In a case of first impression, the First Circuit Court of Appeals denied a New Hampshire motor carrier’s petition for judicial review of a final order issued by the FMCSA that found the motor carrier’s overall safety rating unsatisfactory following a comprehensive on-site compliance review lasting almost four months and conducted by FMCSA’s New Hampshire Division.[1]
Background
Described by the Appeals Court as a small, interstate New Hampshire-based trucking company, Sorreda Transport LLC was formed in 2017. It obtained property authority from the FMCSA, passed its New Entrant Safety Audit and went through an off-site audit in 2018 resulting in no enforcement action. It appears that throughout its short time in business, Sorreda Transport LLC made so-called last-mile deliveries utilizing two owned and four leased straight trucks having GVWR under 26,001 lbs., for Amazon and brokered loads for Lowes.[2] It appears the FMCSA began its last and final investigation of the motor carrier because of confidential complaints relating to safety of operation made by one or more current or former drivers.[3]
The motor carrier challenged the investigation by filing an administrative “petition for review” of the proposed safety rating arguing the Administration committed error in proposing an overall safety rating of Unsatisfactory.[4] The arguments and evidence were rejected by the FMCSA. Its Chief Safety Officer (referred to as the “Agency decisionmaker”) upheld the “Unsat” determination finding no error in the investigation; thus becoming a final decision. The motor carrier appealed to the First Circuit.[5] A two-judge panel denied the motor carrier’s appeal. As of this writing, the motor carrier’s DOT number and operating authority registration (the “MC number”) are “inactive” on the FMCSA’s Safety and Fitness Electronic Records Information (SAFER) website.
Before getting into the details of the case, it is worth commenting on the extraordinary discretion the FMCSA has in conducting motor carrier safety rating reviews and the exceedingly deferential standard of review the Appeals Court applies when evaluating the administrative record and final order issued by the U.S. Department of Transportation’s FMCSA.
Under the Administrative Procedures Act, for an agency decision like the one made in Sorreda Transport to be overturned, the aggrieved party – here the motor carrier, must show the FMCSA’s decision was arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law. Sorreda Transport Decision, 980 F.3d at 4. A court will uphold the FMCSA’s findings and inferences drawn, unless they are irrational. Id. It will respect the agency fact-finder’s credibility assessments in the first instance. Id. Ultimately, the First Circuit concludes the FMCSA did not err in deciding to rate motor carrier with an overall Unsatisfactory safety rating because the facts found were supported by “substantial evidence” which were not arbitrary nor capricious under the Administration’s safety rules (the “FMCSRs”). Id. at 2-3.
Sorreda Transport’s Unique Circumstances Resulting in Judicial Review
The Sorreda Transport case is unique on a number of levels. First, the factual predicate apparently prompting the FMCSA to initiate the comprehensive compliance review (what has historically been referred to within the regulated motor carrier industry as a “DOT audit” and is currently called a “compliance investigation”) was based on driver complaints made to FMCSA’s National Consumer Complaint Database (“NCCD”).[6] Second, administrative practice concerning motor carrier safety, whether compliance investigations or civil enforcement penalty proceedings almost in every case begin and end with a resolution at the FMCSA. Rarely does an adverse administrative decision covering trucking operations by the U. S. Department of Transportation’s FMCSA make it to federal court. Third, exclusive jurisdiction of such appeals lies in the appropriate U.S. Appeals Court – a very unique class of cases.[7]
FMCSA’s Discretion To Conduct Expansive Investigations
In a capably represented challenge to the Administration’s investigation tactics, the motor carrier in Sorreda Transport argued the Administration was heavy-handed in conducting a full on-site compliance investigation when it could have instead, “focused” the review. FMCSA Final Order at 4-5. The motor carrier argued that because the inspection was prompted by driver complaints apparently concerning alleged hours of service (HOS) irregularities, the review should have been a “focused” review – limited to HOS rules in the FMCSRs – not a “comprehensive” compliance investigation involving review of additional safety fitness factors in the motor carrier’s operation involving parts of the FMCSRs unrelated to the HOS complaints. Id. Had the motor carrier succeeded on this argument, the motor carrier’s overall safety rating may have remained unchanged; either Satisfactory or Unrated. This is because a “focused” review does not include review of all parts and factors set forth in FMCSA’s Safety Fitness Rating Methodology.[8] Consequently, following agency precedent, had the motor carrier succeeded on this issue and further, the carrier’s alleged HOS violations amounted to less than 10% of the records FMCSA checked and thus were not “critical violations,” the carrier’s safety fitness rating should have been left unchanged; either Satisfactory or Unrated.[9]
The Agency decisionmaker rejects the argument on the “facts” and law. Facts are in quotations, because the Agency decisionmaker’s Final Order alludes to “falsifying documents” in addition to the alleged HOS violations complained of by the drivers in the NCCD. Id. at 5 (citing 16 pages of the SIs narrative in the compliance review report undergirding the proposed “Unsat.” safety rating).
