Trucking Industry Gets Some Predictability With Bill Passage

Washington D.C. seems to contain a political environment where little if anything gets done anymore. As a refreshing change from this culture, the trucking industry should benefit from the recent passage of a six-year highway bill. The final vote in the house on the bill was 363 to 64 in favor.

While there were some positive aspects to the bill, the trucking industry did not get everything that they wanted. The amendment process lasted for two days and the house voted out several initiatives sought after by the trucking industry. The bill fell short of the spending that the White House originally asked for in their budget. Now the bill goes to the U.S. Senate for approval before it heads to the White House for a signature of approval or veto.

Positive Changes for Trucking Industry

Among the changes being heralded by the industry are the improvements that roads will see because of increased spending. This should increase safety and efficiency in the areas where money is spent. In total the bill calls for $325 billion in spending over a six-year period.

Additionally, an amendment was passed that deals with state wage and labor laws. As this blog has discussed in the past, there has been a rash of litigation going after trucking companies for violating state labor laws related to wages, breaks, and other provisions. The position of companies in this fights has been that the Federal Aviation Administration Authorization Act preempts states from regulating truck drivers and trucking company’s wages.

Instead of continuing the fight over this dispute with state, the industry pushed for Congress to clarify the issue. The amendment will keep states from applying state labor laws to truckers or their companies when they are subject to the Federal Department of Transportation hours of service rules. This was particularly welcome news to trucking companies doing business in California and other states within the 9th Circuit Court of Appeals’ jurisdiction.

Failed Initiatives

The bill passage was not a complete victory for trucking companies. One amendment that sought to increase the possible load weights of trucks traveling on interstate highways was defeated. So while some states allow for 90,000 pound loads with a sixth axle, that will not be the case for the entire country. Critics of the non-passage argue that failing to include this in the bill will hurt American competitiveness.

Other measure that failed to reach a majority vote included doing away with FMCSA’s CSA scores. That system puts gives trucking companies of a certain size a grade that potential customers can look up and decide whether they want to use the company for business.  An amendment to do away with a future graduated CDL program was also voted down.

Trucking Law Firm for the Future

At Anderson and Yamada, P.C. we track and follow all the important developments in the trucking industry. You can rest assured that we can give the counsel and advice that your company deserves when it comes to the laws, regulations, and rules that impact the trucking industry. Contact us about your trucking law needs.

A 40 Year Review: From Economic Regulation to Safety Regulation

Last month was my fortieth year anniversary of practicing transportation law. When I began practicing in 1975 the focus of the ICC was on economic regulation that limited the service carriers could provide both geographically and commodity-wise. Existing carriers could protest an application for new or an extension of authority and did so aggressively. To obtain authority to provide service a carrier had to establish at an administrative hearing that it was required by the “present or future public convenience and necessity”, which the protestants argued and presented evidence was not the case. Economic regulation also included rate regulation and the publication and filing of tariffs that had the force of law. The “filed rate doctrine” required a carrier to collect its tariff rate under all circumstances.  Brokers were virtually non-existent because they were required to charge their brokerage fee in addition to the carrier’s tariff charges.  Economic deregulation proceeded at a rapid pace to where we are today where essentially anyone with the desire and nominal resourses can obtain operating authority.

Safety regulation is now the face of regulation.  The FMCSA’s implementation of its Compliance, Safety, Accountability (CSA) program, and its subprogram Safety Measurement System (SMS), in 2010 has impacted all carriers and will continue to unless Congress reins it in. In addition, the FMCSA was on the cusp of implementing its Unified Registration System (URS) last Friday, October 23, until it delayed implementation of virtually all provisions until September 30, 2016.

The URS (not to be confused with the Unified Carrier Registration (UCR) system) requires Form MCSA-1 to be filed on-line by all for-hire carriers (exempt and non-exempt) and private motor carriers, brokers, freight forwarders, intermodal equipment providers, hazmat safety permit applicants and cargo tank facilities.  All entities filing will be assigned a USDOT number that will be the only identifier issued. There will no longer be MC, FF or MX number assigned but they can continue to be used, although the FMCSA encourages carriers to remove them from vehicles. This means that it is possible for a carrier, freight forwarder or broker to use their old numbers as the distinct identifier required by MAP-21.

An MCSA-1 will need to be filed within 30 days of any change in operation, including name, address and other contact information, for cancellation of registration, for reinstatement of registration, for designation or changes of process agents, and by both the transfer and transferee when a registration/operating authority is transferred (in order to track owners and prevent reincarnated or chameleon carriers).  Most important, a biennial update must be filed every two years. The FMCSA will send out a reminder letter 30 days before a biennial update is due, and failure to file the update will result in the registration being deactivated and the possible imposition of civil penalties.

