Tyson Fisher
A federal appellate court has found that although Texas oil tanker drivers never leave the Lone Star state, they are still involved in interstate commerce and therefore exempt from overtime pay.
Earlier this year, the Fifth Circuit Court of Appeals reversed a district court’s decision denying oil transporter Ace Gathering’s motion to dismiss a class-action wage lawsuit filed by tanker drivers. The case centers on interpretations of “interstate commerce” within the federal overtime pay exemption for motor carriers.
Most of the facts of the case are straightforward and undisputed. Tanker drivers for Ace Gathering load up crude oil from an oil field in Texas and transport that oil to a pipeline also located in Texas. For the truck drivers, their entire operations take place solely in Texas, making their journeys intrastate only.
Despite these intrastate-only trips, Ace Gathering did not offer drivers overtime pay, citing the Fair Labor Standards Act motor carrier exemption. That exemption applies when the driver is:
- Employed by a carrier subject to the U.S. Department of Transportation’s jurisdiction
- Engaged in activities directly affecting the safety of operation of motor vehicles in the transportation on public highways of property in interstate or foreign commerce
Neither party disputes the first requirement, and both parties agree on the “safety-affecting activities” portion of the second requirement. The disagreement is on whether the drivers engage in interstate commerce, exempting them from overtime pay.
According to the Department of Labor, truck drivers are exempt from overtime pay when they are involved in interstate commerce or “connect with an intrastate terminal (rail, air, water or land) to continue an interstate journey of goods that have not come to rest at a final destination.”
Ace Gathering argued that the oil being transported continues beyond Texas state lines after a trucker delivers it to the pipeline.
Once a trucker drops off oil at a Texas pipeline, that oil goes to either an out-of-state refinery or to export markets for shipment outside the U.S. Although the trucking portion of the oil cargo is intrastate, it is only one leg of a longer journey outside of Texas. Therefore, tanker drivers are engaged in interstate commerce and exempt from overtime pay.
However, Judge Lee Rosenthal of the of the Southern District of Texas federal court found that Ace Gathering had no vested interest in oil once it crossed state lines via pipeline. The company’s customers – oilfield and pipeline operators – were all based in Texas. What happens to the oil after it leaves the trucks, Rosenthal argued, is of no interest to Ace Gathering.
But on appeal, the Fifth Circuit rejected that argument. Simply put, court precedent has established that a trucker is engaged in interstate commerce when transporting goods “ultimately bound for destinations beyond Texas, even though the route of the particular carrier is wholly within one state.”
“So while the crude haulers’ transportation of the crude oil is indeed entirely intrastate, their transportation is but one segment of the crude oil’s larger interstate journey and, by all indications, part of the crude oil’s ‘practical continuity of movement’ out of the state,” the appellate panel ruled. “Thus, under controlling precedent, we tread no new ground in holding that purely intrastate transportation rises to the level of interstate commerce when the product is ultimately bound for out-of-state destinations, just as the crude oil was here.”
Confusion surrounding overtime pay exemption
In a concurring statement, Judge Andrew Oldham highlighted the confusing nature of the overtime pay exemption.
Oldham focused on a 1971 Department of Labor interpretive rule exempting certain employees from overtime pay. That rule refers to language in the Motor Carrier Act of 1935 that defines interstate commerce as “between any place in a state and any place in another state or between places in the same state through another state.” Oldham states that based on the text, the 1971 rule would exempt only drivers “who actually crossed state or national borders in the course of their commercial activities.”
However, statutory changes in 1978 and 1995 more broadly defined interstate commerce to include intrastate activities that substantially affect interstate commerce. Despite those changes, the Department of Labor has not updated its 1971 interpretive law, according to Oldham.
With conflicting information, the courts have been forced to devise “multiple, unmanageable standards for making overtime decisions,” Oldham pointed out. That includes an eight-factor balancing test to determine if a driver has a reasonable expectation of interstate transportation.
Without more clarity from Congress or the Department of Labor, courts instead rely on confusing precedent in overtime pay exemption cases involving certain intrastate trucking operations.
