House Members Seek to Set Due Diligence Standards for Motor Carrier Hiring
On May 22, 2014, Representatives Duncan (R-Tenn.), Paulsen (R-Minn.), and Davis (R-Ill.) introduced legislation in the United States House of Representatives entitled “To enhance interstate commerce by creating a National Hiring Standard for Motor Carriers,” H.R. 4727 (the “Bill”). If the Bill were to be enacted into law, the states would be prohibited from imposing liability on a shipper, broker, consignee, freight forwarder, NVOCC, ocean freight forwarder, or ocean transportation intermediary (an “Entity”) for personal injury, death, or damage to property stemming from claims or causes-of-action related to the negligent selection and use of a motor carrier, so long as the Entity had undertaken certain enumerated due diligence procedures. The due diligence procedures that would provide a safe harbor are the following:
Prior to tendering a shipment, but no more than 35 days before the shipment’s pick-up date, the Entity verified that the motor carrier:
- If applicable is registered with the Federal Motor Carrier Safety Administration to operate as a motor carrier;
- Has the minimum insurance coverage required by Federal regulations.
- Does not have an unsatisfactory safety rating issued by the Federal Motor Carrier Safety Administration in force at the time of the verification.
These requirements harken back to the time prior to the Federal Motor Carrier Safety Administration’s (FMCSA’s) implementation of its Compliance Safety Accountability (“CSA”) program, and the industry confusion over carrier selection criteria that followed. Interestingly, the Bill does not seek to eliminate CSA or FMCSA’s use of CSA data, or the controversial practice of publically publishing CSA data and scores. This means that this information will remain a standard utilized by FMCSA in its motor carrier safety program.
Questions remain as to whether the 35-day window is operationally feasible and cost effective for all Entities, regardless of size, financial capability, and/or freight tonnage. Also, does this time frame have some magic to it that will result in an acceptable number of substandard carriers being culled out compared to other time periods? Today, it is not unusual for Entities to utilize longer look-back periods for rechecking carrier status, with semi-annual or annual review not being out of the question.
The Bill is wending its way through Congress, currently sitting with the Senate Committee on Transportation and Infrastructure (Subcommittee on Highways and Transit) and the Committee on the Judiciary. It has already picked up the support of the Transportation Intermediaries Association. Still, it must be remembered that the majority of bills do not make it past the Committee stage, and the language of the Bill will almost certainly be subject to negotiation and amendment if it moves forward.
Regardless of the questions this Bill poses and the hurdles to passage, the fact that Federal legislators have taken notice of the issues relating to motor carrier due diligence caused largely by CSA is a positive development for the shipping community. Perhaps it can even be considered as an acknowledgement of the many voices, such as ASCETT’s, who have long sought to eliminate the negative effects of CSA, including the potential for Entities to be subject to unfair liability. This seems to be a sign that help is on the way.