Challenge An FMCSA Notice of Claim

by G. Spencer Mynko, Esq.

When a Motor Carrier faces an FMCSA Notice of Claim for violations of the regulations and has been hit with Civil penalties and big fines, the Motor Carrier’s has several options.  An explanation of its choices is found at 49 CFR 386.14.  Those choices are three: Agree, Challenge, or Arbitrate. Notably, The FMCSA has been handing down stiff penalties in far greater amounts nowadays compared to even the recent past. The penalties can be devastating and even impossible for a Motor Carrier to pay.

The Motor Carrier’s first choice is to accept that all of the charges are correct and either pay the penalty immediately or arrange a payment plan with the FMCSA.  Alternatively the company can plead to the FMCSA in writing why the penalty should be reduced and discuss a potential settlement (i.e. payment plan). The second choice is to challenge the validity of the charges by filing a written answer to the charges.  This choice requires either an administrative hearing that someone will have to attend or an adjudication based upon the documents submitted – like a “paper” trial. If the Motor Carrier is going in this direction I advise that it hire an attorney. Finally, the Motor Carrier can ask for binding arbitration.  You may choose binding arbitration if the only issues that you dispute are the amount of the civil penalty and/or the length of the time to pay.  Again, it would be advisable for the Motor Carrier to hire a lawyer if it wants to go down that road.

The Law

As I stated, The FMCSA has substantially increased the dollar amount of civil penalties resulting from compliance reviews for violations of The Federal Motor Carrier Safety Regulations. This should be a surprise to no one since since the federal government has made it absolutely clear that they were going to perform more compliance reviews and enhance the penalties for violations of the safety regulations. This is the USDOT’s way of improving safety within the industry.

What is astonishing is the severity of the violations. Even small companies with only a few trucks can end up with claims of tens of thousands or hundreds of thousands of dollars. Therefore, the message should be clear that it is critical for Motor Carriers to achieve and maintain compliance with safety regulations, or face the prospect of substantial civil penalties.  

In the event you are audited by the FMCSA, it is important to treat the investigator with respect  and be reasonably cooperative with the compliance review. Of course, if you’re respectful to the investigator, he or she should be respectful back. Furthermore, being cooperative does not mean yielding to unreasonable demands, signing an admission that violations occurred or allowing the investigator to put words in your mouth. I have to make it clear though, that when the investigator requests documents that they have a right to inspect, which generally includes practically all of the carriers records, being uncooperative is unlikely to accomplish anything other than causing the investigator to continue digging and prolong the compliance review. In the event requested records cannot be provided, make a list of such documents, and worked diligently to gather them and provide them subsequently.

Remember, the the investigator is there to do their job and ensure safe operations of a Motor Carrier. Therefore, I advise clients that they should display a genuine concern for the safety of its operations, and if there are problems, let the FMCSA Investigator know that you want to correct them. Anecdotally, I know that keeping a positive attitude toward safety has been the basis for reducing the amount of a civil penalty.

Additionally, in the event of an FMCSA safety compliance audit, there should be one person in the organization who is the assigned “point person” for the compliance review and who is knowledgeable about the carrier’s operations, and will remain with the investigator at all times while the compliance review is underway. Ideally, the investigator’s access should be limited to the person assigned to handle the audit. You do not want to allow an auditor to randomly question and speak with other people within the organization. It is critically important that the assigned contact person should be cautioned to not make any statement that would represent an admission of a violation.

When the compliance review is concluded, the investigator will provide a report summarizing the findings of the review, and will request that the report be signed by the carrier to acknowledge its receipt. The carrier should sign the report as requested but decline to sign any other documents that may have been generated during the course of the compliance review. Again, there’s no requirement that the carrier sign any documents which may contain admissions against interest that can be used against the carrier.

Following completion of the compliance review, the carrier should immediately take action to correct any deficiencies that may have been discovered and to document the actions taken and when they were taken.

When a civil penalty is claimed, the FMCSA, through it’s chief safety officers, have frequently stated that actions taken by a Motor Carrier to achieve compliance with the safety regulations after a compliance review, but before a notice of claim, is considered as a factor potentially justifying a reduction in the penalty amount. Because the time between completion of the compliance review and issuance of a notice of claim is very brief, prompt action is required on behalf of any carrier hoping to reduce the ultimate penalty amount.

In the event a Notice of Claim is received, it is imperative that the carrier act promptly to preserve its rights if it desires an opportunity to reduce or eliminate the amount of the claimed penalty.

Under FMCSA rule 49 CFR part 386, the carrier must serve it’s written reply within 30 days following service of the notice of claim. If the carrier does not timely serve its reply in the precise manner specified in the rules of practice, this default will likely will result in the Notice of Claim becoming a “final order”, with only limited opportunity for the carrier to seek reduction in the penalty amount afterwards. If the carrier wants to have a hearing, it must be requested within the time period specified for the carrier’s reply, or any right to a hearing will be deemed waived.

However, before proposing or claiming a civil penalty, the FMCSA must, pursuant to 49 USC sections 521(b)(2)(D) and 5123(c),  take into consideration, the nature, circumstances, extent, and gravity of the violation committed and with respect to the violator, the degree of culpability, history of prior offenses, ability to pay, affect on the ability to continue to do business, and such other matters as justice and Public Safety may require. The civil penalty proposed shall be calculated it to induce compliance. These factors will not be considered, however, for violations subject to the section 222 provision (section 222 has to do with a pattern of and/or repeated violations of the law same or related acute or critical regulations. If the FMCSA determines you are allowed to be assessed under section 222, it is unlikely that these factors will be taken into account and you will be unable to mitigate the fine.

A DOT administrator that I have talked to says that the Motor Carrier’s Reply can ask for “the sun, the moon and the stars”.  However, he said that the Motor Carrier needs to realize that it is not going to get everything it asks for.  He said “It never hurts to ask.”
Contact today to discuss FMCSA Compliance Reviews and the unfortunate situation of receiving a Notice of Claim