Regulatory Update

REGULATORY OVERVIEW

A barrage of regulations continues to bear down on the transportation industry. This increased pace of transportation regulations will impact shippers; greater attention to mitigating risks is required. Those who don’t stay on top of changes risk leaving their supply chain vulnerable to capacity, compliance and safety issues.

Stemming from the Motor Carrier Act of 1935, federal rules and regulations were established to assure the “security for the protection of the public … .” Though carriers have traditionally shouldered the majority of the regulatory weight, the accountability net has widened: shippers are now on the hook too.

With the influx of so many new regulations and the promise of more to come, shippers need to continue to educate themselves on the regulatory landscape. This know-how leads to more and better collaboration between transportation providers and shippers.

The following guide has been developed to help shippers better understand the key points of recently adopted regulations challenging the industry, those on the horizon, the potential impact on business and implementation timing.

Recent Regulations in Effect

Self-Certification: January 30, 2014 Effective Date

Background:

As of Jan. 30, 2014, all commercial driver license (CDL) holders in the U.S. must self-certify (formally disclose) to the State Licensing Agency (DMV) what type of work he or she does, using one of the following four categories:

  • Non-Excepted Interstate: Driver is engaged in interstate commerce and must meet the federal Department of Transportation (DOT) medical card requirements
  • Excepted Interstate: Driver is engaged in interstate commerce and does not have to meet the DOT medical card requirements
  • Non-Excepted Intrastate: Driver is engaged in intrastate commerce and must meet state driver qualification requirements
  • Excepted Intrastate: Driver is engaged in intrastate commerce and does not have to meet the DOT medical card requirements

Drivers who work in interstate commerce will also need to provide a medical certification (DOT physical) to prove they are qualified to drive. Failure to present valid medical documentation will result in the denial of the issuance or renewal of the CDL.

Impact:

Any driver who is not currently self-certified or fails to bring their newest medical certification to the DMV will have his or her CDL downgraded to non-CDL status, putting them out of commission until resolved.

Medical Examiner Rule: May 21, 2014 Effective Date

Background:

In 2008, the FMCSA proposed a rule that would require individuals who administer medical exams for commercial drivers to be trained, tested and certified to a national standard. Additionally, a National Registry of Certified Medical Examiners (NRCME) would be created in order to track qualified medical professionals. This rule was developed in order to improve the medical oversight of commercial drivers as well as prevent commercial vehicle-related crashes, injuries and fatalities.

The rule was unfolded in stages, with May 21, 2014 marking the deadline for medical examiners to be properly certified and registered in order for them to administer medical examinations that were compliant with the U.S. DOT.

Impact:

The standardized examinations have identified drivers who exhibit or are considered at-risk for conditions such as hypertension, sleep apnea and diabetes. Flagged drivers are issued temporary medical cards, granting them an additional three months to follow up with their primary care physician regarding their specific condition. Examiners must submit to the FMCSA the name(s) of those individuals they performed an examination on and the results monthly.

Because of the increased complexity and administrative efforts associated with the NRCME, most medical professionals and/or healthcare providers have dramatically increased the price for physicals. Carriers alone cannot bear the burden of the increased, regulatory- imposed costs. These costs are being passed along to shippers and consumers, becoming a permanent part of the market’s supply chain and distribution costs. Some examiners have exited the business of performing U.S. DOT physicals altogether, shrinking the pool of qualified examiners.

Tank Endorsement: July 8, 2015 Effective Date

Background:

Shippers moving contained liquids in dry van trailers must now comply with the same tank endorsement rules as the bulk industry. The “Commercial Driver’s License Testing and Commercial Learner’s Permit Standards” rule redefined what is considered to be a tank and, for the first time, includes capacity requirements.

Under the new rule, a tank is:

  1. “Any commercial vehicle that is designed to transport any liquid or gaseous material within a tank.”
  2. “Tanks having an individual rate capacity of more than 119 gallons and an aggregated capacity of 1,000 gallons or more that is either permanently or temporarily attached to the vehicle or chassis.”

Tanks that are manifested as either being empty or as residue on a bill of lading do not apply under the rule.

