Multistar Indus., Inc. v. U.S. Dep't of Transp.

• Citation: 707 F.3d 1045
• Decision Date: 07 February 2013
• Docket Number: 12–73485.,Nos. 12–73138,s. 12–73138
• Parties: MULTISTAR INDUSTRIES, INC., dba Multifrost, Inc., Petitioner, v. U.S. DEPARTMENT OF TRANSPORTATION; Federal Motor Carrier Safety Administration, Respondents. Multistar Industries, Inc., dba Multifrost, Inc., Petitioner, v. U.S. Department of Transportation; Federal Motor Carrier Safety Administration, Respondents.
• Court: United States Courts of Appeals. United States Court of Appeals (9th Circuit)

707 F.3d 1045

MULTISTAR INDUSTRIES, INC., dba Multifrost, Inc., Petitioner,

v.U.S. DEPARTMENT OF TRANSPORTATION; Federal Motor Carrier Safety Administration, Respondents.

Multistar Industries, Inc., dba Multifrost, Inc., Petitioner,

v.U.S. Department of Transportation; Federal Motor Carrier Safety Administration, Respondents.

Nos. 12–73138, 12–73485.

United States Court of Appeals,

Ninth Circuit.

Argued and Submitted Dec. 5, 2012.

Filed Feb. 7, 2013.

Timothy W. Wiseman (argued) and Christopher C. McNatt, Jr., Scopelitis, Garvin, Light, Hanson & Feary, P.C., Indianapolis, IN, for Petitioner.

Jonathan H. Levy (argued) and Matthew Collette, United States Department of Justice, Civil Division; Stuart F. Delery, Principal Deputy Assistant Attorney General; Robert S. Rivkin, General Counsel; Paul M. Geier, Assistant General Counsel for Litigation; Timothy H. Goodman, United States Department of Transportation; T.F. Scott Darling, III, Chief Counsel; Fred K. Ford, Assistant Chief

Counsel; Jedd Miloud, Federal Motor Carrier Safety Administration, Washington, D.C., for Respondents.

On Petition for Review of an Order of the Department of Transportation, Federal Motor Carrier Safety Administration. TRAN No. 461410.

Before: MARSHA S. BERZON and SANDRA S. IKUTA, Circuit Judges, and JENNIFER G. ZIPPS, District Judge.^*

OPINION

BERZON, Circuit Judge:

Petitioner Multistar Industries, Inc. (“Multistar”) is a for-hire motor carrier engaged in the business of transporting hazardous materials. As a result of a recent compliance review of Multistar's operations, conducted by the U.S. Department of Transportation Federal Motor Carrier Safety Administration (“FMCSA” or “the agency”), Multistar was assigned an “unsatisfactory” safety rating and, as a consequence, ordered to cease operations. The agency denied Multistar's subsequent administrative appeal, which challenged certain violations discovered during the compliance review.

Multistar now petitions for review of FMCSA's order, and, in a separate petition for review, challenges the agency's denial of Multistar's petition for administrative review. We dismiss in part and deny in part the consolidated petitions.

I. Statutory and Regulatory Background

Congress has directed the Secretary of Transportation to “determine whether an owner or operator is fit to operate safely commercial motor vehicles, utilizing among other things ... [the] safety inspection record of such owner or operator.” 49 U.S.C. § 31144(a)(1). To do so, the Secretary is directed to “maintain by regulation a procedure for determining the safety fitness of an owner or operator.” Id. § 31144(b); see also id. § 31136. With regard to the transportation of hazardous materials, Congress has declared that “an owner or operator who the Secretary determines is not fit may not operate in interstate commerce beginning on the 46th day after the date of such fitness determination and until the Secretary determines that such owner or operator is fit.” Id. § 31144(c)(3).

The Secretary's authority to regulate the procedures of such fitness determinations has been delegated to the FMCSA. See49 U.S.C. § 113(f); 49 C.F.R. § 1.87(f). FMCSA has established a fitness determination procedure as directed by Congress. See 49 C.F.R. Pt. 385. Under this regulatory framework, a motor carrier is either “unrated” or is assigned one of three possible safety ratings: “satisfactory,” “conditional,” or “unsatisfactory.” See id. § 385.3. A motor carrier receives a “satisfactory” safety rating if it has in place “adequate safety management controls” to meet the safety fitness standard prescribed in § 385.5.¹Id. A motor carrier is assigned a “conditional” safety rating if it “does not have adequate safety management controls in place to ensure compliance with the safety fitness standard that could result in” violation of safety regulations. Id. § 385.3.

An “unsatisfactory” safety rating means that the carrier “does not have adequate safety management controls in place to ensure compliance with the safety fitness standard,” and that, as a result, violation of the safety regulations has occurred. Id. Pursuant to FMCSA's safety ratings procedures,a hazardous materials carrier that receives an “unsatisfactory” safety rating is prohibited from operating a commercial motor vehicle in interstate or intrastate commerce. Id. § 385.13(a)(1); see also49 U.S.C. § 31144(c)(3). FMCSA may also revoke the operating registration of a motor carrier rated “unsatisfactory.” 49 C.F.R. § 385.13(e).

