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Owner-Operator Independent Drivers Association, Inc. v. United States Department of Transportation

United States Court of Appeals, Seventh Circuit

October 31, 2016

Owner-Operator Independent Drivers Association, Inc., Mark Elrod, and Richard Pingel, Petitioners,
United States Department of Transportation, et al., Respondents.

          Argued September 13, 2016

         On Petition for Review of the Final Rule of the Federal Motor Carrier Safety Administration. FMCSA-2010-0167.

          Before Bauer, Kanne, and Hamilton, Circuit Judges.

          Hamilton, Circuit Judge

         Since 1935, federal law has regulated the hours of service of truck drivers operating in interstate commerce. The regulations are intended to reduce fatigue-related accidents, and they require drivers to keep paper records showing their driving time and other on-duty time. Compliance has long been an issue, though, because it is easy to insert an error in paper records, whether intentionally or not.

         In 2012, Congress directed the Department of Transportation to issue regulations to require most interstate commercial motor vehicles to install electronic logging devices (ELDs). ELDs are linked to vehicle engines and automatically record data relevant to the hours of service regulations: whether the engine is running, the time, and the vehicle's approximate location. The devices are intended to improve drivers' compliance with the regulations, to decrease paperwork, and ultimately to reduce the number of fatigue-related accidents. Congress instructed the Department in promulgating the rule to consider other factors as well, such as driver privacy and preventing forms of harassment enabled by the ELDs. 49 U.S.C. § 31137. The Federal Motor Carrier Safety Administration, which is part of the Department of Transportation, promulgated the final rule requiring ELDs in 2015. Electronic Logging Devices and Hours of Service Supporting Documents, 80 Fed. Reg. 78, 292 (Dec. 16, 2015) ("Final ELD Rule"), codified in 49 C.F.R. Pts. 385, 386, 390, and 395.

         Petitioners Mark Elrod, Richard Pingel, and the Owner-Operator Independent Drivers Association (OOIDA) brought this action for judicial review of the final rule. Elrod and Pin-gel are professional truck drivers, and OOIDA is a trade organization. They argue that the agency's final rule should be vacated for five reasons. We uphold the final rule and deny their petition.

         Petitioners claim first that the final rule is contrary to law because it permits ELDs that are not entirely automatic. We disagree. Petitioners' reading of the statute seeks to pit one statutory requirement against another rather than allow the agency to balance competing policy goals endorsed by Congress. Second, petitioners argue that the agency used too narrow a definition of "harassment" that will not sufficiently protect drivers. This claim also fails. When defining harassment, the agency sought input from drivers, motor carriers, and trade organizations; it considered administrative factors; and it ultimately provided a reasonable definition of the term. Third, petitioners argue that the agency's cost-benefit analysis was inadequate and fails to justify implementation of the ELD rule. However, the agency did not need to conduct a cost-benefit analysis for this rule, which was mandated by Congress. Even if such analysis were required, the studies were adequate. Fourth, petitioners argue that the agency did not sufficiently consider confidentiality protections for drivers. The agency, however, adopted a reasonable approach to protect drivers in this regard.

         Fifth, petitioners argue that the ELD mandate imposes, in effect, an unconstitutional search and/or seizure on truck drivers. We find no Fourth Amendment violation. Whether or not the rule itself imposes a search or a seizure, inspection of data recorded on an ELD would fall within the "pervasively regulated industry" exception to the warrant requirement. The agency's administrative inspection scheme for such information is reasonable.

         I. Factual and Regulatory Background

         The agency's road to the 2015 final rule was long and rocky. That history is relevant to several of petitioners' arguments, particularly the claims that ELDs must be entirely automatic, that ELD benefits do not outweigh their costs, and that the ELD mandate violates the Fourth Amendment.

