Issue link: http://read.dmtmag.com/i/464194
16 Oil Prophets FMCSA Lacks Data to Support Proposed Increase in Minimum Insurance Requirements for HAZMAT Transporters Mark S. Morgan PMAA Regulatory Counsel Washington, D.C - Petroleum marketers with cargo tank vehicles may soon face higher insurance premiums if the U.S. Department of 7UDQVSRUWDWLRQ'27PRYHVIRUZDUG with a proposed rule to increase PDQGDWRU\PLQLPXP¿QDQFLDO UHVSRQVLELOLW\)5OHYHOVIRUPRWRU carriers. The Federal Motor Carrier 6DIHW\$GPLQLVWUDWLRQ)0&6$ outlined the upcoming FR increase in an Advanced Notice of Proposed 5XOHPDNLQJ$13507KHDJHQF\ says the increase is necessary because current minimum insurance levels are not adequate to cover the cost of serious accidents involving FRPPHUFLDOPRWRUYHKLFOHV&09,Q a report mandated by Congress the )0&6$VD\V³LQÀDWLRQKDVJUHDWO\ increased medical claims costs and related expenses associated with CMV crashes" and is largely to blame for the current shortfall in FR coverage. There is some truth to the FMCSA's concern. Minimum FR rates mandated by federal rules have remained the same for thirty years. Medical, legal and property claims costs have risen dramatically over the same period. The call to increase FR levels would make sense if current minimum insurance requirements failed to cover actual damages from a CMV crash. Currently, petroleum marketers are required to carry a minimum $1,000,000 FR for their trucks hauling petroleum products – a bargain compared with all other HAZMAT haulers who must carry $5,000,000 in FR. The FMCSA also argues that an FR increase is in order because higher insurance premium costs will encourage motor carriers to operate more safely. Some members of Congress agree with the FMCSA. Efforts were made in the 2012 Highway Bill to include a provision raising FR rates across the board but failed due to opposition from the trucking industry. Last year, Representative Matt Cartwright (D- 3$LQWURGXFHGDELOOWKDWZRXOGUDLVH the minimum $750,000 FR currently paid by non-HAZMAT haulers to $4.4 million. Cartwright's bill, however, never made it out of Committee. More recently, after hearing witness testimony arranged by FMCSA, the Motor Carrier Safety Advisory Committee voted to recommend an increase to $4-4.5 million for general freight and $21 million for hazmat. For its part, the FMCSA sees HAZMAT FR rates climbing to between $9 and $10 million. While it looks like the FMCSA has a slam dunk argument for an increase in FR rates, closer inspection of its own report to Congress argues the opposite. First, the FMCSA report found that catastrophic accidents which exceed minimum FR levels are rare – very rare. According to the report, less than 0.2% of truck- involved accidents (just 20 crashes SHU\HDUUHVXOWLQSURSHUW\DQG personal injury damages that exceed current minimum liability coverage requirements. The majority of these crashes involve passenger carrying motor carriers where everyone on board at the time of the accident is a potential claimant. Moreover, the FMCSA study found that over 99% of all truck-involved accidents do not exceed the current federal minimum FR level. Average claims for these truck accidents amount to REGULATORY CORNER