Regulatory Overview From 30,000 Feet

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Transcript Regulatory Overview From 30,000 Feet

Regulatory Overview
From 30,000 Feet
39th Annual Conference
San Diego, California
April 22-24, 2013
Henry E. Seaton
What is the Federal Government’s Role in
Interstate Truck Transportation?
• Government’s Answer:
– Protect the traveling public against big trucks
(reduce highway fatalities involving trucks to zero)
– Ensure driver welfare
• Get drivers home very night
• Ensure drivers make living wage, can join union and get
What is Missing
from this Equation?
• The National Transportation Policy (49
USC 13101)
• It is not the agency’s job to:
– Promulgate rules of commerce.
– Foster competition.
– Encourage small privately owned businesses.
– Promote efficiency.
How Does Government/FMCSA Promote
Its Safety/Driver Welfare Agenda?
• Eliminate owner-operators
– Obama agenda
• Department of Labor and state initiative
• Obamacare
– Restrictive work rules
– CSA discriminates against owner-operators
• Eliminate small and new carriers
– New rules and technology burden
– Frustrate use of older equipment through CSA
How to Ignore Duty to Establish
Uniform Rules of Commerce and
Traditional Role of Federal Government
in Favor of Pro-Safety Agenda
• Argue Eisenhower is dead. Fixing the highways is
the state’s job.
• Sell a privatized interstate highway system to
Australian and Spanish corporations.
• Bypass rulemaking process:
– Establish rules by “internet guidance”
– Establish handpicked advisory committees
– Seed committees with labor safety groups and “big
players” seeking to curry favor and competitive advantage.
• Backlog Rulemaking
– Engage in informal “listening sessions”.
• Agency eliminates cargo insurance requirement
The Result:
The Agency’s Statement of its Core Principles
“MAP-21 tracks FMCSA’s strategic framework to improve
CMV safety by supporting its three core principles:
• Raise the bar to enter the industry and operate on our roads;
• Hold motor carrier and drivers to the highest safety standards
to continue operations; and
• Remove the highest risk drivers, vehicles, and carriers from
our roads and prevent them from operating.”
From PowerPoint, “Implementation of Moving Ahead for
Progress in the 21st Century (MAP-21) by FMCSA
What Does MAP-21 Require?
• 29 new rulemakings in 27 months
• 34 programmatic changes
• 12 uncompleted rulemakings (not counting
• 15 new reports
And the agency is going broke?
MAP-21 Safety Highlights
(New Rules to be Promulgated)
Electronic logs
New drug clearinghouse
Chameleon carriers
New entrant requirements
New driver training requirements
Sleep apnea
Unfinished Safetea-Lu
Mandates (2005)
URS – the missing 400,000 carriers
Consumer complaints
Patterns of safety violations
Two New Rules
• URS – Unified Registration System
– New fees and registration requirements for
forwarders and brokers
• Omnibus Rule
– “Non-discretionary and self-executing”
– “Likely to increase penalties and enhance safety
Watch Out – The Omnibus Rule
will include between 16 and 23
Rulemakings in
1 Federal Register Notice
Interim Final Rules
will probably be issued.
Omnibus Rulemaking was
Promised Before Christmas
• What is in it? Only insiders know.
• FFIT may be included:
Fighting Fraud in Transportation
Redefines instrumentalities of transportation
Increases bond to $75,000
Makes every carrier a broker on convenience
interlining and “cross dock” LTL
– Excludes only “interchanged” freight
• Will create as many as 50,000 new broker applications
• Must be renewed every 4 or 5 years
• 3 years experience required for new applicants
• Effective date October 2013
• Existing carriers with broker authority must split into separate
docket number
• Current rules must be changed but agency has made no
provision for this.
There is no way the agency has the
manpower to accomplish this task.
Publication of SMS Methodology and
Agency’s Duty to Certify Carrier Safety
The new rule is not ready for prime time,
it is a work in progress and the release date
has been extended 5 times so far.
In the meantime, the following
has happened:
• The agency was sued for premature publication of SMS scores
and agreed to settlement affirming its preemptive duty to
determine which carriers are safe to operate on the nation’s
roadways (NASTC et al. v. FMCSA).
• Notwithstanding the court settlement, the agency published
guidance to shippers and brokers repudiating the preemptive
effect of its own safety fitness determinations and advising
shippers and brokers to use methodology in credentialing
carriers (Guidance to Shippers and Brokers, May 2010).
• Over 50% of shippers and brokers use SMS methodology out
of fear of vicarious liability and suits today, notwithstanding
the settlement in NASTC and universal criticism of the
Results of Publication
of SMS Data
• New lawsuits against shippers and brokers.
• Insurers increasing rates and terminating
• Additional safety burdens and costs placed on
carriers with no proven decline in fatality rate.
• Small carriers and owner-operators are
particularly prejudiced by:
– The methodology
• The law of large numbers
– Profiling
• Owner-operator trucks are 4 times as likely to
be inspected
– In guidance, the agency has attempted to deputize
the shipping public to second guess the agency’s
ultimate safety fitness determination and prune the
motor carrier industry of carriers branded as “bad
– SMS is the plaintiff’s attorney crowbar to leverage
its way up the supply chain.
• If this issue is left up to the states, so much for the
Commerce Clause, deregulation and free competition
in the trucking industry.
• See ASECTT et al. v. FMCSA, in the United States
Court of Appeals for the District of Columbia, Case
No. 12-1305 – filed July 16, 2012.
• Briefs have been filed, issue is before the court.
• Publication of SMS scores is currently
ranked as the number one issue facing
the industry.
• Yet:
– There is little press about the lawsuit; and
– TIA and others decry improper use of
information yet do not mention suit.
What is the issue and why is the suit so
• Lethargy among shippers
• Competitive advantage divides industry
• Politics
– Demonize
Bad Apples
– Ignore
No Press
– Change the subject
HOS Supreme
Court Appeal
What is it all about?
• The issue is federal preemption:
– It is the FMCSA’s job, not the public’s job, to
certify safety.
– The FMCSA is solely responsible for certifying
highway safety in accordance with the Commerce
Clause and need for uniformity.
– Safe to operate equals safe to use.
Preemption is a Hot Topic
• California Ports Authority case argued before the
Supreme Court.
• Owner-operator decision in Sanchez v. Lasership,
Inc., 2012 U.S. Dist. LEXIS 122404 (EDVA)
• Undoubtedly the Court in ASECTT will not reach the
preemption argument but the agency’s abandonment
of the doctrine of federal preemption and the
application of one uniform safety standard is the
biggest threat which the industry faces.