If a load meets the capacity and configuration requirements defined above, a driver with a “tank endorsement” on his or her CDL must transport it. All states must be in compliance by July 8, 2015.

Impact:

Since the rule has been published, it has exacerbated the driver capacity crunch, increased load re-planning and caused a higher rate of out-of-service trucks.

What Shippers Can Do:

To overcome these hurdles, shippers are encouraged to be aware and thoroughly understand the new tank vehicle definition. When working with a carrier, shippers should fully disclose the type of freight that needs to be transported as well as its weight and packaging.

Driver Coercion: January 29, 2016 Effective Date

Background:

Beginning January 29, 2016, new fines for carriers, shippers, receivers or transportation intermediaries who coerce truck drivers to operate outside of federal safety regulations go into effect. Coercing drivers to violate Hours of Service limits, drug and alcohol testing, hazardous materials rules and other regulations are prohibited. Any party in the supply chain found responsible for coercive acts will be fined up to $16,000 per incident.

Under the rule, coercion is defined as:

  • “a threat by a motor carrier, shipper, receiver, or transportation intermediary, or their respective agents, officers or representatives to withhold business, employment or work opportunities from, or to take or to permit any adverse employment action against, a driver in order to induce the driver to operate a commercial motor vehicle under conditions which the driver stated would require him or her to violate one or more Federal Motor Carrier Safety Administration (FMCSA) regulations; or the
  • the actual withholding of business, employment or work opportunities or the actual taking or permitting of any adverse employment action to punish a driver for having refused to engage in such operation of a commercial motor vehicle.”

Impact:

This regulation places shippers directly under the FMCSA’s regulatory purview for the first time. The final rule prohibits coercion, establishes procedures for drivers to report instances of coercion to the FMCSA for follow-up investigations, sets minimum criteria for the agency to investigate such claims and details the practice followed in response to reports of coercion. Drivers must file claims within 90 days of the occurrence. How the rule impacts the manner in which carriers, shippers, receivers and brokers interact with and schedule drivers is yet to be known.

What Those in the Supply Chain Can Do:

Continue to treat drivers with respect. Understand the rule and the types of actions that may constitute coercion. For example, a receiver that forces a driver to leave its premises is not threatening the driver with an adverse employment action; it is asserting its right as a property owner to control access to its property. On the other hand, a receiver refusing to sign a proof of delivery which prevents a driver from leaving a facility to comply with the hours of service rule might be coercing the driver. Now is the time to reevaluate your current practices to ensure you are not at risk of a violation and to have candid conversations with carriers on what, if any, practices need to change. To learn more, contact your Schneider representative or email us.

Commerial Drivers License Requirements for Military Personnel (CDL Rule Ⅰ): Final rule published October 12, 2016

Background:

In recognition of the truck driver training received while serving our country, the federal government is looking to ease the transition of military members into civilian careers by reducing onerous paperwork and simplifying the licensing process. The proposal includes:
  • Extending the time period for applying for a skills test waiver from 90 days to 1 year for recently separated military
  • Requires states to accept the military commercial vehicle license of certain military personnel in exchange for a CDL
  • Allowing active duty military members to apply for their Commercial Learner’s Permit (CLP) or CDL in their current state of residence with the CLP or CDL being issued by their state of domicile

Impact:

This process has been placed in a temporary exemption since 2014, and the final rule made it permanent.

 

Proposed Regulations Expected in the Near Future

Carrier Safety Fitness Determination: Rule has been withdrawn pending review of CSA study results

The Federal Motor Carrier Safety Administration (FMCSA) withdrew its January 21, 2016, notice of proposed rulemaking on March 23, 2017. The notice had proposed changing the current Compliance, Safety, Accountability (CSA) system to a one-rating system that would deem carriers “unfit” if they failed two or more CSA BASICS. The withdrawal was prompted by reactions to the initial proposal. As required by the Fixing America’s Surface Transportation Act (FAST Act), the FMCSA must receive the correlation study from the National Academies of Science to assess whether corrective actions are needed and, if so, which corrective actions are recommended. The study will help the FMCSA determine if further rulemaking is necessary to revise the current safety fitness determination process.

