes.

Application of the concept of preemption is thus a key defense against enforcement of state misclassification standards discussed in No. 1 above. It is also a major defense to plaintiff’s bar’s argument that state negligent selection laws can be used to create up-supply chain liability for shippers and brokers.

There is a petition for certiorari in C.H. Robinson Worldwide, Inc. v. Allen Miller intended to resolve the latter issue. While the express preemptive language of the F4A is a central issue in the litigation, the legislative history of federal safety regulations suggests that not only express preemption, but implied and field preemption support the argument that Congress intended there to be but one standard for determining a carrier’s fitness to operate and, hence, fitness for use. That standard should be the FMCSA’s decision that the carrier is fit for use on the nation’s roadways.

3. Nuclear verdicts and prohibitive insurance costs

Opposing needed tort reform at the federal and state level is the powerful plaintiff’s bar lobbying effort. State law vicarious liability standards and the requirement that insurers must offer “policy limits” to avoid nuclear judgments now operate to increase insurance premiums, particularly for new and small carriers.

In this context, there is a proposal to increase the insurance minimum requirement for for-hire carriers transporting regulated commodities in commercial motor vehicles from $750,000 per occurrence to $2 million. With very few exceptions, the industry is uniform in its opposition to this legislation. The argument made in favor of raising the limits is that accidents cost more now than in yesteryear and that some adjustment is needed. Ignored, though, is the fact that the $2 million limit would have a stifling effect on new entrants and small carriers.

There are 10,000 new entrants for authority per month, and typically new entrants are subject to premiums as high as $25,000 or more per unit. An increase to $2 million would make the cost of insuring a truck or tractor trailer as much or more than the price of a used truck or tractor. Its practical effect would simply be to increase plaintiff’s bar’s demand for settlement at the higher limit.

It is interesting to note that the $2 million proposal is totally arbitrary and capricious in that the higher limit would apply only to “for-hire” carriers that transport regulated commodities. Under the proposed legislation, private carriers and exempt carriers otherwise regulated by the FMCSA could continue to operate – transporting the same commodities with similar equipment and the same drivers and accident profile as for-hire carriers – but have no federal insurance requirements at all!

Thus, the $2 million increased minimum insurance initiative that was included in the House-passed infrastructure bill may be a sleeper issue of great importance. Clearly, it would disproportionately stifle small business and competition in the regulated segment of the trucking industry. Particularly affected would be small business entrepreneurs which now operate approximately 800,000 units as owner-operators. To become full-fledged carriers with their own insurance in response to AB 5 and possible passage of the PRO Act, they could face unsurmountable insurance costs.

4. Reform of federal motor carrier safety regulations and the future of SMS methodology

Safety Measurement System (SMS) methodology – originally called CSA 2010 – has never been shown to predict safety fitness performance, yet it has remained touted by the agency and plaintiff’s bar. Now more than 15 years in the development, the National Academies of Science, Congress in the FAST Act, and even DOT itself has criticized the model. Meanwhile, the proposed IRT methodology has never been developed.

An impatient Congress, egged on by plaintiff’s bar, has included in the House bill provisions that would reinstate publication of SMS methodology and urge quick reform of the longstanding safety fitness rules with uncertain administrative protection. There is support at the agency for expanding the remote audit to alleviate the cost of the in-person compliance review. Yet, in practice the desktop audit to date can result only in an unsatisfactory safety rating and is discontinued without assigning a satisfactory rating if the initial audit of the unrated carrier does not merit a comprehensive analysis.

Since the agency endorses a desktop audit as an objective tool for evaluating carrier safety, the brouhaha begs the question: Why not replace the flawed SMS system with assigning safety ratings based upon a desktop audit given to new carriers and biennial updates using time-tested safety fitness rules already in place? The objective cost and effectiveness of this alternative has been presented to the DOT and FMCSA but remains unaddressed. Clearly, SMS has become a political football of great cost to the industry and no value in objectively assessing carrier safety performance.

In conclusion, each of the four tipping point issues discussed above not only affect “routes, rates and services” but also the viability of small businesses in interstate trucking. Unless changed, the National Transportation Policy is based on the value of competition, the encouragement of free markets, and privately owned carriers. (See 49 U.S.C. §13101). Individually and collectively, these issues would either directly or indirectly place stifling new burdens on the industry which could constrict needed capacity and frustrate competition.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through August 31. The latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19.

Courts

• Supreme Court asked to rule on preemption of common law claims against brokers
• Appeals CTA seeks rehearing of 9th Circuit ruling on AB 5

Legislation

• Organizations ask Senate to support independent contractor model
• House panel approves infrastructure bill with numerous motor carrier provisions
• House carrier section bill would mandate new safety fitness rule
• Texas legislature enacts reform of CMV crash litigation

Regulation and Enforcement

• DOT seeks public input on data and tools to help assess transportation equity
• Waste Management seeks brake lighting exemption

Advocacy and Comment

Courts

Supreme Court asked to rule on preemption of common law claims against brokers

C.H. Robinson has asked the U.S. Supreme Court to overturn a U.S. Court of Appeals for the Ninth Circuit ruling that the “safety exception” to federal preemption under the Federal Aviation Administration Authorization Act of 1994 (F4A) includes common law damage claims against brokers. The appeals court in September had reversed a lower court ruling concluding that a common law negligent selection claim against C.H. Robinson did not fall within the safety exception. (See Regulatory Update, October 2020.)

In its petition for a writ of certiorari, C.H. Robinson argued that the appeals court ruling “badly misinterprets” the safety exemption contained in F4A. “A common-law tort claim against a freight broker is not an exercise of the ‘safety regulatory authority of a State’,” C.H. Robinson said. “By its plain text, the safety exception preserves the State’s authority to enact and enforce positive-law rules and regulations; it does not encompass private claims brought by private parties to compensate for past injuries.” The broker further argued that a safety regulation would not apply to brokers in any event because they neither own or operate motor vehicles nor hire or employ drivers operating those vehicles.

C.H. Robinson’s petition has received support from several “friend of the court” briefs filed last month. In addition to the Transportation Intermediaries Association and a separate brief filed by 10 major brokers, parties filing in support of the writ include a group of about a dozen major truckload carriers and a joint brief submitted by the National Association of Manufacturers, the U.S. Chamber of Commerce, and the National Retail Federation.

One common theme in the “friend of the court” briefs is that freight brokers are not appropriate parties to determine the safety of individual motor carriers. “This Court has the opportunity to clarify once and for all that the federal motor carrier and broker regulatory scheme established by Congress in the Motor Carrier Act vests in the FMCSA – not brokers, shippers or other users of transportation – the duty to qualify and register applicants as fit for operating as interstate motor carriers,” the dozen trucking companies said in their brief.

If the Supreme Court decides to hear the case, the decision could have wide-ranging implications for other ongoing litigation, including California’s ABC test for worker classification as it applies to motor carriers. The questions presented are distinct. The C.H. Robinson case addresses specifically the scope of the “safety exception” while the AB 5 litigation centers on whether a generally applicable state labor law can also be considered regulation of a carrier’s rates, routes, and services. Even so, a decision in the C.H. Robinson case would reflect the first opportunity the Supreme Court has had to rule on F4A’s scope since President Trump’s appointees took the bench. For links to C.H. Robinson’s petition and the supporting briefs, visit http://bit.ly/CHRvMiller.

CTA seeks rehearing of 9th Circuit ruling on AB 5

As expected, the California Trucking Association and other plaintiffs on May 26 asked the U.S. Court of Appeals for an “en banc” rehearing of the April 28 split ruling that the California’s enforcement of AB 5’s ABC test on worker classification as it applies to motor carriers is not preempted by the federal law. If granted, an en banc rehearing would mean that instead of just three judges the case would be heard by 11 appeals court judges.

In its petition for a rehearing, CTA said that AB 5, by effectively prohibiting independent contractor drivers, “makes a core feature of the motor-carrier transportation market unlawful in California.” The association argued that the three-judge panel’s decision is contrary to the Supreme Court’s decisions interpreting the Federal Aviation Administration Authorization Act’s (F4A) express preemption provision and identical language in the Airline Deregulation Act. The decision also conflicts with the 9th Circuit’s previous decisions and creates an acknowledged conflict with the U.S. Court of Appeals for the First Circuit’s decision in Schwann v. FedEx Ground Package System, Inc., CTA said.

A decision by the appeals court regarding whether to grant a rehearing is expected by mid-June. If granted, an en banc rehearing could take months during which time the preliminary injunction rejected by the three-judge panel presumably would remain in place. However, if the appeals court rejects a rehearing, the state of California could begin enforcing AB 5 on motor carriers unless the appeals court were to order the status quo pending the inevitable appeal to the U.S. Supreme Court.

Legislation

Organizations ask Senate to support independent contractor model

A group of 21 organizations on June 3 urged U.S. senators to support the continuation of the independent contractor model for owner-operators in trucking. The letter to senators was prompted by the recent passage in the House of pro-labor legislation (H.R. 842) that includes a provision essentially federalizing the same ABC test for worker classification that is incorporated into California's AB 5 law. The U.S. House of Representatives narrowly passed the bill, known as the Protecting the Right to Organize (PRO) Act, on March 9 in a highly partisan vote.

“This model is the backbone of service in key truck transportation niches including over-the-road truckload service, the transportation of refrigerated commodities including fresh fruits and vegetables, intermodal truck shipments with prior or subsequent movement by rail, water and air, the transportation of new and used automobiles, etc.,” the organizations said in their letter. “The owner operator/independent contractor model is a choice, not some form of forced servitude. Owner operators, under federal regulations, have portability and can choose to provide service over routes they select working with over 500,000 licensed interstate motor carriers.”

The organizations signing the letter supporting the independent contractor owner-operator model include a broad range of carriers, shippers, intermediaries, and small business advocates across industries. The letter and list of signatories is available at http://bit.ly/ICSupportLetter.

Owing to the filibuster, the PRO Act stands almost no chance of passing the Senate as a stand-alone piece of legislation. But the text of the legislation could be attached to a budget reconciliation bill, which would require only a majority vote to pass. This tactic would greatly enhance the legislation’s chances, although Democrats likely would have to hold every single senator as Republicans uniformly would be expected to oppose the PRO Act. However, universal Republican opposition to individual elements of the PRO Act, such as the ABC test, would be less certain if the alternative is a failure of an important piece of budget-related legislation.

House panel approves infrastructure bill with numerous motor carrier provisions

After a 19-hour highly partisan markup session that ended early on June 10, the House Transportation & Infrastructure Committee approved H.R. 3684, the Investing in a New Vision for the Environment and Surface Transportation in America Act (INVEST in America Act). The legislation, which is essentially the same as a bill (H.R. 2) the committee approved last year, includes controversial measures related to motor carrier safety and regulatory policy. The House passed H.R. 2 last year, but it died in the Senate at the end of the 116th Congress.

Key motor carrier safety provisions of H.R. 3684 would require:

• Revision of Compliance, Safety, Accountability methodology, restoration of publicly available CSA data, and implementation of a new process for issuing safety fitness determinations;
• An increase in minimum insurance standards to $2 million and an adjustment every five years;
• A rulemaking to establish screening criteria for obstructive sleep apnea among commercial vehicle drivers;
• Issuance of guidance to clarify the definition and roles of brokers and bona fide agents, including consideration of the impact of technology and the role of dispatch services in freight transportation;
• A study of the safety of operations using small commercial vehicles;
• A comprehensive review of current hours-of-service regulations, including revised guidance for personal conveyance to establish specific mileage or time limits;
• Automatic emergency braking systems to be installed and used on all newly manufactured commercial motor vehicles (CMVs);
• More stringent rear underride guard standards and consideration of side underride guard standards;
• Establishment of a Truck Leasing Task Force to examine truck leasing agreements and their impact on the net compensation of drivers;
• A DOT Inspector General examination of the prevalence of operation of CMVs by drivers admitted to the U.S. under temporary business visas and the safety impact of such operations; and
• A motor vehicle safety standard to require newly manufactured CMVs to be equipped with a universal electronic identifier the vehicle to roadside inspectors for enforcement purposes;

Republicans on the T&I Committee unsuccessfully offered numerous amendments, some of which aimed at killing or greatly modifying the more controversial motor carrier provisions, such as the increased minimum insurance levels. On May 20, T&I’s Republican leadership had introduced H.R. 3341, the Surface Transportation Advanced through Reform, Technology & Efficient Review (STARTER) Act 2.0. As was the case with the Democratic bill, H.R. 3341 is basically the same as one Republicans had proposed last year. The STARTER Act 2.0 also includes some significant legislative provisions related to motor carrier safety, though far fewer than what is contained in the Democratic bill. For example, H.R. 3341 would establish an interim carrier selection standard for brokers and shippers pending a rulemaking to modify safety fitness determination standards and create a pilot program to conduct remote compliance audits. It also would expand flexibility for haulers of agricultural goods and livestock under the hours-of-service regulations.

For more on the Democratic version, visit https://www.congress.gov/bill/117th-congress/house-bill/3684 or http://bit.ly/HR-3684, which includes a link to a section-by-section summary.

For more on the Republican version, visit https://www.congress.gov/bill/117th-congress/house-bill/3341 or http://bit.ly/HR-3341, which includes the press release an a link to a section-by-section summary.

The next steps for H.R. 3684 are a visit to the House Rules Committee, where T&I’s work will be merged with legislative pieces from other committees, and then to the House floor, where passage is likely without Republican amendments – at least not on motor carrier safety.

House carrier selection bill would mandate new safety fitness rule

Rep. Mike Gallagher (R-Wisconsin) has introduced legislation (H.R. 3042) that would establish an interim carrier selection standard for brokers and others until FMCSA completes a rulemaking to revise current safety fitness determination standards. Under the bill, until FMCSA finalizes that rule, selection of a motor carrier shall be considered reasonable if the contracting entity ensures that the carrier is licensed, registered, and insured and is not deemed unfit under existing standards. H.R. 3042 is similar to legislation that is incorporated into the Republican infrastructure bill known as STARTER Act 2.0. Rep. Bob Gibbs (R-Ohio) also had introduced similar legislation (H.R. 7457) last year, but it died at the end of the last Congress.

The Transportation Intermediaries Association has endorsed the bill. In a letter to Gallagher and original co-sponsor Seth Moulton (D-Massachusetts), TIA President Anne Reinke said the legislation would update the current “antiquated system” that results in about 89% of carriers being unrated. “This will help ensure that only the safest motor carriers can operate on the nation’s highways and give the Agency and the public, including our members, updated and more reliable data on these motor carriers,” Reinke said.

Texas legislature enacts reform of CMV crash litigation

Texas Gov. Greg Abbott is expected soon to sign legislation (House Bill 19) to reform litigation of lawsuits over CMV crashes. The House passed the bill in late April, and the legislature sent a final bill to Abbott on May 31 after the legislature agreed to the Senate version, which included some minor changes.

Motor carrier defendant’s compliance with a regulation or standard to be admissible only if the evidence tends to prove that failure to comply with the regulation or standard was a proximate cause of the injury or death. Also, any consideration of negligent entrustment is barred unless in the fault phase it was found that the carrier’s employee was negligent in operating the vehicle. For more on the bill, visit https://legiscan.com/TX/bill/HB19/2021.

Regulation and Enforcement

DOT seeks public input on data and tools to help assess transportation equity

DOT is requesting information by June 24 on data and tools to help the department assess whether, and to what extent, its programs and policies perpetuate systemic barriers to opportunities and benefits for people of color and other underserved groups. DOT said these assessments would better equip the department to develop policies and programs that deliver resources and benefits equitably to all. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-10436.

Waste Management seeks brake lighting exemption

FMCSA requests comments until July 9 on an application from Waste Management, Inc. for an exemption to allow all of its 106 operating companies to replace the high-mounted brake lights on their owned and operated fleets of heavy-duty refuse and support trucks with red or amber brake-activated pulsating lamps positioned in the upper center position, or in an upper dual outboard position, in addition to the steady burning brake lamps required by the Federal Motor Carrier Safety Regulations (FMCSRs). For the Federal Register notice, visit https://www.federalregister.gov/d/2021-11639.

Advocacy and Comment

Our crystal ball on future legislative and administrative issues has become clearer this month.

As the analysis above reflects, there are two basic issues: (1) the future of the independent contractor model; and (2) possible reinstatement of Safety Measurement System (SMS) methodology and its concomitant effect on nuclear verdicts, negligent selection suits, and increased insurance costs.

1. The future of the owner-operator/independent contractor model. The Protecting the Right to Organize (PRO) Act supported by labor interests has passed the House and incorporates the ABC test across industries for some federal purposes. Like California AB 5 which is working its way through the court, the PRO Act would incorporate independent contractor owner-operators in a one-size-fits-all reclassification scheme that could kill the small businessman entrepreneurial opportunity essential to the success of the model. As noted, 21 organizations across trucking have signed on to the Senate letter arguing in support of retention of the independent contractor model based upon its importance in the supply chain, past precedent, and the existing FMCSA regulations which support it. See http://bit.ly/ICSupportLetter.

