Regulatory and Legislative Update - August 2024

Contents

Regulation and Enforcement

• FMCSA supports legislation to assess penalties for unlawful brokerage
• FMCSA Holds Final Listening Session on SFD Initiative
• FMCSA pushes back timing of various rulemaking proceedings
• DOT’s artificial intelligence head named FMCSA deputy administrator
• Company loses exemption bid for additional driving time
• FMCSA denies HOS exemption for drivers hauling cement
• FMCSA removes four devices from list of registered ELDs
• CVSA schedules Brake Safety Week for August 25-31
• FMCSA allows multiple carriers to use pulse lighting systems
• Carriers allowed to use two camera systems instead of mirrors

Legislation

• House DOT funding bill would block speed limiters, preemption changes
• Committee directs DHS to establish task force on supply chain fraud and theft

Courts

• U.S. Supreme Court weakens executive agencies’ regulatory authority
• Federal judge likely to strike down FTC ban on noncompete agreements

Advocacy and Comment

Regulation and Enforcement

House DOT funding bill would block speed limiters, preemption changes

In a July report to Congress, FMCSA said that a change in federal law is needed to clearly vest the agency with the authority to assess civil penalties administratively for unauthorized brokerage. Such statutory authority, the FMCSA says, will allow it to assess penalties in a timely manner “rather than engaging in a lengthy referral process” with the Department of Justice (DOJ) the agency said was mandated by a DOT funding bill enacted in December 2022.

As noted by the conference report on the funding bill, the issue is the result of a DOT administrative law judge ruling in 2019 in Darlene Riojas et al. (Docket No. FMCSA-2012-0174) that FMCSA lacks statutory authority to administratively adjudicate and assess civil penalties. The agency must instead maintain those violations in the U.S. District Court. FMCSA noted that the commercial regulations affected by the Riojas decision include the agency’s broker and household goods (HHG) consumer protection regulations.

The agency said that it and the Department of Transportation are developing processes to refer cases to DOJ for adjudication and judicial enforcement, although it added that the focus is especially on HHG consumer protection violations. Much of the report to Congress addressed steps it has taken in the HHG arena. For example, FMCSA noted that it has coordinated with DOT’s Office of the Inspector General (OIG) in HHG consumer protection cases.

“Unless a regulated entity that violates FMCSA’s commercial regulations voluntarily resolves its noncompliance, FMCSA must refer cases to DOJ for enforcement of those regulations,” the agency said in its report. “The need to refer cases to DOJ complicates and hampers the ability of FMCSA to enforce the agency’s commercial regulations, including those regarding unauthorized brokerage.”

Before the Riojas decision, FMCSA assessed civil penalties via notices of claim, or NOCs. Between 2014 and 2019, the agency issued 20 NOCs for unlawful brokerage activities. Since Riojas, FMCSA has used two other techniques, neither of which allows the agency to directly assess penalties. One is a Notice of Violation, or NOV, which FMCSA issues to a non-registered entity “to induce compliance.” The NOV states the violations and corrective action needed, giving the broker 30 days to acknowledge receipt and submit proof of corrections. If the broker takes sufficient corrective action, no further action is taken by the agency.

The other mechanism is a Letter of Probable Violation, or LOPV. An LOPV is used when FMCSA determines that a civil penalty is deemed appropriate. “The LOPV serves as a valuable tool to encourage brokers and carriers to enter into settlement arrangements to mitigate the identified violations and take corrective action,” FMCSA said. If the broker fails to respond or to take sufficient action, the agency may refer the case to DOJ.

FMCSA also noted that it is still assessing the relationship between motor carrier safety and unlawful brokerage. “While the agency has received multiple expressions of concern from stakeholders regarding fraud related to ‘double brokering,’ it lacks data to quantify or confirm a safety impact.” However, FMCSA said it “does acknowledge an association between motor carriers with poorer safety performance and carriers that lack a verifiable ‘brick and mortar’ principal place of business (PPOB). And the agency has also received comments and other information asserting that use of a virtual PPOB is more common among entities that engage in unauthorized brokerage.”