Speed Limiters: Rule was withdrawn July 2017

Background:

A pending rule by the U.S. DOT issued by both FMCSA and NHTSA will mandate the use
of speed limiting devices—automatically calibrating a vehicle’s speed—on the electronic
control modules (ECM) of newly manufactured trucks weighing more than 26,000 lbs.,
effective three years after the final rule is published. The rule will also require the carrier
to ensure the setting is not modified. The agency is seeking feedback on whether to include
all heavy vehicles already equipped with an ECM capable of limiting the vehicle speed in
the final rule.
 
The proposed rule does not recommend a single maximum speed but instead seeks
feedback on three options: 60, 65 and 68 mph.

Impact:

The rule is expected to help improve fuel economy and decrease greenhouse gas
emissions, along with reducing severe traffic accidents and collision severity. For each
speed option in the rule, it lists a cost benefit analysis. For example: A 65 mph max speed
expects to save 63 to 214 lives and $848 million annually in greenhouse gas emissions.
The net savings is listed at $1 billion to $2.8 billion dollars.

What Shippers Can Do:

Carriers and shippers are encouraged to adjust now. Carriers should make the commitment
to outfit their fleets with speed limiters, and shippers can make an impact by tendering freight
to carriers using speed limiters.

Evaluation of Safety Sensitive Personnel for Obstructive Sleep Apnea:Rule was withdrawn June 2017

Background:

The FMCSA and Federal Railroad Administration (FRA) requested data and information regarding the prevalence of moderate to severe obstructive sleep apnea (OSA) for individuals occupying safety-sensitive positions in rail and highway transportation. The agencies also sought information about the potential economic impact and safety benefits of regulatory action for transportation workers with multiple risk factors for OSA to undergo medical evaluation and treatment.
FMCSA’s Medical Review Board (MRB) approved updated guidelines requiring a driver undergo a sleep apnea study in August 2016. The guidelines were approved by the Motor Carrier Safety Advisory Committee (MCSAC) and sent to FMCSA for consideration for inclusion in the proposed rule.
 
The guidelines indicate any driver with a BMI over 40, who has experienced excessive fatigue or been in a sleep-related crash should undergo a sleep study. In addition, any driver with a BMI over 33 and with three of 11 identified risk factors, including hypertension, type II diabetes or being age 42 or older should also participate in a sleep study.

Minimum Liability Insurance: February 26, 2015 End of Comment Period — Awaiting next steps

Background:

The FMCSA is proposing to raise the minimum amount of liability insurance carriers must have to operate. The current minimum, set in 1984, is $750,000, which the FMCSA advises should be closer to $2 million if it were indexed to inflation.
 
The existing required minimum level of insurance does not offer adequate coverage for damages resulting from involvement in a serious accident – and doesn’t come near providing the level of financial assurance that had been provided at the time the levels were last adjusted.

On Nov. 28, 2014, the FMCSA published an Advanced Notice of Proposed Rulemaking to solicit input from carriers and other industry stakeholders.

Impact:

According to the Motor Carrier Safety Advisory Committee, an increase of this size could put extensive strain on small fleets and owner-operators. Some insurance companies have already hiked rates as high as 30 percent, making it more difficult for for-hire fleets to obtain coverage. Two insurance companies, Zurich Insurance Group AG and American International Group, dropped coverage of most for-hire fleets in 2016. In 2015, the average U.S. trucking company spent 44 percent more per mile on premiums than the prior two years, and that isn’t taking into account the increases experienced in 2016.

What Shippers Can Do:

Shippers are encouraged to confirm that the transportation providers serving them are appropriately capitalized and that they maintain adequate insurance.

Diabetes Standard: July 3, 2015 Projected Publication Date–Awaiting publication of final rule

Background:

The FMCSA issued a proposed rule May 4, 2015 seeking comments on amending the Medical Qualification Standards, allowing drivers with insulin-treated diabetes mellitus to operate commercial motor vehicles without seeking an exemption from the Federal Motor Carrier Safety Regulations. The rule received over 1,000 comments many in support of the change. The final rule is expected in 2016.

Impact:

If approved, a small number of insulin-dependent drivers may be added to the industry’s mix.

Entry-Level Driver Training: Final Rule Published on December 7, 2016–Compliance Required by February 7, 2020

Background:

This rule went into effect June 5, 2017.

