FMCSA Faces Legal Challenges With New Rule

Kevin Anderson Regulations, Transportation

The FMCSA is in the rulemaking business yet again. One of the newest rule proposals by the federal agency is Safety Fitness Determination which will classify motor carriers as unfit to work under certain circumstances. Known as SFD, the new rule will regulate and introduce new methods for the agency to label companies as safe or not. Under the current safety rating system there are three different classifications a motor carrier can have. A motor carrier is rated as either satisfactory, conditional, or unsatisfactory. The current system is the CSA and BASIC system which uses behavior analysis and safety improvement categories to rate companies, but it has come under fire by lawmakers. Criticisms of the current system include the fact that it is too complex and difficult for the regulators to enforce evenly across a large, diverse industry. What the Rule Would Do The proposed rule would seek to make …

Start the New Year Right with a Quick Checkup

Kevin Anderson Transportation

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 …

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

Kevin Anderson CSA 2010, Regulations, Transportation

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 …

Lessons from the Heyl Logistics Case – How Brokers Can Prevent a Similar Situation from Happening to Them

John Anderson Contracts, Judgments, Transportation

In our last newsletter we summarized a recent jury verdict that imposed a $1.68 million punitive damage award against Heyl Logistics, a broker. Heyl was found liable  for hiring an unauthorized and unqualified carrier.  We received many comments in response. One response simply asked the following question:  “So what can be done to prevent this from happening to other brokers?” The quick and short answer the question is to properly qualify your carriers. This applies to both shippers and brokers who hire carriers and, in addition, applies to carriers who hire other carriers on occasion. However, what does it mean to properly qualify your carriers? One approach suggested by some transportation attorneys is to rely solely on the FMCSA/USDOT’s determination. That is, if a carrier’s motor carrier operating authority is “active,”  the required proof of insurance is on file, and the carrier does not have an “unsatisfactory” safety rating or …

FMCSA Updates SMS Methodology

Kevin Anderson CSA 2010, Transportation

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. 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 …

Start the New Year Right with a Quick Checkup

John Anderson CSA 2010, Regulations, Transportation

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 …

Updates from the TLA Annual Conference

Kevin Anderson CSA 2010, Regulations, Transportation

We (John & Kevin) recently attended the Annual Conference of the Transportation Lawyers Association and want to pass on to you several of the major issues discussed. To CSA or Not CSA. As you know, the issue of “carrier qualification” under CSA is a hot topic, and it has been argued and generally accepted by the industry that shippers, brokers and other users of carriers must use CSA and the “basics” to establish standards for the carriers they will use. This prevailing understanding was turned upside down by several presenters who argue that only the FMCSA is empowered to decide if a carrier is safe enough to operate. That is, 49 USC 385.1 states that Part 385 “establishes FMCSA’s procedures to determine the safety fitness of motor carriers, to assign safety ratings, to direct motorcarriers to take remedial action when required, and to prohibit motor carriers determined to be unfit …

Double Brokering Redux

Andrew Schlegel Contracts, Q & A, Transportation

Question: If a broker tenders a shipment to a carrier and the carrier double brokers or subcontracts the shipment to another carrier, what information does the broker need if the broker was not aware that the shipment had been tendered to another carrier? Answer: Our recommendation is for every broker to have a written Broker-Carrier Contract that prohibits the carrier from re-brokering the shipment and, further, makes the carrier fully liable for any loss even if it is re-brokered in violation of the contract. A broker that learns after the fact that one of its shipments was double brokered could do nothing and hope that a problem does not arise. However, this is not the prudent course of action. A more prudent approach is for the broker to find out as much information as possible about the secondary carrier that actually transported the shipment including, at a minimum, the secondary …

Plaintiff’s Attorneys Try to Take Advantage of CSA

Kevin Anderson CSA 2010, Regulations, Transportation

We all knew it was coming; plaintiff’s attorneys have started to devise ways to use CSA against motor carriers. The American Association for Justice (formerly the Association of Trial Lawyers of America) published an article in its February 2011 magazine outlining how plaintiff’s attorneys (now wanting to be known as “civil justice attorneys”) should use particular discovery steps to use CSA and PSP data against motor carriers. While it is disconcerting to know that the plaintiff’s attorneys are organizing around CSA, it is beneficial to know how they plan to use the data so you can take steps to protect your company. The article had three main areas of focus. First, the Pre-employment Screening Program (PSP). We have discussed this program previously here. The plaintiff’s attorneys plan to use the PSP as a double edged sword. If you do not utilize the program to screen job applicants for safety violations, …

FMCSA Begins Sending CSA Warning Letters

Kevin Anderson Citations / Violations, CSA 2010, Regulations, Transportation

In February the FMCSA began sending warning letters to motor carriers.  This article will provide a basic overview of what a warning letter is, who will receive a warning letter, and what to do if you receive a warning letter. Warning letters are the initial intervention under CSA.  A warning letter provides early contact with carriers who have identifiable, but not yet severe, safety problems.  It is designed to make carriers aware of their safety performance issues so they can address them early, and outlines possible consequences of continued safety problems. A sample warning letter can be found here. A carrier will receive a warning letter if its Safety Measurement System (SMS) score exceeds the threshold in any Behavior Analysis and Safety Improvement Category (BASIC) resulting in the assignment of an “Alert.”  The SMS calculates a measure for each BASIC as a percentile on a 0-100 scale.  A lower percentile …