The agency went on to say, however, that since brokers do not typically engage in actual transportation of goods, “the direct safety impact of failing to register with FMCSA as a broker is unclear.” FMCSA said it is considering additional research into any safety nexus with unlawful brokerage.

For FMCSA’s July 2024 report to Congress on unlawful brokerage activities, visit https://www.fmcsa.dot.gov/mission/policy/unlawful-brokerage-activities-report-congress.

FMCSA Holds Final Listening Session on SFD Initiative

The FMCSA held its third and final listening session concerning its proposed new safety fitness determination on July 31, 2024. The agency concentrated its focus on four questions concerning whether new rules should involve the three existing category ratings of Satisfactory, Unsatisfactory, and Conditional or otherwise be changed. The listening session provided no details of any proposed rule or the timing of any proposed rulemaking, nor did it address any proposed changes in the audit requirements set forth in 49 CFR 385. When asked, the FMCSA representative said that the new rule would incorporate use of SMS data and gather more evidence of roadside data. Apparently as envisioned, the new program would not result in an actual safety rating for all applicants, but would contemplate that new applicants could be identified as “licensed to operate” in lieu of the current unrated status.

Participants included a significant number of small carriers who stated they are at a competitive disadvantage due to the fact that they are not currently rated and have difficult obtaining insurance and access to freight. It was pointed out that existing authorized carriers currently have no safety rating. Interested readers can listen to the presentation at https://youtu.be/Afi6dF0PRs0.

FMCSA pushes back timing of various rulemaking proceedings

Several FMCSA rulemaking initiatives that previously had been slated for this year have been delayed until next year, according to the Biden administration’s latest unified agenda. Measures delayed until June 2025 include (1) an advance notice of proposed rulemaking (ANPRM) to consider a proficiency exam for new entrants; (2) an NPRM to propose changes to the record retention requirements in Appendix A of Part 379; and (3) an NPRM to revise various elements of electronic logging device (ELD) standards. The fall 2023 agenda had pegged the records preservation and ELD rulemakings for October 2024 and the new entrant rulemaking for July 2024.

A planned NPRM to revise safety fitness procedures also is penciled in for June 2025. Although last fall’s regulatory agenda had not listed next steps following the ANPRM issued last year, a February 2024 report on significant DOT rulemakings had already pegged June 2025 for the proposal.

FMCSA now plans a second NPRM to propose use of speed limiters on heavy vehicles for May 2025. The significant rulemakings report had identified May of this year as the timing for that step. Other measures that are still slated for this year include, among others, NPRMs on transparency in property broker transactions; updates to the Unified Registration System; changes to the agency’s rules of practice for proceedings involving motor carriers, brokers, and others; and revisions to drug and alcohol use and testing rules by increasing the availability of driver violation information in the clearinghouse.

To search the unified agenda by the agency, visit https://www.reginfo.gov/public/do/eAgendaMain.

DOT’s artificial intelligence head named FMCSA deputy administrator

Vinn White has been named FMCSA’s deputy administrator, which also means that White now also serves as acting FMCSA administrator. White had been serving as the Department of Transportation’s acting chief artificial intelligence officer. His duties included coordinating policies related to automated driving systems, drone and advanced air mobility systems, surface vehicle-to-everything connectivity and more. White previously served at DOT in 2016 as acting assistant DOT secretary for policy. Before returning to DOT in 2021, White had served as a senior advisor to New Jersey Gov. Phil Murphy. In that position he was involved in efforts related to autonomous vehicles and vehicle electrification.

In another personnel move, FMCSA named Melody Drummond Hansen chief counsel. Before joining FMCSA, Drummond Hansen was a partner at BakerHostetler where she co-chaired the automotive/mobility industry team and advised clients on a range of transportation and technology matters.