The factors considered in determining a carrier's safety rating include information collected during “on-site examination[s] of motor carrier operations,” termed “compliance reviews.” Id. §§ 385.3, 385.7. During a compliance review, FMCSA evaluates the motor carrier's compliance with the Federal Motor Carrier Safety Regulations ² (“FMCSRs”) and Hazardous Materials Regulations ³ (“HMRs”). See id. Pt. 385, App. B § (d). Based on the information collected from the compliance review, FMCSA assigns the carrier a proposed safety rating based on any regulatory violations found. Id. § 385.9(a).

The methodology for determining the proposed safety rating is contained in Appendix B to Part 385. Section VII of Appendix B categorizes certain regulations (i.e., certain FMCSRs and HMRs) as “acute” or “critical.” The ratings methodology provides that each violation of an acute regulation is considered one “point.” Each pattern of violations of a critical regulation (meaning more than one violation of the same critical regulation) is considered one or two points, depending on which critical regulation is violated. Id. Pt. 385, App. B, § II(g), VII. All regulatory violations (acute, critical, or otherwise) are grouped into six Factors, which are associated with particular parts of the FMCSRs or HMRs:

• Factor 1—General (Parts 387 and 390)

• Factor 2—Driver (Parts 382, 383, and 391)

• Factor 3—Operational (Parts 392 and 395)

• Factor 4—Vehicle (Parts 393 and 396)

• Factor 5—Hazardous Materials (Parts 397, 171, 177 and 180)

• Factor 6—Accident Factor

Id. § II(C). Based on data gathered during the compliance review, each Factor is assigned a rating of “satisfactory” if no points have been assigned, “conditional” if one point has been assigned, and “unsatisfactory” if two or more points have been assigned. Id. § III(A). Finally, the ratings for the six Factors are combined into a single “overall” rating for the carrier according to a “Rating Table.” Id. If two or more Factors are rated “unsatisfactory,” the carrier's proposed overall rating is “unsatisfactory.” Id. § III(B).

A proposed overall “unsatisfactory” safety rating is provisional and does not become final until 45 days after the carrier receives written notice of the proposed rating. Id. § 385.11(c)(1). Pursuant to 49 C.F.R. § 385.15, a carrier may seek administrative review of a proposed or final safety rating within 90 days of its issuance. Id. § 385.15(a), (c)(2). Carriers assigned an “unsatisfactory” rating, however, are encouraged to file such requests within 15 days to allow the agency to issue a “final decision” before the prohibition on operating accompanying such a rating takes effect. Id. § 385.15(c)(1).

In addition to, or instead of, seeking administrative review under § 385.15, a carrier may request an upgrade of its safety rating under § 385.17 based on steps the carrier has taken to correct violations found during the compliance review. Such “upgrade requests” are separate from petitions for administrative review under § 385.15, and may be filed at any time, including after the proposed safety rating becomes final and operating authority is revoked. See id. § 385.17(a). Upon receipt of an upgrade request, the agency must determine whether “the motor carrier has taken the corrective actions required and [whether] its operations currently meet the safety standard and factors specified in [49 C.F.R.] §§ 385.5 and 385.7.” Id. § 385.17(h), (i). If the agency denies the upgrade request, the carrier may seek administrative review of that denial under § 385.15(c)(2).

II. Factual and Procedural Background

A. Multistar's Compliance Review and Safety Rating

On August 13, 2012, FMCSA conducted a compliance review of Multistar's operations. That review found 26 total sets of violations of various regulations, resulting in unsatisfactory Factor 2 and Factor 5 ratings and, therefore, an overall “unsatisfactory” rating. Multistar's Factor 2 rating was based on discovered violations of two acute regulations.⁴ Its unsatisfactory Factor 5 rating was based on violations of two acute and five critical regulations.⁵ Pursuant to the agency's ratings methodology, Multistar was assigned two points for Factor 2 and seven points for Factor 5, which in turn resulted in a proposed overall safety rating of “unsatisfactory.” See49 C.F.R. Pt. 385, App. B, § III.

Four days later, on August 17, FMCSA sent Multistar an official notice stating that the proposed “unsatisfactory” rating would become final and Multistar would be prohibited from operating commercial motor vehicles in 45 days—that is, on October 2, 2012—unless it took the steps necessary to improve its rating before that date. The notice also provided information regarding how to request a safety rating upgrade under § 385.17 and how to file an administrative appeal under § 385.15. With respect to the latter, the notice pointed out that although Multistar had 90 days in which to file an appeal, it was encouraged to do so within 15 days if it wanted the agency to rule before the “unsatisfactory” rating became final.

B. Administrative Proceedings1. Multistar's Administrative Appeal under § 385.15

On August 31, 2012—fourteen days after FMCSA sent the official notice—Multistar filed a petition for administrative review of the proposed “unsatisfactory” safety rating under § 385.15 (“petition for administrative review”). That petition challenged five of the regulatory violations FMCSA discovered...