California Motor Carriers Rest Easy: 9th Circuit Upholds Preemption of California Meal and Rest Break Rules

The case is International Brotherhood of Teamsters, Local 2785 v. Fed. Motor Carrier Safety Admin.

Background

The FMCSA is a federal agency within the Department of Transportation tasked with issuing regulations on commercial motor vehicle safety. Coupled with that power, the FMCSA is authorized to decide whether state laws on the same topic of safety are preempted. In 2018, the FMCSA made a determination that federal law – the FMCSA’s own rest break regulations – preempts the CA MRB Rules as applied to drivers of property-carrying commercial motor vehicles.

Previously, in 2008, the FMCSA declined to preempt the CA MRB Rules as applied in this context, finding that it lacked authority to preempt because the CA MRB Rules applied beyond just the trucking industry and were thus not “on commercial motor vehicle safety.” In 2018, two associations in the industry requested that the FMCSA revisit its 2008 decision. The FMCSA sought public comment and then decided that the CA MRB Rules were in fact preempted. California’s Labor Commissioner, certain labor organizations (including the Teamsters union), and other named individuals (together, the “Petitioners”) petitioned the 9th Circuit for review of the FMCSA’s preemption determination.

Framework

Under the Motor Carrier Safety Act of 1984 (“MCSA”), if a state law is “additional to or more stringent” than federal regulation, the state law may be enforced unless it is determined by the FMCSA that the state law (1) has no safety benefit, (2) is incompatible with the federal regulation, or (3) would cause an unreasonable burden on interstate commerce if enforced.

The FMCSA’s hours-of-service regulations impose specific limits on the driving time for property-carrying commercial motor vehicle drivers. The CA MRB Rules, on the other hand, cover all employees in California and impose more onerous meal and rest break requirements on those and other drivers, including more frequent breaks and less flexibility as to the timing of those breaks.

The Opinion

The 9th Circuit analyzed the FMCSA’s decision using the familiar Chevron framework, which provides for deference to administrative agency interpretations of ambiguous or unclear statutes that the agency is charged with administering. Against this backdrop, the Court upheld the FMCSA’s decision, noting that it reflected a permissible interpretation of the MCSA and was not arbitrary or capricious, as would be needed to overturn the determination.

The Court first addressed whether the CA MRB Rules were regulations “on commercial motor vehicle safety,” as required for the FMCSA to have preemption authority. The Petitioners argued that the FMCSA should receive no deference in interpreting the statute because the 2018 determination reversed the agency’s 2008 determination. The Court noted, however, that an agency may change its position so long as the departure from prior views is explained. Here, the FMCSA did explain its departure, noting that the 2008 interpretation was unnecessarily restrictive and that circumstances had changed as a result of the specific break regulations for motor vehicle drivers enacted in 2011. As a result, the FMCSA was entitled to Chevron deference.

The Petitioners also argued that the CA MRB Rules do not qualify as regulations “on commercial motor vehicle safety” because they apply generally to all California workers. However, applying Chevron deference, the Court found that FMCSA’s determination that a state law “on commercial motor vehicle safety” is one that “imposes requirements in an area of regulation that is already addressed by a regulation” is a permissible construction, especially in light of the dictionary definition of the word “on” and the legislative history of the regulation.

Petitioners next argued that the finding by FMCSA that the CA MRB Rules were more stringent than federal regulations was arbitrary and capricious. The 9th Circuit reviewed the FMCSA action with deference and rejected this argument. The FMCSA concluded that the CA MRB Rules were “more stringent than federal regulations because they required more breaks, more often and with less flexibility as to timing.” This is true despite the fact that California law has some flexibility in its design including an option to pay the employee one additional hour of pay for each workday that the meal, rest, or recovery periods are not provided.

Finally, the Petitioners argued that the FMCSA’s findings that the CA MRB Rules (1) had no safety benefit, (2) were incompatible with the federal regulation, and (3) would cause an unreasonable burden on interstate commerce if enforced, were each arbitrary and capricious. Because any one of the three grounds is sufficient for preemption, the Court did not analyze the first two findings. The Court ruled that the FMCSA did not act arbitrarily or capriciously in finding that enforcement of the CA MRB Rules would cause an unreasonable burden on interstate commerce by imposing costs on the industry stemming from decreased productivity and increased administrative burden. The Court noted that the agency had weighed the costs and benefits and sought public comment in making its decision.

The Impact and the Limitations

The 9th Circuit’s decision is generally good news for members of the trucking industry operating in California. It minimizes the administrative burden and cost of providing for additional breaks for drivers beyond those required by the MCSA.

However, the opinion applies only to those drivers who are subject to the MCSA. For example, certain short-haul drivers who fall into an exception to the hours-of-service rules (49 C.F.R. § 395.3) are still subject to the CA MRB Rules. Motor carriers should carefully assess which of their drivers may be subject to this exception.

Moreover, the Biden administration, with Pete Buttigieg as the Director of Transportation, may well take action to overturn the FMCSA decision. There are two possible approaches it might take. First, the Biden administration could attempt to change the FMCSA interpretation without altering the underlying regulation. Such an approach may be vulnerable to attack on the grounds that it is arbitrary and capricious since such a rapid change in view would presumably lack a democratic process, an improved understanding, or a comprehensive analysis of changed circumstances. More likely, the administration will attempt to change the underlying regulations themselves to implement some level of deference to state meal and rest break laws. This approach, which would require notice and comment, could take some time but would be less susceptible to attack in the courts.

The Court’s opinion also does not address the critical issue of FAAAA preemption of state-level misclassification statutes (such as the ABC test in California) currently being faced by the transportation industry. This issue was argued before the 9th Circuit in September. Read Arent Fox’s in-depth analysis of that issue here.