The rule is the result of the negotiated rulemaking process where 26 stakeholders worked together to come to consensus on the key aspects of the rule. The rule will apply to new drivers seeking their Class A or B CDL for either interstate or intrastate and includes special training for drivers seeking a hazardous materials, passenger or school bus endorsement on their CDL.

The training will be made up of two core parts: theory (classroom) and behind the wheel (BTW) on a range and on a public road. There is no required time that must be spent on theory training, but there are specific topics and materials that must be covered. The theory portions can be done either in a classroom or online. The BTW portion for a Class A driver had proposed a minimum 30 hours of driving: however, the final rule removed the minimum hours requirement.

The final rule relies on a driver demonstrating proficiency in operating a commercial vehicle safley at the conclusion of the training, and the driver must pass a knowledge test with at least 80 percent.

The training must be given by a registered training provider, be included in FMCSA’s Training Provider Registry (TPR) and certify its students before a student may sit for the CDL skills exam. Additionally, all BTW instructors are required to have two years’ experience as either an instructor or CMV driver, and they must have a valid CDL. Training providers must certify that students have met the theory and BTW requirements before the student can sit for the CDL skills test. At the conclusion of training, the training provider must send an electronic training certification by close of the next day to the State Licensing Agency, which will be required to check for training completion prior to issuing a CDL to an individual.

Impact:

The FMCSA estimates the new requirements will collectively have a net cost to the industry of $131M annually. This cost is based only on quantifiable costs and benefits such as the price of tuition, lost opportunity due to increased training time, and cost of compliance and registration. The rule does not include any safety benefit, as there is no documented improvement in safety due to training; however, an 8.5 percent reduction in crashes would make the rule cost neutral.

Commercial Driver's License Drug and Alcohol Clearinghouse: Final rule published December 5, 2016–Effective January6, 2020

Background:

This rule will create a national clearinghouse for DOT regulated positive drug and alcohol tests, excluding hair test results. Those drivers with a positive test will be removed from the industry unless they have completed the mandated return-to-duty process including treatment and follow-up testing.
 
The database will contain both positive tests, refusals to test and drivers who are cited for operating a commercial motor vehicle (CMV) under the influence.

In addition, the rule would require:

  • Employers of commercial driver’s license (CDL) holders or their service agents to report positive test results to the clearinghouse
  • Prospective employers, acting on an application for a CDL driver position with the applicant’s written consent, to pay a fee and query the clearinghouse to determine if positive tests are on record for that applicant prior to hiring or allowing the person to drive a CMV
  • Carriers to check their entire existing fleet annually to ensure no new results are in the clearinghouse since the driver was hired or leased to
  • State licensing agencies to query the database and ensure no positive tests exist prior to issuing a new CDL or renewing or transferring a CDL

Impact:

The rule is projected to cost $154 million annually. Each year the annual query is expected to identify 6,900 drivers who will need to be removed from driving; an additional 17,200 are expected to be identified and stopped from entering the industry from the pre-hire query. These increased costs are being passed along to shippers and consumers, becoming a permanent part of the market’s supply chain and distribution costs.

What Shippers Can Do:

Continue to contact your state and federal legislators in support of this rule and its timely implementation.
 

Hours of Service: Restart Rule: March 8, 2017, Effective Date

Background:

A July 1, 2013, restart provision that had required two consecutive overnight periods and could only be used once a week has been overturned. The overturn was initiated by the Department of Transportation (DOT) after reviewing the results of a congressionally mandated study of the rule which did not explicitly find any operational, health, safety or fatigue-related benefits.

Under the July 1, 2013, rule, if commercial drivers wanted to “restart” their 60- or 70-hour duty cycle limit, they were required to include at least two nighttime periods from 1 a.m. to 5 a.m. in their restart breaks. Use of the 34-hour restart was limited to once every 168 hours.

With the overturn of the rule, restart requirements will revert back to the provisions that were in place before July 1, 2013, which allow:

  • Drivers may restart a weekly 60- or 70-hour duty cycle after taking a restart break of 34 or more consecutive hours off duty.