“It is unclear how the 1971 rule comports with the text of the relevant statutes,” Oldham stated. “And it is unclear how our precedents comport with the 1971 rule, which says nothing about factors like the good’s ultimate destination or the shipper’s state of mind. Incoherent as they might be, the precedents bind us.”
Congress can clear confusion regarding overtime pay exemptions
One way to end any confusion regarding overtime pay for truckers is to eliminate the exemption altogether.
That is exactly what the bipartisan GOT Truckers Act will do if passed by Congress and signed into law. Introduced by Rep. Jeff Van Drew, R-N.J., and Sen. Alex Padilla, D-Calif., the bill simply removes the overtime pay exemption from the Federal Labor Standards Act. Consequently, all employee truck drivers will receive overtime regardless of whether they drive interstate or intrastate, ending any confusion around the definition of interstate commerce.
Although the bill would apply only to company drivers, the Owner-Operator Independent Drivers Association contends that forcing shippers and receivers to value a trucker’s time would create change throughout the industry.
“America’s truckers keep our nation’s economy moving, and without the hard work of these men and women, our supply chain would grind to a halt,” OOIDA President Todd Spencer said. “Unbelievably, trucking is one of the only professions in America that is denied guaranteed overtime pay. We are way past due as a nation in valuing the sacrifices that truckers make every single day. This starts with simply paying truckers for all of the time they work.”
Truck drivers can go to FightingForTruckers.com to encourage their lawmakers to co-sponsor the GOT Truckers Act.
NOTE: This Supreme Court Decision is important. 49CFR part 385, FMCSA has laid out the ADMINISTRATIVE process in which a motor carrier can use when receiving a notice of a proposed “unsatisfactory” safety rating or the findings of a Compliance Review. This Supreme Court decision states that the motor carrier has a right to a jury trial. For those motor carriers who have been involved in the “administrate” process have found our that FMCSA many times will say, “My way or the highway”. This Decision changes the rights of the motor carrier to request a jury trial.
On June 27, 2024, the U.S. Supreme Court issued its long-awaited decision in SEC v. Jarkesy. In its holding, the Court found that when the Securities Exchange Commission seeks civil penalties against a defendant for securities fraud, the Seventh Amendment entitles the defendant to a jury trial and thus the SEC must bring the action in federal court.
The implications of this decision, including its effect on SEC (and other agency) use of administrative tribunals, are considerable.
By way of background, in 2011 the SEC initiated an investigation into George Jarkesy and his firm, Patriot28, LLC. In 2013, the SEC brought an in-house action alleging violations of the antifraud provisions contained in the federal securities laws. After an evidentiary hearing, an administrative law judge found Jarkesy liable for securities fraud and ordered him to pay $300,000 in civil monetary penalties, among other sanctions. Jarkesy then sought review in the U.S. Court of Appeals for the Fifth Circuit, which reversed and remanded, finding that the SEC’s decision to adjudicate the matter in-house (rather than in federal court) violated Jarkesy’s Seventh Amendment right to a jury trial.
Yesterday, the Supreme Court affirmed the Fifth Circuit’s ruling as to Jarkesy’s Seventh Amendment right. Specifically, the court noted that the Seventh Amendment’s guarantee of a right to a jury trial applies to “[s]uits at common law,” which includes statutory claims that are “legal in nature.” The Court went on to say that the type of remedy the SEC sought against Jarkesy, i.e., civil monetary penalties, is the “prototypical common law remedy,” making clear that the SEC’s action was legal in nature (as opposed to an action in equity, to which no constitutional jury right is attached). This, according to the Court, follows from the fact that the civil penalties sought by the SEC were designed to “punish and deter” the wrongdoer rather than to enforce some sort of public right or, as the Court put it, to “restore the status quo.”
The Court added that the “public rights” exception to the Seventh Amendment, which allows Congress to assign certain matters that might otherwise be considered “legal in nature” for decision to an agency without a jury (such as matters relating to revenue collection, certain customs and immigration laws, or relations with Native American tribes), did not apply to Jarkesy’s case because the SEC’s suit intended to target “the same basic conduct as common law fraud,” which amounts to a “matter[] of private rather than public right.”
