Feds Hit Operators With Costly New Rules, Sudden Visits

Posted on September 9, 2010 by LCT Staff - Also by this author - About the author

The tri-state region becomes ground zero for a federal DOT change that kills a vital interstate commerce exemption for chauffeured operators. The Limousine Associations of New Jersey is helping operators take steps to comply and avoid “crazy” fines.

PRINCETON, N.J. — Operators across the nation are facing stiff new permit fees and requirements since a key exemption for limousine vehicles expired on May 3.

Operators who take clients across state lines face total additional compliance costs of $2,000 per company per year in the first year, and about $1,000 for each year thereafter. The steep fees hit especially hard in the tri-state region of New York, New Jersey, and Connecticut, which is the nexus of the national chauffeured transportation industry. Most operators serving the NYC metro region must be able to carry clients in and across all three state lines.

The LIMOUSINE ASSOCIATIONS OF NEW JERSEY will advise operators of the need to obey the new rules and to be aware of stepped-up enforcement at its general membership meeting at 12 p.m. Wednesday, Sept. 15 at the Clarion Hotel, 3499 Route 1 South, in Princeton.

Former New York Taxi and Limousine Commissioner Matthew Daus will conduct a presentation for operators that will explain the new requirements, detail the procedures for handling compliance, and review the legal options for limousine businesses charged with violations. Daus, who stepped down from his post earlier this year, is now a partner in a New Jersey law firm that specializes in ground transportation issues and serves as the president of the International Association of Transportation Regulators.

At issue is an administrative decision by the Federal Motor Carrier Safety Administration (a division of the U.S. Department of Transportation) that removed an exemption May 3 that applied to limousines being classified as “common carriers” engaged in interstate commerce.

In a column released today, Daus explained that the exemption that applied to commercial motor vehicles that transport nine to 15 passengers in interstate commerce within a 75 air-mile radius no longer applies. “This means that licensing and safety requirements that apply under federal law to motor carriers now apply to any limousine businesses that conduct any type of pick-up or drop-off within the tri-state region for any distance whatsoever (and likewise, for such businesses located in geographic proximity to state borders around the country). These new regulations define interstate commerce not only as actually crossing the border — but simply “intending to cross the border” — even if it has not happened before,” Daus wrote.

As a result, operators running limousines of certain seating capacities that engage in interstate commerce (i.e. move across states lines) must do three things: 1) Obtain operating authority and permits from the federal government, 2) Ensure that the drivers of those vehicles obtain medical certification; and 3) Maintain required minimum levels of vehicle liability insurance.

Daus estimates the average cost for a chauffeured transportation company to comply with those three requirements is about $2,000 the first year, and $1,000 per year afterward. “The fines for noncompliance could range from $1,000 to $3,000 per violation, which may be increased or decreased due to culpability, history of prior offenses and any additional public policy/safety considerations,” Daus wrote.

Since the official federal compliance deadline of June 1, authorities have made surprise visits to several New York and New Jersey operators who were found in violation of the post-exemption rules, Daus told LCT. His firm is representing operators facing federal fines and penalties.

“The fines are crazy and I will explain all of that,” said Daus, referring to the DOT’s lack of an established fine schedule, which could result in subjective assessments. “They are showing up at companies and inspecting on site, and then the company gets a notice finding you guilty and in violation. If you don’t act quickly, [the feds] can file a judgment against you in [U.S.] District Court.”

Daus will provide operators with tips and procedures at the meeting on how to comply and also fight back if cited.

The aggressive DOT changes and enforcement are happening as part of a wider trend toward more federal regulation and revenue-raising that began with the political shift in Washington, D.C. since early 2009.

“There has been an internal change in the department [DOT] that is part of the atmosphere in D.C. about [more] regulating,” said Barry Lefkowitz, the executive director of the LIMOUSINE ASSOCIATIONS OF NEW JERSEY. “I think this is an attitude that seems to be pervasive throughout the federal government. We’re seeing a new era of greater regulatory activity.”

Sources: LANJ; Martin Romjue, LCT Magazine

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