The independent contractor model is the backbone of over-the-road truckload transportation upon which carriers, shippers, brokers, and small truck owners agree. The letter with attached supporting statements demonstrated broad support across the industry. Hopefully, the merits of the IC model and the possibility of a 50/50 split resolved by the Vice President will not occur. In any event, the time is now to make clear the united industry support for continued independent contractor treatment of owner-operators at both the state and federal level.

2. SMS methodology. SMS and its effect on nuclear verdicts, negligent selection liability, and insurance costs is the second major issue that ties together several of the issues discussed above. After 15 years of development, the FMCSA is no closer to proposing a viable safety fitness determination using SMS methodology than when it started. The BASICs and peer groups they use have been shown to be arbitrary. The laws of statistical analysis demonstrate its fallacies. Grading on a curve is no basis for an independent objective analysis, and neither data sufficiency and nor data accuracy issues have been resolved. Congress has already found in the FAST Act that the scores should be taken down, and the agency has not provided a defense to the FAST Act mandates. The National Academies of Science failed to approve the program which has officially not been modified in the past 5 years.

Yet, SMS continues to be used by plaintiffs’ bar to increase nuclear verdicts and its claim that its use by shippers and brokers is somehow a state law standard that trumps FMCSA’s duty to certify carriers as fit to operate and fit to use. Unfortunately, underwriters fascinated with a proxy for handicapping risk have embraced SMS as an alternative rating system particularly for small and new carriers, and insurance rates for new entrants and small carriers are now at unsustainable levels.

Shippers and brokers in search of a clearer “red light/green light” have supported bipartisan legislation mentioned above which would reaffirm that ”fit to operate is fit to use.”

Yet, the reaffirmation of a red light/green light through Congress was dimmed by T&I’s markup of a new bill this past week which aims to reinstate SMS without reaffirming that the traditional broker regulations which establish that the broker selection obligations are limited to hiring a carrier which is properly licensed, authorized and insured. See 49 C.F.R. 371.2.

If SMS is allowed to be republished and further developed with congressional approval, misuse of SMS could further exacerbate nuclear judgements, negligent broker selection claims, and insurance rates.

FMCSA was told over a decade ago to develop a system for assigning a safety rating to all carriers and there is no way a new applicant can be assigned a safety rating utilizing roadside data when it begins operations. That is the reason a desktop audit under existing safety fitness determination rule and with due process should be advocated as a more efficient “red light/green light” proposal.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through May 31. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19.

Courts

• Appeals court panel rules that California can enforce AB 5 on motor carriers

Legislation

• Senate Republicans float a smaller infrastructure bill; House plans action in May
• Texas legislature advances reform of CMV crash litigation

Regulation and Enforcement

• Joshi nominated as FMCSA administrator
• FMCSA proposes to extend deadline related to medical examiner certification
• FMCSA’s Medical Review Board to meet May 19-20

Advocacy and Comment

Courts

Appeals court panel rules that California can enforce AB 5 on motor carriers

The State of California may soon be allowed to outlaw motor carriers’ use of leased owner-operators within the state following a key federal appeals court decision. On April 28, a three-judge panel of the U.S. Court of Appeals for the 9th Circuit by a split decision ruled that the Federal Aviation Administration Authorization Act of 1994 (F4A) does not preempt California’s enforcement of AB 5’s ABC test on worker classification as it applies to motor carriers. The decision overturns a preliminary injunction granted by a federal judge in January 2020. Two of the panel’s judges declared that the district court had abused its discretion by granting the preliminary injunction contrary to precedent in the 9th Circuit.

Enacted in September 2019 and effective in January 2020, AB 5 codified a so-called ABC test for whether workers must be considered employees or can be treated as independent contractors. Although in many states satisfying one or more prongs is sufficient to establish an independent contractor relationship, the California test requires all three prongs to be satisfied. In effect, the “B” prong of California’s test outlaws the leased owner-operator model because it says a worker engaged in the same occupation as his or her employer cannot be an independent contractor. Since both owner-operators and the trucking companies that use them haul freight, owner-operators cannot be independent contractors under AB 5.

At issue in this case is the scope of F4A’s preemption, which bars state laws related to a price, route, or service of any motor carrier with respect to the transportation of property. In rejecting preemption, the majority ruled that AB 5 "is a generally applicable labor law that impacts a motor carrier’s relationship with its workforce and does not bind, compel, or otherwise freeze into place a particular price, route, or service of a motor carriers at the level of its customers."

The majority conceded that 9th Circuit precedent did not rule out the possibility that a generally applicable law could so significantly affect the employment relationship that it effectively bound motor carriers to specific prices, routes, or services at the consumer level. However, the appeals court has "considered and rejected predicted effects similar to those raised by CTA,"" the majority said. "We see no basis for departing from our precedent holding that a law increasing motor carriers’ employee costs, but not interfering at the point where the motor carrier provides a service to its customers, does not simply fall ‘into the field of laws’ that Congress intended to preempt."

In his dissent, Judge Mark Bennett contended that AB 5 does more than just affect motor carriers’ relationships with their workers and that the law significantly impacts the services carriers can provide to their customers. Bennett argued that – contrary to the majority opinion – the effect on motor carriers’ service is not merely "tenuous, remote, or peripheral." For example, Bennett cited a declaration from a CTA member that because of the capital costs associated with specialized equipment, employee-based motor carriers will not be able to offer services requiring such equipment.

AB 5 also will eliminate motor carriers’ flexibility to accommodate fluctuations in supply and demand because California’s wage orders require employers to supply their employees’ tools and equipment, Bennett wrote. “Again, this inability to meet temporary rises in demand will deprive motor carriers’ consumers of particular services – consumers such as farmers and retail sellers who depend on motor carriers to seasonally hire independent contractors during harvests and peak retail seasons, respectively,” Bennett wrote.

Bennett noted that the majority’s opinion conflicts with rulings in the First Circuit and Third Circuit that held or at least implied that “all or nothing” rules like California’s ABC test should be preempted. In the First Circuit case, essentially the same test in Massachusetts was found to be preempted by F4A. The Third Circuit upheld New Jersey’s ABC test, but the court in that case emphasized that the New Jersey test’s B prong allows an alternative method for establishing independent contractor status – something that was not allowed under the Massachusetts test and is not allowed under the California ABC test.

Next steps

At a minimum, nothing changes for 21 days from the date of the ruling. The California Trucking Association (CTA), which is leading the legal challenge to AB 5, has 14 days to respond with its inevitable appeal. Even if the appeals court were to deny that appeal immediately and issue a mandate to enforce the three-judge panel’s ruling, it would be another seven days before the injunction is lifted.

CTA has several options for appeal. One would be to ask the same three-judge panel to rehear the case, but that approach almost certainly would end with the same result. Another option would be to go immediately to the U.S. Supreme Court with a petition for writ of certiorari (“cert petition”). However, the current Supreme Court term will end in June, so it probably would be this fall at the earliest before the court even decided whether to review the appeal’s court ruling and months later before the court heard arguments and ruled.

CTA’s most likely first step is to ask the 9th Circuit for an “en banc” rehearing, which would mean that a group of 11 judges would hear the case. If CTA petitions for such a rehearing, the court would have up to 21 more days to decide whether to rehear the case, although it could respond immediately. If the court were to agree to an en banc rehearing, the preliminary injunction presumably would remain in effect pending that ruling, which could be months away. If the court denies an en banc appeal, however, the injunction presumably would be lifted, and the trucking industry would have to abide by AB 5 pending an appeal to the Supreme Court. En banc rehearings are not routinely granted, but the panel’s split decision likely increases the chances for one.

A cert petition before the U.S. Supreme Court by either CTA or the State of California probably is inevitable regardless of the outcome of any further appeals before the 9th Circuit. The U.S. Supreme Court agrees to review only a tiny percentage of the cases brought to it. However, the fact that the 9th Circuit opinion conflicts with rulings in other federal appeals courts increases the chances that the Supreme Court would agree to hear the case.

For the April 28 ruling visit https://cdn.ca9.uscourts.gov/datastore/opinions/2021/04/28/20-55106.pdf.

Legislation

Senate Republicans float a smaller infrastructure bill; House plans action in May

The ranking Republicans on key Senate committees responsible for transportation infrastructure, policy, and financing in April announced the framework for an infrastructure bill to counter legislation contemplated by the Biden administration. The Republican proposal is much smaller at $568 billion than the White House’s $2.3 trillion proposal, but the details are key. More than half of the Republican plan – $299 billion – would go to roads and bridges. The White House plan included only $115 billion, but that appears to be new money while the Republican plan represents funds that would be provided anyway with reauthorization of the FAST Act, which expires September 30.

Money aside, infrastructure legislation is significant because it surely will be the first major vehicle for any changes to motor carrier law under President Biden, a Democratic-controlled House, and a Senate that is at least technically in Democratic control. Peter DeFazio (D-Oregon), chairman of the House Transportation & Infrastructure Committee, announced recently that his committee in May would consider surface transportation reauthorization legislation. The House T&I Committee bill likely will resemble legislation (H.R. 2) that passed the House last year but died in the Senate. As passed by the House in July 2020, H.R. 2 would require:

• Revision of Compliance, Safety, Accountability methodology, restoration of publicly available CSA data, and implementation of a new process for issuing safety fitness determinations;
• An increase in minimum insurance standards to $2 million and an adjustment every five years;
• A rulemaking to establish screening criteria for obstructive sleep apnea among commercial vehicle drivers;
• Automatic emergency braking systems to be installed and used on all newly manufactured CMVs;
• More stringent rear underride guard standards and consideration of side underride guard standards;
• Revised guidance for personal conveyance to establish specific mileage or time limits.
• Establishment of a Truck Leasing Task Force to examine truck leasing agreements and their impact on the net compensation of drivers.

Another set of issues that could arise as part of the infrastructure package – although not within the T&I Committee – are pro-labor measures, such as those in the Protecting the Right to Organize (PRO) Act (H.R. 842; S. 420). The Biden administration’s infrastructure proposal referred to passage of the PRO Act as if it were considered part of the package. The PRO Act includes a provision that in essence would establish as a federal standard California’s ABC test for whether a worker is an employee or independent contractor.

Texas legislature advances reform of CMV crash litigation

The Texas House of Representatives on April 30 passed by an 81 to 49 vote legislation (House Bill 19) to reform litigation of lawsuits over CMV accidents. Among other provisions, the bill would establish that in a fault phase of the litigation, juries are presented with evidence that is directly relevant to causation and injuries. For example, House Bill 19 would allow evidence of a motor carrier defendant’s compliance with a regulation or standard to be admissible only if the evidence tends to prove that failure to comply with the regulation or standard was a proximate cause of the injury or death. Also, any consideration of negligent entrustment would be barred unless in the fault phase it was found that the carrier’s employee was negligent in operating the vehicle. For more on the bill, visit https://legiscan.com/TX/bill/HB19/2021.

Regulation and Enforcement

Joshi nominated as FMCSA administrator

President Biden has nominated Meera Joshi to be FMCSA administrator. Joshi has served as deputy administrator and acting administrator since Biden was inaugurated in January. She must be confirmed by the Senate before she formally becomes administrator. The Senate Commerce Committee has yet to schedule a confirmation hearing. FMCSA has had only acting administrators since Raymond Martinez left the agency in October 2019.

Joshi most recently was principal and New Your general manager with transportation planning firm Sam Schwartz. From 2011 until 2019, Joshi held senior positions with the New York City Taxi and Limousine Commission, first as deputy commissioner and general counsel and then as CEO and commission chair.

FMCSA proposes to extend deadline related to medical examiner certification

FMCSA proposes to amend its regulations to extend the compliance date from June 22, 2021, to June 23, 2025, for several provisions of its April 2015 medical examiner’s certification Integration final rule. The agency said the action is being taken to provide FMCSA time to complete certain information technology (IT) system development tasks for its National Registry of Certified Medical Examiners and to provide the state driver’s licensing agencies (SDLAs) sufficient time to make the necessary IT programming changes. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-08238.

FMCSA’s Medical Review Board to meet May 19-20

FMCSA’s Medical Review Board Advisory Committee (MRB) will meet via videoconference May 19-20. The meeting will be open to the public. The meeting will address three topics: (1) Finalizing recommendations on updates to the Medical Examiner Handbook; (2) conducting a review of the medical assessment form for CMV drivers with noninsulin-dependent diabetes mellitus; and (3) evaluate for medical sufficiency comments and the vision assessment form from January’s proposed rule on vision standards. Advance registration is recommended via the FMCSA website at www.fmcsa.dot.gov/mrb. Requests to submit written materials to be reviewed during the meeting must be received by May 12. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-09271.

Advocacy and Comment

As the above analysis shows, 100 days into the new Administration there are fewer but more significant issues facing the trucking industry.

The future of the owner operator / independent contractor model is in jeopardy before all three branches of Government. The Ninth Circuit decision concerning AB-5 was not particularly surprising. Only the dissenting Judge appeared to comprehend the importance of the independent contractor model on routes, rates and services. As noted, the PRO Act which passed the House and is teed up for consideration by the Senate, possibly as part of the infrastructure bill. If the 60 vote filibuster requirement does not apply, this could result in reclassification of owner operators as employees for federal labor purposes. On the Executive level, the new Department of Labor is signaling it will revisit independent contractor rules for purposes of the Fair Labor Standards Act as a matter of regulation if the PRO Act does not prevail.

Moreover, as noted above, the House Committee considering the infrastructure bill continues to address other anti-trucking provisions of noted concern. OOIDA has issued a press release outlining its concerns including:

• Increasing federal liability insurance requirements from $750,000 to $2,000,000
• Time and/or distance caps on personal conveyance
• Expansion of tolling authority via congestion pricing and diversion of revenue to non-highway programs
• Sleep apnea screening and testing rules
• Republication of flawed CSA safety data

Clearly there is an immediate need for concerted efforts by the industry to oppose the attack on the owner operator / independent contractor model and to oppose other pending anti-trucking legislation mentioned above. The case is yet to be made for the importance of the independent contractor model to small businesses and the continued stability of interstate trucking.

The time has come for a coordinated effort to counter the continuing rhetoric which mischaracterizes the trucking industry.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through May 31. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19.

Regulation and Enforcement

• DOL proposes to withdraw rule on worker classification
• DOT rescinds Trump administration’s changes on rulemakings, guidance
• CVSA to hold enforcement events in May and July
• Bus operator seeks exemption from full clearinghouse query in hiring
• Armored car operation seeks exemption to weld front doors shut
• FMCSA grants windshield exemption to Bendix

Legislation

• West Virginia law allows clear path to independent contractor status
• Biden infrastructure plan envisions passage of the PRO Act
• Bills reintroduced to allow 18-year-old interstate drivers under specific conditions
• House and Senate bills would require underride protection rulemaking
• House bill would authorize $755 million to expand commercial truck parking
• Sen. Fischer reintroduces bill to loosen restrictions on agricultural hauling
• Senate bill would establish federal working group on electric vehicles

Advocacy and Comment

Regulation and Enforcement

DOL proposes to withdraw rule on worker classification

Comments are due April 12 on a notice of proposed rulemaking (NPRM) to withdraw a Trump administration rule regarding independent contractor status. The U.S. Department of Labor’s Wage and Hour Division (WHD) had already delayed the effectiveness of the rule until May 7 while it reviewed the regulation. The Trump administration regulation, which was issued in January and originally scheduled to take effect in March, adopted a new “economic reality” test to determine whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FSLA).

In the NPRM, WHD said that courts and the department have not used the new economic reality test and that neither the text of the FLSA nor longstanding case law support the test. WHD said the rule would narrow or minimize other factors that courts have traditionally considered, making the economic test less likely to establish that a worker is an employee under the FLSA. For the NPRM, visit https://www.federalregister.gov/d/2021-05256.

DOT rescinds Trump administration’s changes on rulemakings, guidance

The U.S. Department of Transportation (DOT) issued a final rule that rescinds policies and procedures related to rulemaking, guidance, and enforcement that DOT had implemented in December 2019. The rule affects not only department-level proceedings but also those within its agencies, including the Federal Motor Carrier Safety Administration.

The 2019 changes largely wrote into DOT regulations (49 CFR part 5) some of the reforms that had been ordered by various executive orders issued by President Trump. Those included regulatory reform policies on regulatory budgeting, the “2-for-1” plan (repealing two rules for every one new rule), and the Regulatory Reform Task Force.