Thus, the Court concluded that the SEC’s suit against Jarkesy implicated the Seventh Amendment and that Jarkesy was entitled to a trial by jury on the SEC’s claims.
The Court’s ruling may have significant implications. As an initial matter, the decision amounted to a partial rejection of the SEC’s administrative forum. Further, while the SEC has limited the number of enforcement actions it brings in the administrative process in recent years, given the substantial costs associated with federal court litigation, Jarkesy may force the SEC to be more selective in its future enforcement efforts.
More broadly, the Jarkesy decision calls into question whether any federal regulatory agency—not just the SEC—can bring in-house proceedings to enforce civil penalties. This is particularly noteworthy, because although some agencies (such as the SEC) may choose whether to pursue civil penalties in federal court or via an in-house administrative proceeding, other agencies, such as the Occupational Safety and Health Review Commission, are only statutorily authorized to pursue enforcement through in-house proceedings.
Thus, some have voiced concern that because of Jarkesy, the powers of certain enforcement agencies may be substantially curtailed. Indeed, as Justice Sotomayor noted in her dissent, “the Constitutionality of hundreds of statutes may now be in peril, and dozens of agencies could be stripped of their power to enforce laws enacted by Congress.”
Consequently, Jarkesy may be only the beginning.
SJ Munoz
The Federal Motor Carrier Safety Administration enacted a Hurricane Helene regional emergency declaration for eight states on Friday, Oct. 4.
Additionally, state emergency declarations previously issued in Alabama, Florida, Georgia, North Carolina, South Carolina, Tennessee, Virginia and West Virginia have all been extended.
“This declaration is in response to Hurricane Helene and its effects on people and property, including immediate threats to life and public safety from heavy rains, strong winds, storm surge, high surf and flooding,” the FMCSA regional emergency said.
Federal relief from 49 CFR Parts 390 through 399 granted by FMCSA’s declaration applies to commercial vehicle operators providing direct assistance supporting emergency relief efforts involving transportation and other relief services incident to the immediate restoration of essential supplies or services.
The origin of the trip does not matter so long as the direct assistance doesn’t include transportation related to long-term rehabilitation of damaged physical infrastructure after the initial threat to life and property has passed.
Direct assistance terminates when a driver or commercial motor vehicle is used in interstate commerce to transport cargo or provide services that are not in support of Helene emergency relief efforts related to the emergency, the FMCSA order said.
A driver may return empty to the motor carrier’s terminal or the driver’s normal work reporting location without complying with 49 CFR Parts 390-399.
FMCSA said it will continually review the status of the declaration and modify, extend or terminate as conditions warrant.
The Department of Transportation has activated its routing-assistance hotline for Hurricane Helene responders. This hotline at 833-99-ROADS (833-997-6237) supports the movement of federal, state, local, tribal and territorial response personnel, equipment and goods by providing recommended safe routes using a variety of data sources.
Learn more about assistance or find links to local resources in affected states on the FEMA website.
A world without Chevron deference empowers courts to ignore agencies’ interpretations of their own statutory authority, bringing new vulnerability to emissions regulations, FMCSA rulemaking, and more.
Jeremy Wolfe
The Supreme Court in June overruled Chevron deference, a major legal doctrine that articulated federal agencies’ ability to interpret the law.
This raises the question of whether agency policies, like some emissions regulations, will still be supported by the judicial system. But is this a big deal for the trucking industry?
“Some have argued it’s not a big deal because courts have been working to interpret statutes to find there is no ambiguity in the first instance (in which case, Chevron did not apply),” Prasad Sharma, partner at Scopelitis and general counsel for the Truckload Carriers Association, told FleetOwner. “They point to the fact that the Supreme Court has not relied on Chevron to decide a case of late.
“However, it’s a longstanding precedent that was largely followed by the lower courts, so it is a big deal. It will shift power from agencies to the judiciary and heighten the importance of Congress legislating with clarity to address issues that arise in the modern world.”
The end of Chevron deference represents a significant shift in interpretive power. With it comes a new possibility for courts to block major agency rulemakings from the EPA, FMCSA, and others.
