March 23, 2017

FMCSA to scrap carrier safety proposal; will wait until NAS completes study

Ruling is victory for carriers, defeat for brokers, 3PLs.

By Mark B. Solomon

The Federal Motor Carrier Safety Administration (FMCSA) announced today that it has scrapped its controversial proposal to change the methodology for grading the safety operations of the nation's 530,000 motor carriers under the agency's purview.

In a notice, FMCSA said it would stand aside to let the National Academy of Sciences (NAS) complete its Congressionally mandated study into the formula that FMCSA uses to evaluate a carrier's fitness. The NAS study, called for under the five-year federal transport bill signed into law in December 2015, is expected to be complete in June, according to industry groups. FMCSA said it would analyze the study's findings to determine what, if any, actions it should take.

The FMCSA's decision means that the traditional approach of grading a carrier by three tiers—satisfactory, conditional, and unsatisfactory—will remain in place. The Department of Transportation sub-agency had proposed in January 2016 to move to a single rating of "unfit" based on a new set of analytical criteria. FMCSA said at the time that its proposal would streamline what has been a cumbersome process, and would cast as wide an oversight net as possible given the agency's limited manpower and resources.

However, the proposal's many critics said the FMCSA would be relying upon flawed safety data and scores, and as a result couldn't provide an accurate accounting of which carriers were operating safely and which weren't. They also took issue with FMCSA proposing a change in its methodology ahead of the release of the NAS study, the findings of which may moot the proposal.

Last month, a coalition of 62 organizations sent a letter to Transport Secretary Elaine L. Chao calling on her to rescind the rulemaking. Today's FMCSA decision did not address what role, if any, the letter played in influencing subsequent events. The decision simply stated that the letter had been added to the public record.

Today's decision may have been influenced by the Trump administration's policy to freeze all pending regulations until they can be evaluated to determine if they provide public benefits to justify the expense of implementation and compliance.

The two primary trucking groups, the American Trucking Associations (ATA) and the Owner-Operator Independent Drivers Association (OOIDA), hailed the FMCSA action. ATA President and CEO Chris Spear said in a statement that "numerous reviews have shown flaws in the data ... so it makes sense to withdraw" the rule. Spear added that the group hopes that FMCSA enacts "necessary reforms" to its 2010 Compliance, Safety, Accountability (CSA) carrier-grading program, of which the now-withdrawn safety analysis was a key part.

Todd Spencer, an OOIDA executive vice president, said any safety analysis performed under the proposal would have been based on "fatally flawed data" that was "as likely to show safe carriers to be unsafe and unsafe carriers to be safe." In an email, Spencer called the FMCSA move to pull its proposal a "no-brainer."

However, the Transportation Intermediaries Association (TIA), the nation's primary freight broker trade group and a supporter of what it called the FMCSA's "red light, green light" approach to fitness determinations, was disappointed in the decision. Brokers and third-party logistics (3PL) providers have long worried they would be found liable for severe monetary damages if a carrier chosen to move a customer's goods was involved in an accident with a motorist or pedestrian; they fear the broker could be sued on grounds it should have done a better job assessing the carrier's fitness.

In an email, Nancy O'Liddy, TIA's vice president of regulatory affairs and TIA services, said the "liability nightmare" for intermediaries will continue to exist as long as federal regulators aren't able to make a straightforward assessment of a carrier's fitness. The group has argued that, as the lead federal carrier safety agency, FMCSA has the final word on a carrier's fitness to operate, and that a carrier should, by law, be considered a safe operation unless it is specifically determined by FMCSA to be unfit.

Those views were echoed by the Alliance for Safe, Efficient, and Competitive Truck Transportation (ASECTT), a group of shippers, carriers, and brokers that has been at war with FMCSA for seven years over CSA implementation. To end the long-running battle over safety determinations, Congress and the Trump administration need only state that a carrier is authorized to operate unless it receives an unsatisfactory rating from FMCSA or is specifically singled out by the agency to cease operations, ASECTT said.

"The pernicious concept that the shipping public can be subject to suit for not second guessing the agency's ultimate safety fitness determination needs to be definitively rejected," ASECTT said in an email.

About the Author

Mark B. Solomon
Executive Editor - News
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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