Motor Carrier Authority

On March 5th, the FMCSA issued an order finding the Alabama Metal Coil Securement Act to be preempted because the act is more stringent than federal law but is not beneficial with respect to safety and  imposes an undue burden on interstate commerce. As such, effective April 4, 2013, the state can no longer enforce the law against interstate motor carriers.

The National Transportation Safety Board (“NTSB”) recently issued recommendations to the Federal Motor Carrier Safety Administration (“FMCSA”) after investigation of a 2011 accident where a truck crashed into a train near Reno, Nevada, killing six and injuring dozens.  NTSB recommended that FMCSA require motor carriers to look back ten years into driving-related employment history prior to hiring new drivers. The recommendation came after NTSB’s investigation revealed the truck driver in the Nevada accident had traffic citations and crashes in his commercial driving history.  We will monitor the FMCSA’s response to the recommendation.  

CBP recently announced that it will only accept petitions filed outside of the 60 day time period allowed by the CBP Form 7501 Notice of Penalty in certain limited circumstances.  Moreover, if a late filing is accepted, the cost of late filing has increased significantly. In the past, CBP would typically accept a late filed petition including an offer in compromise if the petitioner added $200 to the mitigated amount.  Now, the agency will assess a pealty of .1% of the full assessed claim (as opposed to the mitigated amount) multiplied by the number of days the petition is late.  Thus, for a $50,000 assessment that is 30 days late, the additional penalty is $1,500 (.001 x 30=.03 x $50,000= $1,500). 

As such, the firm strongly recommends that motor carriers and customs brokers that receive notices of penalty from CBP ensure that petitions are filed within the initial 60 period. 

Illinois House Bill 5101 prohibits texting or using a hand-held cell phone while driving a commercial motor vehicle - making it a serious traffic violation.  Illinois previously prohibited texting while driving for all vehicles, but cell phones were permitted.  Illinois statutes have since been amended to be in compliance with the Motor Carrier Safety Regulations law that prohibits texting and cell phone use by commercial motor vehicle drivers.

Senate Bill 2488 also prohibits cell phone use in construction or maintenance speed zones regardless of the speed limit in those zones.  Drivers can only use cell phones in voice-operated mode, which includes the use of a headset or cell phones used with single button activation.

Beginning November 1, 2012, the informed compliance period of the Canada Border Services Agency's ("CBSA") eManifest program begins.  eManifest is the third phase of the Advance Commercial Information ("ACI") program, which enhances CBSA's ability to identify potential threats to Canada while facilitating the movement of low-risk shipments across the border.  eManifest requires motor carriers, freight forwarders, and importers to electronically transmit cargo, conveyance, house bill/supplementary cargo, and importer data to the CBSA prior to arrival at the border.

Throughout the informed compliance period, which lasts from November 1, 2012 through May, 2013, the CBSA expects carriers to become eManifest-compliant.  During this six-month period, the CBSA will not deny entry to Canada or impose penalties for eManifest non-compliance; however, beginning in May, 2013, non-compliant carriers will be subject to penalties and will be denied entry.  Additional information on the implementation of eManifest can be found at http://www.cbsa.gc.ca/prog/manif/implementation-eng.html.

With the implementation of eManifest, highway carriers transporting goods into Canada are required to transmit cargo and conveyance data electronically to the CBSA prior to arrival.  The cargo and conveyance data must be received and validated by the CBSA a minimum of one hour before the shipment arrives at the border.

North Carolina has joined Arizona, Mississippi, and South Carolina in requiring employers, including motor carriers, to use the federal government's E-Verify system for evaluating employment eligibility.  The E-Verify system compares Form I-9 employment eligibility information with data from the U.S. Department of Homeland Security and the Social Security Administration to ensure a match.  E-Verify is an otherwise voluntary system, except for certain federal contractors and employers in Arizona and Mississippi.

Beginning October 1, 2012, North Carolina employers with at least 500 employees must use the E-Verify system for all new hires.  The obligation will apply to employers with 100 or more employees beginning January 1, 2013, and employers with 25 or more employees must use E-Verify as of July 1, 2013.  E-Verify requirements do not apply with respect to current employees.  

