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Attorney: Shippers are in the crosshairs

Shippers are increasingly being held responsible for actions of carriers hauling their freight, says a leading transportation attorney. ( Photo: Shutterstock )

As the Trump Administration continues efforts to roll back regulations and major pieces of legislation such as an infrastructure bill remain stuck in limbo, attorney Henry E. Seaton offered up some of his thoughts about the impact the current political climate is having on the supply chain.

“We seem to have people who talk at each other rather than to each other,” he told attendees at the 44th annual Transportation & Logistics Council meeting in Charleston, SC, on Tuesday. “We have regulation that moves based on which political party [is in power].

“And shippers are the ones in the crosshairs of all that is coming down the pipe,” Seaton added. “Shippers need to be involved.”

Seaton, speaking from the point of view of an attorney that defends transportation companies, took aim at the FMCSA while offering the audience some updates on current rules and his thoughts on rules that need to be addressed.

“From 2003 until now, the [FMCSA’s] approach is to get more data … rather than inspecting carriers,” he said.  Seaton noted that the FMCSA has essentially thrown the burden onto shippers to verify the safety of carriers they use and when plaintiffs sue claiming the shipper hasn’t done enough, there are “consultants ready to testify that there is FMCSA data (SMS scores) available” and shippers should have known the carrier was unsafe.

Seaton referenced a National Academies of Science report that found the SMS methodology did not accurately identify unsafe carriers. Suggestions in the report, though, were also questioned by Seaton, who noted that paying drivers by the hour, improving driver retention and weather issues had not shown any specific correlation yet to safety.

“Should we develop some sort of macro data so that if you wreck on a snowy day, it doesn’t count as much as if you crash on a sunny day?” he asked, joking that the solution may simply be to shut down freight movement on bad weather days.

FMCSA was supposed to provide an Action Plan in response to the report on how it would alter SMS/CSA data models to more accurately reflect carriers at risk. The report was due in December 2017 but has yet to be released and there has been no indication on when the plan will be issued. “You might want to say there is a strategic decision by FMCSA to delay [any recommendations] until after the election,” Seaton said.

Seaton noted that several requirements within the FAST Act are also not being addressed, including a study on the effect of public SMS scores, objections issued by the Inspector General and GAO, and a recommendation that FMCSA institute a 20-point rule so that it had enough data points on a carrier to make a sound judgement on its fitness. In addition, the lawyer noted that FMCSA has taken to issuing more “guidance” on rules rather than rules themselves.

“It doesn’t allow the public to have input,” Seaton said. “What they are doing is just putting guidance on the website and moving the bar.”

Some shippers have questioned whether FMCSA’s determination of a carrier being “safe to operate” is sufficient legal cover should an incident take place. Seaton said that as FMCSA has refused to “affirm for shippers that safe to operate is [equivalent] to safe to use,” plaintiff attorneys are taking advantage.

According to Seaton, 83% of carriers are not monitored by FMCSA (meaning they don’t have enough data or interactions with the carrier to compile an SMS rating) and of those rated, about 250 were deemed they should be put out of service. Yet, that doesn’t mean they are unsafe carriers. Seaton pointed out that of those 250, 53% had no accidents the following year and 23 had only one accident (not necessarily their fault, either).

“The average motor carrier is only responsible for 1 out of every 5 accidents, so if you apply this methodology, you can see how it is not sustainable,” he said.

Seaton mentioned that plaintiff attorneys are pushing shippers to exert more control over their broker/carriers but those that do are then being held responsible for actions by those brokers/carriers.

“Federal regulation is working against shippers,” Seaton noted.

Seaton also tackled crash preventability, including the fact that FMCSA and state enforcement agencies are not consistent with assigning blame. Carriers can currently request that a crash be reviewed, and if it is deemed that the crash is not the driver’s fault, it can be scrubbed from the carrier’s SMS score. However, the American Transportation Research Institute found that only 8% to 11% of all crashes would be scrubbed under FMCSA’s methodology.

To illustrate, Seaton told the story of a bus company who had one of its buses hit an axle that came flying across the road. Video in the bus clearly showed what happened and the driver could not have prevented the impact. Still, the crash was logged as preventable. An appeal was denied and as a result the company’s insurance carrier dropped its coverage. The bus company was within weeks of going out of business due to lack of insurance coverage before it secured a policy, at a higher rate.

“A guy can have a bad day and cause an accident … does that mean that one bad apple is going [to pull down the whole company]?” Seaton asked, “because that is where we are heading with this preventability study.”

Seaton concluded his presentation with some regulatory reform suggestions. They are:

  • Replace SMS with biennial carrier audits
  • Replace URS with a simple, comprehensive, publicly accessible system
  • Separate FMCSA’s investigative and adjudicatory functions
  • Move adjudicatory and administrative functions of FMCSA into the Surface Transportation Board of some other separate DOT panel
  • Seek clarification on the score of federal preemption of state laws.

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Brian Straight

Brian Straight covers general transportation news and leads the editorial team as Managing Editor. A journalism graduate of the University of Rhode Island, he has covered everything from a presidential election, to professional sports and Little League baseball, and for more than 10 years has covered trucking and logistics. Before joining FreightWaves, he was previously responsible for the editorial quality and production of Fleet Owner magazine and Brian lives in Connecticut with his wife and two kids and spends his time coaching his son’s baseball team, golfing with his daughter, and pursuing his never-ending quest to become a professional bowler.