Transportation Insurance Newsletter

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June Newsletter

FMCSA Withdraws SFD Rulemaking from Consideration
The Federal Motor Carrier Safety Administration (FMCSA) announced in the Federal Register its notice of withdrawal of the January 21, 2016 notice of proposed rulemaking (NPRM) on Motor Carriers Safety Fitness Determination (SFD). The SFD would have revised the methodology for issuance of a safety fitness determination for motor carriers. The new methodology would have determined when a motor carrier is not fit to operate commercial motor vehicles (CMVs) in or affecting interstate commerce based on the carrier’s on-road safety data; an investigation; or a combination of on-road safety data and investigation information.
The Agency announces through this notice in the Federal Register that it awaits the results of the National Academy of Sciences correlation study, as required by the FAST Act, based on that report the Agency will assess whether, and, if so, what corrective actions are advisable, and complete additional analysis before determining whether further rulemaking action is necessary to revise the SFD process.
TIA has been a supporter of the SFD rulemaking because it cleared up how safety ratings for motor carriers are presented to the public, and removed the confusion and liability traps that surround the four-tiered rating system. The entities that hire motor carriers, like 3PLs and shippers, need a clear-cut line to determine which carriers are safe to use and which carriers are not.

Administration Rolls Back Regulations
This week, the Secretaries of Transportation and Labor each announced the withdrawal of rulemakings and policy statements from the Obama Administration. On Monday, June 5, 2017, the Department of Transportation announced that it was withdrawing the 2014 Advanced Notice of Proposed Rulemaking (ANPRM) that sought to increase minimum insurance levels for motor carriers. Then, on Wednesday, June 7, 2017, new Secretary of Labor Alex Acosta announced that the Department of Labor would withdraw the previous Administrator’s Opinions on joint employment of independent contractors.
The 2014 ANPRM on motor carrier financial responsibility considered the potential for increasing the minimum insurance for commercial motor vehicles from $750,000 to potentially more than $4 million per power unit. The Department of Transportation received over 2,100 comments were received on the ANPRM, of which over 1,900 provided substantive reasoning either in favor of, or opposing, an increase. Despite the significant response, the Agency concluded that it was unable to collect sufficient data or information to support moving forward with a rulemaking on the issue. Increases in motor carrier insurance could have placed tremendous pressures on the owner-operator and independent driver community, as well as large fleets that have economies of scale, and could potentially have created a significant capacity shortage in the marketplace.
The Department of Labor joint employer standard is a major concern to all companies that work either with a franchising business model, or with independent contractors and owner-operators. Secretary Acosta’s withdrawal of the Administrator Opinions on joint employment does not change the legal responsibilities of employers under current labor law, however it does provide a clearer picture of how the Wage and Hour Division of the new Department of Labor will enforce that law. Despite this reversal, the joint employment standard as set out by the National Labor Relations Board (an independent agency) can still be applied to businesses. That standard was established in a 2015 decision that found Browning-Ferris Industries to be a joint employer, and significantly muddied what was previously a bright-line test for joint employment responsibility. It is expected that Trump Administration nominees to fill open seats on the National Labor Relations Board, as well as the Republican-controlled Congress, will take steps to roll back the impacts of the Browning Ferris decision in coming months.


April Newsletter

CROSS-BORDER OPERATIONS
The U.S. Department of Commerce reports that trucks moved more than 60% of all cross border freight, and the dollar value in December was more than 9 percent greater than a year earlier. Truck cargo grew 9.3 percent, and trucks were responsible for $3 billion in freight.  In other NAFTA news another law suit has been filed to prevent the opening of the Mexican-US border. The International Brotherhood of Teamsters the Advocates for Highway and Auto Safety and the Truck Safety Coalition, filed suit this month in the Ninth Circuit claiming that the program violated the Administrative Procedures Act. The suit relies in part, on an audit released by the Inspector General which concluded that the program failed to prove that Mexican carriers should be given access to US roadways.   We will see where this goes.
 
CSA ATTACK
This has been a tough month for the FMCSA as it faces battles on many fronts. The U.S. Senate’s Subcommittee on Surface Transportation and Merchant Marine Infrastructure, Safety, and Security of the Committee on Commerce, Science, and Transportation had hearings on the Oversight and Reform of the Federal Motor Carrier Safety Administration this month. The FMCSA faces a number of attacks on the public release of data under CSA and demands for full reform of the agency.  U.S. Rep. Lou Barletta, R-Pa., has filed HR1371, the Safer Trucks and Buses Act of 2015, in the House of Representatives. The act targets CSA and seeks removal of the data from public view. Barletta’s bill calls for FMCSA to revamp CSA and use only data “determined to be predictive of motor carrier crashes” in its scoring mechanism, prohibit the use of data from crashes in which the motor carrier was not at fault, specifically if the motor carrier’s vehicle is struck by an intoxicated driver or wrong-way driver, or if the motor carrier’s vehicle is struck while the truck driver is otherwise engaged in lawful operation.
 