On remand from the Ninth Circuit, the United States District Court for the Southern District of California issued its decision on August 27, 2012, holding Affinity Logistics Corporation (“Affinity”), a motor carrier, carried its burden of establishing it properly classified as independent contractors a certified class of former owner-operator delivery drivers (the “contractors”) under California law.  Ruiz v. Affinity Logistics Corp., No. 05CV2125, slip op. at 21 (S.D. Cal. Aug. 27, 2012). 

The Southern District previously reached this same conclusion under Georgia law, which applies a presumption of independent contractor status, to the facts adduced at a three-day bench trial.  On appeal, the Ninth Circuit concluded California, not Georgia, law should apply to the contractors’ relationship with Affinity and remanded the case.  California law applies a presumption of employment status that a putative employer may overcome if the weight of the evidence supports a finding of independent contractor status when the court applies a multi-factor, common law right of control test.   

When it revisited the issue under California law, the Southern District applied the right of control test with “with deference for the remedial purposes of California’s protective legislation.”  Id. at 6.  This notwithstanding, the court found evidence that the contractors could “hire others to complete the deliveries Affinity hired them to do is strong evidence suggesting that Affinity did not have the requisite level of control over the manner and means of [the contractors’] work.”  Id. at 7.  The court further found the majority of the “secondary factors” considered by California courts, including, e.g., investment in equipment and opportunity for profit or loss, among others, favored independent contractor status.  Id. at 20-21. 

While the court further found Affinity exercised “some control” over the contractors, the court deemed this evidence irrelevant to the ultimate question because “this control was either unrelated to the manner and means by which [the contractors] accomplished their work, or it was a result of other factors—such as federal regulatory requirements or [customer] preferences—rather than direct control by Affinity.”  Id. at 21.

The court therefore found in favor of Affinity.  Judgment has been entered against the plaintiff and class of contractors.  Plaintiff filed a Notice of Appeal on August 29, 2012.              

In light of increased oil and gas drilling, the Federal Motor Carrier Safety Administration ("FMCSA") has proposed revisiting hours-of-service guidance for oilfield carriers. The FMCSA has traditionally granted two HOS exceptions to oilfield haulers.

One exception grants oilfield haulers a 24-hour restart after 70 hours of work in eight days. This applies to drivers who exclusively haul oil and gas equipment, such as pipe, as well as drivers who serve field operations. The second exception provides that specially trained drivers of vehicles specific to oil wells do not have to include waiting time in their on-duty time.

The FMCSA intends to clarify these exceptions. Specifically, the 24-hour restart would apply to carriers that provide direct support to oil and gas well sites, including hauling water used in the fracking process, and hauling waste away from the site. The waiting time exception would apply only to drivers of equipment that is specially built for well service, and who have been trained in the operation of that equipment.

Drivers who haul supplies, equipment and materials such as sand and water would not be eligible for the waiting time exception, even if their trucks have been somewhat modified or if they have extra training.

The FMCSA will release the proposed guidance one June 5, 2012 in the Federal Register and comments will be due in August.
 

Recently, the Federal Motor Carrier Safety Administration ("FMCSA") released its 2012-2016 strategic plan, which lays out the agency's safety-focused initiatives over the next five years. The strategic plan is built around a three-pronged approach to truck and bus safety: raise the barrier to entry to the industry; enforce high safety standards; and eliminate high-risk carriers and drivers.

Among other things, the agency plans to development a smartphone application called the "SaferBus App" in order to assist consumers in selecting a particular carrier. Additionally, the FMCSA hopes to increase accessibility to its data management system. The FMCSA plans to complete rulemaking revisions to the Safety Fitness Procedures, in accordance with the CSA. Through this rulemaking FMCSA would establish safety fitness determinations based on safety data from crashes, inspections, and violation history rather than the old compliance review. The intention is to permit the FMCSA to assess the safety performance of a greater segment of the motor carrier industry with the hope of reducing large truck and bus crashes, injuries, and fatalities. The FMCSA will also work on rulemaking revisions to the Electronic On-Board Recorders for Hours of Service Drivers to require motor carriers to install and operate Electronic On-Board Recorders (EOBRs).

