Regulatory and Legislative Update
Asectt
FMCSA reopens comment period on broker transparency
In a sign that the Trump administration is considering expanded broker transparency in some form, FMCSA has reopened the comment period on the notice of proposed rulemaking (NPRM) issued last November despite a halt on almost all other federal regulatory activity initiated during the Biden administration. As is typical with a change in the party controlling the executive branch, President Trump ordered a broad regulatory freeze immediately after taking office on January 20.
(See article below.)
Comments were due January 21, but FMCSA has reopened the comment period for another 30 days until March 20 at the request of the Small Business in Transportation Coalition. The agency also said that it would consider comments submitted between January 21 and the February 18 comment period reopening.
Reopening the comment alone would not necessarily mean that FMCSA under the Trump administration still adheres to the approach expressed by the Biden administration’s FMCSA in November. However, a separate email message distributed to industry stakeholders on February 18 is further evidence that the change in the White House has not shifted the agency’s thinking. The final paragraph of that email message states:
“Broker transparency is intended to enable efficient outcomes in the transportation industry by providing the material information necessary for the transacting parties to make informed business decisions. Broker transparency also supports the efficient resolution of disputes between parties. Though the current regulations are meant to provide broker transparency, the Agency believes that Regulation and Enforcement Regulatory and Legislative Update – February 2025 2 broker transparency is rare in practice. By reinforcing the regulations, the Agency believes that broker transparency, and its benefits, would become more common.” For the Federal Register notice extending the comment period, visit https://www.federalregister.gov/d/2025-02707 . For the NPRM and comments submitted already, visit https://www.regulations.gov/document/FMCSA-2023-0257-0001.
Truck Leasing Task Force issues final report opposing lease-purchase programs
On the final full business day of the Biden administration, FMCSA’s Truck Leasing Task Force (TLTF) issued its final report, focusing on issues related to lease-purchase programs. A separate report was submitted by the staff of the Consumer Financial Protection Bureau (CFPB), which had been retained as a consultant to the TLTF.
The TLTF report unequivocally opposes lease-purchase programs. The report states that the task force began with a range of perspectives, including members who believed such programs could provide an important avenue to truck and small business ownership. “Over the last year and half, however, the comments drivers and non-driver industry stakeholders provided in public meetings and submitted to the public docket, as well as data reviewed by TLTF, told a consistent and increasingly troubling story: lease-purchase programs cause widespread harm without offering meaningful scale opportunities for truck and small business ownership.” The report goes on to state that “such arrangements, whereby a motor carrier controls the work, compensation, and debts of the driver, should be prohibited.
For further discussion of the TLTF report, see the “Advocacy and Comment” section below. For the TLTF and CFPB staff reports, visit https://www.fmcsa.dot.gov/mission/advisory-committees/tltf/final-report.
DOT appoints several FMCSA officials
Although FMCSA does not yet have an administrator or nominee, the position already has a designated senior advisor. Recently confirmed DOT Secretary Sean Duffy has announced numerous staff appointments within DOT and its modal agencies, including several at FMCSA.
The most senior position announced is Jesse Elison as chief counsel. Elison has worked in various legal capacities over the past 20 years, including stints both at law firms and at trucking operations, including Watkins and Shepard, Quality Distribution, Montgomery Transport LLC, and the Bennett Family of Companies. He most recently was a partner with Taylor and Nelson PL in Atlanta.
Duffy named Adrienne Camire senior advisor to the FMCSA administrator. Camire served as chief counsel for the Federal Highway Administration late in the first Trump presidency. Previously, she was as an adjunct professor at New England Law in Boston and worked in banking for about 15 years.
Matt Schuck has joined FMCSA as director of communications and senior governmental affairs officer. Schuck has held numerous positions over the past 14 years in communications and public relations, including a brief stint as communications director for then-U.S. Rep. Sean Duffy.