Company loses exemption bid for additional driving time

FMCSA has rejected an application by Clym Environmental Services LLC for an exemption from the hours-of-service (HOS) regulations to allow its drivers up to 14 hours of driving within the work shift or, in the alternative, up to 12 hours. Clym had indicated that complying with the 11-hour driving time limit places a strain on the company's drivers and its overall operating costs. FMCSA responded that Clym failed to establish that it would likely maintain a level of safety equipment to, or greater than, the level achieved without the exemption. For the Federal Register notice, visit https://www.federalregister.gov/d/2024-14410.

FMCSA removes four devices from list of registered ELDs

FMCSA has removed CTE-LOG ELD, ELD VOLT, POWERTRUCKS ELD, and TFM ELD devices from the list of registered Electronic Logging Devices (ELD). FMCSA placed these ELDs on the Revoked Devices list due to the companies’ failure to meet the minimum requirements established in 49 CFR part 395, subpart B, appendix A. The removals are effective July 23, 2024.

Motor carriers using revoked devices must immediately discontinue their use and replace them within 60 days of the revocation. In the interim, carriers must revert to paper logs or logging software. For a list of registered and revoked ELDs, visit https://eld.fmcsa.dot.gov/List.

FMCSA removes four devices from list of registered ELDs

FMCSA has removed CTE-LOG ELD, ELD VOLT, POWERTRUCKS ELD, and TFM ELD devices from the list of registered Electronic Logging Devices (ELD). FMCSA placed these ELDs on the Revoked Devices list due to the companies’ failure to meet the minimum requirements established in 49 CFR part 395, subpart B, appendix A. The removals are effective July 23, 2024.

Motor carriers using revoked devices must immediately discontinue their use and replace them within 60 days of the revocation. In the interim, carriers must revert to paper logs or logging software. For a list of registered and revoked ELDs, visit https://eld.fmcsa.dot.gov/List.

CVSA schedules Brake Safety Week for August 25-31

The Commercial Vehicle Safety Alliance (CVSA) announced August 25-31 as the dates for this year’s Brake Safety Week. The week is an annual commercial vehicle/driver inspection and regulatory compliance enforcement initiative. For more information, visit https://www.cvsa.org/news/2024-bsw-dates.

FMCSA allows more carriers to use pulse lighting systems

Having already approved one exemption in May for Gemini Motor Transport to use the system, FMCSA in separate actions granted exemptions to five more motor carriers allowing them to use a pulse lighting system module manufactured by Intellistop, Inc. for rear clearance, identification, and brake lamps. Current regulations require that such lighting be steady burning.

Carriers allowed to use two camera systems instead of mirrors

In separate actions, FMCSA granted limited five-year exemptions to Convoy Technologies, Inc. and Safe Fleet Bus and Rail allowing motor carriers to operate CMVs with their camera monitor systems installed as an alternative to the two rear-vision mirrors required by the Federal Motor Carrier Safety Regulations. For the Federal Register notice on Convoy technologies, visit https://www.federalregister.gov/d/2024-16208. For Federal Register notice on Safe Fleet Bus and Rail, visit https://www.federalregister.gov/d/2024-16340.

Legislation

House DOT funding bill would block speed limiters, preemption changes

Separate bills to fund the Department of Transportation and other departments for fiscal 2025 are working its way through the House and Senate. Both bills would fund FMCSA operations, but the House version includes some notable legislative provisions while the Senate bill merely continues measures that are already in place.

The House Appropriations Committee on July 10 approved a fiscal year 2025 funding bill (H.R. 9028) for the Department of Transportation, adopting several notable provisions related to motor carriers. Newly adopted measures would bar FMCSA from issuing a rule to require speed limiters on Class 8 trucks operated in interstate commerce. The bill also would prohibit the agency from rescinding its preemption declarations against California and Washington imposing meal and rest break restrictions on drivers governed by the federal hours-of-service rules. That measure also would require FMCSA to deny any waivers of preemption.

The fiscal 2025 bill also would maintain the recently enacted measures mandating changes to the younger driver pilot program and would continue a longstanding prohibition against requiring livestock haulers from using electronic logging devices (ELDs). The House funding bill also includes $200 million for truck parking development with one condition being commercial vehicle drivers would have access to parking facilities funded by those grants without charge. For more information on H.R. 9028, visit https://www.congress.gov/bill/118th-congress/house-bill/9028.