In its latest action, DOT said it was responding to two recently issued executive orders that (1) revoke several Trump administration executive orders relating to rulemaking, guidance, and regulatory enforcement (E.O. 13992) and (2) direct executive departments to review regulations that conflict with the objectives concerning protecting public and the environment (E.O. 13990). However, the new rule rescinds more than just provisions directly attributable to now-revoked executive orders. The department also has rescinded regulations in 49 CFR part 5 that:

• Solely apply to the department's internal operations “and thus need not be codified in the Code of Federal Regulations;”
• Are duplicative of existing procedures contained in internal departmental procedural directives; and
• Are derived from the Administrative Procedure Act and significant judicial decisions “and thus need not be adopted by regulation in order to be effective.” 49 CFR part 5, subpart D – Enforcement Procedures was rescinded in its entirety for that reason, DOT said.

DOT said removing these provisions “ensures that the Department is able to effectively and efficiently promulgate new Federal regulations and other actions to support the objectives stated in E.O. 13990.” However, the department said the regulations would continue to include provisions related to the public’s ability to interact with DOT on rulemaking matters and activities. For example, DOT retained procedures for the public to petition for rulemakings and exemptions. Although the new rule rescinds language that explicitly provided for retrospective reviews and guidance document petitions, “the Department will nevertheless accept and process these types of petitions,” it said.

DOT issued the new rule without a notice-and-comment process on the grounds that Administrative Procedure Act requirements do not apply to an action that is a rule of agency organization, procedure, or practice. The same was true for the December 2019 rule that this rule largely overturns.

For the Federal Register notice of the final rule, visit https://www.federalregister.gov/d/2021-06416. For DOT’s December 2019 rule, visit https://www.federalregister.gov/d/2019-26672.

CVSA to hold enforcement events in May and July

The Commercial Vehicle Safety Alliance has scheduled its annual Operation Safe Driver Week for July 11-17 with an emphasis on speeding. During Operation Safe Driver Week, law enforcement personnel will be on the lookout for commercial motor vehicle drivers and passenger vehicle drivers engaging in risky driving behaviors in or around a commercial motor vehicle (CMV).

CVSA previously announced that its annual International Roadcheck enhanced inspection event would be held May 4-6. The emphasis of this year’s Roadcheck will be lighting and hours of service. Roadcheck traditionally has been held in early June, but CVSA moved it up a month because its research has shown that weather tends to be better in early May than in early June.

Bus operator seeks exemption from full clearinghouse query in hiring

FMCSA is requesting comments by April 15 on an application by FirstGroup plc for an exemption to allow it to use a limited pre-employment query of the drug and alcohol clearinghouse as a screen when hiring school bus and transit drivers rather than having to conduct a full pre-employment query as required under the regulations. FirstGroup says the requirement for a full query is hindering its ability to hire at the speed and level needed to keep pace with the demands of the contracted school and transit transportation industry and is resulting in hundreds of thousands of dollars of increased costs.

Under the requested exemption, in lieu of a full query, FirstGroup would conduct a limited pre-employment query of the clearinghouse. If the limited query indicated that information about the driver existed, the company would then conduct a full query of the clearinghouse with the driver-applicant providing consent in the clearinghouse as required. FirstGroup also would conduct a second limited query within 30 to 35 days of the initial limited query and conduct multiple limited queries on all its CDL drivers each year thereafter. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-05328.

Armored car operation seeks exemption to weld front doors shut

FMCSA is inviting comments by May 7 on an application from Loomis Armored US, LLC for an exemption to allow the driver and passenger doors of the cab of its specialized armored vehicles to be welded shut. Loomis believes that welding shut the cab doors and adding two new doors behind the cab will maintain safety while allowing secure armored car operations with reduced staff. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-07102.

FMCSA grants windshield exemption to Bendix

FMCSA granted an exemption to Bendix Commercial Vehicle Systems to allow its advanced vehicle safety systems, which are equipped with cameras, to be mounted lower in the windshield on CMVs than is currently permitted. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-06982.

Legislation

West Virginia law allows clear path to independent contractor status

LegislationWest Virginia Gov. Jim Justice last month signed legislation (Senate Bill 272) intended to provide a clear framework for establishing when a worker is an independent contractor or employee. The findings section of the new law notes that legal standards are not only often subjective but also often vary depending on the particular law at issue. The goal of the legislation is to provide certainty and clarity for all involved.

Under the new law, a person is an independent contractor if there is a written contract stating such and the person satisfies any three of nine specified conditions that indicate an independent contractor relationship. Of particular interest in the trucking context is a provision that explicitly allows firms using the services of an independent contractor to specify safety-related devices, procedures, or training. For the text of the West Virginia law, visit http://bit.ly/WVA-IC.

Biden infrastructure plan envisions passage of the PRO Act

The Biden administration’s proposed American Jobs Plan – a $2.3 trillion broadly defined infrastructure package – apparently contemplates enactment of various pro-labor measures, including the Protecting the Right to Organize Act, or PRO Act. An endorsement of the PRO Act is contained in a White House fact sheet on the American Jobs Plan, specifically in a section that proposes measures aimed at promoting union organization and collective bargaining.

The U.S. House of Representatives has already passed the PRO Act on a party line vote. Among a host of pro-labor provisions, the bill (H.R. 842) includes language that would mandate a federal ABC test for worker classification similar to that in California’s AB 5. The bill also would explicitly declare misclassification of workers a violation of the National Labor Relations Act.

Although broadly billed as an infrastructure plan, the American Jobs Plan allocates relatively little money for highways – just 5% of the total cost. Most of the funding goes into construction and retrofitting of buildings and into investments in Biden administration priorities, such as promoting adoption of electric vehicles. Almost as controversial as the labor provisions are the financing measures, including an increase in the corporate tax rate to 28% and the sunset of various tax benefits for companies that operate overseas. The bill also would eliminate tax preferences held by the petroleum industry. To view the fact sheet on the American Jobs Plan, click on the “Learn More” button at https://www.whitehouse.gov/american-jobs-plan.

Bills reintroduced to allow 18-year-old interstate drivers under specific conditions

Legislation (S. 659, H.R. 1745) that would establish an apprenticeship program allowing for interstate drivers aged 18 to 20 was reintroduced in both the House and Senate last month. The Developing Responsible Individuals for a Vibrant Economy Act, or DRIVE Safe Act, would require separate probationary periods of 120 hours and 280 hours, each with specific performance benchmarks. A driver could not transport hazardous materials until after completing the 120-hour probationary period hauling non-hazmat freight.

The legislation would allow 18- to 20-year-olds to drive interstate only if the CMV is governed at 65 mph and equipped with automatic manual or automatic transmissions; active braking collision mitigation systems; and Forward-facing video event capture. The legislation has been introduced in the past two Congresses but failed to advance. For more information, visit https://www.congress.gov/bill/117th-congress/senate-bill/659 and https://www.congress.gov/bill/117th-congress/house-bill/1745.

House and Senate bills would require underride protection rulemaking

Sen. Kirsten Gillibrand (D-New York) and Rep. Steve Cohen (D-Tennessee) reintroduced legislation (S. 605, H.R. 1622) that would mandate regulations to require installation and retrofit of rear, side, and front underride guards on all CMVs with gross vehicle weight ratings of more than 10,000 pounds. The bill also would specify performance standards for each type of underride guard as well as require rules on inspection, maintenance, and repair of the devices. Essentially the same bills were introduced in the past two Congresses. For more information, visit and https://www.congress.gov/bill/117th-congress/senate-bill/605 and https://www.congress.gov/bill/117th-congress/senate-bill/659.

House bill would authorize $755 million to expand commercial truck parking

Reps. Mike Bost (R-Illinois) and Angie Craig (D-Minnesota) have reintroduced legislation (H.R. 2187) that would establish a set-aside source of funding to expand more commercial truck parking throughout the U.S. The bill would authorize $755 million total in annual increments. The funds could be used at a variety of locations, including construction of public rest areas and commercial vehicle parking facilities and parking capacity next to commercial truck stops, weigh stations, and public and private freight facilities. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/2187.

Sen. Fischer reintroduces bill to loosen restrictions on agricultural hauling

Sen. Deb Fischer (R-Nebraska), the ranking Republican on the Senate subcommittee that oversees trucking regulations, has introduced legislation (S. 792) 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 S. 792, visit https://www.congress.gov/bill/117th-congress/senate-bill/792.

Senate bill would establish federal working group on electric vehicles

Sen. Catherine Cortez Masto (D-Nevada) introduced legislation (S. 508) that would establish a federal working group to make recommendations on the development, adoption, and integration of light and heavy-duty electric vehicles into the transportation and energy systems of the U.S. The working group would include federal and private sector members, including at least one representative of the trucking industry. For more information, visit https://www.congress.gov/bill/117th-congress/senate-bill/508.

Advocacy and Comment

Easy Come, Easy Go

Advocacy and CommentLast year, the Department of Transportation issued internal rules providing needed clarity and due process applicable to FMCSA investigations, safety ratings and civil forfeitures. The Agency’s decisions got little publicity but were reviewed with approval approximately a year later in a transportation lawyers’ journal.

Unfortunately, the ink was not dry on the article before incoming Secretary Pete Buttigieg issued a 19-page document largely countermanding the previous findings and eliminating administrative restraints on regulatory abuses the earlier rules were intended to address.

The formal rulemaking process, which was not followed, includes an opportunity for notice and comment, the development of a record for appeal, and the provision for due consideration concerning the effect of the regulations on small carriers. Unfortunately, neither the Trump Administration’s findings nor Buttigieg’s reversal were based on any opportunity for notice or comment. Both must be viewed as “Rules du Jour” (rules of the day).

All too frequently, administrative agencies have grown accustomed to publishing guidance documents masquerading as rules which themselves offer no due process as the FMCSA’s touting of SMS methodology has poignantly demonstrated.

The formal rulemaking process, while cumbersome, is an important procedural protection against unvetted material changes in regulations. The first 100 days of the new administration indicate that there may be many new regulatory and legislative developments to be covered in the coming months.

Owner Operator Update

As previously noted, the PRO Act passed by the House would, along with other pro-labor provisions, eliminate independent contractor treatment of owner-operators. The chance of passage in the Senate may be increased by the parliamentarians’ decision that revenue bills are not subject to a 60-vote filibuster. The FAST Act has been tied to the infrastructure funding bill, which could thus result in a greater chance of passage.

Contents

Legislation

• House passes PRO Act with strict ABC test
• COVID RELIEF ALERT – New Legislation Could Provide Additional Relief for Small Carriers and Brokers

Advocacy and Comment

Legislation

House passes PRO Act with strict ABC test

The U.S. House of Representatives on March 8 passed on a party line 225 to 206 vote legislation that would mandate a federal ABC test for worker classification similar to that in California’s AB 5. The Protecting the Right to Organize (PRO) Act (H.R. 842) now moves to the Senate. The same legislation passed the House in the 116th Congress but died in the Republican-controlled Senate.

Although Democrats technically control the Senate by virtue of Vice President Harris’ tie-breaking vote, H.R. 842 faces an uphill battle owing to the filibuster. Some observers believe that killing the filibuster altogether would be the only path to final passage of the entire PRO Act, although it is more feasible that individual pieces could pass as riders to other legislative vehicles. Regardless, House passage coupled with Democratic control of the Senate means that this is the closest Congress has ever come to essentially outlawing the leased owner-operator model.

The PRO Act contains a host of pro-labor provisions, but for the trucking industry, the most problematic measure is section 101(b), which includes a definition of an employee stating that an individual performing any service shall be considered an employee and not an independent contractor unless:

• A. the individual is free from control and direction in connection with the performance of the service, both under the contract for the performance of service and in fact;
• B. the service is performed outside the usual course of the business of the employer; and
• C. the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.

In addition to imposing a federal ABC test, the PRO Act would explicitly declare misclassification of workers a violation of the National Labor Relations Act (NLRA). As such, the legislation would overturn the National Labor Relations Board’s August 29, 2019 decision in Velox Express, which held that misclassification is not a violation of the NLRA. For more on the PRO Act, visit https://www.congress.gov/bill/117th-congress/house-bill/842.

COVID RELIEF ALERT – New Legislation Could Provide Additional Relief for Small Carriers and Brokers

President Biden is set to sign the American Rescue Plan (“ARP”) this evening that will provide an additional $1.9 trillion in COVID-19 relief.  The relief is in addition to the trillions that the Trump administration funded over the course of the past year. $50 billion will be used to fund new and existing relief programs for small businesses that are administered by the Small Business Administration (“SBA”).  Some these programs include:

Paycheck Protection Program (PPP)

• ARP will give $7.25 billion funds for the existing PPP.
• Recent changes to PPP rules have been made by the Trump and Biden administrations making access to PPP loans more equitable, specifically for sole proprietors, independent contractors, and smaller businesses with up to 10 employees.  If fall into one of those categories and haven’t taken advantage of this program, contact your bank before the latest deadline for the program of March 31, 2021.
• 2nd draws are available for eligible businesses if you have previously received a PPP loan.

Economic Injury Disaster Loan

• Provides grants for businesses up to $10,000.

Information on the above programs and other relief programs administered by the SBA is available on the following SBA website: https://www.sba.gov/page/coronavirus-covid-19-small-business-guidance-loan-resources.  Note, the new law will also provide $1.32 billion in administrative funding to the SBA for resources necessary to further implement these relief programs.

Advocacy and Comment

This mid-month update reflects how quickly important legislation is moving through the new Congress.

Although the above analysis of the effect of House passage of the PRO Act is hopefully correct, the prospect of it becoming law is deeply concerning, particularly for owner operators and their carrier partners. The importance of the model to the trucking industry and to small businesses has still not gained traction and is a “hot topic” of general industry concern. (See March Regulatory and Legislative Update)

As predicted, the new Department of Labor has formally repudiated the “Economic Realities” rule promulgated by the former DOL. In doing so, it suggests that based upon existing precedent it might have denied employee benefits to existing workers that could have been reclassified as independent contractors. In turn, any change contemplated by the new Administration which would require reclassification of owner operators would deprive blue collar entrepreneurs of their long held right to be treated on equal footing with other independent businessmen.

Secondly, included is a description of the possible effect of the $1.9 trillion COVID-19 legislation on additional stimulus funding. The dysfunctionality of the earlier PPP grants is hopefully over, and funds will be available to needy small businesses and independent contractors. If you missed out on earlier funding and have questions, please email us at info@transportationlaw.net.

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through May 31. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19.

Regulation and Enforcement

• DOL postpones effective date on independent contractor rule
• DOL withdraws opinions sleeper berth pay, independent contractor status
• SBA takes steps to improve PPP access for very small businesses
• FMCSA postpones effective date on rule changing rulemaking procedures
• Wilson Logistics wins exemption on use of permit-holding drivers

Legislation

• House Democrats reintroduce PRO Act
• House, Senate bills would establish an advisory board to promote women in trucking
• House bill would provide HOS relief on perishable agricultural products

Open Issues

• Comment period still open on proposed alternative vision standard

Advocacy and Comment

Regulation and Enforcement

DOL postpones effective date on independent contractor rule

As expected, the U.S. Department of Labor’s Wage and Hour Division (WHD) has delayed until May 7 the effective date on a Trump administration final rule regarding independent contractor status under the Fair Labor Standards Act (FSLA) while Biden administration officials review the rule for issues of law, policy, and facts. The rule, which had been set to take effect March 8, is virtually certain to be either scrapped or fundamentally revamped. (For details on the final rule, see Regulatory Update, January 2021.)

In keeping with a regulatory freeze and review ordered on January 20, WHD on February 5 proposed to delay the rule until May 7 pending review and invited comments on that question. WHD received 1,512 comments in response with numerous comments on both sides of the issue, along with comments making procedural objections to the short time frame to comment or to the lead time for delaying the effective date of a final rule. For the Federal Register notice delaying the effective date, visit https://www.federalregister.gov/d/2021-04608. For the regulation and comments on the proposed delay of the effective date, visit https://beta.regulations.gov/docket/WHD-2020-0007.

DOL withdraws opinions sleeper berth pay, independent contractor status

WHD has withdrawn a July 2019 opinion letter (FSLA2019-10) declaring that a truck driver did not have to be compensated for time spent in a truck’s sleeper berth provided that the driver had been relieved of all duties and permitted to sleep without interruption from the employer. WHD also withdrawn a May 2019 opinion letter (FSLA2019-6) addressing whether a service provider for a “virtual marketplace company” is an employee of the company under FSLA or an independent contractor.

In a February 19 notice on the agency’s website, WHD said that opinion letter FSLA2019-10 “was inconsistent with longstanding WHD interpretations regarding the compensability of time spent in a truck's sleeper berth.” WHD said that “several courts have declined to follow the opinion letter, determining, among other things, that it is inconsistent with the Department's regulations; unpersuasive; and not entitled to deference, in part because the letter did not adequately explain WHD's change in position.” The agency said those courts have instead continued to follow the department's longstanding prior position. To the extent that FLSA2019-10 withdrew prior opinion letters on the issue, those letters are reinstated, WHD said.