Further, the FMCSA will create a single comprehensive safety ranking system that covers all regulated carriers (ie, passenger, HAZMAT property, and HHG carriers, as well as shippers, including intermodal freight, brokers, drivers, and cargo tank manufacturers or repair facilities.)  The Agency hopes to expand CSA and the number of carriers with SMS BASIC scores.

 The FMCSA's strategic plan is available at http://www.fmcsa.dot.gov/about/what-we-do/Strategic-Plan/Strategic-Plan.aspx.

On April 25, 2012, the Equal Employment Opportunity Commission (“EEOC”) issued important new guidance impacting the way employers use criminal arrest and conviction records of prospective employees to make hiring decisions.  Motor carriers (including last-mile carriers, household goods carriers, and couriers) dealing directly with homeowners, residents, and retail consumers are quite often required by their retailer customers to perform criminal background checks.  Although the EEOC’s guidance applies to “employers” as opposed to contractors of owner/operators, caution and attention are warranted.  Employers seeking to avoid liability for claims of discrimination under the disparate impact and disparate treatment prohibitions contained in Title VII are advised to evaluate their application and hiring policies to ensure compliance with the EEOC’s new guidance.

Under the EEOC’s new guidance, an employer’s (e.g. motor carrier) blanket policy or practice of excluding applicants with criminal records from employment may violate Title VII to the extent the policy strays far from Federal Motor Carrier Safety Regulations and the commercial motor vehicle driver disqualifications listed at 49 U.S.C. § 31310.  Instead, the EEOC now requires narrowly-tailored individualized assessments, or “targeted screens,” of applicants that consider the nature of the crime, the time elapsed since the arrest or conviction, and the specific responsibilities of the job for which the applicant is applying. 

With the new guidance in place, employers should expect the EEOC to step up its investigative and enforcement efforts, particularly to the extent blanket criminal background policies raise the “pattern or practice” flags most noticeable to the EEOC.  Motor carriers that “employ” drivers and helpers to conduct in-home deliveries should therefore evaluate their application and hiring policies related to the use of criminal arrest and conviction records to ensure narrow tailoring and individualized assessments in light of the new EEOC guidance.  Even contractor-model motor carriers should use reasonable efforts to avoid overly-broad screening of owner/operators.  For additional information on the new EEOC guidance, or to discuss implementing a policy that minimizes your company’s exposure on a claim of discrimination in its hiring practices, contact Greg Feary, Jim Hanson, David Robinson, or Jack Finklea in the Firm’s Indianapolis office at (317) 637-1777.
 

Beginning in 2014, Kansas will no longer have a motor carrier property tax.  The tax has applied to for-hire motor carriers operating in Kansas (regardless whether the motor carrier is actually based in the state) since 1956 as an ad valorem tax on the value of their rolling stock.  The new law, which was signed by the Kansas governor on April 6, does impose an additional registration fee on intrastate and interstate carriers operating in Kansas.  Unlike the repealed tax, however, the registration fee will apply equally to both for-hire and private carriers.

Late Friday, a South Carolina federal Court struck down the National Labor Relations Board's recently-promulgated employee rights notice-posting regulation.  The regulation, set to go into effect April 30, 2012, requires employers, including motor carriers and other transportation companies, to post a notice informing employees of their rights to engage in union and other protected, concerted activity.  The Court recognized that the NLRB had only the authority granted to it by Congress and that the NLRB exceeded that authority.  The Court's ruling contradicts last month's finding by a D.C. federal Court that Congress in fact granted broad power to the NLRB, which included power to require the proposed notice-posting.  The NLRB has not yet commented on the ruling, nor has it formally suspended the April 30 effective date of the regulation.  We will continue to monitor the matter as the proposed implementation date approaches.   