Impact:

The return to the consecutive 34-hour restart provision allows for easier understanding by drivers and a reduction in the productivity impact of the 2013 rule change.

Military Licensing and State Commercial Driver’s License Reciprocity (CDL RULE Ⅱ): Notice of proposed rulemaking June 12, 2017–Comments due by August 11, 2017

Background:

The proposed rule will address the one item that Congress directed FMCSA to do as part of the FAST Act that FMCSA did not address in the CDL Rule I that was finalized in October of 2016. This proposed rule will allow the SDLAs to waive the requirements for the commercial driver’s license knowledge tests for certain individuals who are, or were, regularly employed within the last year in a military position that requires/required the operation of a commercial motor vehicle.

Impact:

This program is voluntary for states, and they would not be required to waive the knowledge or skills tests. The costs of this rule are thought to be minimal and not quantifiable, while benefits would be accrued primarily by the service member and their future employer.

Emissions and Fuel Economy Standards: October 26, 2016, Effective Date

Background:

The U.S. Environmental Protection Agency (EPA) and the U.S. Department of Transportation’s National Highway Traffic Safety Administration (NHTSA) finalized new emissions and fuel economy standards for medium- and heavy-duty vehicles in a final rule dated October 26, 2016, that follows the Phase 1 greenhouse gas and fuel efficiency (GHG/FE) standards to be implemented fully in 2017.
The proposed rule calls for specific percentage reductions in carbon dioxide emissions and fuel consumption for tractors, engines and trailers with improvements throughout the vehicle. The Phase 2 proposed rule would set GHG and FE standards on trailers for the first time beginning with model year 2018 trailers, which could be achieved using tire and aerodynamic technologies already on the market.

Impact:

The rule is expected to lower CO2 emissions by approximately 1.1 billion metric tons, while reducing oil consumption by up to 2 billion barrels over the lifetime of the vehicles sold under the program. The agencies estimate payback time on tractors and trailers to be just two years.

What Shippers Can Do:

To set sights on a sustainable future, shippers can carefully evaluate the transportation providers they work with to include those who operate in as environmentally sound a manner as possible. Look for carriers who meet the following criteria:
  • Weave sustainability throughout their organization, including financial, social and environmental
  • Offer multiple modes of transport for the most efficient route, reducing carbon emissions and fuel consumption
  • Test the latest advancements in products, practices, technology and alternative fuels
  • Have open communication with original equipment manufacturers and rail providers to optimize performance

Unified Registration Rule: June 22, 2017 Projected Publication Date–Awaiting publication of proposed rule

Background:

The proposed Unified Registration Rule will do the following:

  • Adjust the Unified Registration System (URS) registration fee for those under the FMCSA’s jurisdiction who must register with the agency to operate in interstate commerce
  • Implement several MAP-21 provisions that require changes to the URS regulations, the online application for U.S. DOT Number/Operating Authority Registration (Form MCSA-1) and MCSA-1 instructions
  • Prohibit transfers of operating authority registration
  • Make several technical amendments to the Motor Carrier Safety Administration (MCSA-1) form and instructions for purposes of clarification
  • Retire MC, MX, and FF numbers – DOT numbers will be the sole identifier for carriers, brokers, freight forwarders

Impact:

The URS will streamline the registration process and serve as a clearinghouse and depository of information on, and identification of, motor carriers, brokers, freight forwarders, intermodal equipment providers, hazardous materials safety permit applicants and cargo tank facilities required to register with the FMCSA.

Electronic Logging Devices: Effective Date December 2017

Background:

In March 2014, the FMCSA gave supplemental notice of a proposed rulemaking on Electronic Logging Devices (ELDs). Key regulations within the proposal include the requirement for every motor carrier with interstate drivers to install a compliant ELD.

Impact:

The ELD technology will drive compliance and allow for an accurate assessment of HOS rules industry-wide.

What Shippers Can Do:

To maximize efficiency, shippers will want to find a multimodal carrier that is an early adopter of ELDs and has already worked through the productivity, driver compliance and acceptance issues associated with this technology.

Shippers should not assume that all early adopters of ELDs are safety conscious. Shippers should proactively check Compliance, Safety and Accountability (CSA) scores before awarding a carrier.

Published May 2017

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