The MCSA-1 is proposed to be an interactive on-line application akin to tax preparation software, but it is not yet on-line. The hard copy is 26 pages long and likely will be confusing to many filers, many of who will need outside assistance. In addition, the application process undoubtedly will become slower, probably much slower than the time it takes now, which is about 45 days if the applicant has its insurance and process agent filings ready to file without delay.

Entities that already have USDOT numbers have been granted a one year reprieve. However, for those entities that do not have a USDOT number, they will need to begin using the MCSA-1 form to file on-line beginning December 12, 2015, about seven weeks from now. How that works remains to be seen. This seven week period presents a window of opportunity. Entities that need to apply for authority can do it between now and December 12 under the current system that is known. For example, a carrier that wants to set up a broker subsidiary or affiliate as a separate entity, or vice versa, can do that under the current system for the next seven weeks. After December 12 the MCSA-1 on-line application will be required.

The foregoing short summary points out only some of the provisions of the new URS system. It is by no means a complete and comprehensive summary. If you have any questions about the URS, please call John or Kevin at 503-227-4586.

Proposed Legislation to Create National Hiring Standard, Reduce Influence of CSA BASICs

U.S. House representatives have introduced an amendment to H.R. 1120 that would affect the trucking industry in several ways. H.R. 1120 was originally introduced by the House in 2013 as a way to prevent uncertainty in the labor market, and the amendment seeks to do the same with the trucking industry. The overall goals of the proposed language are to improve interstate commerce through creating a national standard for motor carriers.

What H.R. 1120 Would Do

The primary purpose of the new proposal would be to nationalize hiring standards for motor carriers. Under the language of of the bill, freight forwarders, brokers, shippers, and receivers would be required to do the following before hiring a motor carrier:

  • Ensure that the motor carrier has current and accurate registration with the Federal Motor Carrier Safety Administration;
  • Check that the motor carrier has the minimum amount of insurance required under law; and
  • Check that the motor carrier does not have an “unsatisfactory” rating for safety.

The proposed standards are a way to put nationally recognized best practices into law..

Currently the FMCSA uses the Compliance, Safety, Accountability program to quantify and rate each motor carrier under each motor carrier’s Behavior, Analysis, and Safety Improvement Categories, known as CSA BASICs. But according to many in the industry, the current standards and rules under CSA BASICs are confusing and should not be used as a tool in hiring motor carriers. CSA BASICs rates a motor carrier on the following categories:

  • Unsafe Driving;
  • Hours-of-Service Compliance;
  • Driver Fitness;
  • Controlled Substance/Alcohol Regulation Compliance;
  • Vehicle Maintenance;
  • Hazardous Materials Compliance; and
  • Crash Indicator.

While rating motor carriers based on CSA BASICs can be helpful to the FMCSA, it too often is overly complicated for those companies hiring motor carriers. If passed, the bill would replace this system by simply requiring a freight forwarder, shipper, receiver, or broker to find out whether the motor carrier is safe or not.

Impact on the Industry

This proposed legislation would go a long way to provide stability to an increasingly unstable legal landscape. As many transportation companies know, negligent selection of a motor carrier can cripple a company’s business plans. CSA BASICs does not help in that regard because it increases the number of ways a plaintiff can accuse a company of being negligent. Of course brokers, shippers, receivers, and freight forwarders have a responsibility to act reasonably and safely in selecting a motor carrier, but CSA BASICs has many categories that can be picked apart and scrutinized by plaintiff’s attorneys. As a way to mitigate that problem, under the proposed legislation in H.R. 1120, hiring would be based on a simple safe or not safe rating issued by the FMCSA. Having one standard that companies can look to before hiring a motor carrier can go a long way in stabilizing the industry.

The trucking industry’s legal landscape continues to change and develop. As it does, trucking companies will be well served to have a truck law focused law firm on their side to help them when they need it. The attorneys at Anderson and Yamada, P.C. are ready to represent you and your company’s interests.

FMCSA Updates SMS Methodology

The Federal Motor Carrier Safety Administration (FMCSA) has enhanced the Safety Measurement System (SMS) Methodology so that it includes violations based on new cell phone use regulations and provides more detailed breakouts of some existing brake, wheel, and coupling regulations. In February, when the January snapshot is released, motor carriers may notice the following two changes.

