Henry E. Seaton, Esq.
Memphis World Trade Club
February 16, 2016
1

2

1. Hours of Service Requirements / ELDs
2. CSA 2010 / SMS Methodology / Safety Fitness
Determination
3. Efforts to make shippers, brokers and forwarders into “regulated stakeholders”
3

• Over 15 years ago with the agency’s promotion of “halfbaked science.”
• Used “restorative sleep science” to opine “10 consecutive hours off” necessary every 24 hours for long distance trucking.
• The resulting rule eliminated flexibility of sleeper berth.
• Rule put truckers on congested highways during rush hour.
• Rule terminated scheduling flexibility.
4

• 10 years later, the agency attempts to double down with ELD to eliminate logging errors.
• ELD and RODs measures truck productivity, not fatigue.
• Agency ignores best sleep science study of its own experts.
• The value of the nap.
• The use of actograph and other fatigue measuring systems.
• We are stuck with cheaper versions of the old school tachographs.
• FMCSA/Virginia Tech are studying suspended 34 hour restart.
• Speed limiters and ELDs will straightjacket driver flexibility to avoid rush hour and convoy effect on interstate.
5

• Rules frustrate drivers, particularly owner-operators “getting miles and getting home.”
• Agency’s pronouncements about interest in driver welfare ignores the loss of flexibility and human error issue-
• Tracy Morgan effect.
• How do carriers control driver’s off-duty time?
6

• In Safetea-Lu, Congress directed the agency to develop a system to:
• Replace SafeStat
• Allow the agency to give an actual safety rating to all carriers it regulates.
• The agency did not and does not now have an accurate handle on how many carriers are actually operating.
• After initiating a new carrier audit, it has always conducted audits based on an as-needed basis at the discretion of the state supervisor.
• Roadside inspection reports, crash history and whistleblowing have been used to identify carriers for audit.
7

• Double down on SafeStat.
• SafeStat ranked carriers based upon hours of service, safety infractions and vehicle maintenance.
• Everyone knew SafeStat did not accurately measure carrier performance.
• The agency spent 10 years trying to beef up its data by:
• Adding scores of non-out of service violations with no proven correlation to safety.
8

• When the agency could not submit SMS for review under rulemaking, it issued percentile rankings in December 2010 attempting to transfer its obligation to shippers and brokers with disastrous results.
• Publication was Christmas present to plaintiff’s bar.
• Estimates were 70% of the shippers and brokers thought they had to use SMS percentile rankings and carrier selection to avoid up-supply chain liability.
9

• Filed in order to:
• Make clear it was the agency’s duty to certify fit to operate is fit to use.
• Provide a defense to shippers and brokers in up-supply chain liability suits.
• Preclude the arbitrary branding of carriers based upon percentile rankings which had no relevance to safety.
• Agency entered settlement published on its website:
• “Unless a motor carrier in the SMS has received an UNSATISFACTORY safety rating pursuant to 49 C.F.R. Part 385, or has otherwise been ordered to discontinue operations by the FMCSA, it is authorized to operate on the nation's roadways.”
10

• Yet in 5 years after NASTC et al. v. FMCSA the agency continued to tout CSA percentile rankings as intended for use by “stakeholders.”
• Agency advised shippers and brokers to incorporate methodology into contracts and to bar carriers with high scores.
11

• Roadside inspections did not generate sufficient data to measure most small carriers (law of small numbers).
• Enforcement anomalies, particularly in Unsafe Driving prejudices carriers based upon where they operate, not how they operate.
• Over half the violations in Hours of Service are form and manner and have nothing to do with fatigue.
12

• Vehicle Maintenance scores are greatly affected by non outof-service items like tire, brakes and trailer lights (which kill drayman scores and led to drayman maintained chassis pools).
• The denominator used to produce nexus was based upon unwashed crash scores with an 80% error factor.
• Finally, Congress took note.
13

• Coalition of small trade associations and ASECTT were instrumental in getting GAO and IG studies critical of system.
• Gradually shippers, brokers and forwarders recognized that SMS is too toxic and too inaccurate to use.
14

15

• Immediately take down publication of SMS percentile rankings and scores.
• Initiate an 18 month study followed by a corrective action plan addressing the flaws in the data and methodology mentioned earlier.
• Not initiate any ultimate safety fitness determination with SMS data until corrective action plan was reviewed by Congress.
• Initiate no rulemaking involving the industry without full consideration of the effect of the rule on all segments – shippers, brokers and carriers.
16

• Most importantly, Congress reaffirmed NASTC et al. v. FMCSA writing into the statute: “Unless a motor carrier in the SMS has received an UNSATISFACTORY safety rating pursuant to 49 C.F.R. Part 385, or has otherwise been ordered to discontinue operations by the FMCSA, it is authorized to operate on the nation's roadways.”
• Together with existing statute, Section 31144, this language should eliminate the notion once and for all that shippers and brokers can be liable for negligent selection when using a carrier the agency certifies is fit to operate.
17

• Less than a month after the FAST Act was passed, the agency issues Safety
Fitness Determination rulemaking (over 1,500 pages including referred to documents).
• Safety Fitness Determination rule is culmination of SMS data and 10 years of the agency’s effort.
• It is warmed over SafeStat using the very data that Congress told the agency could not be used.
• Group of 8 associations have objected to this “quickie rulemaking” which requires a response in 2 months.
18