CARGO THEFT 
FreightWatch has released a report indicating that while the number of verified and reported instances of cargo theft in the U.S. declined in 2014, the average loss value per incident once again increased. According to the report, the number of verified cargo theft incidents in the U.S. fell 12 percent in 2014. Electronics lead the pack as a target commodity.  The average loss value per incident rose 36 percent.  90 percent of verified thefts in 2014 occurred when the truck was stationary and unattended. The vast majority of all thefts were theft of truckloads, and 87 percent of thefts with a known location were stolen from unsecured parking areas like truck stops, public parking and roadsides. Thefts from secured parking locations actually fell from 11 percent to 2 percent. High-value electronics theft incidents tripled from 2013 to 2014, with the category seeing a 43 percent surge in the total average loss value of all electronics thefts, at $568,664. Where are the hits taking place?  Florida, California, Texas, Georgia and New Jersey lead the pack, something most cargo underwriters already know.
 
ANTI-INDEMNITY STATUES 
An Arkansas Anti-indemnification bill has moved through both chambers and has moved to the Governor’s desk.  Once signed it will become effective immediately and will make Arkansas the 42nd state to pass legislation preventing shippers from requiring indemnity clauses in their contracts.  Once the Arkansas bill becomes law, only Mississippi, Ohio, Delaware, New York, New Jersey, Rhode Island, Vermont and New Hampshire will be without anti-indemnification laws.

FMCSA RESTART STUDY 
In the Consolidated and Further Continuing Appropriations Act of 2015, Congress directed FMCSA to conduct a commercial motor carrier driver restart study. The FMCSA has started the study, which will compare 5-month driver work schedules and assess operator fatigue and safety critical events (SCEs) between the following two groups: CMV drivers who operate under the hours of service (HOS) restart provisions in effect between July 1, 2013, and December 15, 2014 AND CMV drivers who operate under the provisions as in effect on June 30, 2013. Safety critical events, driver fatigue/levels of alertness, and driver health outcomes will be evaluated using:

  • Electronic Logging Devices (ELDs) (which track drivers’ time on duty).
  • The Psychomotor Vigilance Test (PVT) (which measures alertness).
  • Actigraph watches (which assess sleep).
  • Onboard monitoring systems and/or cameras that record or measure SCEs and driver alertness.
  • The Karolinska Sleepiness Scale (KSS) (which measures drivers’ assessment of sleepiness).

 
ADDITION OF NEW SERIOUS VIOLATIONS TO SMS.
The FMCSA updated the Safety Measurement System (SMS) to add new serious violations. The following will now be considered serious violations:

  • §172.704(a)(4), Failing to provide security awareness training (Hazardous Materials (HM) Compliance Behavior Analysis and Safety Improvement Category (BASIC))
  • §172.704(a)(5), Failing to provide in-depth security awareness training (HM Compliance BASIC)
  • §383.37(c), Knowingly allowing, requiring, permitting, or authorizing an employee with more than one commercial driver’s license to operate a commercial motor vehicle (Driver Fitness BASIC)
  • §395.3(a)(3)(i), Requiring or permitting a property-carrying commercial motor vehicle driver to drive more than 11 hours (Hours-of-Service (HOS) Compliance BASIC)
  • §395.3(a)(3)(ii), Requiring or permitting a property-carrying commercial motor vehicle driver to drive if more than 8 hours have passed since the end of the driver’s last off-duty or sleeper-berth period of at least 30 minutes (HOS Compliance BASIC)

 
BTS 2014 NORTH AMERICAN FREIGHT NUMBERS 
The BTS released its North American Freight numbers report this month which reflects the transport of goods between 2010 and 2014.  The report provides excellent statistical data on the modes of transport, the goods transported and the values of product moving across this continent, too much to summarize here.  Click here to review the report.
 
BTS STATE TRANSPORTATION BY THE NUMBERS PROFILE 
The BTS also released a two-page collection of transportation information for each of the 50 states and the District of Columbia. The profiles include information on infrastructure, safety, freight transportation, passenger travel, registered vehicles and vehicle-miles traveled, economy and finance, and energy and environment. A copy of the report can be viewed here.