By ruling the Administration had the authority here to conduct a full compliance investigation, the Administration then had the discretion to expand the scope of records checked to not only include HOS, but also include review of maintenance and inspection records, driver qualification (DQ) files, CDL requirements, financial responsibility, crash involvement records, hazardous materials and other safety and transportation records required to be maintained in various parts of the FMCSRs.[10]
Unfortunately for a motor carrier challenging the Administration’s determination, the criteria that will be considered for overturning the safety rating at the administrative level, and later on further appeal to the U.S. Appeals Court, permit the tribunal to uphold the decision even if the motor carrier establishes by the preponderance of evidence the agency erred in setting a particular safety rating factor but the change to that factor would not change the motor carrier’s overall safety rating. In this case, the alleged document falsification claim constituting a “conditional” safety rating for Factor 1 (General), was not reviewed by the Agency decisionmaker because the decision can and will be upheld for the reasons addressed if the reasons addressed will result in the same outcome.[11] In this case, the Agency decisionmaker notes that “even if the [motor carrier] succeeded on its challenge [denying it made a false entry on its driver’s road test], its overall [Unsatisfactory] safety rating would not change.” FMCSA Final Order at n.47. In other words, if the compliance investigation report includes three alleged violations of the FMCSRs, but two of the three charged violations results in the same outcome, a finding that the evidence supports two of the three violations ends the inquiry and the safety rating – here, overall Unsatisfactory stands.
On the law, the Administration has the authority and discretion to: 1) determine which carrier it will investigate; 2) how it will conduct the investigation; and 3) conduct unannounced on-site, full compliance investigations of the motor carrier. FMCSA Final Order at 5 (citing 49 U.S.C. §§ 504(c), 5121, 31144 and In Matter Tristate Collision, LLC, Dock. No. FMCSA-2017-0073 (FO Denying Pet. for Admin. Rev. of Cond. Safety Rating) sv’d 8-8-18, at 12).
The takeaway on the threshold issue of the scope of investigation is that even a discrete driver complaint may result in the FMCSA scrutinizing all aspects of a motor carrier’s operations.
The Acute And Critical Violations Resulting In Motor Carrier’s Overall Unsatisfactory Safety Rating
The Appeals Court examined the alleged “acute” and “critical violations” as found by the two New Hampshire FMCSA safety investigators (SIs).[12] According to the Court, the SIs found that the motor carrier:
- Allegedly did not obtain and file away several drivers’ motor vehicle records (MVR) within 30 days of hire (2 out of 5 checked); failed to maintain medical examiner’s certificates (MEC) in several driver qualification (DQ) files (3 out of 5 checked) (Critical violations); and
- Allegedly failed to maintain and retain accurate and true time records for several of its drivers; failed to install an electronic logging device (ELD) to record those entries (Critical violations). Sorreda Transport Decision, 980 F.3d at 3.
Motor Vehicle Record (MVR) Background Check and CMV Driver Qualification File
The FMCSRs require the motor carrier maintain a DQ file for each driver. Among other items, it must include a copy of the MVR received from the state drivers licensing agency (SDLA). FMCSA Final Order at 5 (citing 49 CFR 391.51(b)(2)).