FMCSA withdraws two pending rulemakings following regulatory freeze
In keeping with the usual practice following a partisan change in the White House, President Trump on January 20 issued a broad 60-day regulatory freeze that includes not only rules and proposed rules issued by the Biden administration but also “any agency statement of general applicability and future effect that sets forth a policy on a statutory, regulatory, or technical issue or an interpretation of a statutory or regulatory issue.”
For FMCSA, the freeze resulted in the withdrawal of two rulemaking proceedings that had been under review by the White House Office of Management and Budget (OMB). One was a proposed rule that had been under OMB review for more than a year to make changes in regulations governing commercial motor vehicle (CMV) operations, inspection, repair, and maintenance to ensure safe and secure operations of CMVs equipped with automated driving systems. The proposed rule would have been a step toward a federal regulatory regime for autonomous CMVs.
The other proceeding was an advance notice of proposed rulemaking (ANPRM) submitted for OMB review just four days before the end of the Biden administration. According to DOT’s regulatory agenda published last fall, the ANPRM would have sought information how FMCSA could enhance the physical safety of women truck drivers and trainees and address the negative impacts of workplace sexual harassment. It also would have addressed the safety of vulnerable road users, such as pedestrians and bicyclists.
Nomination hearing for Trump’s DOL pick held February 19
Although the Senate has already confirmed most cabinet secretaries, including several that have been widely controversial, the nomination of Lori Chavez-DeRemer is still pending as secretary of the Department of Labor (DOL). The Senate Committee on Health, Education, Labor and Pensions held a February 19 hearing on Chavez DeRemer’s nomination.
Among the general public, Chavez-DeRemer’s nomination is not as high profile as several others, but President-elect Trump’s pick following the election raised concerns in the business community, including in the trucking industry. As a member of Congress in the most recent session, she was one of only three Republicans to co-sponsor the Protecting the Right to Organize (PRO) Act. Among the many elements of the pro-union PRO Act is a restrictive ABC test for worker classification similar to the one in California’s AB 5 law.
Although President Trump’s nomination of Chavez-DeRemer is at odds with expectations for a Republican nomination for DOL secretary, the action appears to square with other Trump positions recently. For example, he sided with the labor union in its dispute with management over automation and job security at intermodal container ports on the East and Gulf Coasts. To view a video stream of the Senate confirmation hearing for Chavez-DeRemer, visit https://www.help.senate.gov/hearings/nomination-of-lori-m-chavez-deremer-to-serve-as-secretary-of-labor.
Trump orders 10-for-1 deregulation initiative
Building on a 2-for-1 initiative rolled out in his first administration, President Trump in late January issued an executive order directing that before issuing a new rule, regulation, or guidance document, federal agencies must identify at least 10 existing rules, regulations, or guidance documents to be repealed. For fiscal 2025, the total incremental cost of all new regulations including the savings from repealed regulations must be “significantly less than zero.” The White House Office of Management and Budget will ensure standardized measurement and estimation of regulatory costs.
EPA refers Biden administration’s CARB waivers to Congress
In a move that sets the stage for a possible legal battle with California, the Environmental Protection Agency said that it will be transmitting to Congress for its review the Biden administration “rules” granting waivers under the Clean Air Act that allowed the California Air Resources Board (CARB) to implement its own emissions standards on commercial vehicles as well as passenger cars.
For trucking, the CARB regulations at issue are the Advanced Clean Trucks (ACT) rule and the heavy duty Omnibus Low NOx rule. The ACT rule requires that an increasing share of commercial trucks sold in California qualify as “zero-emissions vehicles” or ZEVs. The low NOx rule sets an emissions standard that differs from the federal standards set to take effect in 2027. EPA granted a waiver for the ACT rule in April 2023, and it granted a low NOx rule waiver last December.