WHD said in a separate February 19 notice that FSLA2019-6 addresses the same issue under consideration in the final Trump administration rule concerning independent contractor status. Given that the Biden administration has delayed the effective date of that rule while it considers further comments, the opinion letter is withdrawn, WHD said.

The withdrawal of FSLA2019-6 follows a January 26 withdrawal of an opinion letter (FSLA2021-9) related to independent contractor status that was specific to trucking. FSLA2021-9, which WHD had issued on the final full day of the Trump administration, had concluded that a motor carrier’s requirement that tractor-trailer drivers abide by safety-related mandates does not constitute control for the purposes of determining independent contractor status. As it did with FSLA2019-6, WHD a week later ruled that FSLA2021-9 was premature because the final rule on independent contractor status had not taken effect.

For WHD opinion letters and notices on those that are withdrawn, visit https://www.dol.gov/agencies/whd/opinion-letters/search?FLSA.

SBA takes steps to improve PPP access for very small businesses

The White House in February announced several changes in the Paycheck Protection Program (PPP) to improve access to the recently reauthorized program by very small businesses. The steps included designating February 24 through 5 p.m. Eastern on March 9 as a period during which only sole proprietors and businesses with fewer than 20 employees could apply for PPP loans. This exclusive period is intended to ensure that very small businesses have ample time to apply for and receive support before PPP expires on March 31.

SBA also is allowing sole proprietors, independent contractors, and self-employed individuals to receive more financial support by revising the PPP’s funding formula for these categories of applicants. SBA also loosened some prior restrictions to allow access to PPP loans by small business owners who (1) have non-fraud felony convictions; (2) have struggled to make student loan payments; and (3) are not citizens but are lawful U.S. residents.

For more information, visit https://www.sba.gov/funding-programs/loans/coronavirus-relief-options/paycheck-protection-program.

FMCSA postpones effective date on rule changing rulemaking procedures

FMCSA postpones effective date on rule changing rulemaking procedures that was slated to take effect March 1. The effective date is now March 21, allowing time for the Biden administration to review the rule and consider any questions of fact, law, or policy that it might raise. For the Federal Register notice delaying the effective date, visit https://www.federalregister.gov/d/2021-04110. For the Federal Register notice on the rule itself https://www.federalregister.gov/d/2020-27854.

Wilson Logistics wins exemption on use of permit-holding drivers

FMCSA has granted an exemption to Wilson Logistics to allow drivers who have hold a commercial learner’s permit (CLP) and who have passed the commercial driver’s license (CDL) skills test but who have yet to receive the CDL document to drive even if the accompanying CDL holder is not seated in the passenger seat. FMCSA has previously granted similar exemptions to C.R. England and New Prime, Inc. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-03685.

Legislation

House Democrats reintroduce PRO Act

Rep. Bobby Scott (D-Virginia) and 195 original co-sponsors on February 4 introduced comprehensive pro-labor legislation (H.R. 842) that includes language mandating a federal ABC test for worker classification similar to that in California’s AB 5. The legislation – called the Protecting the Right to Organize Act, or PRO Act – passed the House in the 116th Congress but was never considered by the Republican-controlled Senate.

Section 101(b) of the PRO Act includes a definition of an employee stating that an individual performing any service shall be considered an employee and not an independent contractor unless:
A.  the individual is free from control and direction in connection with the performance of the service, both under the contract for the performance of service and in fact;
B.  the service is performed outside the usual course of the business of the employer; and
C.  the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.”

In addition to imposing a federal ABC test, the PRO Act would explicitly declare misclassification of workers a violation of the National Labor Relations Act (NLRA). As such, the legislation would overturn the National Labor Relations Board’s August 29, 2019 decision in Velox Express, which held that misclassification is not a violation of the NLRA.

The PRO Act also would establish a host of other pro-labor measures, including prohibiting employers from permanently replacing striking workers, prohibiting offensive lockouts, removing limitations on secondary picketing and strikes, and barring employers from holding mandatory meetings to persuade employees not to unionize.

Since introduction of H.R. 842, another 16 Democrats have co-sponsored the bill. Meanwhile, Sen. Patty Murray (D-Washington), the lead sponsor of the Senate version of the PRO Act in the last Congress, also announced plans on February 4 to reintroduce the bill, but the legislation apparently has not been formally introduced yet. For more on the House bill, visit https://www.congress.gov/bill/117th-congress/house-bill/842.

House, Senate bills would establish an advisory board to promote women in trucking

Legislation (H.R. 1341, S. 469) aimed at increasing participation of women in various aspects of the trucking industry was introduced in both the House and Senate in February. Rep. Mike Gallagher (R-Wisconsin) and Sen. Jerry Moran (R-Kansas), lead sponsors of the legislation, had introduced the bills in the 116th Congress, but they did not advance.

The bills would require FMCSA to establish and facilitate an advisory board to promote organizations and programs that provide education, training, mentorship, or outreach to women in the trucking industry and that recruit women into the trucking industry. The board would report to FMCSA within 18 months of the legislation’s enactment, and FMCSA would report to Congress outlining actions taken to adopt the strategies recommended by the board or explaining the reasons the agency did not adopt the strategies. For more information on the bills, visit https://www.congress.gov/bill/117th-congress/house-bill/1341 and https://www.congress.gov/bill/117th-congress/senate-bill/469.

House bill would provide HOS relief on perishable agricultural products

Rep. W. Gregory Steube (R-Florida) introduced legislation (H.R. 358) that would require the Federal Motor Carrier Safety Administration (FMCSA) to exempt from certain provisions of the hours-of-service (HOS) rules drivers and carriers “transporting any agricultural, horticultural, or floricultural commodity.” The bill further defines the category as including “both fresh and processed products, as well as sod and other agricultural products sensitive to temperature and climate and at the risk of perishing in transit.”

Under the bill, in those situations (1) loading and unloading of commercial motor vehicles would be excluded from on-duty time requirements; (2) the 30-minute rest break would not be mandatory; and (3) carriers and drivers would not be limited by the maximum on-duty time if they are within 150 miles of their scheduled delivery point. For more information on the bill, visit https://www.congress.gov/bill/117th-congress/house-bill/358.

Open Issues

Comment period still open on proposed alternative vision standard

FMCSA’s proposed rule to adopt an alternative vision standard for physical qualification to replace the current vision exemption remains open for comment until March 15. Although the rule was proposed late in the Trump administration, FMCSA has yet to take any action halting or delaying the comment date. The Federal Register notice is available at https://www.federalregister.gov/d/2020-28848.

Advocacy and Comment

This month’s Regulatory and Legislative Update confirms earlier predictions that the owner operator/independent contractor model is in the crosshairs of proposed future administrative and congressional action. As predicted, the favorable “Economic Realities Test” of the former Department of Labor was stayed by the new Administration. Also as noted above, the new DOL is already issuing new opinions and taking actions which could adversely affect established practices. Finally, the prolific use of Executive Orders by the new Administration has been noted in both the New York Times and the Wall Street Journal, as has evidence of the new Administration’s support for increased unionization.

On the legislative side, the PRO Act sets up an across-industry employee classification test similar to California’s AB-5 which the owner operator/ independent contractor model as presently applied could not meet. Missing from the debate at both the legislative and DOL levels is the uniqueness and importance of the owner operator model to the trucking industry and to the blue-collar small businessmen for whom independent contractor status under the truth-in-leasing regulations is an opportunity and a choice.

Clearly, the independent contractor treatment of small businesspersons that lease equipment with drivers to carriers under the Federal Leasing Regulations (49 C.F.R. 376) has been an established rule of commerce for decades. This model is the backbone of the long-haul truckload segment, intermodal drayage and other trucking niches.

Yet the case is left to be made that the owner operator model is a unique and an important exception to any new or different rule of general application in determining independent contractor status. The model is based upon past precedent and grounded in Federal Regulations which provide opportunities and choices to blue collar entrepreneurs while ensuring protections against abuses offered through the truth-in-leasing regulations and Federal self-help statutes.

On February 24, 10 trade associations filed comments with the new Department of Labor to make the case for special treatment and a carve-out for the owner operator model consistent with past precedent. See https://www.regulations.gov/comment/WHD-2020-0007-3105. Readers of this monthly update are urged to read these comments and participate in efforts to save this important model.

Contents

FMCSA has updated various guidance related to COVID-19, including guidance related to the Center for Disease Control’s order related to use of masks at “transportation hubs.” For the latest, visit www.fmcsa.dot.gov/COVID-19.

Regulation and Enforcement

• President Biden charts new regulatory course; White House freezes rulemaking
• Buttigieg confirmed as new DOT secretary, FMCSA deputy named
• DOL withdraws opinion on safety requirements’ impact on worker status
• FMCSA proposes alternative vision standard to replace exemption program
• Proposed pilot on split rest dropped from website
• Final rule on third-party CDL testing likely dead
• Medical registry problems limit FMCSA’s oversight of driver qualifications, OIG says
• CVSA schedules International Roadcheck for May 4-6
• FMCSA expands MCSAC membership, appoints new driver subcommittee
• FMCSA proposes changes in HHG broker disclosures

Courts

• Ninth Circuit upholds FMCSA’s preemption of California rest break rules

Open Issues

• Comment period still open on several FMCSA proceedings

Advocacy and Comment

Regulation and Enforcement

President Biden charts new regulatory course; White House freezes rulemaking

In his first day in office, President Biden signed an executive order and a related memorandum that confirm a reversal of the Trump administration’s deregulatory approach. The first executive order directly revokes various deregulatory executive orders that President Trump had signed four years earlier, saying that executive departments and agencies “must be equipped with the flexibility to use robust regulatory action to address national priorities.” The executive order (E.O. 13992), “Revocation of Certain Executive Orders Concerning Federal Regulation,” is available at https://www.federalregister.gov/d/2021-01767.

In a memorandum also signed on inauguration day, President Biden reinforced the tone of the executive order, directing the Office of Management and Budget and representatives of the various departments and agencies to develop recommendations for improving regulatory review. Biden asked that the recommendations “ensure that the review process promotes policies that reflect new developments in scientific and economic understanding, fully accounts for regulatory benefits that are difficult or impossible to quantify, and does not have harmful anti-regulatory or deregulatory effects.” The memorandum, “Modernizing Regulatory Review,” is available at https://www.federalregister.gov/d/2021-01866.

Another White House document related to regulation was completely expected. In a memorandum, Ronald Klain, White House chief of staff, directed federal departments and agencies to freeze regulatory activity, subject to exceptions, pending review. The memorandum stops the publication of rules that had not been published in the Federal Register before January 20 and postpones the effective date for 60 days beyond January 20 of any rule that had been published. During that time, agencies may reopen the comment period and/or entertain new petitions for reconsideration. The freeze applies to regulatory guidance and notices of proposed rulemaking (NPRMs) as well as final rules. For Klain’s memorandum, visit http://bit.ly/WHfreeze.

Most significant final actions taken by the Federal Motor Carrier Safety Administration during the Trump administration – most notably the recent changes in the hours-of-service (HOS) regulations – are unaffected by the regulatory freeze. The most significant rule affected by the freeze that directly relates to trucking – although it is not specific to trucking – is the Department of Labor’s recent final rule regarding worker classification. (See Regulatory Update, January 2021) That rule is not scheduled to take effect until March, and it almost certainly will not take effect, at least not as currently drafted.

Regulatory freezes and reviews are common when the White House transitions to a new political party. However, reviews do not necessarily result in reversals. The Trump administration kept in place two major trucking-related rules issued late in the Obama administration – the drug and alcohol clearinghouse and the entry-level driver training rule. The Trump administrations did, however, withdraw several ongoing Obama administration rulemakings, including carrier safety fitness determinations, minimum insurance levels, and obstructive sleep apnea.

Buttigieg confirmed as new DOT secretary, FMCSA deputy named

The U.S. Senate on February 2 voted 86 to 13 to confirm Pete Buttigieg as secretary of the U.S. Department of Transportation. The former mayor of South Bend, Indiana, had run for president in 2020 but ultimately withdrew and endorsed Joe Biden. Prior to his confirmation, Buttigieg had testified before the Senate Commerce Committee, which approved him by a 21 to 3 vote less than a week later. For a recording of the January 21 confirmation hearing, visit https://www.commerce.senate.gov/2021/1/ni.

President Biden has yet to nominate an FMCSA administrator – a position that has been vacant aside from acting executives since Raymond Martinez left the agency more than a year ago. However, the Biden administration has named Meera Joshi deputy FMCSA administrator, making her the agency’s acting executive until a new administrator is confirmed.

Joshi most recently was principal and New Your general manager with transportation planning firm Sam Schwartz. From 2011 until 2019, Joshi held senior positions with the New York City Taxi and Limousine Commission, first as deputy commissioner and general counsel and then as CEO and commission chair.

DOL withdraws opinion on safety requirements’ impact on worker status

On the final full day of the Trump administration, the Department of Labor’s Wage and Hour Division issued an opinion letter (FSLA2021-9) concluding that a motor carrier’s requirement that tractor-trailer drivers abide by safety-related mandates does not constitute control for the purposes of determining independent contractor status. However, since President Biden’s inauguration and the regulatory freeze it imposed, WHD has withdrawn the January 19 opinion letter. In its place, the website provides the following notice: “WHD is withdrawing opinion letters FLSA 2021-4, FLSA2021-8, and FLSA 2021-9. These letters were issued prematurely because they are based on rules that have not gone into effect. This withdrawal is an official ruling of the Wage and Hour Division for purposes of the Portal-to-Portal Act, 29 U.S.C. § 259, and these letters may not be relied upon as statements of agency policy as of the date of withdrawal.” Opinion letters are available at https://www.dol.gov/agencies/whd/opinion-letters/search.

The opinion letter specifically addressed four basic types of safety requirements that a carrier might impose on an owner-operator: (1) video-based onboard safety monitoring systems; (2) systems that monitor sensor and engine data to assess risky behavior; (3) installation and use of a GPS-based speed limiter; and (4)mandatory monthly safety meetings, quarterly reviews, and quarterly online safe-driving courses.

FMCSA proposes alternative vision standard to replace exemption program

In the waning days of the Trump administration, FMCSA issued a notice of proposed rulemaking (NPRM) that would adopt an alternative vision standard for physical qualification to replace the current vision exemption program. The NPRM would allow individuals who cannot meet either the current distant visual acuity or field of vision standard, or both, in one eye to be physically qualified to operate a commercial motor vehicle (CMV) in interstate commerce.

Comments are due March 15. Because the NPRM was published before January 20 but is not a final rule, the docket presumably remains open unless and until FMCSA rules otherwise. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-28848.

Proposed pilot on expanded split rest dropped from website

Less than a week before President Biden’s inauguration, FMCSA announced a proposed pilot program to evaluate allowing CMV drivers to use sleeper berth splits of 6 hours/4 hours and 5 hours/5 hours. The final HOS rule implemented in September allows a 7/3 split in addition to an 8/2 split, which had been the only sleeper berth split option for about 15 years.

The proposed pilot was not published in the Federal Register before the inauguration, and both the January 14 news release and the draft proposal notice linked to in the news release have since been removed from the FMCSA website. The action was not unexpected as the Biden White House had announced on January 20 a freeze on all rulemaking and guidance documents that had not already become final before January 20.

FMCSA last year proposed two other pilot programs – one on allowing a pause in the 14-hour driving window and one to assess the safety of younger CMV drivers in interstate commerce. Although the agency published both proposals and solicited comments on them, neither was finalized before the Trump administration exited.

Final rule on third-party CDL testing likely dead

A final rule announced in in December to loosen a longstanding restriction on commercial driver’s license (CDL) testing probably will not take effect. FMCSA in December announced a final rule that would have allowed states to permit third-party skills test examiners to administer CDL skills tests to applicants to whom those examiners also provided skills training. (See Regulatory Update, January 2020)

In its December 17 news release, the agency linked to a draft copy of the final rule, but it was never published in the Federal Register. Although the news release remains on the FMCSA website – unlike the release related to a proposed pilot program on split rest in sleeper berths – the link to the draft rule no longer works. Given the regulatory freeze imposed by the Biden White House, the rule is unlikely to be published.

Medical registry problems limit FMCSA’s oversight of driver qualifications, OIG says

FMCSA’s ability to oversee whether drivers meet physical qualification standards to operate safely is limited because of a lengthy outage of the National Registry of Certified Medical Examiners and the resulting backlog of driver examination reports that were not entered into the registry, the DOT Office of Inspector General concluded. An OIG audit also found that weaknesses associated with the accuracy and completeness of data in the registry limit the effectiveness of FMCSA’s oversight. Another problem is that the agency is not yet conducting annual eligibility audits after certification, which means that FMCSA could be missing fraud indicators or other risks, the OIG said. The DOT OIG audit report is available at https://www.oig.dot.gov/library-item/38181.