The motor carrier must make an inquiry of each State’s SDLA where the driver held or holds a motor vehicle operator’s license or permit during the preceding three years; evidenced by obtaining the driver’s MVR. FMCSA Final Order at 5 (citing 49 CFR 391.23(a)(1)). As noted by the Agency decisionmaker, both an inquiry to the SDLA and placement of a copy of the MVR in the DQ file must occur within thirty days of the date the driver’s employment begins. Id. (citing 49 CFR 391.23(b)).
The only exception permitted under the FMCSRs is where the MVR does not exist for a particular State. It would not be a violation if in addition to the non-existence of the MVR, the carrier documents: a) “good faith” effort to obtain the MVR from the SDLA in that State, and b) certify in writing that as a result of the inquiry, no record for the driver exists in that State. Id. at 5-6 (citing 49 CFR 391.23(b)).
The motor carrier did not dispute that the SIs had found evidence that it had not obtained copies of MVRs of some drivers within the required timeframe. Instead, the motor carrier argued the FMCSA could have cited it for a lesser related offense; which would not have been a critical violation for that safety factor. Sorreda Transport Decision, 980 F.3d at 4.
The motor carrier argued that it should have been cited with violating 49 CFR 391.23(b) for failing to place in the DQ files the MVR within 30 days of the date the driver’s employment begins. FMCSA Final Order at 8. The Agency decisionmaker rejected the argument, observing 391.23(b) a non-critical violation and 391.51(b)(2) resulting in the critical violation, are two separate regulatory obligations and it was not improper for the Administration to cite the motor carrier for the critical violation. Id. (citing In Matter Finishline Trucking, LLC, Dock. No. FMCSA-2018-0392 (Final Order on Petition for Administrative Review of Conditional Safety Rating) sv’d 1-17-19, at 7 (“Although Petitioner could have been cited for violating 49 CFR 391.23(b), a non-critical regulation, it was not improper for the Agency to cite Petitioner for violating 49 CFR 391.51(b)(2) because it failed to properly maintain its DQ files with initial MVRs. While Petitioner may have complied with one regulatory obligation, that alone does not excuse a motor carrier from complying with another regulation.” Emphasis added)). The Appeals Court upheld the Administration’s decision citing the more serious charge, rather than the lesser related charge as an agency action committed to agency discretion which is “unreviewable.” Sorreda Transport Decision, 980 F.3d at 4.
The motor carrier defended its system of performing background checks arguing it had made a “good faith” effort to obtain the MVRs within 30 days. FMCSA Final Order at 5-6. It stated that its insurance provider conducted an inquiry, but the insurance provider did not give a copy of the driving history to the motor carrier due to privacy issues. Id. (emphasis added). The motor carrier argued having its insurance provider to acquire MVRs “well before” the 30-day mark and to immediately alert it if there is a “issue with a driver” was a “failsafe” and demonstrated that it had made a “good faith effort” to comply with the critical regulation. Id.
According to the Appeals Court, “the [FMCSA] was correct that the plain language of the ‘good faith’ exception to the [MVR] requirement does not apply to Sorreda’s situation because the [MVR] records for the two drivers at issue did in fact exist and were eventually received by Sorreda, just not within the timeframe set by regulation.” Sorreda Transport Decision, 980 F.3d at 4 (emphasis added).
The takeaway on the MVR issue is that it cannot be delegated to third-parties such as the carrier’s insurance broker.
Medical Examiner Certificate (MEC) And CMV Driver Qualification File
On the MEC issue, The motor carrier argued the Administration erred when it concluded the records checked showed a pattern of violating the FMCSRs requiring MECs in the DQ files checked. FMCSA Final Order at 9. The Compliance Review Report generated by the SI’s following the comprehensive compliance investigation stated that 3 violations were “discovered” out of the 5 drivers “checked,” which at 60 percent of the drivers examined, is greater than the 10 percent threshold required to find a pattern of noncompliance of a critical regulation; in this case, requiring the DQ file must also include the MEC or a legible copy. Id. at 8.
