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Regulatory and Legislative Update - August 2021

By Dan Boaz


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.



Regulation and Enforcement

Advocacy and Comment



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.



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.

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Regulatory and Legislative Update - July 2021

By Dan Boaz


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.



Regulation and Enforcement

Advocacy and Comment



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.



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.

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Regulatory and Legislative Update - June 2021

By Dan Boaz


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.



Regulation and Enforcement

Advocacy and Comment



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.



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.

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