Motor Carrier Safety:

New Applicant Reviews Should Expand to Identify Freight Carriers Evading Detection

GAO-12-364: Published: Mar 22, 2012. Publicly Released: Mar 22, 2012.

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What GAO Found

FMCSA does not determine the total number of chameleon carriers within the motor carrier industry. Such a determination would require FMCSA to investigate each of the tens of thousands of new applicants that register annually and then complete a legal process for some of these suspected chameleon carriers, an effort for which FMCSA does not have sufficient resources. Rather, FMCSA’s attempt to identify chameleon carriers among new applicants, referred to as the vetting program, is limited to bus companies (passenger carriers) and movers (household goods carriers). These two relatively small groups, representing only 2 percent of all new applicants in 2010, were selected because they present consumer protection and relatively high safety risks. Through the vetting program, FMCSA conducts electronic matching of applicant registration data against data on existing carriers and investigates each application from these two small groups, but does not determine whether all other new applicants, including freight carriers, may be attempting to assume a new identity. Federal internal control standards direct agencies to assess the risks they face to determine the most effective allocation of federal resources, including how best to distribute resources for activities such as investigations and enforcement. GAO demonstrated how analysis of registration data can be used to assess risk by targeting all new applicant carriers that have attributes similar to those of chameleon carriers—for example, company registration data that match data for another carrier with a history of safety violations. Using FMCSA data, GAO found an increasing number of carriers with chameleon attributes, from 759 in 2005 to 1,136 in 2010. GAO also found that 18 percent of the applicants with chameleon attributes were involved in severe crashes compared with 6 percent of new applicants without chameleon attributes.

FMCSA’s investigative programs—the vetting and new entrant safety assurance programs—are not well designed to identify suspected chameleon carriers. The vetting program assesses all passenger and household goods carriers applying for operating authority, but it does not cover other groups of carriers, including freight truck carriers, which represented 98 percent of all new motor carrier applicants in 2010 and were more likely to be involved in fatal crashes than passenger carriers. The new entrant safety assurance program—which involves a safety audit for all new entrants, including freight carriers—entails a brief assessment of whether a carrier may be chameleon, but is primarily designed to educate new entrants about federal motor carrier safety regulations. The safety audit includes questions to elicit information on connections between new and previous carriers, but auditors lack necessary guidance on how to interpret the responses to distinguish chameleon carriers from legitimate carriers.

FMCSA faces several constraints in pursuing enforcement actions against suspected chameleon carriers. For example, as a result of a 2010 decision by an FMCSA Assistant Administrator, it is unclear whether FMCSA should use a state or a federal legal standard to demonstrate that a carrier is a chameleon. Thus, evidence is gathered to meet both a state and federal legal standard, which can lead to differing enforcement actions across states and has increased the time necessary to pursue chameleon carrier cases. FMCSA is pursuing several options to achieve a single standard, including providing input to Congress on a legislative proposal, monitoring chameleon carrier cases that could clarify the 2010 decision, and pursuing a separate rulemaking. Other constraints on FMCSA enforcement actions include a resource-intensive legal process, the inability to preclude carriers from obtaining multiple registration numbers, and low maximum fines.

Why GAO Did This Study

The Federal Motor Carrier Safety Administration’s (FMCSA) mission is to ensure motor carriers operate safely in interstate commerce. FMCSA partners with state agencies to conduct a variety of motor carrier oversight activities, which are carried out by certified auditors, inspectors, and investigators. Some motor carriers have registered under a new identity and begun to operate in interstate commerce, violating federal law in an effort to disguise their former identity and evade detection by FMCSA. Such carriers are known as chameleon carriers.

GAO’s objectives were to examine (1) the prevalence of chameleon carriers; (2) how well FMCSA’s investigative programs are designed to identify suspected chameleon carriers; and (3) what constraints, if any, FMCSA faces in pursuing enforcement actions against suspected chameleon carriers.

To address these objectives, GAO analyzed data on new applicants; reviewed investigative program guidance, federal motor carrier laws and regulations, GAO and other reports, and selected state corporate successor liability laws; observed two new entrant safety audits; and interviewed FMCSA headquarters and field officials, state officials—including law enforcement agencies—and motor carrier stakeholders.

What GAO Recommends

FMCSA should expand the vetting program using a data-driven approach; and provide guidance to improve the new entrant program. FMCSA generally concurred with our recommendations.

For more information, contact Susan A. Fleming at (202) 512-2834 or flemings@gao.gov.