In this case, to successfully challenge a pattern of violating the critical regulation, the motor carrier must demonstrate by the preponderance of the evidence that the Administration erred in citing two of the three violations; which it could not do. Id. at 8-9.[13]
The takeaway on the MEC issue is, for DQ files requested (whether kept in paper or electronically), the motor carrier should ensure that all the required documents/information are in the files when provided to the Safety Investigator. In this case, the attempt to provide the MEC at the time of the petition for review was filed came too late.
HOS Electronic Logging Device (ELD) And CMV Driver Short-Haul Exemption
The motor carrier was unsuccessful in arguing the Administration erred when it found a pattern of noncompliance with critical regulations in failing to maintain and retain accurate and true time records and failed to install and/or require its driver to use an ELD to record his duty status.
The “short-haul operations” exemption from the requirement to record the driver duty status (whether that duty status be recorded via an ELD or manually via a prescribed grid) for drivers operating a property-carrying CMV for which a CDL is not required is an intricate rule in which both the motor carrier and driver are required to comply with. A driver’s failure to comply however will not relieve the motor carrier. The motor carrier variously blamed its drivers for noncompliance with the exemption and argued the Administration should have charged the driver with preparing false records of duty status instead of the pattern of noncompliance with a critical regulation.
The Agency decisionmaker rejected the arguments. As to shifting the blame to the drivers for HOS noncompliance, the Agency decisionmaker cited “well settled” and longstanding precedent that the motor carrier is responsible for compliance with regulatory requirements and cannot shift the responsibility for doing so to, in this case, the driver. FMCSA Final Order at n.45. Further, as with the charging decision made when finding critical violations in connection with maintaining the driver MECs in DQ file records rather than a noncritical regulatory violations, the Agency decisionmaker holds a motor carrier’s failure to require its drivers to record the driver’s duty status in accordance with 49 CFR 395.8(a)(1) and driver false record of duty status in violation of 49 CFR 395.8(e)(1) are two separate regulatory requirements; it was not improper for the Administration to cite the motor carrier for the critical violation: 49 CFR 395.8(a)(1)(i). FMCSA Final Order at 14. The Appeals Court upheld both findings and the legal conclusions supporting the findings. Sorreda Transport Decision at 5.
The Safety Rating Process
The procedures for assigning a safety rating at the conclusion of a compliance investigation are set out in Appendix B to 49 C.F.R. part 385. Ratings are assigned for each of six “factors,” if applicable.[14] The Administration investigates these factors by examining motor carrier records and in some cases records in the possession of third parties to develop “factor ratings.” The factor ratings then determine a motor carrier’s overall safety rating according to the Motor Carrier Safety Rating Table.[15]
A “conditional” rating in more than two factors, with no “unsatisfactory” ratings, or an “unsatisfactory” rating in one factor, even if all the other factors are rated “satisfactory,” will result in an overall Conditional safety rating.
An “unsatisfactory” rating in one factor and a “conditional” rating in more than two factors or an “unsatisfactory” rating in two or more factors will result in an overall Unsatisfactory safety rating.
The ratings for Factors 1 through 5 are assigned based on violations of acute regulations and patterns of noncompliance with critical regulations.[16] A pattern of noncompliance with a critical regulation exists when the number of violations equals 10 percent or more of the records examined. A carrier is assessed one point for each violation of an acute regulation and each pattern of noncompliance with a critical regulation; however, a motor carrier is assessed two points for each pattern of noncompliance with a critical regulation in 49 CFR part 395 (HOS). The motor carrier will be rated “unsatisfactory” in a factor if the acute violations and patterns of violating critical regulations for that factor total two or more points. It will be rated “conditional” in a rating factor if the acute violation or pattern of violating a critical regulation for that factor equals one point.
Conclusion
The consequence of the proposed safety rating of the motor carrier becoming a final Unsatisfactory safety rating appears to have put it out of business. This area of law and practice is highly technical and should not be taken for granted. Best practices include having a second person being a part of the review process and being able to make a contemporaneous record during the process detailing what exactly was being asked for and what exactly the motor carrier provides in response. An attorney experienced in transportation laws (including the FMCSRs) would be beneficial in advice before, during and after such reviews.
