Business

Will U.S. Truck Safety Improve Under the Trump Administration?

July 13, 2017 by Steven Kinnunen Leave a Comment

Like most other federal agencies, the Federal Motor Carrier Safety Administration (FMCSA) is still waiting for President Trump to nominate an Administrator to lead its operations. For the moment, the main government agency responsible for maintaining the safety of the nation’s interstate trucking system is headed by a holdover deputy administrator.

In the meantime, the FMCSA has backed away from several rulemaking initiatives held over from the Obama administration, and the agency is under heavy industry pressure to relax or eliminate a number of safety regulations. How will truck safety be affected in the years to come?

The current trend has been running in the wrong direction for several years. While fatal crashes involving large trucks or buses declined by 34 percent from 2005 to 2009, they’ve climbed by 20 percent between 2009 and 2015. Especially problematic is the single-year increase of 5 percent in fatal accidents in 2015 over 2014.

Despite the recent increase of heavy-duty vehicle crash fatalities, industry advocates have renewed their request for raising the standard weight limit for semi tractor-trailer combinations from the current 80,000 pounds to 91,000 pounds. Similarly, many trucking companies would like to see standard trailer size increase from 28 feet to 33 feet. Efficiency and increased productivity are cited as the main reasons for these regulatory requests, while opponents point to additional strain on substandard bridges and roads as a sound basis for rejecting them.

Government Regulators Abandon Effort to Increase Insurance Coverage Minimums

The FMCSA recently abandoned a rulemaking procedure for raising liability insurance minimums that had been working its way through the system since late 2014. Minimum insurance requirements have not been raised since 1985, when the current coverage minimums were established: at least $750,000 for general freight, $5 million for the most dangerous hazardous freight, and $1 million for other hazardous freight.

The agency has also suspended rulemaking activity in two different areas: annual inspections of passenger carrier vehicles — that is, interstate buses — and operator fitness standards. One regulation that apparently remains unaffected by the new administration concerns the upcoming transition to electronic logging devices, or ELDs. Nonexempt owners and operators must comply by December 2017 with the new requirement to convert paper driver’s logs to onboard data recording systems.

Until a new Administrator is nominated and confirmed to define the priorities and performance of the FMCSA, it is impossible to say just how the agency will protect the driving public while recognizing the legitimate needs of the trucking industry’s various stakeholders. For the moment, the agency is bound by the administration’s executive orders that discourage new regulation while finding ways to reduce or eliminate bureaucracy and unnecessary government interference with free markets.

Going forward, however, it seems unlikely that the FMCSA will be able to resist the trend toward deregulation without making the recent unfavorable trends in U.S. trucking safety even worse.

Shame on you Judge Rakoff: Slamming the Courthouse Door on Investors Who Were Sold “Crap” and “Pigs” by Deutsche Bank

February 8, 2012 by Steven Berk Leave a Comment

Judge Rakoff agreed with Deutsche Bank and dismissed two investor lawsuits involving the sale of residential mortgage backed securities the bank internally referred to as “crap,” “pigs,” and generally “horrible.” And “crap” they were, as we all know now (and it appears that Deutsche Bank knew before they sold them to investors). The mortgages were made to folks—did they even have jobs?—who could hardly make monthly payments on homes that were surely well overvalued (as appraisers too were willing to play in the game).

All these lies were then forgotten (or at least swept under the rug) by a AAA investment rating brought to you proudly by Standard & Poor’s. With that investment-grade rating, they were able to attract the money of pension funds, in this case the Teachers Insurance and Annuity Fund.

What is so maddening is Judge Rakoff refused to even let the suit proceed beyond the mere filing of the Complaint. “Done, over, go home, nothing to see here, thanks for playing the game.” He wrote that investors had not included allegations of “fraud” specific enough to go forward. “Ah come on now.” The Complaint ran over 100 pages long. At a minimum, the investors demonstrated in detail Deutsche Bank’s knowledge that these securities were questionable by the bank’s decision to short them; after all, the bank bet against them in the market.

