Regulatory and Legislative Update - October 2024

Contents

Legislation

• Speed limiters, preemption, and Norton bill await possible lame duck action
• DOT Funding Bill
• Additional States Considering California Type CARB Restrictions

Regulation and Enforcement

• Significant FMCSA regulation is limited before the next administration
• FMCSA Registration Modernization Stakeholder Day III

Advocacy and Comment

Legislation

Speed limiters, preemption, and Norton bill await possible lame duck action

Although Congress technically continues to meet in October, all significant legislative action paused at the end of September until after the election. Congress is scheduled to reconvene November 12 in what is informally called a “lame duck” session. Among the big issues on the docket are continued funding of the federal government, which has been held in place through December 20 by virtue of a stopgap measure enacted by Congress and signed by President Biden last month. The 118th Congress largely has been a quiet one for issuesrelated to freight transportation, at least in terms of final passage of legislation, but a couple of notable measures have some potential for action as the year winds down.

DOT funding bill

The most likely measure to see final consideration is fiscal 2025 funding for the U.S. government, including a couple of significant administrative provisions related to FMCSA. The House Appropriations Committee approved its version of the Department of Transportation funding bill (H.R. 9028) in July, but the legislation never even made it to the House floor before time ran out.

Additional States Considering California Type CARB Restrictions

Approximately a dozen blue states are proposing legislation similar to California's CARB restrictions. These restrictions are subject to Federal preemption challenges and have repercussions on small carriers' and owner operators' ability to own and operate older equipment, particularly in the handling of short haul moves. This is an issue which deserves further coverage.

Regulation and Enforcement

Significant FMCSA regulation is limited before the next administration

The past two presidential elections have resulted in a change in partisan control of the executive branch, and it has become expected that those changes will bring last-minute regulations that reflect the outgoing administration's political philosophy. Perhaps the most notable example is the final rule in the waning days of the Trump administration that loosened the guidelines surrounding companies' use of independent contractors instead of employees. The Biden administration unsuccessfully employed multiple tactics to undo that regulation before it finally issued a final rule reversing it earlier this year.

Incoming presidential administrations and Congresses have tools at their disposal to undo final or proposed regulations they do not like. Regulations finalized less than 60 days before Inauguration Day are subject to being withdrawn without explanation or justification. For example, the Trump administration used this mechanism in 2017 to halt further consideration of changes to safety fitness procedures. A change in the control of both Congress and the White House might open the door to the use of the Congressional Review Act (CRA) to invalidate regulations issued within a certain time period before the new Congress convenes.

In the current cycle, however, most controversial regulations - especially those issued by the Department of Labor and the Environmental Protection Agency - were finalized well outside the time window for Congress and the White House to use the CRA. The fates of challenges to those regulations now rest with the courts or - if unsuccessful in that area - with the tedious process of starting over with new proposed rules.

FMCSA Registration Modernization Stakeholder Day III

On Monday October 21, 2024, the Agency's Registration Department held its third listening session concerning its proposed new application form and its objective to reduce the systemic problem of fraud which affects all aspects of the trucking industry. Attached as Appendix A is a computer generated summary of the issues covered. A complete video with PowerPoints can be viewed at https://youtu.be/fNWPWyJg82E. Commentary from Overdrive Magazine can be accessed at https://www.overdriveonline.com/regulations/article/15706428/fmcsa-offers-first-look-at-registration-system-aimed-at-fraud

Advocacy and Comment

This month's update was delayed because of the FMCSA's presentation in its Registration Modernization listening session which was held on Monday, October 21, 2024. The discussion ranged far beyond a test drive of the new electronic application process. Presentations were made by several different Agency officials covering a range of topics. Included was the future use of artificial intelligence and plans to extend the program as a vetting system for currently registered and authorized carriers, brokers, and forwarders. Special attention should be paid to the PowerPoint presentation of the Director of Registration which acknowledges that the bait and switch fraud emanating from fraudulent applications is but one of numerous types of fraud which the application process is not intended to monitor.

Left unclear is a cost benefit of the proposal to the government and the compliance cost to new applicants given the assumption that new applicants will be required to select a currently unvetted consultant or application preparer as a perquisite to filing. Also concerning is the fact that material questions of fact and law have been formerly asked but not addressed through rulemaking or in response to the “listening session format.”

Although mention was made of directing enforcement responsibilities to the OIG or some other government agency, it remains clear that while additional vetting personnel are being hired, there is no acknowledged nexus between the registration function and fraud investigation and criminal prosecution. Additional questions were timely submitted requesting confirmation that any new anti-fraud program would apply to for hire interstate shipments regardless of the commodity handled or the size of the equipment used. But the Agency’s response is unclear at this time.

With respect to implementation and timing, the Agency appears to advocate reassignment of DOT numbers as the only identification number to all carriers, brokers, and forwarders, and third parties including unvetted consultants and application preparers over which the Agency currently claims to have no enforcement power. Ironically, it is these unregulated parties which the Agency has selected as the gatekeepers for the program, but who are often cited in the press as the originator of fraudulent principal places of business, telephone numbers and email addresses.

Unfortunately, the third listening session posed more unanswered questions than it provided answers. Left unaddressed are previous issues concerning the timing of a full application of the new program in light of its extended use and the need for rulemaking. In addition to previously unanswered questions, additional comments were submitted concerning the reasoning and cost of abandoning the use of MC Numbers, the application of the new system to all for-hire carriers regardless of commodities transported or the size of the equipment.

In this regard, clearly there is no hard and fast timeline for implementation, particularly given the fact that unvetted third parties which the Agency intends to make gatekeepers for new applications have traditionally been a major source of false principal places of business, nonworking phone numbers and fraudulent email addresses placed on new applications under penalty of perjury by those who hire them to file the application.

With the election less than 2 weeks away and a new Congress not settling in until January, little further action is foreseeable. The Norton Bill mentioned above, even if passed, would not cut the muster in establishing the necessary multi-agency prosecutorial team necessary to address the bigger issue of enforcing Federal anti-fraud remedies against both regulated and unregulated perpetrators. Although there is talk of a Listening Session IV to be held, Session III made clear that there are plans for hiring auditors and third party managed programs under development. Clearly, the Agency's role in enforcement is beyond the Office of Registration's current jurisdiction or any evidence of the Agency's willingness to seek new rules.

Hopefully, consensus can be built that criminal prosecution of fraud to the fullest extent of Federal authority is imperative. While the Agency lacks the resources or expressed authority to lead prosecution of criminal fraud, its role to play is limited to obtaining providing accurate information. The necessary prosecution of criminal fraud affects the trucking industry and broader issues of vetting carriers, brokers and third parties for safety and fraud interdiction purposes is a separate matter which is beyond the scope of the registration function. A trial test of the proposed new registration system can and should be conducted before the completion of rulemaking to ensure that administrative due process is preserved and that the inevitable rulemaking process is not overtaken by default.