Chevron deference shot down
In June, the Supreme Court overruled the 1984 Chevron ruling in the case Loper Bright Enterprises v. Raimondo.
What was Chevron deference?
Chevron deference is a legal doctrine suggesting that, when a law concerning a federal agency is ambiguous, federal courts should defer to the agency’s interpretation of the law.
According to Cornell Law School, the doctrine came from the 1984 case Chevron U.S.A., Inc. v. Natural Resources Defense Council, Inc., where the Supreme Court articulated its opinion on deferring to agencies for interpretations. This deference was appropriate under two conditions: when Congress had not spoken directly to the precise issue in question, and when the agency charged with executing the law held a reasonable interpretation.
“Chevron was a case that led to a judicial doctrine that when an agency is promulgating a substantive rule (one with legal effect) under the Administrative Procedures Act and there is some ambiguity in the authorizing statute enacted by Congress, courts should defer to an agency’s interpretation of the statute so long as it is reasonable,” Prasad Sharma, partner at Scopelitis and general counsel for the Truckload Carriers Association, told FleetOwner. “This meant that a court should accept the agency’s interpretation even if there were other possible reasonable alternative interpretations.”
Chevron deference was a major part of administrative law for the last 40 years. It lent significant support to agencies’ rulemakings, such as EPA’s emissions regulations, for decades.
“The Supreme Court overturned the Chevron precedent, indicating it was inconsistent with the separation of powers under the Constitution, which assigns interpretation of the law to the judiciary,” Sharma said.
The decision shifts the power dynamic between the judiciary and federal agencies. Courts are no longer required to follow an agency’s reasonable interpretation of a relevant law.
“Going forward, courts are to do the work of interpreting statutes enacted by Congress using the tools available to courts,” Sharma said. “Courts may still consider the views of an agency and give it weight based on how long the agency has consistently held the view, the thoroughness of the agency’s consideration, and the validity of its reasoning. However, the courts no longer have to defer to the agency’s interpretation.”
This reduces agencies’ influence in defending against legal challenges.
“To the extent that an agency is filling gaps left unaddressed in a statute or interpreting an ambiguity, the agency will not enjoy deference but will, like other litigants, have to use its power to persuade,” Sharma said. “Because Congress is often unable to legislate with clarity on the wide range of potential questions that arise when Congress addresses an issue, agencies will have less latitude to carry out their views/preferences. On the other hand, some would argue that agencies were, under Chevron, exercising authority they never really should have had.”
What does this mean for trucking?
Judges received a newfound freedom to strike down major agency rulemakings. For trucking, relevant agency rules now have a new vulnerability in the court system.
“The reversal of Chevron is relevant to all agency rulemaking subject to the APA,” Sharma said. “For commercial transportation, that means substantive rules out of FMCSA, NHTSA, EPA, FHWA, among other agencies.”
This could include EPA emissions regulations, carriers’ Compliance, Safety, and Accountability scores, and more.
“It could be any number of statutes that have left gaps or ambiguities (arguably, nearly every statute),” Sharma said. “One area getting interest is the transition to zero-emission vehicles in California under the Clean Air Act and EPA’s construction of its waiver authority.”
EPA-granted waivers allow the California Air Resources Board to set its own emissions regulations. The Clean Air Act permits the EPA to grant California waivers to set its own emissions standards. This helped CARB develop zero-emissions vehicle mandates under its Advanced Clean Trucks regulation.
Legal challenges currently surround EPA’s authority to grant the waiver for ACT, in part because the agency cannot set its own EV mandate, as Julia Stein writes in Legal Planet. According to Stein, a world without Chevron deference means that reviewing courts have greater power to ignore EPA’s own interpretation of its waiver-granting authority—an existential threat to the California ZEV mandate.
“Moreover, in combination with the Court’s revival of the major questions doctrine, rulemaking with impacts on broad swaths of the economy will be under heightened scrutiny,” Sharma told FleetOwner.