Based on analysis provided to congressional leaders, the Government Accountability Office ("GAO") found that while Federal Motor Carrier Safety Administration’s ("FMCSA") resources are limited, it could take steps to identify more "chameleon" carriers that attempt restart business after sanctions for safety violations.

Currently, the process is lengthy and involves screening applicant data against poorly performing carriers dating back to 2003, and reviewing each application.  The process can take from a couple of weeks to a couple of months. However, the increased enforcement only affects buses and movers, a mere 2% of the approximately 66,000 carriers that apply for certificates every year.

While GAO acknowledged the FMCSA does not have the staff to conduct investigations on applicants, it does believes the FMCSA could use its current data screening methods more effectively. GAO derived and tested a method that can identify applicants that have chameleon attributes. It wrote an algorithm that searched the data for matching registration information, and for previously registered carriers that had a motive to evade detection, such as a history of safety violations. GAO said it identified 1,136 new applicant carriers in 2010, an increase from 759 in 2005.  These carriers were three times more likely than other new carriers to be involved in a severe crash, GAO found.

GAO recommended the FMCSA develop a system to screen applicant data against carriers that have chameleon attributes, and apply it to all applicants. It also recommended that the agency strengthen its new entrant safety assurance program by training auditors to identify chameleon carriers.

FMCSA said it will implement the recommendations, although it is not clear when.

The Federal Motor Carrier Safety Administration ("FMCSA") announced planned improvements to the implemented in December 2010 as part of the agency’s Compliance, Safety, Accountability initiative. A preview is currently available to motor carriers and law enforcement. During this data preview period, FMCSA requests comments on the possible impact of the changes.  To comment, go to www.regulations.gov; the docket number is FMCSA 2012-0074. The changes will be available to the public in July 2012.

FMCSA says the SMS improvements are based on ongoing analysis and feedback from enforcement personnel, the motor carrier industry and other stakeholders, and are designed to more effectively identify and prioritize high-risk and other unsafe motor carriers for enforcement interventions designed to reduce commercial motor vehicle crashes and hazardous materials incidents.

 FMCSA will provide motor carriers with the ability to preview how the improvements impact their individual safety data in SMS. These improvements include:
• Changes to the SMS methodology that identify higher-risk carriers while addressing industry biases;
• Better applications of SMS results for agency interventions by more accurately identifying safety-sensitive carriers – such as carriers transporting people and carriers hauling hazardous materials – so that such firms can be selected for CSA interventions at more stringent levels; and
• More specific fact-based displays of SMS results on the SMS Website.

Last week, the Occupational Safety and Health Administration (“OSHA”) placed the Office of the Whistleblower Protection Program under the direct supervision of the agency’s head, Assistant Secretary of Labor Dr. David Michaels.  The move strongly emphasizes the heightened priority OSHA and the U.S. Department of Labor placed on employee whistleblower protections last year.

Among the whistleblower laws enforced by OSHA that are critical to motor carriers is the Surface Transportation Assistance Act, or STAA.  The STAA protects drivers and other employees from adverse employment action taken in response to complaints related to commercial motor vehicle safety.  Motor carrier liability under the STAA is significant and may include back pay, reinstatement, compensatory and punitive damages, and attorney’s fees.  OSHA’s efforts to strengthen whistleblower protections, as indicated by yesterday’s announcement, signals a continuation of the increased government scrutiny motor carriers have faced in recent years.

The Oregon Employment Department intends to initiate formal proceedings to repeal an administrative rule prohibiting the application of the Oregon For-Hire Carrier Unemployment Tax Exemption to owner-operators that obtain their equipment through motor carrier- and motor carrier affiliate-sponsored equipment acquisition programs, sometimes referred to in the industry as “leaseback” arrangements.  A taskforce comprised of industry players, with the advice and guidance of counsel and represented in large part by the Oregon and American Trucking Associations, advanced a vigorous and proactive effort to secure the repeal of the rule.  The repeal of the rule is crucial to protect the long standing utilization of leaseback arrangements by Oregon motor carriers and owner-operators.  The Employment Department resisted the efforts of the task force, but the Governor’s office ultimately intervened.  The formal repeal of the administrative rule is expected to occur at the end of the next legislative session.