  1. The addition of five texting and cell phone use violations in the Unsafe Driving Behavior Analysis and Safety Improvement Category (BASIC) as outlined below. The violations reflect FMCSA’s decision on January 3, 2012 to ban commercial drivers from using mobile telephones while driving, which includes a ban on texting. Motor carriers should discuss the new violations with their drivers to ensure that they are aware of these requirements.
    Added Carrier SMS Unsafe Driving BASIC Violations
    Section Violation Description Shown on Driver/Vehicle Examination Report Given to Commercial Motor Vehicle (CMV) Driver after Roadside Inspection Violation Group Description Violation Severity Weight
    177.804(b) Failure to comply with 49 CFR 392.80 – Texting while Oper a CMV – Placardable HM Texting 10
    177.804(c) Fail to comply with 392.82 – Using Mobile Phone while Oper a CMV – HM Phone Call 10
    392.80(a) Driving a commercial motor vehicle while texting Texting 10
    392.82(a)(1) Using a hand-held mobile telephone while operating a CMV Phone Call 10
    392.82(a)(2) Allowing or requiring driver to use a hand-held mobile tel while operating a CMV Phone Call 10
  2. A breakout of six current Vehicle Maintenance violations into 22 that provide more descriptive and detailed information about compliance with existing brake, wheel, and coupling regulations. This change will ensure that SMS remains aligned with improvements recently made to roadside data collection systems. Those improvements are the results of a joint FMCSA and Commercial Vehicle Safety Alliance effort to increase data uniformity through improved processes and tools. This change will help to clarify who the responsible party is for the violations, either the motor carrier or the Intermodal Equipment Provider.

FMCSA is revising Appendix A of the SMS Methodology document to take these changes into account. The agency will re-post the document to the Compliance, Safety, Accountability (CSA) Website at the same time the January SMS snapshot is released. Stay tuned by subscribing to the CSA Outreach Website at http://csa.fmcsa.dot.gov/stay_connected.aspx.

Start the New Year Right with a Quick Checkup

Every business should periodically check its legal status and make sure that all information listed by various governmental agencies is up to date and correct. The checkup is not difficult and, unless you find something that needs to be updated or corrected, it should not be time consuming. Below is a list of what you should check on:

1.  Secretary of State Registrations.  Check the status of your business on the Secretaries of State websites in those states where your business is incorporated, organized or  formed, in which it is registered as a foreign corporation authorized to do business, or where you have trade name(s) registered. You need to confirm that all of the information listed is current and correct and, most importantly, that your business is in good standing. If it is not, you need to update the information.

Particular care needs to be taken in naming your registered agent. A registered agent is the person you have designated to receive legal notices on behalf of the business. Whoever is named as registered agent needs to understand the importance of the role and that adverse legal consequences likely will result if  an appropriate response is not made in a timely manner. That person should be an officer, director, member or owner of the company. Oftentimes the business’s lawyer will be the registered agent. (See below regarding the FMCSA’s BOC-3 process agent requirement.)

2.  FMCSA.  Check the FMCSA Registration and Insurance website to confirm that the information listed is current and correct and, most importantly, that all of the authority you thought you had remains active.  We recently were contacted by a carrier located in the Midwest who was totally unaware that its authority had been revoked because a cargo insurance certificate was not on file (HHG carriers must still file proof of cargo insurance).

The FMCSA requires carriers and brokers to designate agents by filing a form BOC-3. Carriers must designate agents in each state they are authorized to operate in or though, which means every state since there is no geographical limitation. Brokers are required to designate agents in any state where they have an office or write a contract, which is not necessarily every state. Nevertheless, most carriers and brokers use companies to  make “blanket filings” on their behalf, which means the company designates an agent for the carrier or broker in every state.

Who you use to make a blanket BOC-3 process agent filing can have serious consequences.  You need to know how and how quickly you will be informed of anything served on the BOC-3 process agent. You should not simply hire the lowest cost blanket company since you may pay dearly for saving a buck now.

The carrier mentioned above also ran into problems when it received a copy of a notice of a lawsuit on December 28 even though the documents were served on the carrier’s BOC-3 process agent on December 7.  The carrier stated that it had no recollection of ever hiring the blanket company.  I suspect they hired the blanket company because they received a fax solicitation from it and the price was cheap.  However, the consequences will be expensive.  The problem now is that the lawsuit was filed in small claims court where the carrier’s response was due within 14 days after the December 7 service date. Thus, the 14 day deadline had expired a week before the carrier even found about the lawsuit.  It is very likely that a default judgment for thousands of dollars will be entered against the carrier even though it may have had valid defenses to the claim.

3.  SMS &  MCS-150.  Check the SMS website and determine your safety scores in each of the basics and figure out what violations you might be able to challenge through DataQs.  If you haven’t already, spend some time looking at your scores and the information provided and learn about the new system. Of course, if any of the basic information concerning your company is incorrect, correct it.  You also need to update your carrier profile by filing an updated MCS-150 form at lease once every two years. Failure to update that information can adversely affect your CSA Basic scores.