Dated: Sudbury, MA
January 5, 2022
Andresen & Borovick, LLP
323 Boston Post Road
Sudbury, Massachusetts 01776
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Tel: (978) 443-6868
borovick@abmasslaw.com
The foregoing is designed to provide general information based on a summary of legal principles for clients and friends of the firm. It is not intended to be construed as legal advice, or legal opinion on any specific facts or circumstances. Companies and individuals should consult with legal counsel before taking any action based on these principles to ensure their applicability in a given situation. The information presented here and on our website should not be construed to be legal advice or the formation of a lawyer/client relationship. Copyright © 2022 Andresen & Borovick, LLP. All rights reserved.
[1] Sorreda Transport, LLC v. U.S. Dept. of Transportation, 980 F.3d 1 (1st Cir. 2020) (hereafter the “Sorreda Transport Decision”). The First Circuit consists of the Districts of Maine, Massachusetts, New Hampshire, Puerto Rico and Rhode Island.
[2] Compliance Review Report dated Aug. 28, 2019 contained in Dock. No. FMCSA-2019-0234 (35 pages).
[3] See e.g., “[Compliance investigation] assigned as an onsite comprehensive CI based upon a NCCDB HQ complaint. [The Safety Investigator] was notified that he was to make contact with [the motor carrier] to address alleged complaints. Based upon alleged complaints a comprehensive CI was assigned & performed.” Compliance Review Report at 17. At the start of the on-site compliance investigation, the assigned Safety Investigator (SI) for the New Hampshire Division gave the motor carrier’s representative “FOIA information concerning the alleged complaints.” Compliance Review Report at 20.
[4] In Matter Sorreda Transport LLC, Dock. No. FMCSA-2019-0234 (Final Order on Pet. for Administrative Review of Proposed Unsatisfactory Safety Rating) sv’d 11-26-19, at 1 (hereafter the “FMCSA Final Order”). Instead of fighting the charge, the FMCSRs permit an alternative process for having the FMCSA upgrade the carrier’s safety rating. The motor carrier could take corrective action after receipt of the notice of proposed overall Unsatisfactory safety rating by addressing the noted deficiencies and timely requesting the FMCSA change its safety rating to either “conditional” or “satisfactory” based on such corrective action. See 49 CFR 385.17. However, due to the severity of the consequence of an overall Unsatisfactory safety rating, a motor carrier cannot reasonably rely on the FMCSA to change the rating based on corrective action because if the upgrade request is denied (which happens often) an Unsatisfactory safety rating effectively shuts down the carrier’s business – loss of insurance, loss of customers, personnel, etc.
[5] Id. and Sorreda Transport Decision, at 3. Absent a stay, the failure to take corrective action within 61 days of the Administration’s notice of a proposed Unsatisfactory safety rating for a non-hazardous, property-carrying motor carrier results in a final order prohibiting it from operating a commercial motor vehicle in commerce. 49 USC § 31144(b) and 49 CFR 385.13(a)(2). Following notice, the Administration will then issue an order revoking the motor carrier’s operating authority and for-hire registration. 49 CFR 385.13(e). If this case had involved what the Administration considered an “imminent hazard” (which it was not) the motor carrier would have been required to follow a different regulation dictating different procedures and timeframes. See 49 CFR 386.72.