CVSA schedules International Roadcheck for May 4-6

The Commercial Vehicle Safety Alliance has set May 4-6 as the dates for this year’s International Roadcheck intense inspection event. This year’s emphasis will be driver HOS compliance and vehicle lighting violations. In the event a driver is transporting COVID-19 vaccine, law enforcement will not hold up shipments for inspection unless there is an obvious serious violation that is an imminent hazard, CVSA said. International Roadcheck traditionally was held in early June, but it had been scheduled for early May last year before it was rescheduled for September because of the pandemic.

FMCSA expands MCSAC membership, appoints new driver subcommittee

Prior to the inauguration, FMCSA announced the 2021 membership of its Motor Carrier Safety Advisory Committee and the initial appointees to the committee’s new driver subcommittee. The agency expanded the MCSAC’s membership to 25 from 18 previously. Of those 25, 16 prior MCSAC members are returning. Only Bill Dofflemyer and Leroy Taylor, law enforcement representatives from Maryland and South Carolina, respectively, have departed. New members are:

• Michael Bray, GM Commercial Transportation
• Adrienne Gildea, Commercial Vehicle Safety Alliance
• David Heller, Truckload Carriers Association
• Dawn King, Truck Safety Coalition
• Siddarth Mahant, Mahant Transportation, LLC
• Jaime Maus, Werner Enterprises
• Travis Plotzer, Tennessee Highway Patrol
• Ellen Voie, Women in Trucking
• Andrew Young, The Law Firm for Truck Safety

The new 25-member driver subcommittee will provide direct feedback to FMCSA on various issues, including regulation, enforcement, training, parking, etc. For more on MCSAC and the driver subcommittee, visit https://www.fmcsa.dot.gov/mcsac.

FMCSA proposes changes in HHG broker disclosures

In a document published since President Biden took office, FMCSA is accepting comments until March 3 on proposal to revise information collection requirements related to the obligation of household goods (HHG) brokers to provide potential shippers with information throughout the various stages of interaction – prospecting, contact, estimate, and agreement. The agency specifically is asking (1) whether the proposed collection is necessary; (2) whether the estimated paperwork burden is accurate; (3) how FMCSA could enhance the quality, usefulness, and clarity of the collected information; and (4) how the agency could minimize the burden without reducing information quality. For the Federal Register notice, visit https://www.federalregister.gov/d/2021-02021.

Courts

Ninth Circuit upholds FMCSA’s preemption of California rest break rules

The U.S. Court of Appeals for the Ninth Circuit on January 15 denied petitions for review of FMCSA’s December 2018 determination that federal law preempted California’s meal and rest break (MRB) rules as applied to drivers of property-carrying CMVs who are subject to federal HOS regulations. The three-judge panel noted that FMCSA has the authority under federal law to review for preemption state laws on and regulations “on commercial motor vehicle safety” and held that the agency’s interpretation merited deference under Chevron v. Natural Resources Defense Council. Although FMCSA conceded that it’s determination departed from its own 2018 interpretation, it provided a reasonable basis for doing so, the court ruled.

The Ninth Circuit also concluded that FMCSA’s decision relied on the Congress’ stated interest in uniformity of regulation. Just because California regulated mean and rest breaks in a variety of industries does not mean that the MRB rules were not “on commercial motor vehicle safety.” The panel further said FMCSA’s determination that the MRB rules were “additional to or more stringent than” federal regulation were supported by the agency’s finding that California required more breaks, more often, and with less flexibility regarding timing than the federal rules.

The Ninth Circuit’s decision is available at https://cdn.ca9.uscourts.gov/datastore/opinions/2021/01/15/18-73488.pdf. For FMCSA’s preemption determination, visit https://www.federalregister.gov/d/2018-28325.

In November, FMCSA issued a similar preemption declaration regarding MRB rules in the State of Washington. (See Regulatory Update, December 2020) Given that Washington also falls within the Ninth Circuit’s jurisdiction, it would seem likely that FMCSA’s ruling in that situation also would be upheld.

Open Issues

Comment period still open on several FMCSA proceedings

Although the status of individual proceedings is unclear until FMCSA clarifies how the regulatory freeze applies to open proceedings, several FMCSA proceedings initiated late in the Trump administration remain open for public comment:

• NPRM to end the annual requirement for drivers to submit a list of traffic violations to employers – Comments are due February 12. The Federal Register notice is at https://www.federalregister.gov/d/2020-26957.
• NPRM on annual inspections of rear impact guards – Comments due March 1. The Federal Register notice is available at https://www.federalregister.gov/d/2020-27502.

Advocacy and Comment

1. As anticipated, the Biden Administration has rolled back helpful Executive Orders and pending rules including the Department of Labor’s economic realities test discussed last month. The Administration’s “Modernizing Regulatory Review” document signals that the Administration will encourage agency use of its discretion in new policy initiatives granting great deference to the Agency’s purported expertise. While the Administration’s Executive Orders cannot nullify the Administrative Procedures Act or statutes intended to protect the rights of affected parties and small businesses in particular, these developments not only affect current issues, but they also have a more far-reaching effect. Whether the DOT’s final rule establishing administrative due process will be formally repudiated remains to be determined. Yet, neither the White House nor the Democratic-controlled Congress can be seen as a champion of regulatory restraint, particularly with respect to safety and labor/independent contractor issues.

2. The Ninth Circuit decision on the meal and rest break discussed above is clearly a victory for court recognition of the “federal preemption” doctrine. Yet the Ninth Circuit’s reference to “Chevron deference” is not helpful. When the Commerce Clause and federal preemption of state laws is used to trump state law in the name of uniformity, one must be careful what one asks for. “Chevon deference” refers to court precedent that holds that the benefit of the doubt goes to the Agency in any judicial appeal of an Agency decision. The new Attorney General, Merrick Garland, is a proponent of this doctrine. Accordingly, in the next four years we can expect a more difficult task in reining in major changes in regulations and guidance.

3. As noted above, eight new appointees have been named to the Agency’s MCSAC. The new members do not change the profile of the committee and includes 3 safety advocates and 2 enforcement representatives. Missing from the list are any of a number of qualified small carrier representatives that would have added needed representation for the over 500,000 small carriers the FMCSA oversees.

Contents

FMCSA has modified various guidance related to COVID-19. For the latest, visit www.fmcsa.dot.gov/COVID-19.

Regulation and Enforcement

• DOL finalizes rule to clarify independent contractor status
• FMCSA proposes to revise HOS guidance on yard moves
• Final rule announced to allow third-party CDL examiners to test their own trainees
• FMCSA implements FAST Act requirements on rules and petitions
• Annual inspections of rear impact guards proposed
• FMCSA proposes to drop mandate for annual driver reports of traffic violations
• Railroads win relief from HOS regulations during ‘unplanned events
• Helicopter firm seeks HOS relief for ground support operators
• Netradyne receives windshield exemption for safety system
• Comment period still open on TIA petition

Legislation

• Trucking loses legislative buffer as Democrats control the Senate
• Applications for the PPP to reopen week of January 11

Advocacy and Comment

• Independent contractor treatment of owner operators
• FAST Act approved
• Broker petition

Regulation and Enforcement

DOL finalizes rule to clarify independent contractor status

Although the rule almost certainly will never take effect, the U.S. Department of Labor’s Wage and Hour Division issued a final rule clarifying the standard for employee versus independent contractor status under the Fair Labor Standards Act (FLSA). The final rule:

• Adopts an “economic reality” test to determine whether an individual is in business for him or herself (independent contractor) or is economically dependent on a potential employer for work (FLSA employee);
• Identifies and explains two “core factors” that are most probative to the question of whether a worker is economically dependent on someone else’s business or is in business for him or herself:
  -The nature and degree of control over the work; and
  -The worker’s opportunity for profit or loss;
• Identifies three other factors that may serve as additional guideposts in the analysis, particularly when the two core factors do not point to the same classification:
  -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;
• Holds that the actual practice of the worker and the potential employer is more relevant than what may be contractually or theoretically possible.

The rule’s effective date is March 8, but the chances of the rule taking effect are extremely slim. By virtue of executive action promptly after the inauguration, President Biden probably will set aside the DOL rule along with potentially dozens of so-called “midnight regulations” – rules finalized within 60 days before inauguration. This procedure is routine in a transition of the White House from one party to another.

The final rule is available at https://www.federalregister.gov/d/2020-29274.

FMCSA proposes to revise HOS guidance on yard moves

FMCSA invites comments by February 3 on proposed to revise the regulatory guidance concerning recording time operating a commercial motor vehicle as a “yard move” as it applies to commercial motor vehicle (CMV) drivers required to record their hours of service. The proposed guidance includes examples of properties that are and are not “yards.” Movements of CMVs in “yards” would be considered “yard moves” and could be recorded as on-duty not driving time rather than driving time. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-29062.

Final rule announced to allow third-party CDL examiners to test their own trainees

Although it has yet to be published formally, FMCSA on December 17 announced a final rule that would allow states to permit third-party skills test examiners to administer commercial driver’s license (CDL) skills tests to applicants to whom those examiners also provided skills training. Current regulations bar third-party CDL skills instructors authorized by their states to administer CDL skills tests from performing both the instruction and the qualifying testing for the same CDL applicant. FMCSA, which had proposed the change in July 2019, said the rule would alleviate testing delays and eliminate needless inconvenience and expense to CDL applicants without compromising safety.

The rule would take effect 60 days after publication in the Federal Register, but its fate is uncertain as it is unclear whether the incoming Biden administration would support it. Even if the rule is published before January 20, the Biden administration could vacate it among other so-called “midnight regulations.” The draft final rule is available at https://www.fmcsa.dot.gov/registration/commercial-drivers-license/ third-party-commercial-drivers-license-testers. For the July 2019 NPRM and comments submitted, visit https://www.regulations.gov/docket?D=FMCSA-2018-0292.

FMCSA implements FAST Act requirements on rules and petitions

More than five years after Congress passed the Fixing America’s Surface Transportation (FAST) Act, FMCSA has issued a final rule to change its rulemaking procedures to comply with various requirements of the law regarding how the agency conducts rulemakings, including use of advance notices of proposed rulemaking (NPRMs) or negotiated rulemakings when a major rule is anticipated and the definition of and procedures for handling petitions for rulemaking. The agency’s NPRM had been published in August 2017. The final rule, which takes effect March 1, is available at https://www.federalregister.gov/d/2020-27854. Petitions for reconsideration are due February 1.

Annual inspections of rear impact guards proposed

FMCSA has invited comments until March 1 on an NPRM to amend the Federal Motor Carrier Safety Regulations (FMCSRs) to include rear impact guards on the list of items that must be examined as part of the required annual inspection for each CMV. The agency also proposed to amend the labeling requirements for rear impact guards. It also proposes to exclude road construction controlled (RCC) horizontal discharge trailers from the rear impact guard requirements, consistent with changes made by the National Highway Traffic Safety Administration (NHTSA) to the corresponding Federal Motor Vehicle Safety Standards (FMVSS).

FMCSA said the NPRM responds to rulemaking petitions, as well as a Government Accountability Office (GAO) recommendation. (See https://www.gao.gov/products/GAO-19-264) However, Congress in the fiscal 2020 appropriations act mandated annual inspections of rear underride guards as recommended by GAO. That provision was retained in the fiscal 2021 appropriations act passed in December. To view the NPRM, visit https://www.federalregister.gov/d/2020-27502.

FMCSA proposes to drop mandate for annual driver reports of traffic violations

FMCSA has invited comments until February 12 on an NPRM to eliminate requirement that drivers operating CMVs in interstate commerce prepare and submit a list of their convictions for traffic violations to their employers annually. The agency said the requirement largely duplicates a separate provision that requires each motor carrier to make an annual inquiry to obtain the motor vehicle record (MVR) for each driver it employs from every state in which the driver holds or has held a CMV operator's license or permit in the past year. To account for drivers who might be licensed in Canada or Mexico, FMCSA also proposes to require that carriers make annual inquiries of those authorities as applicable. FMCSA said that removing the requirement for drivers to provide a list would reduce the paperwork burden on drivers and motor carriers without adversely affecting CMV safety. To view the NPRM, visit https://www.federalregister.gov/d/2020-26957.

Railroads win relief from HOS regulations during ‘unplanned events’

Despite objections raised by several trucking and labor groups, FMCSA has granted an exemption to the Association of American Railroads and the American Short Line and Regional Railroad Association and member railroads from various hours-of-service (HOS) rules 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 exemption covers the regulations on mandatory minimum rest, the 14-hour driving window, the 11-hour driving limit, and cumulative work limits.

Several organizations, including the Commercial Vehicle Safety Alliance, Truckload Carriers Association, and the Transportation Trades Department of the AFL-CIO, opposed the request on safety grounds. “The Agency believes there is a public interest in ensuring that railroads clear blocked tracks and rights-of-way and restore service as quickly as possible,” FMCSA said. It acknowledged the concerns bus said it “does not believe the requested relief would compromise safety when used occasionally to respond to unplanned events.” The agency also said the exemption would not decrease drivers' responsibility under 49 CFR 392.3 to cease operations if their ability to safely operate a CMV is impaired by illness or fatigue. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-28341.

Helicopter firm seeks HOS relief for ground support operators

FMCSA requests comment until January 19 on Mountain Blade Runner Helicopters, LLC's (MBR Helicopters) application for an exemption from two provisions of the hours-of-service (HOS) regulations for its ground support equipment operators. The exemption would allow MBR Helicopters' ground support equipment operators a 16-hour window within which to complete all driving and allow them to use an eight-consecutive hour off-duty break, combined with at least two other off-duty hours during the 16-hour window within which driving would be completed, in lieu of taking 10 consecutive hours off duty. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-27966.

Netradyne receives windshield exemption for safety system

FMCSA has granted an exemption to Netradyne, Inc to allow its Driveri® Dash Cam to be mounted lower in the windshield on CMVs than is currently permitted. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-27967.

Comment period still open on TIA petition

FMCSA is accepting comments until January 25 on Transportation Intermediaries Association’s (TIA) petition for rulemaking concerning the rights of parties to a brokered transaction to review the records of the transaction and on TIA’s request that the agency issue regulatory guidance concerning dispatch services. (For details of the petitions and further discussion of it, see the September 2020 and December 2020 Regulatory Updates.) For the Federal Register notice, visit https://www.federalregister.gov/d/2020-25307. For more information, including comments submitted, visit https://www.regulations.gov/docket?D=FMCSA-2020-0150.

Legislation

Trucking loses legislative buffer as Democrats control the Senate

Although the results have yet to be certified, Raphael Warnock and Jon Ossoff apparently have garnered enough votes to become U.S. senators from Georgia later this month. The Warnock and Ossoff victories in runoff elections on January 5 against Sens. Kelly Loeffler and David Perdue, respectively, result in a 50-50 split among Democrats and Republicans. With incoming Vice President Kamala Harris casting a deciding vote, the Georgia results mean that Democrats will now control both houses of Congress and the White House for the first time in a decade.

For trucking, the Senate’s flip means that the Senate no longer serves as a firewall against legislation the industry opposes, especially given that a veto of such legislation is no longer a threat that serves to moderate the scope of legislation in the first place. For example, last February, the House in a highly partisan vote passed the Protecting the Right to Organize Act of 2019, or PRO Act, which would have enacted various pro-union measures, including one that would have essentially adopted the ABC test for worker classification that was adopted in California’s AB 5.

Specific to trucking, the Democrats’ control of the Senate could allow initiatives that have cropped up in recent years to become law. For example, the House version of the DOT appropriations bill for fiscal 2020 would have required FMCSA to restore public access to Compliance, Safety, Accountability (CSA) program metrics. It also would have barred FMCSA from issuing any further preemption declarations related to meal and rest breaks as it did regarding truck drivers in California in late 2018, although that prohibition likely is unnecessary in the Biden administration. Democratic control of Congress also could lead to some other controversial measures, such as mandatory speed limiters and higher minimum levels of insurance for trucking companies.

Applications for the PPP to reopen week of January 11

In late December, President Trump signed into law another round of COVID-19 relief along with funding of the federal government through fiscal 2021. Along with more funding for unemployment benefits and direct payments to taxpayers, the legislation provides up to $284 billion more money for the Paycheck Protection Program (PPP) through March 31. The latest round of PPP funding, which the Small Business Administration said would be available starting the week of January 11, allows existing PPP borrowers to apply for a “second draw” forgivable PPP loan under certain conditions.

To promote access to capital, initially only community financial institutions will be able to make “first draw” PPP Loans on January 11 and “second draw” PPP Loans on January 13. The PPP will open to all participating lenders shortly thereafter.