         A. Federal Regulation of Commercial Motor Vehicles

         In the early twentieth century, commercial motor vehicles were largely regulated by individual states. See John J. George, Federal Motor Carrier Act of 1935, 21 Cornell L. Rev. 249, 249-51 (1936). This decentralized system ran into dormant commerce clause problems. In a series of cases, the Supreme Court struck down state regulations of commercial motor vehicles that interfered with interstate commerce. See, e.g., Buck v. Kuykendall, 267 U.S. 307 (1925) (striking down state's attempt to require certificate of "public convenience" to compete in commercial interstate transportation); George W. Bush & Sons Co. v. Maloy, 267 U.S. 317 (1925) (same); Interstate Transit, Inc. v. Lindsey, 283 U.S. 183 (1931) (striking down state tax on privilege of providing interstate bus transportation). In 1935, Congress responded by passing the Federal Motor Carrier Act of 1935, Pub. L. No. 255, § 201, 49 Stat. 543.

         The Act delegated authority to the Interstate Commerce Commission to regulate many elements of interstate freight and passenger motor vehicle traffic. Most relevant for this case, the Act directed the Commission to regulate the maximum hours of service for commercial drivers. Id., § 204(a)(1). Regulating hours of service was intended to promote highway safety by reducing accidents related to driver fatigue. 79 Cong. Rec. 12209-37 (1935). This remains the goal of the hours of service regulations today. Final ELD Rule, 80 Fed. Reg. at 78, 303. Jurisdiction over the regulations moved to the Federal Highway Administration in 1995 and then to the new Federal Motor Carrier Safety Administration in 2000. See Interstate Commerce Commission Termination Act, Pub. L. 104-88, 109 Stat. 803 (1995); Owner-Operator Independent Drivers Ass'n v. Federal Motor Carrier Safety Admin., 494 F.3d 188, 193 (D.C. Cir. 2007) (discussing regulatory history).

         The regulations require drivers to document four possible statuses: (1) driving; (2) on duty not driving; (3) in the sleeper berth; and (4) off duty 49 C.F.R. § 395.8(b). They set out maximum times for driving and require a minimum number of hours off duty each day. They also establish the maximum permissible on-duty time for each week.

         Driver status has been traditionally documented through paper logs called the "Record of Duty Status." Drivers are required to keep copies of these records for seven days before submitting them to their motor carrier. 49 C.F.R. § 395.8(k)(2). The carrier must retain copies for six months. § 395.22(i)(1). Both drivers and carriers must provide these records to authorized safety officials during roadside inspections or audits. If a driver violates the hours of service or fails to maintain her records accurately, she may be placed out of service. § 395.13.

         These paper records have been ongoing sources of concern because they are easy to falsify. For example, a driver could exceed the cap on continuous driving (11 hours), but fail to record the excess hours. § 395.3(a)(3)(i). There is evidence that falsification of paper records occurs on a regular basis. 65 Fed. Reg. 25, 540, 25, 558 (May 2, 2000) (agency noting that hours of service violations are widespread). The paper records are also vulnerable to human error. Final ELD Rule, 80 Fed. Reg. at 78, 303. These concerns were part of the impetus to update the hours of service regulations.

          B. Efforts to Update the Hours of Service Regulations

         In 1995, Congress directed the agency to revise the hours of service regulations for commercial motor vehicles. Pub. L. 104-88 § 408, set out as note under 49 U.S.C. § 31136 (1996 Supp.). The Agency then tried to modernize the regulations. The agency's proposed new rules have been struck down three times, twice by the Court of Appeals for the District of Columbia Circuit and once by this court.

         In 2003 the agency issued a new final rule that overhauled the hours of service rules. 68 Fed. Reg. 22, 456 (Apr. 28, 2003). The rule altered various requirements, including the length of the daily driving limit, the daily off-duty requirement, and the weekly on-duty maximum. See id. at 22, 457, 22, 501-02. The D.C. Circuit vacated the rule because the "agency failed to consider the impact of the rules on the health of drivers, a factor the agency must consider under its organic statute." Public Citizen v. Federal Motor Carrier Safety Admin., 374 F.3d 1209, 1216 (D.C. Cir. 2004).

         The agency then issued a revised final rule in 2005. 70 Fed. Reg. 49, 978 (Aug. 25, 2005). The D.C. Circuit again held that the agency erred. Owner-Operator Independent Drivers Ass'n v. Federal Motor Carrier Safety Admin., 494 F.3d 188 (D.C. Cir. 2007). This time, the agency violated the Administrative Procedure Act by failing to provide sufficient opportunity for interested parties to comment on the method that justified the change in the hours of service rules. The agency also failed to explain sufficiently certain elements of that method. Id. at 193.