Recommendations for Executive Action

  1. Status: Closed - Implemented

    Comments: In March 2012, we found that the Department of Transportation's Federal Motor Carrier Safety Administration (FMCSA) cannot readily determine the number of chameleon carriers (motor carriers that have registered and been operating illegally in interstate commerce by using a new identity in an effort to disguise their former identity and evade enforcement actions issued against them by the Federal Motor Carrier Safety Administration) because doing so would require extensive investigation of the tens of thousands of new applicants that register with FMCSA each year and, in some cases, the completion of a legal process. However, given the volume of new applicants and the necessary resources to investigate them, FMCSA uses the vetting program to focus its review of new applicants on two groups of carriers, for-hire passenger and household goods carriers, representing only 2 percent of all new applicants in 2010. While FMCSA's exclusive focus on passenger and household goods carriers limits the vetting program to a manageable number, it does not account for the risk presented by chameleon carriers in the other groups that made up 98 percent of new applicants in 2010. In our view, data analysis can be used to target other types of new applicants, including freight carriers, that are more likely to be chameleons for further investigation as they register or apply for operating authority. FMCSA and other federal agencies use data analysis to target entities or items with certain risk factors. Regularly using data analysis for targeting new applicants would allow FMCSA to expand its examinations of newly registered carriers to include new applicants of all types using few or no additional staff resources. To demonstrate that it is possible to use data analysis to target new applicants for further investigation, we developed a method and applied it to FMCSA data to identify carriers with chameleon attributes. We defined such carriers as those that met two criteria: 1) they submitted registration information that matched information for a previously registered carrier and 2) the previously registered carrier had a motive for evading detection, such as a history of safety violations. Our data analysis identified 1,136 new applicant carriers with chameleon attributes in 2010, an increase from 759 in 2005. Using a risk-based, data-driven approach such as the one we outline would allow FMCSA to use available resources to target all types of carriers, including freight, and then periodically evaluate the effectiveness of the methodology and adjust its method based on the outcomes of follow-up investigations. Therefore, we recommended that FMCSA develop a data-driven, risk-based vetting methodology that incorporates matching and motive components for targeting carriers with chameleon attributes. In June 2013, FMCSA developed and began testing a risk-based methodology that implemented a match and motive criteria framework. This framework closely follows the methodology we outlined in our report, including the same match score and motive formulas that were used in our data analysis. FMCSA's preliminary analysis of this methodology indicates that it is generally successful in providing a risk-based screening of new applicants, which it plans to use as a front-end screening methodology for all carrier types seeking operating authority. By developing this risk-based methodology and analyzing the initial results, FMCSA has developed an approach that will help keep unsafe carriers off the road.

    Recommendation: To help FMCSA better identify chameleon carriers through its vetting program, the Secretary of Transportation should direct the FMCSA Administrator to develop a data-driven, risk-based vetting methodology that incorporates matching and motive components for targeting carriers with chameleon attributes.

    Agency Affected: Department of Transportation

  2. Status: Open

    Comments: In June 2013, FMCSA reported that it had developed and is testing a risk-based methodology that implemented a match and motive criteria framework that closely follows the methodology we outlined in our report. FMCSA also reported that it is assessing and validating this methodology through a pilot study and plans to eventually use it as a front-end screening methodology that will be applied to all carrier types seeking operating authority. Once FMCSA expands the use of this methodology to all motor carriers and conducts additional evaluations of its effectiveness we will reassess whether or not to close this recommendation as implemented.

    Recommendation: To help FMCSA better identify chameleon carriers through its vetting program, the Secretary of Transportation should direct the FMCSA Administrator to, using this new methodology, expand the vetting program as soon as possible to examine all motor carriers with chameleon attributes, including freight carriers.

    Agency Affected: Department of Transportation

  3. Status: Open

    Comments: In June 2013, FMCSA reported that it had developed and is testing a risk-based methodology that implemented a match and motive criteria framework that closely follows the methodology we outlined in our report. FMCSA also reported that it is assessing and validating this methodology through a pilot study and plans to eventually use it as a front-end screening methodology that will be applied to all carrier types seeking operating authority. Once FMCSA expands the use of this methodology to all motor carriers and conducts additional evaluations of its effectiveness we will reassess whether or not to close this recommendation as implemented.

    Recommendation: To help FMCSA better identify chameleon carriers through its vetting program, the Secretary of Transportation should direct the FMCSA Administrator to periodically evaluate the effectiveness of this methodology using the results of investigations and refine as necessary.

    Agency Affected: Department of Transportation

  4. Status: Closed - Implemented

    Comments: In March 2012, we reported on the Federal Motor Carrier Safety Administration's (FMCSA) investigative programs to identify suspected chameleon carriers--motor carriers that have registered under a new identity and begun to operate in interstate commerce, violating federal law in an effort to disguise their former identity and evade detection by FMCSA. We found that the new entrant safety assurance program--which involves a safety audit for all new motor carriers--entails a brief assessment of whether a carrier may be chameleon, but is primarily designed to educate new carriers about federal motor carrier safety regulations. Although the safety audit included questions to elicit information on connections between new and previous carriers (a characteristic of chameleon carriers), auditors lacked necessary guidance on how to interpret the responses to distinguish chameleon carriers from legitimate carriers and what documents to collect from the carrier that would help FMCSA identify suspected chameleon carriers. Without such guidance, FMCSA cannot ensure that the new entrant safety assurance program will effectively identify chameleon carriers. Consequently, we recommended that FMCSA strengthen the new entrant safety assurance program audit by developing guidance to help new entrant auditors identify chameleon carriers. For example, guidance could describe how to use the questions to distinguish chameleon carriers from legitimate carriers and what evidence to collect during the audit. In August 2012, FMCSA issued guidance for identifying and investigating potential chameleon carriers. The guidance specifies the actions safety auditors must take (i.e., consultations with the division administrator(s) and an enforcement team) in response to specific questions asked during the new entrant audit and the evidence auditors must collect (i.e., a checklist of documents) when they suspect a chameleon carriers. FMCSA also developed refresher training that consisted of a question-by-question review of the new entrant audit as well as training on, among other things, (1) detecting chameleon carriers through an investigative analysis, (2) distinguishing chameleon from legitimate carriers based on that analysis, and (3) a checklist of evidence to collect. The training occurred from October to December 2012 and over 850 trainees, including auditors, attended across the U.S. These actions--issued standards and tools coupled with training--will help ensure all new entrant auditors are capable of identifying chameleon carriers.

    Recommendation: To help FMCSA identify chameleon carriers that present safety risks, FMCSA should strengthen the new entrant safety assurance program audit by developing guidance to the questions contained in the electronic Field Operations Training Manual designed to help the new entrant auditor identify chameleon carriers, including (1) how to use the questions to distinguish chameleon from legitimate carriers, (2) what types of follow-up questions to ask, and (3) what evidence to collect.

    Agency Affected: Department of Transportation: Federal Motor Carrier Safety Administration

 

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