 The Oregon For-Hire Carrier Unemployment Tax Exemption provides that the term “employment” excludes “transportation performed by motor vehicle for a for-hire carrier by any person that leases their equipment to a for-hire carrier and that personally operates, furnishes and maintains the equipment and provides services thereto.”  ORS 657.047(2) (emphasis supplied).  The soon-to-be repealed administrative rule defined the term “their equipment” to include only equipment “independently furnished by the service-provider, neither leased nor purchased from the for-hire carrier or from any entity affiliated with the for-hire carrier.”  OAR 471-031-0200 (certified as effective on Dec. 13, 2010).

A putative class action brought by former drivers against Performance Food Group, Inc. ("PFG") was dismissed with prejudice by a California federal judge.  The court held that the meal and rest break claims were preempted by the Federal Aviation Administration Authorization Act ("FAAA"), enacted in 1994 to preempt state trucking regulation and bars state laws related to the prices, routes or services of federally regulated motor carriers.  The dismissed class action is the second in several months, after a California federal court granted Penske Logistics LLC's motion for partial summary judgment, holding that the FAAAA trumped meal and rest break claims from a class of appliance delivery drivers and installers. In the PFG order, the court stated that the reasoning in Dilts v. Penske was persuasive.

 

The Federal Motor Carrier Safety Administration ("FMCSA") released a Supplemental Notice of Proposed Rulemaking in order to address concerns regarding its electronic onboard recorder ("EOBR") rule.  By way of background, the initial Notice of Proposed Rulemaking ("NPRM") required frequent hours of service violators to use EOBRs starting July 2012. After making changes to the proposal in light of industry suggestions, the second proposal which  proposes to expand the initial NPRM to include practically all carriers, and is intended to address concerns about the technical standards in the NPRM. However, during the revisions set forth by the FMCSA, the 7th Circuit threw out the EOBR rule, as it did not address the issue of preventing harassment through the use of EOBRs as the FMCSA was statutorily requried to do. As a result, the FMCSA went back to the drawing board and now has decided to hold public listening sessions on the harassment issue and on the technical questions before proposing a revised rule. The FMCSA will release a schedule for the listening sessions in the near future.

On December 27, 2011, the Federal Motor Carrier Safety Administration published the final rule regarding the revised hours of service ("HOS") regulations.  FMCSA's new HOS final rule reduces by 12 hours the maximum number of hours a truck driver can work within a week. Under the old rule, truck drivers could work on average up to 82 hours within a seven-day period. The new HOS final rule limits a driver's work week to 70 hours.

In addition, truck drivers cannot drive after working eight hours without first taking a break of at least 30 minutes. Drivers can take the 30-minute break whenever they need rest during the eight-hour window.

The final rule retains the current 11-hour daily driving limit. FMCSA will continue to conduct data analysis and research to further examine any risks associated with the 11 hours of driving time.

The rule requires truck drivers who maximize their weekly work hours to take at least two nights' rest when their 24-hour body clock demands sleep the most - from 1:00 a.m. to 5:00 a.m. This rest requirement is part of the rule's "34-hour restart" provision that allows drivers to restart the clock on their work week by taking at least 34 consecutive hours off-duty. The final rule allows drivers to use the restart provision only once during a seven-day period.

Companies and drivers that commit egregious violations of the rule could face the maximum penalties for each offense. Trucking companies that allow drivers to exceed the 11-hour driving limit by 3 or more hours could be fined $11,000 per offense, and the drivers themselves could face civil penalties of up to $2,750 for each offense.

The effective date of the final rule is February 27, 2011.  Commercial truck drivers and companies must comply with the HOS final rule by July 1, 2013. The rule is available on FMCSA's Web site at http://www.fmcsa.dot.gov/HOSFinalRule.