Congress changed the terms of PPP to add flexibility and – for “second draw” loans – target loans to businesses most significantly affected by the pandemic. PPP borrowers can set their loan’s covered period to be any length between eight and 24 weeks to best meet their business needs. PPP loans will cover additional expenses, including operations expenditures, property damage costs, supplier costs, and worker protection expenditures. Borrowers generally are eligible for a second PPP loan if they:

• Used the full amount of their previous loans only for authorized uses;
• Have no more than 300 employees; and
• Can demonstrate at least a 25% reduction in gross receipts between comparable quarters in 2019 and 2020.

For more information on PPP, visit https://www.sba.gov/ppp.

Advocacy and Comment

1. Independent contractor treatment of owner operators

As the above update shows, there is much going on. The effect of the election and common control by the Democrats of the Administration in both Houses of Congress is difficult to predict. To follow are some analyses and prediction regarding key issues facing the trucking industry.

The Department of Labor’s belated issuance of the economic reality test discussed above is sure to be overtaken by events. DOL’s new test, one the owner operator model would clearly meet, is sure to be set aside by the Biden Administration. Lost was an opportunity for the outgoing Department of Labor to acknowledge that the owner operator model was established by court precedent and creates a carve-out from any DOL policy statement or rule of general application. The new DOL appointee secretary is rumored to be a former union official so friendly treatment of the IC model at the departmental level is not to be expected.

Also, the industry is likely to see reintroduction of the PRO Act in both the House and Senate which could establish a Federal standard for classifying owner operators as employees similar to California’s AB-5 and other blue states’ use of the so-called ABC standard. The worst-case scenario would be Federal or state $15 minimum wage requirements and time and a half after 40 applied to truck drivers, whether owner operators or W-2 employees.

If more draconian standards applicable to all industries apply, the driver or owner operator away from home for a week would be entitled to 16 hours per day in compensation including overtime after 40. On a 7 day away from home workweek, the minimum pay would jump to $1,995. Obviously, this result would cripple over-the-road operations, pass along unsustainable inflation and stifle any entrepreneurial incentive for small businesses. Active opposition by not only big trucking but shippers, brokers, and particularly independent contractors will be necessary to overcome this foreseeable “political realities test” which is sure to come.

2. FAST Act approved

It is important to note that the due process and regulatory reform proposals that were baked into the FAST Act four years ago have finally become law. These reforms were important push-back on regulatory abuse and so-called “Chevron deference” – judge-made precedent which has previously limited judicial restraint on active administrative guidance and rulings by the FMCSA and other agencies. How a law with helpful language on regulatory restraint fares in the judicial arena in this contentious time is hard to handicap.

3. Broker petition

As noted above, interested parties have until January 25 to comment on initiatives which would provide guidance concerning the role of dispatch services and affect the rights of parties to examine broker records concerning payment of freight charges. The Agency has already affirmed its position that dispatch services fit the definition of property brokers and should be licensed. Also, the rights of parties to see brokers’ transactional records is an important collection tool and particularly helpful in ascertaining whether brokers have maintained the constructive trust required by regulation.

There is no compelling reason for changing existing regulation and precedent with respect to either of these issues. The regulatory buzzwords “transparency and accountability,” neither requiring a dispatch service to obtain a broker’s license nor requiring a broker to maintain transactional accounting, imposes an unreasonable burden on the brokerage industry. The broker regulations certainly do not impose a significant burden when compared to the regulatory obligations of small carriers which actually provide the service.

Contents

FMCSA has extended its emergency declaration regarding enforcement relief for drivers and carriers involved in COVID-19 response through February 28, 2021 and has expanded the declaration to specifically include vaccines and related products within the coverage of the declaration. For details, visit www.fmcsa.dot.gov/COVID-19.

Regulation and Enforcement

• FMCSA declares preemption against Washington’s meal and rest break rules
• Interim final rule clarifies definition of agricultural commodity
• FMCSA seeks comments on TIA’s petition on reporting mandate, dispatch services
• FMCSA considers preemption request regarding Illinois carrier ID requirements
• Ohio carrier obtains exemption for alternate cargo securement for metal coils
• Minnesota seeks reconsideration of CDL skills testing decision
• Grote obtains exemption for pulsating warning lamps
• FMCSA grants windshield exemption to J.J. Keller, considers one for Bendix

Advocacy and Comment

• Proposed changes in broker regulations
• Federal preemption of state labor laws

Regulation and Enforcement

FMCSA declares preemption against Washington’s meal and rest break rules

The Federal Motor Carrier Safety Administration (FMCSA) has granted the Washington Trucking Associations’ (WTA) request for a determination that the State of Washington’s meal and rest break (MRB) rules are preempted as applied to property-carrying commercial motor vehicle (CMV) drivers subject to FMCSA’s hours-of-service (HOS) regulations.

FMCSA determined that Washington’s MRB rules are preempted because they (1) are laws on CMV safety; (2) are more stringent than the agency’s HOS regulations; (3) have no safety benefits that extend beyond those that the Federal Motor Carrier Safety Regulations (FMCSRs) already provide; (4) are incompatible with the federal HOS regulations, and (5) cause an unreasonable burden on interstate commerce. For the Federal Register notice of the preemption ruling, visit https://www.federalregister.gov/d/2020-25155.

FMCSA issued a similar declaration against California’s enforcement of its MRB rules on drivers for motor carriers of property in December 2018. See the December 28 Federal Register notice at https://www.federalregister.gov/d/2018-28325. At the request of the American Bus Association, FMCSA extended the California preemption to passenger-carrying operations in January of this year. See the January 2020 Federal Register notice at https://www.federalregister.gov/d/2020-00835.

Interim final rule clarifies definition of agricultural commodity

FMCSA has issued an interim final rule that clarifies the definition of the terms "any agricultural commodity," "livestock," and "non-processed food," as the terms are used in the definition of “agricultural commodity” under the hours-of-service regulations. For details, visit https://www.federalregister.gov/d/2020-25971. The IFR is effective December 9.

The definitions are important because under current regulations, drivers transporting agricultural commodities, including livestock, from the source of the commodities to a location within 150 air miles of the source, during harvest and planting seasons as defined by each state, are exempt from the HOS requirements. Also, the mandatory 30-minute rest break does not apply to drivers transporting livestock in interstate commerce while the livestock are on the commercial motor vehicle.

FMCSA seeks comments on TIA’s petition on reporting mandate, dispatch services

FMCSA is accepting comments until January 25 on Transportation Intermediaries Association’s (TIA) petition for rulemaking concerning the rights of parties to a brokered transaction to review the records of the transaction and on TIA’s request that the agency issue regulatory guidance concerning dispatch services. TIA argues that transparency in broker transactions is provided through other means in today's marketplace and that regulatory guidance would ensure that interested parties can distinguish between a dispatch service and an authorized broker. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-25307.

In its petition, 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. 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.

TIA’s petition responds in large part to a proceeding that sought comment until November 18 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. (For details of the petitions, see the September 2020 Regulatory Update.) For more information, including comments submitted, visit https://www.regulations.gov/docket?D=FMCSA-2020-0150.

FMCSA considers preemption request regarding Illinois carrier ID requirements

FMCSA seeks comments by January 4 regarding a petition filed by several motor carriers for a determination that certain carrier identification requirements imposed by the Illinois Commerce Commission are preempted by federal law. The petition was filed by Nationwide Freight Systems, Inc., Leader U.S. Messenger, Inc., and Stott Contracting, LLC. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-26668.

Ohio carrier obtains exemption for alternate cargo securement for metal coils

FMCSA has granted an exemption to K & L Trucking, Inc., allowing the Delta, Ohio-based carrier to secure large metal coils to its trailers using a cargo securement system that differs from that required by the FMCSRs. K&L's alternate system consists of a customized metal carrier affixed to the bed of its trailers and the use of a single large cargo securement strap. For more information on the alternate securement system, see the Federal Register notice at https://www.federalregister.gov/d/2020-26669.

Minnesota seeks reconsideration of CDL skills testing decision

FMCSA is requesting comments until December 30 on a request from the State of Minnesota for reconsideration of the agency’s May 2017 denial of an exemption for changes to commercial driver’s license (CDL) testing procedures and practices. The state had asked that it be allowed to combine the vehicle control skills and on-road driving portions of the CDL test and to be exempted from the American Association of Motor Vehicle Administrators 2005 Test Model Score Sheet and from the requirement that applicants must pass the pre-trip inspection portion of the exam before proceeding to the balance of the test. FMCSA had denied the exemption in May 2017 for various reasons.

For the Federal Register notice of Minnesota's petition for reconsideration, visit https://www.federalregister.gov/d/2020-26353. For prior action regarding the original exemption request, visit https://www.regulations.gov/docket?D=FMCSA-2016-0180.

Grote obtains exemption for pulsating warning lamps

FMCSA has granted Grote Industries, LLC a limited five-year exemption to allow motor carriers operating trailers and van body trucks to install amber brake-activated pulsating warning lamps on the rear of trailers and van body trucks in addition to the steady-burning brake lamps required by the FMCSRs. The agency has determined that granting the exemption would likely achieve a level of safety equivalent to or greater than the level of safety provided by the regulation. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-26772.

FMCSA grants windshield exemption to J.J. Keller, considers one for Bendix

FMCSA has granted an exemption to J.J. Keller & Associates to allow the company’s Advanced Driver Assistance Systems (ADAS) camera to be mounted lower in the windshield on CMV than is currently permitted. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-25889.

Separately, the agency requests comments by December 31 on an exemption application from Bendix Commercial Vehicle Systems to allow its advanced vehicle safety systems, which are equipped with cameras, to be mounted lower in the windshield on commercial motor vehicles than is currently permitted. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-26477.

Advocacy and Comment

Proposed changes in broker regulations

Of interest are dueling petitions filed by TIA and OOIDA dealing with the longstanding broker regulations, 49 C.F.R. 371. OOIDA, in response to what it contends are egregious brokerage commissions, wants more transparency in broker commissions and markups. TIA, on the other hand, seeks to eliminate as outdated portions of the broker regulations which require brokers to keep trust accounting showing the billing of freight charges and the transmission of net carrier payments.

From the carrier perspective, it is important that the broker be generally recognized as the agent for a customer and that the accounting regulations remain as an enforcement tool to prevent fraud and misapplication of freight charges by brokers. Too often, brokers treat their gross invoices as factorable receivables that provide them free cash flow that can be diverted from the carriers which their customers intended to pay.

The broker regulations the TIA seeks to omit are important for tracing and accountability. In one current case, an alleged broker that claimed to have FMCSA authority filed a bankruptcy petition showing it owed over 3,000 carriers. Yet it effectively claimed that “the dog ate our records” and we have no money left to pay creditors.

Other intermediaries including stockbrokers, real estate brokers, and yes, even lawyers, are expected to facilitate transactions by receiving and paying transactional charges in trust. The broker regulations in 49 C.F.R. 371.3 plus the federal self-help statute gives carriers recourse to brokers’ principals for violating these regulations are important checks on the misappropriation of funds.

In this context, the idea that the carrier is extending credit to the broker alone and could be considered a mere general unsecured creditor should be rejected. Buyers and sellers of real estate, insurance and stock do not have to make credit decisions based on the balance sheets of the realtor, the stockbroker, or the insurance agent. It is anti-competitive to think that abolishing or changing the existing rules would somehow not prejudice small carriers and small brokers if every spot market load requires a broker credit workup.

TIA’s request to rescind 49 C.F.R. 371.3 substantially undermines motor carrier rights to ensure proper application of freight charges and avoid broker misapplication of freight charges, which is contrary to well established case law. See Parker Motor Freight, Inc. v. Fifth Third Bank, 116 F.3d 1137 (6th Cir. 1997). It would be best to leave the broker regulations alone.

Finally, TIA is right, though, with respect to so-called “dispatch services.” Even if they do not bill and collect freight charges, they meet the definition of brokers and can hardly be heard to complain about the cost of the bond or the difficulty in complying with the broker regulations, particularly when they otherwise claim to be unregulated entities with the power to choose to make arrangements for transportation on behalf of multiple carriers. As noted above, comments are due in this rulemaking on January 25.

Federal preemption of state labor laws

The FMCSA’s declaration that the Washington meal and rest break rules are preempted by the federal hours-of service regulations is helpful precedent. It is consistent with the agency's similar prior decision in California and may help set the stage for the legislative and regulatory battles ahead in Washington after the Georgia votes are tallied and the new administration takes over.

Contents

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

• Coalition urges DOL to affirm that owner-operators are independent contractors
• FMCSA seeks nominations for Motor Carrier Safety Advisory Committee
• Comment period extended until November 18 on broker transparency petitions
• FMCSA to expand pool for military younger driver program
• FMCSA rejects ELD, HOS relief for drivers traveling with pets
• Knight-Swift wins limited exemption from MVR update requirement
• FMCSA approves tank truck group’s exemption allowing pulsating brake light
• FMCSA rejects mobile medical operation request for HOS relief
• Samsara, Nauto granted windshield placement exemptions

Election

• Analysis: A Biden administration likely would pursue tighter safety regulations
• California voters approve ‘gig driver’ ballot measure

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.

Election

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.

Contents

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

• Labor Department proposes to clarify independent contract status
• OMB reviewing interim rule on agricultural commodity, livestock definitions
• TIA seeks rulemaking to end transaction reporting mandate
• FMCSA rejects bid for HOS relief for drivers using Pronto.ai systems
• UPS asks FMCSA to reconsider its denial of driver training exemption
• FMCSA rejects Ohio DPS request to modify skills test rules for veterans
• Firms receive exemption for mirror-replacement camera system
• FMCSA denies ELD exemption for pipeline services company
• Exemption granted regarding fuel systems for stationary auxiliary equipment

Legislation

• Stopgap funding bill also extends highway authorization for a year
• Rep. Gibbs introduces hiring standard bill with remote audit program
• Sen. Fischer introduces bill to loosen restrictions on agricultural hauling

Courts

• Ninth Circuit declines full court rehearing of Amazon decision
• FAAA does not preempt negligent selection lawsuit, Ninth Circuit rules

Open Dockets

• Comment period still open on various FMCSA initiatives

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.

Legislation

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.

Court

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.

Contents

Regulation and Enforcement

• FMCSA plans pilot programs on 14-hour window, younger drivers
• OOIDA, SBTC seek rulemakings to expand broker transparency
• Proposed HHS guidelines on hair testing would require backup alternative
• FMCSA retreats on carrier size analysis in Beyond Compliance study
• Railroads seek broad HOS relief for unplanned events
• IANA training now counts as intermodal inspector qualification
• J.J. Keller, Netradyne seek windshield exemptions for cameras

Courts

• More appellate courts address final-mile drivers and arbitration
• Judge rules against Uber, Lyft in AB 5 case; Ninth Circuit hears CTA case
• ATA files complaint against ocean carriers over intermodal charges

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.

Courts

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.

Contents

Regulation and Enforcement

• FMCSA plans pilot programs on 14-hour window, younger drivers
• OOIDA, SBTC seek rulemakings to expand broker transparency
• Proposed HHS guidelines on hair testing would require backup alternative
• FMCSA retreats on carrier size analysis in Beyond Compliance study
• Railroads seek broad HOS relief for unplanned events
• IANA training now counts as intermodal inspector qualification
• J.J. Keller, Netradyne seek windshield exemptions for cameras

Courts

• More appellate courts address final-mile drivers and arbitration
• Judge rules against Uber, Lyft in AB 5 case; Ninth Circuit hears CTA case
• ATA files complaint against ocean carriers over intermodal charges

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.

Courts

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.

Contents

Note: FMCSA’s emergency declaration related to COVID-19 currently runs through July 14, but the latest extension curtails the coverage of the relief. For latest version, visit https://www.fmcsa.dot.gov/COVID-19.

Legislation

• Congress extends PPP through August 8
• House passes infrastructure bill with major motor carrier provisions
• House bill would establish carrier selection standard
• House bill would expand HOS exemption for agriculture

Regulation and Enforcement

• Safety advocates/Teamsters, CVSA file petition for reconsideration of HOS changes
• MCSAC to address regulation of smaller vehicles, aging drivers
• FMCSA finalizes changes to MCSAP
• Werner gets limited ELD data exemption for transition to new supplier
• FMCSA renews DOE, SCRA exemptions

Advocacy & Comment

Legislation

Congress extends PPP through August 8

President Trump on July 4 signed legislation (S. 4116) that extends the application period for the Paycheck Protection Program through August 8. The program, which provides forgivable loans to businesses with 500 or fewer employees and certain other categories of businesses affected by the coronavirus (COVID-19) pandemic, had been scheduled to expire June 30, but Congress at the last minute extended the program. As of July 6, the Small Business Administration said that nearly $132 billion remained to be loaned. For more information on PPP and other SBA lending programs related to COVID-19, visit www.sba.gov/coronavirus.

