FMCSA Abandons Carrier Oversight
For 75 years, the U.S. Department of Transportation stood as the arbiter of interstate motor carrier safety. That significantly changed on May 16, 2012, when the Federal Motor Carrier Safety Administration (FMCSA) issued three notices on its Web site signaling a retreat from its statutory and historical oversight of carrier safety, in favor of placing more due diligence responsibilities on shippers and brokers.
Entitled Shipper and Insurer Briefing Addendum, FMCSA Data—Information for Shippers, Brokers, and Insurers, and Just the Facts About SMS, the notices represent FMCSA's abdication. The agency has told the public to no longer rely on FMCSA safety ratings as they are only a snapshot in time, and that even a Satisfactory rating "does not mean a carrier is currently in compliance and operating safely."
Instead, shippers and brokers are encouraged to use publicly available information, including FMCSA's controversial Compliance Safety Accountability (CSA) data, "to help make sound business judgements." FMCSA offers no guidelines for how to consider, manage, and weigh this information, however, leaving shippers and brokers to fend for themselves.
Of major concern to shippers and brokers is the effect FMCSA's advisory may have on private litigation for negligent hiring and/or vicarious liability relating to carrier vehicle accidents. FMCSA's new position on shipper and broker due diligence is an arrow in the quiver of plaintiffs' attorneys, because it could possibly support claims that shippers did not act reasonably.
Only time will tell whether such arguments win over judges and juries. What is clear is that FMCSA recognized this issue, but deemed private litigation matters to be "outside the scope…of its area of responsibility."
A Question of Authority
FMCSA issued its advisories on the Internet, which raises other issues—namely, whether the agency has the requisite authority to, in effect, create a rule that alters its statutory obligations without going through Congress; and whether its actions would pass muster under the Administrative Procedure Act, which calls for a Notice of Proposed Rulemaking and an opportunity for the industry to respond to proposals.
Shippers are receiving conflicting advice from attorneys, insurers, and risk managers as to the use of CSA data, and what constitutes proper due diligence. FMCSA has complicated matters by offering its "guidance."
Further, we can expect a continued proliferation of commercial data management service providers. While these service providers offer useful tools for manipulating data, they give no guarantee that data management alone will constitute adequate due diligence.
Without the comfort of FMCSA's safety rating system, shippers are left with an amorphous reasonableness test. Until either government or the courts clarify shipper due diligence responsibilities, transportation professionals, with their legal and risk management advisors, have no choice but to develop internal due diligence practices.
Shippers can be proactive by working with industry associations and cross-industrial trade groups—even the FMCSA itself—to encourage the agency to re-examine its May 16 pronouncements.
Nothing in this article should be relied upon as legal advice in any particular matter.