In a news release, EPA Administrator Lee Zeldin characterized the Biden administration as having “failed to send the rules on California’s waivers to Congress, preventing Members of Congress from deciding on extremely consequential actions that have massive impacts and costs across the entire United States.” However, according to a report issued in August by the nonpartisan Congressional Research Service, EPA’s waivers to California under CAA are not reviewable by Congress under the Congressional Review Act (CRA) because they are “orders,” which are not subject to the CRA, and not “rules.”
Regardless of what happens to the waivers, truck and engine manufacturers might still have to abide by the requirements of CARB’s ACT and low NOx in California. In July 2023, CARB and all the medium- and heavy-duty manufacturers signed the Clean Truck Partnership (CTP), which, among other things, requires manufacturers to abide by the ACT and NOx requirements even if California ultimately is deemed not to have the authority to impose them by regulation.
The latest developments related to the ACT rule come after CARB in January withdrew a waiver request for its Advanced Clean Fleets (ACF) rule, which would have required fleets operating in the state to purchase ZEVs. CARB withdrew the required due to certain disapproval from the Trump administration. CARB’s withdrawal of the ACF rule creates an odd situation in that manufacturers must ensure that an increasing percentage of trucks are ZEVs, but fleets are not required to buy those trucks.
Bills on FMCSA enforcement authority introduced in the House and Senate
Del. Eleanor Holmes Norton (D-D.C.) and Rep. Mike Ezell (R-Mississippi), along with 13 other co-sponsors, have reintroduced into the 119th Congress their legislation (H.R. 880) to clarify FMCSA’s authority to enforce commercial regulations and impose civil penalties on bad actors. Also, Sens. Deb Fischer (R-Nebraska) and Tammy Duckworth (D-Illinois) – both members of the key Senate Commerce Committee – introduced the legislation (S. 337) in the Senate.
H.R. 880/S. 337, which is billed as focusing on household goods shipments, also would require FMCSA to ensure that regulated entities have physical principal places of businesses before receiving authority. In addition, the bill requires entities seeking broker or freight forwarder authority to disclose any relationship involving common ownership, management, control, or familial relationship with other carriers, brokers, or forwarders if they occurred within the past three years. Motor carrier applicants for authority already are subject to such a requirement. For more information on H.R. 880, visit https://www.congress.gov/bill/119th-congress/house-bill/880. For more information on S. 337, visit https://www.congress.gov/bill/119th-congress/senate-bill/337.
Retrospective and the Road Ahead
Chaos from the Congressional lame-duck session has focused attention on the economic realities and unintended consequences of the past eight years of enforcement by the Federal Motor Carrier Safety Administration (FMCSA or Agency) relating to rules of commerce and safety. With respect to our four major issues – safety, regulatory reform, fraud prevention, and labor/owner operator issues – the FMCSA’s track record for rulemaking ranges between poor and none.
Economic Realities and Unintended Consequences
- Safety Fitness Determinations With regard to adopting a new safety fitness rule, the Agency is stuck on the continuing notion that Safety Measurement System (SMS) methodology can somehow be rebooted. Yet it has been soundly rejected by Congress and acknowledged by the Agency’s court settlement as not a safety fitness determination. Furthermore, SMS methodology, when informally used as a vetting process, has resulted in only 12,079 Advocacy and Comment Legislation Regulatory and Legislative Update – February 2025 5 carriers profiled for a safety audit per year, of whom only approximately 362 were assigned an unsatisfactory safety rating.
The Agency has suggested at various times over the past several years that artificial intelligence can augment a reboot of SMS, and has made efforts to encourage a “Beyond Compliance” initiative which has not proven fruitful. Based on its unofficial “listening sessions” without comprehensive notices of proposed rulemaking, it appears that the Agency has problems satisfying the requirements for a cost benefit analysis, particularly when possible use of new technology is involved. When and if a new, comprehensive safety fitness determination (SFD) rule will be proposed is unknown.