         Within the agency's broader efforts to update the hours of service rule was a narrower issue of electronic monitoring. Be- fore promulgating the 2003 rule, the agency considered requiring electronic on-board recorders (EOBRs), which are the technical and regulatory predecessors of ELDs. See 65 Fed. Reg. 25, 540, 25, 598 (May 2, 2000). The agency considered requiring EOBRs in response to Congress's 1995 directive to issue an advance notice of proposed rulemaking "dealing with a variety of fatigue-related issues pertaining to commercial motor vehicle safety ... including ... automated and tamperproof recording devices." Pub. L. 104-88 § 408, set out as note under 49 U.S.C. § 31136 (1996 Supp.).[1]

         While the proposed rule would have required EOBRs, the agency decided not to require them at that time. 68 Fed. Reg. 22, 456, 22, 488 (Apr. 28, 2003). The D.C. Circuit vacated the 2003 rule on other grounds but also admonished the agency for failing to respond adequately to the statutory directive to "deal[] with ... automated and tamperproof recording devices, " noting that the agency's decision on that point was "probably flawed." Public Citizen, 374 F.3d at 1220-22.

         In response, the agency further investigated EOBRs. In 2004, the agency issued an optional advanced notice of proposed rulemaking, which indicated that it was still considering EOBR implementation. 69 Fed. Reg. 53, 386 (Sept. 1, 2004). Then, in 2007 the agency issued a formal notice of proposed rulemaking that considered three issues: (1) EOBR performance standards; (2) mandatory use of EOBRs for motor carriers that regularly violated hours of service rules; and (3) incentives to promote voluntary use of EOBRs. 72 Fed. Reg. 2, 340, 2, 343 (Jan. 18, 2007). The final rule issued in 2010 required, among other things, that motor carriers "that have demonstrated serious noncompliance with the HOS [hours of service] rules will be subject to mandatory installation of EOBRs." 75 Fed. Reg. 17, 208, 17, 208 (Apr. 5, 2010). This rule led to the agency's third rebuke by the courts.

         In 2011, this court vacated the final rule regarding EOBRs. Owner-Operator Independent Drivers Ass'n v. Federal Motor Carrier Safety Admin., 656 F.3d 580 (7th Cir. 2011) ("OOIDA I"). As in the D.C. Circuit's 2003 decision, we found that the agency had failed to consider a statutory requirement: to ensure that electronic monitoring would not be used to harass drivers. 49 U.S.C. § 31137(a) (2011). Instead of building in safeguards to prevent EOBRs from being used to harass drivers, the agency had provided "a single conclusory sentence in the final rulemaking to the effect that the Agency 'has taken the[] statutory requirement[] into account throughout the final rule.'" OOIDA I, 656 F.3d at 588. This shortcoming rendered the final rule arbitrary and capricious. See 5 U.S.C. § 706.

         C. The Current Challenge to ELDs

         In 2012, Congress stepped in again and passed the Commercial Motor Vehicle Safety Enhancement Act of 2012. This time Congress was more direct. It ordered the Secretary of Transportation to issue regulations requiring most commercial vehicles to "be equipped with an electronic logging device to improve compliance by an operator of a vehicle with hours of service regulations." 49 U.S.C. § 31137(a)(1). The Act specified several factors for the Secretary to consider in implementing the ELD mandate, including the potential for harassment, § 31137(a)(2); the potential to reduce paper documents, § 31137(d)(1); driver privacy, § 31137(d)(2); and the confidentiality of personal data, § 31137(e).

         To comply with this statutory mandate, the agency issued its final rule in 2015. Final ELD Rule, 80 Fed. Reg. 78, 292 (Dec. 16, 2015). The rule (1) mandates ELDs for all vehicles that are currently required to maintain hours of service records; (2) provides technical specifications for ELDs; (3) clarifies the extent to which supporting paperwork is required; and (4) adopts provisions to ensure that ELDs are not used to harass drivers. Id. at 78, 293. The ...

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