• To establish the principle that a carrier can be placed out of service based upon roadside inspections alone.
• To simply ignore the APA requirement that a nexus be shown between roadside inspection scores and crashes to justify the rule.
• To seek regulatory authority for the agency to use “guidance” to move the limbo bars at any time and to change the weighting of scores as it sees fit without further rulemaking.
19

• Carriers who in a given month exceed the raw score maximum set in 2 critical BASICs would receive a 2 week notice to either file a protest or sign an agency dictated compliance order or cease all operations.
• This system, the agency claims, would place 320 carriers a year out of business based on roadside inspections alone (our analysis shows far more would be adversely affected).
• The agency retains peer groups but sets measuring stick at minimum of 11 inspections per critical
BASIC claiming as a result it can measure 75,000 carriers.
• The only safety fitness rating actually issued would be “Unfit.” All other carriers would be
“Unrated.”
• Introducing roadside inspections in the safety measurement criteria, the agency claims the number of carriers found unfit and placed out of service annually would more than double, increasing by 1,800 carriers.
20

• Our preliminary analysis shows the effects of the rule are far more dramatic because:
• It establishes the principle that roadside inspections alone is a valid measure for determining carrier safety.
• It fails to address whether fit to operate is fit to use or the whole issue of the use of SMS scores as an audit tool.
21

• Although the agency has worked on SMS methodology for the past 5 years, this rule was issued as a surprise with no advance notice of proposed rulemaking as required by Congress.
• In rulemaking, the agency is required to perform:
• A cost benefit analysis
• Examination of better alternatives
• Reg Flex and Paperwork Reduction Act analysis of effect on small business entities
• Importantly, in the FAST Act Congress directed the agency to issue no rulemaking without considering the effect on all aspects of the industry.
• Proposed rule is devoid of this analysis and does not address the fatal data and statistical flaws which the GAO and IG affirmed must be addressed.
22

• Three-fourths of the crashes are not preventable and the agency has yet to address this crucial issue.
23

• Shippers, brokers, forwarders and carriers (particularly draymen) have a vested interest in this rulemaking.
• Failure to make record can result in legacy of pain as HOS rulemaking shows.
• Coalition members:
(1) Air & Expedited Motor Carrier Association (AEMCA)
(2) The Expedite Alliance of North American (TEANA)
(3) Transportation Loss Prevention and Security Association (TLP&SA)
(4) Auto Haulers Association of America (AHAA)
(5) American Home Furnishings Alliance (AHFA)
(6) National Association of Small Trucking Companies (NASTC)
(7) Western States Trucking Association (WSTA)
(8) Alliance for Safe, Efficient and Competitive Truck Transportation (ASECTT)
24

• Part of its 5 year plan.
• Agency views shippers and brokers as “private vigilantes enforcing safety” not as beneficiaries of the agency doing its job.
• Shippers and brokers have been wooed by “stakeholder” language and fear of up-supply chain lawsuits.
25

• The last week of January the agency’s “coercion” rules went into effect.
Under these rules, any party, shipper, broker, forwarder or carrier who forces or penalizes a driver to violate FMCSA safety regulations can be fined $16,000 per account.
• Although last minute “don’t ask don’t tell” provisions may keep shippers and brokers out of the fire.
• Expect plaintiff’s bar to seize the rules as a predicate for making a case that shippers and brokers demand for on-time delivery notwithstanding delays in loading and traffic problems are recognized proximate cause of the accident.
26

• The agency’s safety initiative has:
• Reduced motor carrier flexibility and productivity;
• Placed shippers and brokers in the cross-hairs for upstream liability due to negligent selection and vicarious liability; and
• Opened the door for further regulation of shippers, brokers and carriers as participants in coercion.
27

• Over zealous shippers and 3PLs have tried to treat these problems by including in contracts:
• Use of CSA / SMS methodology;
• Cram-down of carrier duties and broadly worded indemnities on 3PLs, including safety responsibilities; and
• Tight JIT transit time requirements with draconian penalties for failure to make timed deliveries
• Abandonment of bill of lading and “reasonable dispatch” language.
• Contract should require reasonable dispatch only, contractual penalties for late deliveries sets up the “broker or carrier made me do it” response and heightened up-stream liability.
• Reassessment of just-in-time inventories and inflexible schedules may be a necessity in light of changing restriction on one truck, one driver HOS.
28

• Don’t become overly enamored with telemetrics.
• Best response to up-supply chain lawsuit is carrier was independent contractor in separate trade or business.
• Shipper and broker should not control or micromanage the carriers’ operations.
• Shippers, brokers and forwarders are mere customers of a regulated vendor.
• Plaintiff’s bar loves it when the intermediary takes on carrier duties and micromanages the driver – Sperl, Jones v. D’Souza et al.
29

• The FMCSA has become too politicized to take a balanced view of its role in regulating the motor carrier industry.
• Appealable audits, not roadside inspections alone, should be the basis of the agency discharging its sole responsibility for determining highway safety.
• Shippers, brokers and forwarders as the “shipping public” should be free to choose carriers based upon routes, rates and service without being embroiled in up-supply chain lawsuits in the absence of their own negligence.
30

• Vigilance and concerted action is important to ensure fair and open competition.
• Remember the backbone of the long haul trucking industry has always been small businesses.
31