On July 25, the Senate Appropriations Committee approved legislation (S. 4796) to fund DOT for fiscal 2025. Unlike the House version, the Senate bill steers clear of controversial new measures. However, it does include the same provisions as the House bill that are already in place to restrict conditions on the younger driver program and to prohibit FMCSA from mandating use of ELDs by livestock haulers. For more information on S. 4796, visit https://www.congress.gov/bill/118th-congress/senate-bill/4796.

Committee directs DHS to establish task force on supply chain fraud and theft

A House Appropriations Committee report accompanying the fiscal year 2025 Department of Homeland Security (DHS) appropriations bill (H.R. 8752) includes language directing DHS to spend $2 million to establish the Supply Chain Fraud and Theft Task Force (SCFTTF). The committee said it was concerned about the “alarming rise” in supply chain fraud and theft, especially in the rail, motor carrier, and intermodal systems.

The committee said it expects to the task force to employ “a coordinated, multi-agency, intelligence-based, and prosecutor-led approach to identifying, disrupting, and dismantling organizations primarily responsible for the theft and theft-related violence in the American supply chain.” For the committee report, visit https://www.congress.gov/congressional-report/118th-congress/house-report/553/1.

In a related action, the appropriations committee also included in the report accompanying the funding bill (H.R. 9026) for the Justice Department language directing the FBI provide a briefing on plans to establish regional task forces to investigate cargo theft and refer related cases for prosecution. For the committee report, visit https://www.congress.gov/congressional-report/118th-congress/house-report/582/1.

Courts

U.S. Supreme Court weakens executive agencies’ regulatory discretion

In one of the most significant rulings of the recently ended term, the U.S. Supreme Court overturned a longstanding doctrine that courts should defer to a federal executive agency in situations where statutory law does not clearly conflict with the agency’s interpretation. The so-called “Chevron deference” doctrine adopted by the Supreme Court in 1984 had limited courts’ ability to independently interpret statutory intent when reviewing federal agency regulations and actions.

In the latest decision, Loper Bright Enterprises v. Raimondo, the Court held that the Administrative Procedure Act (APA) requires courts to exercise independent judgment in deciding whether an agency has acted within its statutory authority. Courts may not defer to an agency interpretation of the law simply because a statute is ambiguous, the Supreme Court ruled.

In another action that could open the door to more claims against existing regulations, the Supreme Court ruled that a six-year statute of limitations against the U.S. begins when a business is injured by a final agency action, not when that action becomes final. The case, Corner Post v. Board of Governors, involved a regulation finalized by the Federal Reserve Board in 2011 concerning debit card interchange fees. The case was brought by a North Dakota truckstop that challenged the regulation on the grounds that the regulation allowed higher interchange fees than permitted by statute. The truckstop, Corner Post, had been incorporated in 2017 and opened in 2018. The Supreme Court ruled that the clock on the statute of limitations for Corner Post started when it began accepting debit cards, not when the Federal Reserve Board issued the regulation.

The Supreme Court’s decision overturning the Chevron deference doctrine has sparked legislation from both Democrats and Republicans. In July, Sen. Elizabeth Warren (D-Mass.) and 10 other Democratic and independent senators introduced (S. 4749), which, among other things, would preserve Chevron deference as a matter of statutory law. S. 4749 is the Senate counterpart to H.R. 1507, which had been introduced months before the Supreme Court decision.

Republicans, meanwhile, have moved to highlight regulations that are in place today because of Chevron or even to make the Supreme Court decision retroactive. Sen. Tom Cotton (R-Ark.) introduced legislation (S. 4641) to require the Government Accountability Office to submit a report to Congress that identifies where the federal courts have relied upon Chevron to reach a decision in favor of deference. It also would require federal agencies to conduct a review of cases where the agency was a party and accorded Chevron deference. Rep. August Pfluger (R-Texas) introduced a similar bill (H.R. 8928) a week earlier.