- Fraud
Without instituting rulemaking, the Agency has identified its Office of Registration as responsible for fighting fraud through the use of a new registration system. The proposed system is intended to provide for better vetting of new applicants with focused attention on facial recognition and increased data security. This initiative is intended to address the so-called bait-and-switch scams which arise from fraudulent applications by brokers and carriers. Yet this is but one type of fraud and embezzlement schemes which plague the industry.
This program is being advanced without rulemaking. It has been consistently objected to as piecemeal in the context of the Agency’s admission that rulemaking for new applicant vetting will be necessary in the future, and that this initiative involves substantial and material questions of fact and law that have not been properly addressed.
Unfortunately, none of the Agency’s pending formal and informal initiatives address the compelling need for criminal prosecution of fraud arising out of federal statutes involving truck transportation. The piecemeal handling of miscellaneous initiatives, such as “transparency” and on-line registration with “smart logic,” palpably ignore the extent and nature of fraud and the compelling need for FMCSA and DOT involvement.
Notwithstanding the precedent for criminal prosecution and cooperative undertakings with sister agencies, FMCSA offers no victim assistance. In response to Congressional overtures, its limited participation in criminal prosecutions has focused on safety-related issues, with only reluctant agreement to assume some responsibility for enforcing civil penalties. Pending Congressional bills, that seek to confirm the Agency’s already existing authority to impose civil fines and place bait-and-switch offenders out of service, cannot alone address the scope of the problem.
Other peripheral Agency initiatives, such as the bond replenishment requirement, do not adequately address the fraud issue. In fact they have unintended consequences such as the added cost of the bond, withdrawal of willing sureties from the market, and increased leverage for freight charge collectors seeking recourse against unknowing shippers and consignees.
- Attack on Owner-Operator Model
In the closing days of the last Administration, a Truck Leasing Task Force Report was issued. See https://search.app/n4dbUrgkeLoB8Qkr5. This report was a political creation by pro-labor advocates. Far from being a comprehensive evaluation of “common truck lease agreements and their terms” under the six criteria specified on April 7, 2022 by the former Secretary of Transportation, the Task Force Report aims at alleged abuses of owner-operators in certain categories of agreements with carriers.
The task force members were apparently cherry-picked and no advocate of the owner-operator model was chosen. The resulting 51-page report reads like a plaintiff’s advocate brief, not an impartial review. It focuses on a handful of abuses in certain types of equipment lease-purchase contracts and is not supported by any statistical support.
In this regard, the owner operator / independent contractor model is governed by the truth-in-leasing regulations at 49 CFR Part 376, which creates a carve-out that shifts compliance burdens from lease operators to motor carriers and provides that carriers can use independent contractors without re-designating them as “employees.” Compliant contracts under Part 376 allow owner operators to leverage their contract relationships with the carrier that can handle the safety, insurance, and solicitation of round-trip freight. Such contracts require 15 day minimum payment terms, and create a valuable small business opportunity that can withstand analysis of alleged “employee” status.
Clearly, the role of the FMCSA under its regulations and the National Transportation Policy is to encourage blue-collar entrepreneurship and access to financing as well as insurance, safety compliance, and loads without forced dispatch. Yet the report makes no mention of the efficacy of the existing rules nor of the model’s importance in encouraging small businesses.
Also missing is any statistical analysis of the amount of leased equipment subject to the truth-in-leasing carve out, nor of the various lease-to-own financing protocols which allow owner operators to leverage their owner operator contracts with carriers to assume or enter truck leases. These protocols, like a mortgage, provide “skin in the game,” allowing drivers to purchase equipment over time based upon an amortization chart with portability and the right to complete the purchase at any time. This is a far more secure opportunity than is available for employees who may be terminated at any time and left without a job or benefits.
ATA has estimated there are an estimated 1.4 million independent contractors. Lease-purchase agreements are a standard way of financing the purchase of their new and used equipment. Many carriers, both large and small, help facilitate the lease-purchase of equipment by employee drivers who wish to set their own hours and own schedules. Nowhere does the report treat the importance of the owner operator model, nor consider the economic realities of how carriers and owner operators can work together to mutual advantage.