The major questions doctrine became most relevant after the Supreme Court’s 2022 decision in West Virginia v. Environmental Protection Agency. According to this doctrine, courts should hesitate to assume agencies have the independent authority to make actions of economic or political significance without explicit Congressional approval.
The major questions doctrine and judges’ newly expanded authority to interpret law illustrate a shift in power away from federal agencies. Agency rulemaking has new vulnerabilities in the judicial system. Agencies hoping to make grand changes to the trucking industry could face new, critical setbacks in court.
BT Staff
Users registered with the Federal Motor Carrier Safety Administration are the target of a new phishing campaign that urges them to complete a form attached to the fake email, according to an alert from the agency.
The forms ask for a social security number and USDOT PIN, information that isn’t required on official FMCSA forms. Carriers should not fill out forms attached to the fake email and always refer to official FMCSA forms for the latest and official documents, the agency warned. In some cases, the phishing attempt also asks for a certificate of insurance and driver’s license to help protect the recipient against fraud.
There also is a threat that if the recipient doesn’t respond within a day, they will be fined, which is not an FMCSA practice.
The fake email originates from either safety@fmcsa.gov, filing@fmcsa.gov, dotfilings@fmcsa.gov or audit@fmcsa.gov, none of which are legitimate email addresses and are not used or owned by FMCSA. If the recipient replies to the email, their message goes to @fmcsa-safety-fmcsa.com, which is also not a domain owned or used by FMCSA. Not only is some of this information personal identifiable information, but this information also would allow the unauthorized party to gain access to the recipient’s FMCSA account.
“The fake email containing the phishing link appears very convincing that the correspondence is from FMCSA,” the agency stated in a release.
Screenshots of the fake email can be found on FMCSA’s website.
Communications from FMCSA relating to information requests of this type would either request individuals to log into their portal account at FMCSA Login (dot.gov), or the email would come directly from an FMCSA dedicated mailbox. While these emails typically end in “.gov,” FMCSA encourages stakeholders and customers to verify any email or communication they feel to be suspicious with the appropriate agency.
What individuals can do:
Jason Cannon
A recent study conducted by data collection experts SOAX, utilizing data from the Identity Theft Resource Center on the number of data violation cases from 2020 to 2023 by industry, revealed the United States experienced a total of 3,205 data breaches in 2023, a 78% increase from 2022.
The transportation industry saw 101 data violation cases last year. The number of cases is up more than 181% from the year before and the 101 incidents logged last year matches the total number of cases from 2020, 2021 and 2022 combined. In all the segments ranked by SOAX, no other industry saw a year-over-year increase larger than transportation, with only the financial services sector coming close (177%).
Trellix
“While the study highlights a significant increase in cyberattacks across all sectors, the particularly steep rise in the transportation sector underscores the urgent need for enhanced cybersecurity measures,” Stepan Solovev, CEO and Co-founder of SOAX told CCJ. “Cyberattacks affecting public services such as transportation could majorly affect the day to day lives of average Americans, as shown by the staggering 12 million victims who were impacted by cyberattacks within the transportation sector in 2023.”
Troubling news for trucking’s transition to battery electric trucking is that, despite ranking fourteenth with just 44 data breach incidents, the utilities industry had the highest number of victims in 2023, according to SOAX. A staggering 73 million individuals were affected by data breaches within this sector, highlighting its vulnerability and making it the most at risk for aggressive cyberattacks targeting people.
“The study has identified a concerning sharp rise in cyber incidents across all US industries in 2023, which is particularly alarming,” said Solovev. “The increase in attacks demonstrates that cybercriminals pose an increasing threat. Industries must adapt and evolve with these technological advancements to ensure they are protected from cyberattacks.”
The transportation and shipping sectors generated 53% and 45% of global ransomware detections, according to data from cybersecurity company Trellix.
“The last six months have been unprecedented – a state of polycrisis remains and everything from elections to warfare to law enforcement activity have accelerated cyber threat actor activity globally. We’re seeing radical shifts in behavior,” said John Fokker, Head of Threat Intelligence at Trellix. “The cat and mouse game of cybersecurity is becoming more complex. Security leaders need more operational threat intelligence in order to outpace cybercriminals.”