The most far-reaching Republican proposal on the matter appears to be a bill (H.R. 8889) introduced by Rep. Mark Green (R-Tenn.) on the same day as the Supreme Court decision. H.R. 8889 would sunset any federal rules that were upheld by Chevron deference unless they are enacted into law by Congress. Regulations would sunset in reverse chronological order so that the newest rules sunset first.

Given that Republicans control the House and Democrats control the Senate, none of the legislation proposed by members of either party have any chance of passage this year. Moreover, even if any of the Republican proposals were somehow to pass both houses of Congress, they would be vetoed.

Federal judge likely to strike down FTC ban on noncompete agreements

A federal judge in Texas has temporarily blocked enforcement of a Federal Trade Commission (FTC) ban on non-compete agreements as it applies to specific parties, but the judge indicated that a broader ruling would come next month. U.S. District Judge Ada Brown issued a limited preliminary injunction against the FTC regulation and stated that a ruling on the merits would be issued by August 30.

In issuing the injunction, Judge Brown concluded that the FTC likely exceeded its authority and that the ban likely is “arbitrary and capricious” and violates the Administrative Procedure Act. The injunction applies only to enforcement of the rule as it applies to the specific plaintiffs in the Texas case, but the subsequent ruling could invalidate the rule pending review by the U.S. Court of Appeals for the Fifth Circuit.

Advocacy and Comment

Several of the issues discussed above have not been presented for rulemaking or are otherwise in the planning stages but the issues discussed below are interrelated.

Artificial Intelligence

FMCSA’s plans to use artificial intelligence (AI) is suggested by the hiring of an acting director for FMCSA with AI experience and the agency’s seeking of funding for additional vetting. Yet, the extent to which artificial intelligence can remedy any or all of the issues of SMS is doubtful. Moreover, many experts are worried that AI “technologies could accelerate the spread of disinformation and cause serious harm.” See NYT 8/5/24 at B1-2.

Safety Fitness Determination

The three listening sessions sponsored by the agency concerning its new safety fitness standard suggests that the agency intends to reboot SMS methodology and attempt to correct its data sufficiency problem with the collection of more data and artificial intelligence. The agency has not addressed the other systemic problems with SMS, though.

Ever since the agency launched CSA 2010, it has been unable to present for rulemaking a proposal using roadside inspections and infractions which can pass muster. From the outset, the FMCSA acknowledged in a court settlement that authorized carriers were fit to operate on the nation’s roadways unless they were placed out of service or found to be unsatisfactory. Modified repeatedly, the FMCSA has lost the battle to prove that the methodology can be modified to meet the requirements of the National Academy of Sciences, U.S. DOT, or Congress. The attempt to enhance the program with DataQs has shown no positive results and the agency’s effort  to gain APA approval in 2016 was withdrawn after protests were received. Any efforts to renew the efforts to replace the existing SFD rules have been dormant for over the past decade.

Although Congress required that the scoring be removed from public view, the agency has continued to use roadside data and DataQs as an unpublished methodology touted as useful in profiling carriers for audit. Although renamed the Safety Measurement System, Congress has not changed the stated goal that all carriers be vetted and assigned an actual safety rating. Currently less than 2% of regulated carriers are actually vetted or assigned safety ratings each year.

Apparently, any reboot or future use of roadside inspections as a component of a new safety fitness determination will require massive use of new technology to harvest sufficient data to measure small carriers which make up over 95% of the providers of interstate trucking services. If past experience is considered, use of SMS methodology and Volpe Center generated inspection data will be hard to justify, expensive to price, and difficult to implement. Similarly, recent events like CrowdStrike and other big data and AI issues suggest caution in leveraging current technology and AI which will require extra time and a detailed cost/benefit analysis.