House passes infrastructure bill with major motor carrier provisions

In a highly partisan vote, the U.S. House of Representatives on July 1 passed a large package of infrastructure legislation (H.R. 2) that incorporates the highway reauthorization language approved on June 18 by the House Transportation & Infrastructure Committee. The bill addresses investments in a wide range of activities beyond transportation, including housing, broadband, drinking and wastewater systems, clean energy, health care, and more.

During a marathon two-day session, the T&I Committee rejected Republican members’ attempts to strip out various controversial provisions regarding motor carrier regulation and enforcement, including those that would push the Federal Motor Carrier Safety Administration (FMCSA) to accelerate restoration of public Compliance, Safety, and Accountability (CSA) metrics and delay the upcoming changes to hours-of-service rules. (For other provisions included in the bill as introduced, see the June 2020 Regulatory and Legislative Update addendum distributed on June 12.)

The committee did, however, adopt a couple of important amendments, including one that would increase motor carriers’ minimum insurance coverage to $2 million from the current $750,000. The panel also adopted a measure that would require FMCSA to establish screening criteria for obstructive sleep apnea – an idea that even the Obama administration had relegated to a low priority before the Trump administration withdrew the rulemaking altogether in 2017.

Further Democrat-sponsored motor carrier-related measures were added to the bill during floor consideration. For example, the House adopted an amendment sponsored by Rep. Conor Lamb (D-Pennsylvania) requiring a study on the operational and safety performance of small commercial vehicles used in interstate commerce. Specifically, the study would address package delivery of goods moving in interstate commerce using vehicles with gross vehicle weight ratings below 10,000 pounds. Rep. Alan Lowenthal (D-California) sponsored an amendment that requires newly manufactured commercial motor vehicles (CMVs) to be equipped with universal electronic vehicle identifiers to be used by roadside inspectors. The bill also establishes a structured reporting system for data regarding the testing of automated commercial vehicles.

H.R. 2 contains a wide range of provisions that would be unacceptable to the White House or the Republican-controlled Senate, so the prospects for further action are unclear. The closest Senate counterpart to H.R. 2 is S. 2302, which was approved by the Senate Environment and Public Works Committee in January. However, that legislation focuses solely on transportation infrastructure and does not address motor carrier regulatory and enforcement, which is under the jurisdiction of the Senate Commerce Committee. Nor does it address the wide range of non-transportation provisions included in H.R. 2. Given how far apart the House and Senate are and how little time remains in the legislative session, the most likely outcome is either no action at all or a simple short-term extension of the FAST Act, which is set to expire September 30.

For more on H.R. 2, visit https://www.congress.gov/bill/116th-congress/house-bill/2. For more on S. 2302 visit https://www.congress.gov/bill/116th-congress/senate-bill/2302.

House bill would establish carrier selection standard

Reps. Bob Gibbs (R-Ohio) and Henry Cuellar (D-Texas) on July 2 introduced a bill that would require entities to ensure that any carrier they contracted to transport a load of freight on behalf of their customer (1) is properly registered with FMCSA; (2) has obtained the minimum required insurance; and (3) has not been placed out-of-service at the carrier level for any reason. For more information on the bill, visit https://www.congress.gov/bill/116th-congress/house-bill/7457.

House bill would expand HOS exemption for agriculture

In the latest of many bills to loosen the restrictions on ag haulers, Rep. John Joyce (R-Pennsylvania) introduced legislation (H.R. 7102) that would allow the HOS rules exemption regarding maximum driving and on-duty time for drivers transporting agricultural commodities and farm supplies to apply year-round. Current law provides an exception from the federal hours-of-service rules for the transportation of agricultural commodities within a 150 air-mile radius of the normal work reporting location only during planting and harvest periods which are determined by each state. The bill also would require the Department of Transportation to amend the definition of agricultural commodity to include specific commodities that are covered by the exception. For more information on the bill, visit https://www.congress.gov/bill/116th-congress/house-bill/7102.

Regulation and Enforcement

Safety advocates/Teamsters, CVSA file petition for reconsideration of HOS changes

In a move that sets up an inevitable court challenge, several safety advocacy groups and the Teamsters union on June 30 submitted a petition for reconsideration of FMCSA’s final rule modifying HOS regulations in several areas. At it stands now, the rule takes effect September 29. (For details of the final rule, see the June 2020 Regulatory and Legislative Update.) The groups seek a stay of the rule pending a decision on the petition for reconsideration.

The Commercial Vehicle Safety Alliance (CVSA) also submitted a petition for reconsideration, albeit one that is much narrower in scope. CVSA is concerned that while FMCSA apparently intended to prohibit use of the 150 air-mile radius exemption in combination with the adverse driving provision, the rule does not do so. CVSA also wants FMCSA to change its current personal conveyance guidance, under which “a driver could, in theory, drive hundreds of miles over the course of several hours all under the designation of personal conveyance,” the organization said. Finally, CVSA asked that FMCSA review existing HOS exemptions before the rule takes effect as many of them will either become obsolete or require updating.

For the petitions for reconsideration (under Comments), the final rule, and other materials, visit https://www.regulations.gov/docket?D=FMCSA-2018-0248

MCSAC to address regulation of smaller vehicles, aging drivers

FMCSA’s Motor Carrier Safety Advisory Committee (MCSAC) will hold a videoconference meeting July 13-14 to discuss several issues, including potential regulation of companies using vehicles with gross vehicle weight ratings of less than 10,000 pounds to deliver goods. MCSAC also will address the aging of the CMV workforce and the impact of the legalization of hemp on the safety oversight of CMV drivers.

In a Federal Register notice, FMCSA said that “there appears to be a gap in safety oversight of both drivers and vehicles” in operations that use small vehicles. MCSAC members will hear from agency experts on trends in crash and highway safety data. This issue has received increasing attention in recent years as e-commerce purchasing has soared. Indeed, the House-passed infrastructure bill (H.R. 2) requires a study of the safety of such operations.

In considering the impact of aging drivers, MCSAC will consider data on the distribution of CMV drivers by age. Finally, FMCSA will brief members on how legal transportation of hemp could affect the agency’s view of what happens if drivers transporting hemp test positive for tetrahydrocannabinol.

The MCSAC videoconference is open to the public. For more information, visit the MCSAC’s webpage at https://www.fmcsa.dot.gov/advisory-committees/mcsac/welcome-fmcsa-mcsac. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-13709.

FMCSA finalizes changes to MCSAP

FMCSA issued a final rule finalizing its proposed changes to its financial assistance programs, including amendments based on the funding formula recommendations derived from the Motor Carrier Safety Assistance Program Formula Working Group. This rule, which is effective July 24, reorganizes the agency's regulations to create a standalone subpart for the High Priority Program and includes other programmatic changes to (1) reduce redundancies, (2) require the use of three-year MCSAP commercial vehicle safety plans (CVSPs), and (3) align the financial assistance programs with FMCSA’s current enforcement and compliance programs. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-11464.

Werner gets limited ELD data exemption for transition to new supplier

FMCSA has granted Werner Enterprises a one-year exemption from the requirement that certain data fields be included in electronic RODS files presented by ELDs. Werner had requested that, during the first eight days that each of its drivers transitions to an ELD from its new supplier, Platform Science, five specific data fields in the RODS files accessible through the in-cab ELD unit be left blank due to file compatibility issues between the suppliers' systems. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-14496.

FMCSA renews DOE, SCRA exemptions

FMCSA has renewed existing exemptions from the 30-minute rest break provision of the HOS regulation held by the U.S. Department of Energy and the Specialized Carriers & Rigging Association. For the DOE renewal Federal Register notice, visit https://www.federalregister.gov/d/2020-14497. For the SCRA renewal Federal Register notice, visit https://www.federalregister.gov/d/2020-13597.

Advocacy and Comment

Three recent regulatory and legislative issues are worth commenting on this month.

(1) SMS and its misuse by plaintiff’s bar is not a dead letter but it should be

The FMCSA has not complied with the FAST Act by submitting a corrective action plan. Both the NAS and the Inspector General declined to approve its efficacy. Even the Agency has acknowledged that data generated by the Agency for its own use is not admissible in court and a recent ATRI study highlights misuse of SMS as a significant contributing factor to nuclear judgments and higher insurance costs. Yet to date, the industry support has not coalesced in taking advantage of these findings.

In Section 7202 of its version of the new reauthorization bill, the House majority proposed to advance SMS as a new safety fitness rule, sunsetting the FAST Act requirements without explanation. The FAST Act terminates on September 30 but its unfulfilled requirements are not automatically otherwise trumped.

While the House initiative is unlikely to be law in an election year, the industry should not be caught off guard. Given the uncertain outcome of the Fall election, this issue cannot be left to partisan politics particularly when the facts and law are on our side and useful due process rules have been implemented by the Department of Transportation. It is time to insist the FMCSA move on and abandon SMS as a viable basis for a Safety Fitness Determination and to ensure it is not misused in crash litigation.

(2) Final Mile Issues

The rise of Amazon and Uber has highlighted a regulatory dilemma. Home delivery of freight which is a continuation of an inbound pool shipment is interstate freight. Yet, sprinters and vans which make home delivery which weigh less than 10,000 pounds gvw and are not subject to any FMCSA safety regulation other than the filing of $300,000 in auto liability insurance.

The abuses of the independent contractor model in the home delivery arena has made the regulatory dichotomy more apparent. The House of Representatives has expressed interest in the issue. On Monday July 13 and Tuesday July 14, the FMCSA’s Motor Carrier Safety Advisory Committee – presumably at the Agency’s urging – will consider the existing carve-out from safety regulations for smaller vehicles. This could prove interesting and divisive for vetting and credentialing purposes the industry uses the FMCSA to police carrier compliance. As one client said, home delivery is “the Wild Wild West.” Whether the FMCSA can or should become the new sheriff in town remains to be seen. For more information see https://www.federalregister.gov/documents/2020/06/25/2020-13709/meetings-motor-carrier-safety-advisory-committee-mcsac-public-meeting.

(3) Payroll Protection Program

The barn door did not shut on the Federal Government’s pandemic after big business grabbed up all the stimulus. There is money left in the Payroll Protection Program, small banks are now processing applications, and, as noted above, the time limits for qualifying for loan forgiveness have been extended for 24 weeks after the loan is received. Quite possibly there are more funds on the way.

Unfortunately, apparently carriers with independent contractors cannot qualify for loan forgiveness for using stimulus money to support independent contractors. Owner-operators must file their own application. Yet, sole proprietorships and owners of businesses who report Schedule C income can receive forgiveness by using loan proceeds as the Act requires.

Also, the government is under great pressure to answer for the hasty disbursement of large loans to businesses with no demonstrable need or necessity. As a result, the Administrator and SBA have continually issued interim rules making the loan process, and particularly the forgiveness program, more confusing, restrictive and complicated. Its most recent final rule was issued on June 26. See SBA-2020-0038-0001; Federal Register 2020-13782.

Clearly, the pandemic is far from over and the effects on the motor carrier industry are yet to be fully recognized by many niche carriers. Time restraints for spending stimulus grants and filing for loan forgiveness have been extended. For carriers who have not filed, there are now small banks which are willing to help.

Contents

Note: FMCSA’s emergency declaration related to COVID-19 currently runs through July 14, but the latest extension curtails the coverage of the relief. For latest version, visit https://www.fmcsa.dot.gov/COVID-19.

Legislation

• Congress extends PPP through August 8
• House passes infrastructure bill with major motor carrier provisions
• House bill would establish carrier selection standard
• House bill would expand HOS exemption for agriculture

Regulation and Enforcement

• Safety advocates/Teamsters, CVSA file petition for reconsideration of HOS changes
• MCSAC to address regulation of smaller vehicles, aging drivers
• FMCSA finalizes changes to MCSAP
• Werner gets limited ELD data exemption for transition to new supplier
• FMCSA renews DOE, SCRA exemptions

Advocacy & Comment

Legislation

Congress extends PPP through August 8

President Trump on July 4 signed legislation (S. 4116) that extends the application period for the Paycheck Protection Program through August 8. The program, which provides forgivable loans to businesses with 500 or fewer employees and certain other categories of businesses affected by the coronavirus (COVID-19) pandemic, had been scheduled to expire June 30, but Congress at the last minute extended the program. As of July 6, the Small Business Administration said that nearly $132 billion remained to be loaned. For more information on PPP and other SBA lending programs related to COVID-19, visit www.sba.gov/coronavirus.

House passes infrastructure bill with major motor carrier provisions

In a highly partisan vote, the U.S. House of Representatives on July 1 passed a large package of infrastructure legislation (H.R. 2) that incorporates the highway reauthorization language approved on June 18 by the House Transportation & Infrastructure Committee. The bill addresses investments in a wide range of activities beyond transportation, including housing, broadband, drinking and wastewater systems, clean energy, health care, and more.

During a marathon two-day session, the T&I Committee rejected Republican members’ attempts to strip out various controversial provisions regarding motor carrier regulation and enforcement, including those that would push the Federal Motor Carrier Safety Administration (FMCSA) to accelerate restoration of public Compliance, Safety, and Accountability (CSA) metrics and delay the upcoming changes to hours-of-service rules. (For other provisions included in the bill as introduced, see the June 2020 Regulatory and Legislative Update addendum distributed on June 12.)

The committee did, however, adopt a couple of important amendments, including one that would increase motor carriers’ minimum insurance coverage to $2 million from the current $750,000. The panel also adopted a measure that would require FMCSA to establish screening criteria for obstructive sleep apnea – an idea that even the Obama administration had relegated to a low priority before the Trump administration withdrew the rulemaking altogether in 2017.

Further Democrat-sponsored motor carrier-related measures were added to the bill during floor consideration. For example, the House adopted an amendment sponsored by Rep. Conor Lamb (D-Pennsylvania) requiring a study on the operational and safety performance of small commercial vehicles used in interstate commerce. Specifically, the study would address package delivery of goods moving in interstate commerce using vehicles with gross vehicle weight ratings below 10,000 pounds. Rep. Alan Lowenthal (D-California) sponsored an amendment that requires newly manufactured commercial motor vehicles (CMVs) to be equipped with universal electronic vehicle identifiers to be used by roadside inspectors. The bill also establishes a structured reporting system for data regarding the testing of automated commercial vehicles.

H.R. 2 contains a wide range of provisions that would be unacceptable to the White House or the Republican-controlled Senate, so the prospects for further action are unclear. The closest Senate counterpart to H.R. 2 is S. 2302, which was approved by the Senate Environment and Public Works Committee in January. However, that legislation focuses solely on transportation infrastructure and does not address motor carrier regulatory and enforcement, which is under the jurisdiction of the Senate Commerce Committee. Nor does it address the wide range of non-transportation provisions included in H.R. 2. Given how far apart the House and Senate are and how little time remains in the legislative session, the most likely outcome is either no action at all or a simple short-term extension of the FAST Act, which is set to expire September 30.

For more on H.R. 2, visit https://www.congress.gov/bill/116th-congress/house-bill/2. For more on S. 2302 visit https://www.congress.gov/bill/116th-congress/senate-bill/2302.

House bill would establish carrier selection standard

Reps. Bob Gibbs (R-Ohio) and Henry Cuellar (D-Texas) on July 2 introduced a bill that would require entities to ensure that any carrier they contracted to transport a load of freight on behalf of their customer (1) is properly registered with FMCSA; (2) has obtained the minimum required insurance; and (3) has not been placed out-of-service at the carrier level for any reason. For more information on the bill, visit https://www.congress.gov/bill/116th-congress/house-bill/7457.

House bill would expand HOS exemption for agriculture

In the latest of many bills to loosen the restrictions on ag haulers, Rep. John Joyce (R-Pennsylvania) introduced legislation (H.R. 7102) that would allow the HOS rules exemption regarding maximum driving and on-duty time for drivers transporting agricultural commodities and farm supplies to apply year-round. Current law provides an exception from the federal hours-of-service rules for the transportation of agricultural commodities within a 150 air-mile radius of the normal work reporting location only during planting and harvest periods which are determined by each state. The bill also would require the Department of Transportation to amend the definition of agricultural commodity to include specific commodities that are covered by the exception. For more information on the bill, visit https://www.congress.gov/bill/116th-congress/house-bill/7102.

Regulation and Enforcement

Safety advocates/Teamsters, CVSA file petition for reconsideration of HOS changes

In a move that sets up an inevitable court challenge, several safety advocacy groups and the Teamsters union on June 30 submitted a petition for reconsideration of FMCSA’s final rule modifying HOS regulations in several areas. At it stands now, the rule takes effect September 29. (For details of the final rule, see the June 2020 Regulatory and Legislative Update.) The groups seek a stay of the rule pending a decision on the petition for reconsideration.