What more did they need? And how can investors obtain more specifics without being allowed discovery? AAA bonds that Deutsche Bank is shorting and internally calling “crap,” and investors are not even allowed to get to first base? It’s a travesty. Allow investors to obtain documents and testimony (under oath) to see if behind the smoke there is fire. If not, so be it. But don’t slam the courthouse doors in their faces—and why? To protect Deutsche Bank?

If Judge Rakoff is so concerned about the burden of this suit on Deutsche Bank, or more generally about investor suits claiming fraud, then significantly limit discovery. Allow investors just one or two depositions and documents on a narrow issue they have failed to include in their Complaint. But slamming the door on investors not only denies them a remedy; worse, it allows the Deutsche Banks of the world to avoid scrutiny, and you know where that ends. They will try it again and again knowing the courts have their back.

Read more from attorney Steven Berk at his blog, The Corporate Observer, which focuses on current legal and consumer protection issues. He is the managing partner at Berk Law PLLC.

The SOPA legal fight and the politicization of the tech community

January 10, 2012 by Archives Leave a Comment

The cutting-edge tech community has long maintained a distance from both national and local politics. Instead, a sort of techno-libertarianism has characterized the politic leanings of those who have developed the internet culture and the programs and technologies we use it today.

But the Stop Online Piracy Act (SOPA), a wide-reaching bill introduced by Rep. Lamar Smith of Texas in 2011. The bill is currently before the House Judiciary Committee, but already the online court of public opinion has weighed in. Tech Dirt has been at the fore of the movement, railing almost daily against what it sees as a major infringement on what makes the internet so great in the first place: freedom of speech and content without regard to copyright.

For the first years of its existence, the internet was a largely legilislation-free zone. Enforcement mechanism were even more sparse. As a result, it became the cultural hub of free speech, self-creation, innovation and cat videos.

Of course a new, unregulated medium presented challenges to companies that had profited from the old systems. Tower Records fought the change and lost, heavily. They didn’t lose to free content on Napster, but to a program that distributed music without having to travel to then walk around a Tower Records.

Opponents of the bill argue that copyright legislation can’t change market dynamics. People will always choose the easiest, simplest way to acquire what they want–if it’s free, all the better. That’s essentially what David Price, the piracy guru at Envisional, the research firm often used by big media companies like NBC that want to curtail piracy, said at this year’s Consumer Electronic Show.

“The content owners are really fighting the tide of the Internet,” Price said. “They’re trying to fight the flow of the Internet which is all about making content as widely available as possible, as easily as possible, as quickly as possible. They’re trying to hold back the 1.4 billon users of the Internet from doing what the Internet wants them to do.”

It’s a powerful statement. What lawmakers behind the bill don’t recognize, says Price, is that legislation is not the answer. You cannot sue your way to victory. I-tunes would have put Tower Records out of business even if Napster had never existed.

Today, Bit-Torrent allows users to download tons of content quickly and without complication. It’s simply the most efficient way on the internet to acquire content. The Torrent system harnesses the power of the internet–that a lot of people are on and want the same things– to boost speeds of acquisition and sharing. No mainstream outlet uses it effectively.

Legislation might shut a site like Bit Torrent down, at minimal cost to the host and with no action affecting the people who participating, many of whom are likely spread around the globe. It’s impossible to constrain the options of people on the internet, so all you can do is to compete by putting out a safe, legitimate, and most crucially, cutting edge technology and hoping that people decide to use it.

The SOPA issue highlights a growing tension between the tech community and congress. The essential mistrust is a belief that those on Capitol Hill just don’t know what they’re doing when it comes to tech issues, and are using their power in ignorance of well known best practices.

But this is also the fault of the tech community that has isolated itself from the concerns of real-world governance. However, this dynamic is changing. Code For America is an organization that, like Teach For America, sends smart people in to a tough situation. But instead of education, Code For America addresses the tech deficit in American cities.

Founder Jennifer Pahlka sees people migrating from the tech community to public service. The goal: equip the government with the tools to react as efficiently as the internet does. “It’s something that needs levers and inputs far deeper than just voting for a candidate,” says Pahlka. “In 2000s, people wanted government to look more like businesses. Now people say to us ‘so you want the government to work like an internet startup.’ And we say ‘we want it to look like the internet itself. Anybody can participate, you can create in a permissionless way to create the world you want to live in.”