DOT/FMCSA penalties for unlawful brokerage

The FMCSA’s recent Report to Congress on broker fraud falls short of addressing the broader issue of Federal prosecution of systemic fraud in interstate commerce. The agency’s report mentions reasons it says it lacks prosecutorial authority for fraud policing and prosecution. Although it inherited oversight over rules of commerce almost 20 years ago, it has never accepted responsibility for enforcing rules of commerce. Its reliance on Rojas is misplaced and its complaint about needing to work with other agencies including the Department of Justice and the FBI on prosecuting criminal fraud is an excuse, not a reason. A broad based coalition of shippers, brokers, carriers, and third parties gained bipartisan support requesting the agency to address the issue over a year ago, but received no affirmative response.

The Report to Congress proposes an inadequate alternative. Apparently, FMCSA is willing to give up its Rojas defense and assume responsibility for issuing civil forfeiture fines for brokers when fraudulent conduct is discovered. Yet absent a prosecutorial zeal not yet demonstrated by DOT/FMCSA, this remedy will have little effect. The incarceration of perpetrators of fraud, with few exceptions, must be processed through the Justice Department as a matter of criminal due process. In its Report to Congress, DOT/FMCSA acknowledged that where safety is involved, prosecution is currently available but practiced with prosecutorial discretion. Interagency cooperation with DOJ and the FBI is a standard due process requirement for prosecution of federal crimes but is cumbersome.

The agency’s reluctance to monitor and police the brokerage industry for fraudulent conduct seems to be a decision of its own making. The remedies provided by Congress in the Fighting Fraud in Transportation portion of MAP-21 plus the agency’s oversight responsibility for prosecuting perjury under oath and enforcing the recordkeeping requirements of 49 CFR 371 (for brokers) and 49 CFR 378 were not discussed but are available.

The extent of fraud

It is apparent the extent and nature of the fraud problem has not been fully evaluated by Federal regulators. No hotline figures are calculated nor are the various types of fraud addressed by it in its informal "listening sessions." Fraud schemes include:

(1) Bait and switch scams in which affiliated new applicants file for carrier and broker authority factor the carrier receivables, embezzle and launder the real carrier’s payables, and leave victims to fight over bond funds, if any.

(2) Utilizing fraudulent email addresses or hacking the FMCSA database. Scam artists also commit identity theft, directing payment of shippers’ payments to false addresses with no intention of paying the defrauded carrier from the proceeds.

(3) Larceny by Fraud. Scamsters claiming to be licensed brokers are increasingly booking high value loads which are diverted, reconsigned in transit, and stolen. An increasing subset of this scam involves the reconsignment of loads tendered for domestic destinations in larceny by theft schemes that result in shipments being exported abroad by foreign affiliated cyber thieves.

(4) Retaliation threats. Victims of fraud report that they are subject to intimidation and threats of bodily harm by scamsters. The magnitude of these felonious scams is unmeasured by Federal regulators and include threats of bodily harm.

Reliable third party vetting services report that thousands of letters were sent to the FMCSA during the protest period of new applicants pointing out application deficiencies including false principal places of business, false and missing telephone numbers and email addresses. This research shows as many as 20% of the new applicants were in violation of Section 32103 of MAP-21 which could result in cancelation of operating rights and civil and criminal penalties for perjury made under oath. Yet the FMCSA advised that its legal team has declined to prosecute brokers and other violators for existing application fraud. Thus victims of egregious and multiple verifiable fraud schemes are left with no effective recourse with the FMCSA.

Selective prosecution of authorized carriers and brokers is clearly no omnibus solution to addressing supply chain fraud in truck transportation. Federal statutes of general application including RICO must extend the criminal penalties available to individuals who are co-conspirators in identity thefts and other types of fraud. Only with the active participation of the FMCSA can criminal cases be made utilizing the provisions of 49 CFR 371 and 378 to compel production of accounting records that demonstrate how the proceeds of the types of fraud listed above are diverted and laundered to otherwise unregulated third parties.

Collateral issues

Seldom has the FMCSA or the ICC before it had so many major unresolved issues. As set forth above, most of the pending agenda has been postponed and on major issues little progress towards rulemaking has been accomplished notwithstanding the use of listening sessions. With respect to FMCSA regulations, the analysis above shows there are many unresolved issues. Yet in the absence of rulemaking, collateral issues threaten the process.

