Updating Motor Carrier Compliance, Part 1

A satisfactory rating is a definite competitive edge. Understanding the regulatory environment helps you achieve it.

Any motor carrier’s best defense against an unsatisfactory safety rating from the Federal Motor Carrier Safety Administration (FMCSA), and possibly even a carrier compliance review, is a good proactive program for complying with the Federal Motor Carrier Safety Regulations. A winning strategy for motor carrier management regulatory compliance has two components:

1.Understanding FMCSA expectations of carriers regarding regulatory compliance and the methods the agency uses to measure carrier compliance

2. Devising and successfully implementing cost-effective processes and procedures that ensure regulatory compliance throughout the organization

In Part I of this two-part article, we will closely examine the regulatory processes of compliance reviews and safety ratings in simple terms and show why regulatory compliance is important to the success of any motor carrier operating in the United States. In Part II, we will identify industry trends in noncompliance and discuss how information technology provided by outside service providers can be used to successfully address, achieve, and maintain compliance.

The Regulatory Environment from the Carrier Management Perspective
Even though FMCSA has published its methodology for carrier safety ratings, many senior carrier managers may not know how this process works. Instead, they rely on their safety professionals to handle compliance issues. Unfortunately, there are many instances of compliance reviews that end with unpleasant surprises for senior carrier managers and a new job search for former “safety professionals.”

Devising a cost-effective strategy to achieve and maintain regulatory compliance amid the complexity of day-to-day carrier operations is very challenging. Many senior managers assume that what worked 10 or 20 years ago in regulatory compliance still works today. The demands on senior managers’ time are huge and do not allow for reviewing strategies for safety and regulatory compliance. As a result, a fleet’s compliance processes are not reviewed and technology is not updated because they are not seen as priorities that improve the bottom line. Safety professionals struggle to convince senior management that safety and compliance improvements can lead to huge cost savings by reducing accidents and injuries, increasing productivity, and retaining drivers.When regulatory compliance work continues to be a manual process, mistakes and omissions are made.Gaps in the carrier’s compliance efforts occur and increase over time. Organizational drift carries the regulatory compliance effort passively along until something occurs that triggers an FMCSA compliance review.

FMCSA Expectations
To understand FMCSA expectations, it is important to understand why the agency places so much significance on regulatory compliance.

“Improved compliance with the regulations leads to an improved rating, which in turn increases safety. This increased safety is our regulatory goal.”— FMCSR 385 Appendix B Paragraph VI(b)

Clearly, FMCSA closely links regulatory compliance with safety. (Refer to Part 385 of the Federal Motor Carrier Safety Regulations for a thorough review of all safety fitness procedures.)

Compliance Reviews
FMCSA uses compliance reviews and data obtained through roadside inspections and traffic enforcement stops to assess a carrier’s regulatory compliance. There are many reasons for FMCSA to conduct compliance reviews.Appendix B to Part 385 I(b) states:

“The CR is an in-depth examination of a motor carrier’s operations and is used (1) to rate unrated motor carriers, (2) to conduct a follow-up investigation on motor carriers rated unsatisfactory or conditional as a result of a previous review, (3) to investigate complaints, or (4) in response to a request by a motor carrier to reevaluate its safety rating.”

The above chart, however, shows that another element influences the targeting of compliance reviews. According to this data, the single biggest reason FMCSA has conducted compliance reviews in recent years is carrier SafeStat results. SafeStat uses compliance data measured in out-of-service violations gathered from roadside inspections and citations issued for moving violations in traffic enforcement. Over time, a compliance profile of a carrier emerges. Those carriers whose profiles indicate consistently poor regulatory compliance are targeted by FMCSA for compliance reviews. Consistently poor regulatory compliance means performance that reaches the fourth, or lowest, quartile of performance, greater than or equal to 75 percent, as calculated in each Safety Evaluation Area (SEA).

What really happens in a compliance review? A carrier’s compliance is measured against how well it complies with certain important Federal Motor Carrier Safety Regulations identified as either “acute” or “critical.” (For a complete listing of all the regulations FMCSA has identified as “acute” and “critical,” refer to Appendix B to Part 385.) It says, in part:

“Documents such as those contained in driver qualification files, records of duty status, vehicle maintenance records, and other records are thoroughly examined for compliance with the FMCSRs and HMRs.Violations are cited on the CR document. Performance-based information, when available, is utilized to evaluate the carrier’s compliance with the vehicle regulations. Recordable accident information is also collected.Acute regulations are those identified as such where noncompliance is so severe as to require immediate corrective actions by a motor carrier regardless of the overall safety posture of the motor carrier. Critical regulations are those identified as such where noncompliance relates to management and/or operational controls. These are indicative of breakdowns in a carrier’s management controls.