[6] FMCSA Final Order at 4. Interestingly, the Agency decisionmaker notes that while the two driver complaints against Sorreda Trucking were “not in the record,” they “included allegations of falsifying documents as well as hours of service violations.” Id. at 5. Historically, the NCCD is used by the FMCSA enforcement personnel to prioritize investigation of household goods motor carriers based on accumulation of complaints filed by individual shippers – typically claiming violations of the FMCSA’s Consumer Protection Regulations or other unlawful business practices like so-called “hostage load” situations. In 2016, the FMCSA expanded the NCCD to include certain complaints lodged by CMV drivers. See In Matter Prohibiting Coercion of Commercial Motor Vehicle Drivers, Dock. No. FMCSA-2012-0377 (Final Rule) 80 Fed. Reg. 74695, 74696 (Nov. 30, 2015) (noting Congress in MAP-21, Pub. L. 112-141, section 32911, 126 Stat. 405, 818, July 6, 2012, directed the Administration to create rules to report a substantial violation of the FMCSRs, prohibit driver coercion or harassment, procedures for drivers to report such incidents to FMCSA and rules of practice to follow in response). See also 49 USC 31136(a)(5) and 49 CFR 386.12. It appears that this case is an example of one consequence of that expansion.
[7] Sorreda Transport, LLC v. FMCSA, C.A. No. 19-cv-1226, Report and Recommendation (D. NH 2019) (“This case falls squarely within the parameters set forth in [a Seventh Circuit Court of Appeals decision and a Massachusetts District Court decision]. The FMCSA has issued a final order assessing civil penalties against Sorreda Transport, and so Sorreda Transport may seek judicial review only in the appropriate circuit court of appeals and not in this [U.S. District] court under the express provisions of 49 U.S.C. § 521(b)(9) and 49 C.F.R. § 386.67(a).”).
[8] In Matter Western Freight Carrier, Inc., Dock. No. FMCSA-2012-0179 (Second Interim Order Dismissal of Pet for Rev) sv’d 8-2-02.
[9] See e.g., In Matter Alpha Petroleum Transport, Inc., Dock. No. FMCSA-2014-0078 (Final Order) sv’d 6-23-14, at 3. “When the Field Administrator vacated Petitioner’s Conditional safety rating arising from a focused investigation, Petitioner returned to its previous state as an unrated motor carrier.” And, In Matter Diesel Direct, Inc., Dock. No. FMCSA-2020-0183 (Order Dismissing Petition for Administrative Review of Conditional Safety Rating) sv’d 11-6-20, at 1. Where FMCSA Eastern Service Center conducted a “focused review” the “Petitioner’s overall safety rating reverted to Petitioner’s previous [safety] rating of “Satisfactory.” Petitioner was successful in challenging and resulting in removing three of 9 accidents as non-preventable, ESC will dismiss the petition as “moot” and revert back to pervious safety rating as of Satisfactory.
[10] In Matter 49 CFR Parts 383, 384, 390 et al. Medical Certification Requirements as Part of the CDL; National Registry of Certified Medical Examiners, Dock. No. FMCSA-1997-2210 (Final Rule and Proposed Rule) 73 Fed. Reg. 73096, 73098 (12-1-08).
[11] See FMCSA Final Order at n.47 (“Petitioner challenged the violation of 49 CFR 390.35/391.5(a), denying that it made a false entry on its driver’s road test. For the ‘conditional Factor 1 rating, even if Petitioner succeeded in its challenge, its overall safety rating would not change.”).
[12] For a description of some of the more salient points of the safety rating procedures used by the FMCSA to review a motor carrier’s safety management controls and overall safety rating following a comprehensive compliance review (now referred to as a “compliance investigation”) see the summary at the end of this article.
[13] A pattern is more than one violation. Id. n.24 (citing 49 CFR 385, app. B.II(g)).
[14] Critical and acute regulatory violations, roadside vehicle out-of-service rates, and a motor carrier’s recordable accident rate are grouped into six factors under the Safety Fitness Rating Methodology (SFRM):
Factor 1 General = Parts 387 and 390 of 49 CFRs
Factor 2 Driver = Parts 382, 383, and 391 of 49 CFRs
Factor 3 Operational = Parts 392 and 395 of 49 CFRs
Factor 4 Vehicle = Parts 393 and 396 of 49 CFRs
Factor 5 Hazardous Materials = Parts 397, 171, 177 and 180 of 49 CFRs
Factor 6 Accident Factor = Recordable Accident Rate
[15] 49 CFR part 385, app. B.III.A.
[16] These regulations are identified in section VII of Appendix B to 49 CFR part 385.