This is, of course, the tack that national lawmakers should take as well. Collaborate with the experts in the field and find out what works and what doesn’t, then legislate around that. The internet is a frontier, but it isn’t lawless, only self-policing. The quickest gun isn’t some rugged law man, but a collective impulse to find the easiest way of doing things.

In legislating the internet, Congressmen like Lamar Smith would do well to observe that a lack of government regulation is not the same thing as lawlessness.

International Sanctions, OFAC and the butterfly effect: Why US foreign policy matters in unexpected ways

November 17, 2011 by Archives Leave a Comment

Part of what I hope to get at in contributing here to Groupblawg is to talk about legal issues that affect businesses internationally. Especially interesting to me, either because I’m a geek or a Greek, are the decisions and events that have unexpected and far-reaching side effects– let’s call them legal “butterflies”.
МикроКлад
The US sanctioning strategy is one such butterfly. The International Bar Association’s (IBA) Annual Conference is here in Dubai this year. It afforded many of us the great opportunity to hear some terrific speeches. Adam M. Smith of the Treasury Department’s Office of Foreign Assets Control (OFAC) gave a talk mainly focused on sanctions on Iran, but that also provided a general overview of sanction regimes generally. Since the IBA is clearly focused on this, it seemed like a perfect topic for my first post here at Groupblawg.

A brief overview for the uninitiated: The executive branch has control over foreign policy matters under the Constitution and for at least 200 years it has initiated economic sanctions against foreign governments. Normally, sanctions are just one of a host of other diplomatic tools used to influence individuals and governments hostile to the US. Notice I didn’t use the words “punish” or “force”: these sanctions are not meant to do either, otherwise, certain due process requirements would attach. Instead, they are just meant to influence. The executive branch still has this authority, but now it is largely under the International Emergency Economic Powers Act (IEEPA) (50 USC s. 1701-1706) in which Congress gave the President fairly broad authority in declaring an international emergency that had to be dealt with by sanctioning people and governments. Today, over 5,000 individuals, banks, and governments are on the sanctions list, aka the Specifically Designated Nationals (SDN) list, that also includes banks and companies.

In essence, OFAC prevents companies from trading with SDNs without a license from OFAC for specific purposes, like medical or humanitarian efforts. Also, if you are listed on OFAC’s list, you are essentially black-listed from conducting financial transactions globally because of a particular quirk in the global financial system: the Federal Reserve Bank of New York clears all international trades that require US dollars and the US dollar is by far the most widely held foreign currency reserve in the world at over 60%. What this effectively means is don’t use the US dollar in “cash” to pay for things like commodities or to clear international financial transaction. Any time such a trade is made, it must cross into the US, if ever so briefly, to be cleared by the Federal Reserve Bank of New York. This dynamic gives the sanctions tremendous reach and power.

But why do sanctions against Iran, Syria, Cuba, drug traffickers, terrorists affect U.S. businesses, especially those doing only minor trade abroad? Well, the US government can and does punish companies for violating its sanction regime, even for relatively minor amounts of trade. Just last week, Wilson Tool of Minnesota was fined $15,000 by OFAC for conducting selling its punch presses without an OFAC license to a company in Iran. The deal itself was only worth $10,304.33.

So what’s the take away for businesses? Make sure that you know who you are doing business with and have a process for checking those people against sanction lists. There are a variety of computer programs that can help you do this, but, in general, your bank will do this as part of its standard operating procedure. If you’re a US company, make sure that your US bank is somehow involved in the money transfer so that they can pre-screen the deal. If the company or individual that you’re negotiating with doesn’t want to be paid through your US bank (or another international bank that will run similar checks), think twice about the deal and who you’re sitting across the table from.

And, as always, CALL YOUR LAWYER.

John E. Katsos is Assistant Professor of Business Ethics and Law at the American University in Dubai School of Business Administration. He has his JD and MBA from the George Washington University and his BA from Haverford College. Follow him on twitter: @jekatsos.

Photo Credit: Pablo Garcia