Logistics and the Law: CSA/SMS—Shippers, take action!

The implementation of the FMCSA’s Safety Measurement System (SMS) has the unintended effect of increasing shippers’ exposure to vicarious liability for highway accidents. Our transportation law expert explains how this came to be and calls on the industry to come together to support a legislative solution.

By Brent Primus · February 1, 2012

Much has been said and written about the Federal Motor Carrier Safety Administration’s (FMCSA) Compliance, Safety, Accountability (CSA) Safety Measurement System (SMS) over the past year. During that time, Logistics Management has, to its credit, set out to explain why CSA/SMS exists and what it could mean to the dynamics of the shipper/carrier relationship.

However, in this installment of the series that we call “Logistics and the Law,” we’ll focus on how the very existence of the SMS data exposes shippers to vicarious liability for highway accidents. Simply put, the current situation is a total mess.

We will first take a look at how we got to where we are today. We will then propose a global solution to the problem, namely legislation that would (1) restore the true purpose of CSA/SMS as a means for the FMCSA to identify carriers with potential safety problems, and (2) eliminate a use that was never intended—a courtroom argument for holding a shipper, or any other entity in the supply chain that uses motor carriers, vicariously liable for highway accidents.

Because a legislative solution will require an act of Congress, we will also offer some suggestions on how to weather the storm until Congress acts.

First, some history…
The Motor Carrier Safety Act of 1984 required the Secretary of Transportation to “maintain, by regulation, a procedure for determining the safety fitness of an owner or operator of commercial motor vehicles.” 

The resulting regulations were first implemented in 1988. Pursuant to these regulations, motor carriers are assigned a safety rating. These ratings are based upon a compliance review that is an on-premises inspection of the carrier’s records, driver logs, and procedures to see if they are adequate from a safety viewpoint. The possible ratings are “satisfactory,” “unsatisfactory,” “conditional,” or “unrated.”

The first important takeaway for shippers is that this system is still in place today and will remain in place for the indefinite future. CSA/SMS is an independent system and does not replace or supersede the safety rating system. While the terms “unfit” and “marginal” are possible future replacements for the terms “unsatisfactory” and “conditional,” they are not currently used for either safety ratings or as part of CSA/SMS. 

In the mid-1990s another system was initiated known as the Motor Carrier Safety Status Measurement System (SafeStat). Under this system, a carrier was assigned a rating in four areas with a score of 75 or above labeled “deficient.”

The primary difference between the determination of a safety rating and the determination of a SafeStat score was that the latter was based upon a statistical methodology, not an on-site visit. Up until 2004, most persons in the industry were aware of the fact that a carrier had a safety rating (e.g., “satisfactory” or “unsatisfactory”), but many persons, including myself, had never even heard of SafeStat scores. 

This all changed when a U.S. District Court issued a decision in the case of Schramm v. Foster. Specifically, the judge denied C.H. Robinson’s request to dismiss the case and allowed the case to go to the jury on the theory of negligent hiring of a motor carrier. The judge considered two factors. First, the motor carrier’s safety rating was “unrated.” Second, at the time of the accident, the motor carrier had a SafeStat rating of 74 in the driver safety evaluation rating.

Although not explicitly so stated, the Schramm decision equated a “deficient” SafeStat rating with an “unsatisfactory” carrier safety rating. This would mean that if one of a carrier’s ratings was 75 or higher then that carrier should not be used by a shipper just as a shipper should not knowingly hire a carrier with an “unsatisfactory” safety rating. 

Indeed, even though the trucker’s SafeStat rating was 74—not “deficient”—the judge opined that it was close enough to 75 to warrant further investigation. The problem with the court’s analysis in Schramm is that its reasoning leads to an illogical result.

Assume for a moment that all of the carriers who had one or more SafeStat scores of 75 or higher went “out of business” because no one tendered them any freight. Immediately thereafter 75 percent of the initial group of carriers would then become 100 percent of a new group of carriers. 

Of these carriers, 25 percent would have SafeStat scores of 75 percent or higher and, accordingly, they too would have to be put “out of service”…and so on until all carriers but one had closed their doors. This hypothetical exercise shows the basic flaw in the Schramm decision as well as using SafeStat scores or SMS data for carrier selection: at any given point in time there will always be carriers who are safer than others—even though all of them might be perfectly safe when measured by an objective standard.

CSA implementation, litigation, and settlement
Beginning in the mid-2000s, the FMCSA began work on a new system, CSA, to replace SafeStat. Although the statistical methodology of CSA is different than SafeStat, conceptually the two are the same. They’re both intended by the FMCSA to be a way to identify carriers who may not be operating in a manner consistent with a “satisfactory” safety rating.

Under the previous system, a SafeStat score of 75 or above was deemed deficient. Under CSA, there are seven categories called Behavior Analysis and Safety Improvement Categories, or BASICs. For five of these categories, a carrier’s score is available for public view on the FMCSA’s website. A score of 60 or 65 (or higher), depending upon the area, originally resulted in the word “alert” appearing next to the carrier’s score.

The motor carrier industry was well aware that after Schramm many shippers would not be willing to use a motor carrier who had one or more “alerts” posted on the FMCSA website even though the carrier had a “satisfactory” safety rating. The trucking industry was also concerned with the basic methodology used by the FMCSA—for example, an accident that is determined not to be the fault of the carrier still goes against its BASICs score. 

Accordingly, three motor carrier trade associations—The National Association of Small Trucking Companies (NASTC), The Expedite Alliance of North America (TEANA), and the Air & Expedited Motor Carrier Association (AEMCA)—brought a lawsuit against the FMCSA seeking to, amongst other things, postpone publication of the percentile rankings and the “alert” designation. The case was resolved through mediation. 

The result of the mediation was that the FMCSA will continue to publish the percentile rankings, however the term “alert” has been changed to a yellow triangle containing an exclamation mark. Also, the FMCSA agreed to reword and strengthen the disclaimer on its website regarding the purpose and use of BASICs scores. 

The most important aspect of the disclaimer is to clearly state that the BASICs scores do not replace or supersede a carrier’s safety rating. In other words, so long as a carrier has not been deemed “unsatisfactory” they are authorized to be on the nation’s highways.

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About the Author

Brent Primus
Brent Wm. Primus, J.D., is the CEO of Primus Law Office, P.A. and the Senior Editor of transportlawtexts, inc. He is the author of Motor Carrier Contracts Annotated and co-author of U.S. Domestic Terms of Sale and Incoterms 2010. He also was the Editor of Freight Claims in Plain English, 4th Edition, and is a frequent contributor to Logistics Management. He can be reached at [email protected]

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