For each instance of noncompliance with an acute regulation or each pattern of noncompliance with a critical regulation during the CR, one point will be assessed. A pattern is more than one violation.When a number of documents are reviewed, the number of violations required to meet a pattern is equal to at least 10 percent of those examined. “However, each pattern of noncompliance with a critical regulation relative to Part 395, Hours of Service of Drivers, will be assessed two points.”

Safety Rating Process
The next step in the compliance review process is to assign ratings in various groupings of regulations called “factors,” as shown in Table 1. Factors are grouped based on the similarities of the acute and critical regulations in the various parts of the Federal Motor Carrier Safety Regulations and Hazardous Materials Regulations. Factors 1-5 are rated, based on the total number of points assessed from the compliance review, as satisfactory, conditional, or unsatisfactory. The sixth factor, Accident, receives either a satisfactory or unsatisfactory rating.

Once each factor has been rated, an overall safety rating is assigned to a carrier, based on Table 2.

To better understand how this overall safety rating system works, let’s assume that a carrier is found to have a pattern of violations of a critical regulation, such as the following: §395.3(a)(2) Requiring or permitting a property- carrying commercial motor vehicle driver to drive after the end of the 14th hour after coming on duty (critical).

A quick review of the information in Table 1 tells us that a pattern of noncompliance with a critical regulation related to Part 395, Hours of Service of Drivers, will be assessed two points. This means that this carrier, with two points assessed in this factor, will receive a rating of unsatisfactory in Factor 3, Operational.

As Table 2 shows, if this is the only item of noncompliance found in the compliance review, one unsatisfactory factor rating means that the best overall Safety Rating this carrier can achieve is a conditional rating.

Consequences of an Adverse Safety Rating
It does not take many instances of noncompliance with the acute and critical regulations to adversely affect a carrier’s overall safety rating. What are the consequences of receiving an unsatisfactory safety rating? From a regulatory perspective, here are the things that can happen (FMCSR 385.13):

(a)(1) Motor carriers transporting hazardous materials in quantities requiring placarding, and motor carriers transporting passengers in a CMV, are prohibited from operating a CMV beginning on the 46th day after the date of the FMCSA’s notice of proposed “unsatisfactory” rating.

(a)(2) All other motor carriers rated from reviews completed on or after November 20, 2000, are prohibited from operating a CMV beginning on the 61st day after the date of the FMCSA’s notice of proposed “unsatisfactory” rating. If the FMCSA determines the motor carrier is making a good-faith effort to improve its safety fitness, the FMCSA may allow the motor carrier to operate for up to 60 additional days.

(b) A Federal agency must not use a motor carrier that holds an “unsatisfactory” rating to transport passengers in a CMV or to transport hazardous materials in quantities requiring placarding.

(c) A Federal agency must not use a motor carrier for other CMV transportation if that carrier holds an “unsatisfactory”rating which became effective on or after January 22, 2001.

(d) Penalties. If a proposed “unsatisfactory” safety rating becomes final, the FMCSA will issue an order placing its interstate operations out of service. Any motor carrier that operates CMVs in violation of this section will be subject to the penalty provisions listed in 49 U.S.C. 521(b).

There are also other economic consequences of an adverse safety rating. One of the first things insurance companies look at is the motor carrier’s safety rating and Safe- Stat scores.Motor carriers with conditional and unsatisfactory ratings are charged higher premiums. And, in addition to federal agencies being prohibited from using motor carriers with unsatisfactory safety ratings, many shippers refuse to use carriers with unsatisfactory ratings. Shippers also will not pay motor carriers with conditional ratings as much as carriers that have satisfactory ratings. A satisfactory rating is a definite competitive edge.

Understanding how compliance reviews are conducted and how the safety rating process works is extremely important, but it is only half the battle. In the second part of this article,we will examine the trends in noncompliance with acute and critical regulations as found in compliance reviews and discuss how onboard fleet management technology can help carriers achieve and maintain regulatory compliance to avoid compliance reviews and unfavorable safety ratings.

This article originally appeared in the July 2008 issue of Occupational Health & Safety.

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