The Commercial Vehicle Safety Alliance (CVSA) also submitted a petition for reconsideration, albeit one that is much narrower in scope. CVSA is concerned that while FMCSA apparently intended to prohibit use of the 150 air-mile radius exemption in combination with the adverse driving provision, the rule does not do so. CVSA also wants FMCSA to change its current personal conveyance guidance, under which “a driver could, in theory, drive hundreds of miles over the course of several hours all under the designation of personal conveyance,” the organization said. Finally, CVSA asked that FMCSA review existing HOS exemptions before the rule takes effect as many of them will either become obsolete or require updating.

For the petitions for reconsideration (under Comments), the final rule, and other materials, visit https://www.regulations.gov/docket?D=FMCSA-2018-0248

MCSAC to address regulation of smaller vehicles, aging drivers

FMCSA’s Motor Carrier Safety Advisory Committee (MCSAC) will hold a videoconference meeting July 13-14 to discuss several issues, including potential regulation of companies using vehicles with gross vehicle weight ratings of less than 10,000 pounds to deliver goods. MCSAC also will address the aging of the CMV workforce and the impact of the legalization of hemp on the safety oversight of CMV drivers.

In a Federal Register notice, FMCSA said that “there appears to be a gap in safety oversight of both drivers and vehicles” in operations that use small vehicles. MCSAC members will hear from agency experts on trends in crash and highway safety data. This issue has received increasing attention in recent years as e-commerce purchasing has soared. Indeed, the House-passed infrastructure bill (H.R. 2) requires a study of the safety of such operations.

In considering the impact of aging drivers, MCSAC will consider data on the distribution of CMV drivers by age. Finally, FMCSA will brief members on how legal transportation of hemp could affect the agency’s view of what happens if drivers transporting hemp test positive for tetrahydrocannabinol.

The MCSAC videoconference is open to the public. For more information, visit the MCSAC’s webpage at https://www.fmcsa.dot.gov/advisory-committees/mcsac/welcome-fmcsa-mcsac. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-13709.

FMCSA finalizes changes to MCSAP

FMCSA issued a final rule finalizing its proposed changes to its financial assistance programs, including amendments based on the funding formula recommendations derived from the Motor Carrier Safety Assistance Program Formula Working Group. This rule, which is effective July 24, reorganizes the agency's regulations to create a standalone subpart for the High Priority Program and includes other programmatic changes to (1) reduce redundancies, (2) require the use of three-year MCSAP commercial vehicle safety plans (CVSPs), and (3) align the financial assistance programs with FMCSA’s current enforcement and compliance programs. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-11464.

Werner gets limited ELD data exemption for transition to new supplier

FMCSA has granted Werner Enterprises a one-year exemption from the requirement that certain data fields be included in electronic RODS files presented by ELDs. Werner had requested that, during the first eight days that each of its drivers transitions to an ELD from its new supplier, Platform Science, five specific data fields in the RODS files accessible through the in-cab ELD unit be left blank due to file compatibility issues between the suppliers' systems. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-14496.

FMCSA renews DOE, SCRA exemptions

FMCSA has renewed existing exemptions from the 30-minute rest break provision of the HOS regulation held by the U.S. Department of Energy and the Specialized Carriers & Rigging Association. For the DOE renewal Federal Register notice, visit https://www.federalregister.gov/d/2020-14497. For the SCRA renewal Federal Register notice, visit https://www.federalregister.gov/d/2020-13597.

Advocacy and Comment

Three recent regulatory and legislative issues are worth commenting on this month.

(1) SMS and its misuse by plaintiff’s bar is not a dead letter but it should be

The FMCSA has not complied with the FAST Act by submitting a corrective action plan. Both the NAS and the Inspector General declined to approve its efficacy. Even the Agency has acknowledged that data generated by the Agency for its own use is not admissible in court and a recent ATRI study highlights misuse of SMS as a significant contributing factor to nuclear judgments and higher insurance costs. Yet to date, the industry support has not coalesced in taking advantage of these findings.

In Section 7202 of its version of the new reauthorization bill, the House majority proposed to advance SMS as a new safety fitness rule, sunsetting the FAST Act requirements without explanation. The FAST Act terminates on September 30 but its unfulfilled requirements are not automatically otherwise trumped.

While the House initiative is unlikely to be law in an election year, the industry should not be caught off guard. Given the uncertain outcome of the Fall election, this issue cannot be left to partisan politics particularly when the facts and law are on our side and useful due process rules have been implemented by the Department of Transportation. It is time to insist the FMCSA move on and abandon SMS as a viable basis for a Safety Fitness Determination and to ensure it is not misused in crash litigation.

(2) Final Mile Issues

The rise of Amazon and Uber has highlighted a regulatory dilemma. Home delivery of freight which is a continuation of an inbound pool shipment is interstate freight. Yet, sprinters and vans which make home delivery which weigh less than 10,000 pounds gvw and are not subject to any FMCSA safety regulation other than the filing of $300,000 in auto liability insurance.

The abuses of the independent contractor model in the home delivery arena has made the regulatory dichotomy more apparent. The House of Representatives has expressed interest in the issue. On Monday July 13 and Tuesday July 14, the FMCSA’s Motor Carrier Safety Advisory Committee – presumably at the Agency’s urging – will consider the existing carve-out from safety regulations for smaller vehicles. This could prove interesting and divisive for vetting and credentialing purposes the industry uses the FMCSA to police carrier compliance. As one client said, home delivery is “the Wild Wild West.” Whether the FMCSA can or should become the new sheriff in town remains to be seen. For more information see https://www.federalregister.gov/documents/2020/06/25/2020-13709/meetings-motor-carrier-safety-advisory-committee-mcsac-public-meeting.

(3) Payroll Protection Program

The barn door did not shut on the Federal Government’s pandemic after big business grabbed up all the stimulus. There is money left in the Payroll Protection Program, small banks are now processing applications, and, as noted above, the time limits for qualifying for loan forgiveness have been extended for 24 weeks after the loan is received. Quite possibly there are more funds on the way.

Unfortunately, apparently carriers with independent contractors cannot qualify for loan forgiveness for using stimulus money to support independent contractors. Owner-operators must file their own application. Yet, sole proprietorships and owners of businesses who report Schedule C income can receive forgiveness by using loan proceeds as the Act requires.

Also, the government is under great pressure to answer for the hasty disbursement of large loans to businesses with no demonstrable need or necessity. As a result, the Administrator and SBA have continually issued interim rules making the loan process, and particularly the forgiveness program, more confusing, restrictive and complicated. Its most recent final rule was issued on June 26. See SBA-2020-0038-0001; Federal Register 2020-13782.

Clearly, the pandemic is far from over and the effects on the motor carrier industry are yet to be fully recognized by many niche carriers. Time restraints for spending stimulus grants and filing for loan forgiveness have been extended. For carriers who have not filed, there are now small banks which are willing to help.

Contents

For the latest FMCSA guidance related to COVID-19, visit https://www.fmcsa.dot.gov/COVID-19.

Regulation and Enforcement

• FMCSA relaunches Crash Preventability Program
• NPRM would downgrade CDLs, CLPs for positive drug tests
• Safety technology firm seeks HOS relief for drivers using its systems
• SBTC seeks reconsideration of broker bond exemption denial
• FMCSA again denies SBTC’s ELD exemption bid
• Pipeline services company seeks ELD exemption
• Werner seeks limited ELD data exemption for transition to new supplier
• Samsara seeks windshield placement exemption for dash camera
• McKee Foods Transportation sleeper berth exemption renewed
• FMCSA requests comments on DOE, SCRA exemption renewals

Advocacy and Comment

• Crash Preventability Program and Paycheck Protection Program 2

Regulation and Enforcement

FMCSA relaunches Crash Preventability Program

The Federal Motor Carrier Safety Administration (FMCSA) has decided to resume ruling on the preventability of certain categories of commercial motor vehicle (CMV) crashes in a new program that expands on the categories of crashes to be reviewed beyond those in the pilot program; excludes crashes deemed not preventable from the Safety Measurement System (SMS); and streamlines the review process. Motor carriers that have an eligible crash that occurred on or after August 1, 2019 may submit a request for data review (RDR) with the required police accident report and other supporting documents, photos, or videos through the agency’s DataQs website (https://dataqs.fmcsa.dot.gov).

Although FMCSA rejected the Motor Carrier Regulatory Reform Coalition’s (MCRR) position that the proposed changes be made through notice and comment rulemaking, the agency acknowledged in a draft Federal Register notice the concerns expressed by MCRR and the National Association of Small Trucking Companies (NASTC) that preventability would be conflated with fault and that this confusion could lead to negative outcomes in insurance rates and private litigation.

FMCSA emphasized that determinations on crash preventability do not establish legal liability, fault, or negligence by any party. “Fault is generally determined in the course of civil or criminal proceedings and results in the assignment of legal liability for the consequences of a crash,” FMCSA said in the draft notice. “By contrast, a preventability determination is not a proceeding to assign legal liability for a crash. Under 49 U.S.C. § 504(f), FMCSA’s preventability determinations may not be admitted into evidence or used in a civil action for damages and are not reliable for that purpose.”

In response to MCRRC and NASTC concerns about the potential conflation of preventability and fault – and the Commercial Vehicle Safety Alliance’s concerns about the impact on state criminal proceedings – FMCSA has added a disclaimer to the SMS website that states:

A crash preventability determination does not assign fault or legal liability for the crash. These determinations are made on the basis of information available to FMCSA by persons with no personal knowledge of the crash and are not reliable evidence in a civil or criminal action. Under 49 U.S.C. § 504(f), these determinations are not admissible in a civil action for damages. The absence of a not preventable determination does not indicate that a crash was preventable.

The agency also will provide language in its notifications to submitters, as it did in the demonstration program, that determinations are not appropriate for use by private parties in civil litigation and that they do not establish legal liability, fault, or negligence. The language also confirms that crash preventability determinations will not affect safety ratings or result in any penalties or sanctions.

For more information on the CPP, including a link to the draft Federal Register notice, visit https://www.fmcsa.dot.gov/crash-preventability-determination-program.

NPRM would downgrade CDLs, CLPs for positive drug tests

FMCSA is requesting comments by June 29 on a notice of proposed rulemaking (NPRM) that would require states to query the drug and alcohol clearinghouse before issuing, renewing, upgrading, or transferring a commercial driver’s license (CDL) or commercial learner’s permit (CLP). The agency would prohibit states from taking such actions for individuals prohibited from driving a CMV due to drug and alcohol violations.

FMCSA also proposes to change how reports of actual knowledge violations, based on citations for driving under the influence (DUI) violations are maintained in the clearinghouse. Under the NPRM, a driver who is issued a citation for a DUI would still be flagged in the clearinghouse as such even if the driver is not ultimately convicted of the offense. Although the citation would remain in the record, drivers who are not convicted of a DUI could petition FMCSA to add documentary evidence to that effect to their clearinghouse record.

The December 2016 final rule on the drug and alcohol clearinghouse required state driver’s licensing agencies (SDLAs) to query the clearinghouse before issuing, renewing, transferring, or upgrading a CDL. The American Association of Motor Vehicle Administrators (AAMVA) petitioned for reconsideration of that requirement, saying that the authority for acting based on federal clearinghouse records should remain with FMCSA and the employer. In response to AAMVA petition, FMCSA in December extended the compliance date for the mandate that SDLAs query the database until January 6, 2023 so that it could consider a rulemaking on what role SDLAs would play in the process.

In the NPRM, FMCSA proposes that SDLAs be required to downgrade CDLs and CLPs once notified by the clearinghouse that a driver is prohibited from operating a CMV due to a positive drug test. Under the rule in place today, such drivers are prohibited from operating CMVs, but there is no mechanism for changing their CDL or CLP status.

The NPRM also proposes to change how an employer’s report of actual knowledge of a driver’s drug or alcohol use is maintained in the clearinghouse. The current rule allows drivers to petition FMCSA to remove such notifications from the clearinghouse if a DUI citation does not result in a conviction. The NPRM instead would retain an employer’s report regardless of whether the driver is ultimately convicted, although drivers can petition FMCSA to add the fact that they were not convicted to the record. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-08230.

Safety technology firm seeks HOS relief for drivers using its systems

FMCSA is requesting comments by May 20 on an application by Pronto.ai, Inc. on behalf of its interstate motor carrier customers for an exemption from the 11-hour driving limit and 14-hour driving window in the hours-of-service (HOS) regulations. Specifically, Pronto requests that 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, be allowed to drive up to 13 hours during a period of 15 consecutive hours after coming on duty following 10 consecutive hours off duty. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-08343.

SBTC seeks reconsideration of broker bond exemption denial

FMCSA is requesting comments until June 3 on an SBTC petition for reconsideration of the March 2015 denial of an application by the Association of Independent Brokers and Agents (AIBA) for an exemption from the $75,000 bond requirement for all property brokers and freight forwarders. In a Sept. 10, 2019 letter, SBTC submitted its current request for a five-year exemption from the $75,000 broker/freight forwarder financial responsibility requirement for those brokers and freight forwarders with revenues under $15.01 million.

The initial April 10 Federal Register notice requested comments until May 11, but that notice included an incorrect docket number. A May 4 Federal Register notice corrects the docket number (FMCSA-2020-0130) and extended the comment period to June 3. For the original Federal Register notice, visit https://www.federalregister.gov/d/2020-07539. For the correction and extension of the comment period, visit https://www.federalregister.gov/d/2020-09467.

FMCSA again denies SBTC’s bid for ELD exemption reconsideration

FMCSA on April 13 rejected the Small Business Transportation Coalition’s (SBTC) request for reconsideration of its application for an exemption from electronic logging devices (ELDs) for all motor carriers with fewer than 50 employees. The agency, which denied the application in July 2019, said that after reviewing the petition for reconsideration and public comments received it “has determined that neither the applicant nor the commenters provided information that would change the Agency’s previous decision to deny the exemption.” For the Federal Register notice, visit https://www.federalregister.gov/d/2020-07730.

Pipeline services company seeks ELD exemption

FMCSA is requesting comments by May 28 on 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. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-09013.

Werner seeks limited ELD data exemption for transition to new supplier

FMCSA is requesting comments by May 13 on Werner Enterprises’ application for an exemption from the requirement that certain data fields be included in electronic RODS files presented by ELDs. Specifically, Werner requests that, during the first eight days that each of its drivers transitions to an ELD from its new supplier, Platform Science, five specific data fields in the RODS files accessible through the in-cab ELD unit be left blank due to file compatibility issues between the suppliers' systems. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-07731.

Samsara seeks windshield placement exemption for dash camera

FMCSA is requesting comments by May 13 on the application by Samsara Networks Inc. for an exemption to allow its AI Dash Cam to be mounted lower in the windshield on CMVs than is currently permitted. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-07729.

McKee Foods Transportation sleeper berth exemption renewed

FMCSA has renewed McKee Foods Transportation, LLC's exemption allowing its team drivers to take the equivalent of 10 consecutive hours off duty by splitting sleeper-berth time into two periods totaling 10 hours, provided neither of the two periods is less than 3 hours. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-08207.

FMCSA requests comments on DOE, SCRA exemption renewals

FMCSA is inviting comments on requests for renewal of existing exemptions from the 30-minute rest break provision of the HOS regulation. Comments are due May 26 on an exemption held by the U.S. Department of Energy that treats DOE-contracted motor carriers and drivers transporting security-sensitive radioactive materials similarly to drivers of shipments of explosives. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-08579.

Comments are due June 1 on an exemption held by the Specialized Carriers & Rigging Association covering drivers for all specialized carriers transporting loads that exceed normal weight and dimensional limits that require permits issued by a government authority. For the Federal Register notice, visit https://www.federalregister.gov/d/2020-09171.

Advocacy and Comment

Crash Preventability Program and Paycheck Protection Program 2

Two recent administrative actions this past month may have a continuing effect on the trucking industry.

1) Preventability study approval. As discussed above, the FMCSA, while rejecting rulemaking, has issued important policy statements that make clear that the agency’s decision to call balls and strikes on crash predictability is not a finding of fault or legal liability. By drawing this clear distinction and citing the federal statute (49 U.S.C. 504(f)) hopefully the agency has put an end to plaintiff’s bar’s mischief that FOIA information gleaned from the agency concerning past crashes is admissible in court or to troll for nuclear verdicts. Defense bar take note. These findings should be useful in opposing the admissibility of crash preventability findings to exacerbate judgments against carriers.

2) Payment Protection Program Part 2. Across industries PPP has been roundly criticized as not reaching the neediest small businesses affected by the pandemic. Distributed by gatekeeper banks which, with unfettered restrictions, showed preference for their preferred customers, funds were quickly exhausted with large payments often to well-heeled recipients with no evidence of correlation to the pandemic quarantine or loss of business. Particularly shut out were small motor carriers, sole proprietors, and owner-operators, which were not preferred borrowers and which were frustrated by changing Treasury rules that prejudiced pass through to sole proprietors, commission sales agents, anyone paid on a Form 1099, and independent contractors and owner-operators in particular.