Clearly, the Task Force Report was not intended as an objective analysis of the types of financial arrangements that exist for purchases of equipment between owner-operators and their carrier partners. The only focus is on alleged bad actors and on alleged violations of the truth-in-leasing regulations. Without a survey of the types and nature of the leasing arrangements, including the number of owner-operators and carriers that use them successfully on a win-win basis, the study is of little conclusionary value.
The Need for Common Sense Solutions
In sum, there is no pending rulemaking nor are there any serious answers to the pressing need for a new safety fitness rating, for addressing systemic fraud, or for dealing effectively with the challenges to the owner operator model. These issues beg for common-sense solutions. Clearly, listening sessions are no substitute for administrative due process and rules which can meet the standards for judicial review. Fragmentary treatment of tangential issues like the new bond requirements, the transparency rulemaking, and the pending new application procedure have a piecemeal effect and do not address in systematic fashion the major issues requiring rulemaking.
As a matter of advocacy, now is the time to consider the road ahead and alternative proposals which can best address these basic issues.
- Safety Fitness Alternative
After SMS methodology, based on roadside inspections, was withdrawn in 2017, the Secretary of Transportation requested regulatory reform proposals in Docket No. DOT-OSB-2017-0069. Therein, a simpler and more straightforward alternative to the use of SMS was presented but has not been acted upon. The proposal involves use of the so-called desktop audit, which was developed to replace on-site compliance reviews during the COVID pandemic and is still in use today. If adopted with modifications, this program would result in the pre-grant interviewing and testing of new applicants using existing federal and state inspectors. The reasonable fixed cost could be passed on to the new applicant; the resulting safety fitness finding of “fit to operate” could eliminate the red light / green light issue facing the shipping public, and could result in lower insurance costs by virtue of the new carriers having been vetted for safety.
- Fighting Fraud
As part of the proposed pre-application audit for carrier safety, the same pre-grant scrutiny could provide hands-on vetting of new broker, forwarder, and carrier applicants for compliance with commercial regulations and for authentication under the Agency’s fraud initiatives. This existing system could be adopted on an annual or biennial basis and conducted as part of the registrants’ regular update for both safety and fraud purposes.
- Need for Criminal Prosecution of Supply Chain Fraud in Truck Transportation
The United States Department of Transportation (USDOT) has not taken an active role in monitoring, policing, or prosecuting violations of federal criminal law with respect to felonies involving interstate trucking. Fraud enforcement tools clearly are available to the U.S. DOT through FMCSA’s specific recordkeeping requirements, including the segregation of funds and expenses, and the creation of a constructive trust. These tools create access to FMCSA registrant data necessary to establish a prima facie case of fraud, embezzlement, and related remedies. The Agency’s express jurisdiction includes not only civil remedies but the clear authority to work with DOJ and sister agencies in developing criminal indictments, marshalling evidence, and aiding in the prosecution of perpetrators of not only regulated entities but also third-party accomplices. Coordinated interagency participation is necessary to address this issue. Congressional oversight in support will be needed.
- The Owner Operator Issue and Related Pro-Labor Initiatives
A large part of our advocacy has been addressed to participating in U.S. DOT and state law initiatives to protect the small business rights and remedies of owner-operators. Active support for the existing court standards on independent-contractor treatment, for the importance of the Part 376 carve-out, and for the need to oppose divergent state laws like AB5 in California requires continuing effort. Positive signs for success in future advocacy include (1) the previous support by the new President for an economic realities test at the Department of Labor; and (2) favorable court precedent in the so-called Chevron deference decision and other recent cases that indicate traditional precedent will apply to review of bureaucratic overreach. Advocacy supporting federal preemption of inconsistent state initiatives affecting needed uniformity also should be encouraged. Readers with interest in supporting advocacy issues are welcome to send their contact information and questions to asectt@gmail.com.