The following issues are of concern:

(1) New carrier applications. The new carrier application proposal is directly related to both the safety fitness determination issue and the anti-fraud topic. It has been advanced without rulemaking and has issues of its own. The proposal was discussed in listening sessions and is not really different from relevant data now collected. Yet based upon the data currently collected, the agency has assumed no responsibility for vetting carriers as part of the pre-authorization process. At least one petition has been filed requesting the agency to postpone the new application proposal until the use of pre-grant screening and other unresolved rulemaking issues are addressed.

In this regard, the effect of AB5, similar efforts by other states, and pending pro-labor initiatives at the federal level threaten the owner operator independent contractor model. The economies of scale resulting from carrier lessee responsibilities for safety and fraud would be undermined. Unaddressed is the major issue of the Federal Government’s ability to comply with its responsibilities for safety and fraud vetting if large numbers of owner operators with one truck are now responsible for their own insurance and related safety and fraud compliance.

(2) Dispute between brokers and carriers over existing broker regulations. FMSCA has before it a petition to consider whether the recordkeeping requirements in 49 CFR 371 can be waived by contract. The current rules have been unchanged over the past 30 years and place a burden on brokers to keep records of transactions which establish a constructive trust and allow the tracing of freight payments and freight. As here relevant, requiring brokers to maintain and produce these records is a major anti-fraud remedy which allows victims and law enforcement to “follow the money” and important subpoenable records in civil and criminal litigation involving bond proceeds in bankruptcy. The clear nexus between this dispute and the importance of the recordkeeping documents involved in the rule cannot be understated.

Importance of court review of administrative rules

The Federal Government’s system of checks and balances is designed to require judicial review of material changes in proposed rules promulgated by federal agencies. The Administrative Procedure Act prescribes the standard for review the court should enforce. The recent decision by the Supreme Court mentioned above overturns the so-called “Chevron deference” doctrine imposed by the DC Court of Appeals in the past. Under Chevron, this appellate court has typically erred on the side of the agency without strict application of existing precedent. The recent Supreme Court decision suggests that traditional standards of judicial appeal will now apply. Among these requirements is findings of material fact and conclusions of law. It is for this reason that affected stakeholders should closely monitor the agency’s processing of these issues through rulemaking in order to preserve their appellate rights.

The obvious unexplored alternative

With pending rulemaking activity concerning pre-grant testing, the obvious question is whether applicants for carrier and broker authority should be vetted for safety and fraud before the issuance of a grant. In last week’s listening session, the agency representatives acknowledged that the agency previously conducted an audit of each carrier and had the enforcement power to do so.

This audit procedure is in place and the cost could be covered in whole or in part by an increase in the application filing fee with updates reconducted on a biennial basis as part of existing requirements. The benefits of this option would include providing the shippers with a red light / green light with respect to safety. Importantly, the desktop audit could be modified to include brokers and could be based upon verifiable objective data without bias with respect to carrier’s safety obligation. Hopefully, the FMCSA and Congress notwithstanding the results of the November elections will consider a cost benefit analysis and consider the already existing objective audit model as an alternative to the pending proposals for fraud and safety.

Conclusion

This two month update shows that remaining legacy issues of safety fitness, fighting fraud, and addressing the independent contractor model have not changed. In fact, decisions have been postponed. Although listening sessions have been handled with respect to each issue, no findings of fact or conclusions of law have been presented to advance these issues.

The agency’s proposed new application has been advanced without rulemaking. Although appropriation for personnel to conduct vetting and specialists in artificial intelligence have been hired, rulemaking issues such as a cost benefit analysis of the effect of any rule has not been tabled for discussion. The common nexus between these topics and other pending issues and rulemaking shows that a piecemeal effect for considering interrelated issues should not be encouraged.

From the point of view of stakeholders, now is the time to ensure these issues are tabled for discussion and any new rules or substantial changes are based on due process and a complete record which specifically considers the agency’s findings of fact and law necessary to win judicial approval.