Division offices partner with state agencies to conduct a  variety of motor carrier oversight activities carried out by certified auditors,  inspectors, and investigators. The interstate commercial motor carrier industry is large and dynamic. After a carrier registers for a USDOT number, FMCSA uses the new  entrant safety assurance program to examine all new entrants registered  to operate in interstate commerce—including all for-hire and private  passenger, household goods, and freight carriers—and intrastate  hazardous materials carriers. FMCSA Does Not Determine the Prevalence of Chameleon Carriers; Our Analysis Found More than 1,100 New Applicant Carriers with Chameleon Attributes in 2010

		FMCSA Cannot Readily Determine the Number of Chameleon Carriers

FMCSA does not determine the prevalence of chameleon carriers  because doing so would require extensive investigation of the tens of  thousands of new applicants that register with FMCSA each year and, in  some cases, the completion of a legal process. While FMCSA’s exclusive focus on passenger and household goods  carriers limits the vetting program to a manageable number, it does not  account for the risk presented by chameleon carriers in the other groups  that made up 98 percent of new applicants in 2010. As we have  previously reported, federal agencies need to assess the risks they face  to determine the most effective allocation of federal resources, including  how best to distribute resources for investigative and enforcement-related  activities. As table 2 shows, 18 percent of carriers with chameleon  attributes were involved in a severe crash at some point between their  time of registration and the end of 2010, compared with 6 percent of new  applicant carriers without these attributes. FMCSA’s Investigative Programs Are Not Well Designed to Identify Chameleon Carriers across All New Applicants

		Vetting Program Is Designed to Identify Chameleon Carriers but Is Neither Comprehensive nor Risk-Based

FMCSA’s vetting program, established in August 2008 immediately  following the Sherman, Texas, bus crash, is designed to assess the ability  of an applicant for new operating authority to comply with FMCSA motor  carrier safety regulations and, in part, to determine whether the new   The program—which is FMCSA’s  applicant may be a chameleon carrier.primary effort to identify chameleon carriers—is labor-intensive, according  to officials, requiring detailed reviews of each application, national  consumer complaint database queries, and outreach to division offices to  obtain additional information about new applicants. However, FMCSA officials stated  they do not have the resources to vet all for-hire carriers that apply for new  operating authority. Specifically, crashes involving unsafe passenger carriers, such  as the Sherman bus crash, may have multiple fatalities. As  discussed, freight carriers made up 94 percent of the carriers we identified  with chameleon attributes from 2005 through 2010, and carriers with  chameleon attributes were about three times more likely than all other new  applicants to be involved in a severe crash or to be assessed a fine by  FMCSA for a safety violation. 3). New Entrant Safety Assurance Program Audit Includes Questions Designed to Help Identify Chameleon Carriers but Does Not Provide Related Guidance

Newly registered motor carriers, including those that were vetted, are  required to enter the new entrant safety assurance program and undergo  a safety audit. The  representatives told us the lack of guidance on how to use the questions  made it difficult to distinguish chameleon from legitimate carriers. As a result of a 2010 decision by  an FMCSA Assistant Administrator, it is not clear whether a state or a  federal legal standard should be used by FMCSA to demonstrate that a  carrier is a chameleon. This uncertainty can lead to differing enforcement  actions across states and has increased the time necessary to pursue  chameleon carrier cases. Other constraints include a resource-intensive  legal process and limitations in FMCSA’s enforcement authorities. FMCSA is pursuing options to address these constraints. Specifically,  FMCSA cannot preclude carriers, including suspected chameleon  carriers, from acquiring a new USDOT number. In addition, FMCSA is pursuing two other means to achieve a  single federal legal standard. FMCSA generally concurred with our  recommendations. Appendix I: Objectives, Scope, and Methodology

Our objectives were to determine the prevalence of chameleon carriers,  how well the Federal Motor Carrier Safety Administration’s (FMCSA)  investigative programs are designed to identify suspected chameleon  carriers, and what constraints, if any, FMCSA faces in pursuing  enforcement actions against suspected chameleon carriers. Assessing FMCSA’s Investigative Programs

To determine how FMCSA’s investigative programs are designed to  identify chameleon carriers, we reviewed federal motor carrier laws and  safety regulations; federal internal control standards; related reports and  statements published by GAO, the National Transportation Safety Board  (NTSB), and the Department of Transportation’s Office of Inspector  General; documentation about FMCSA’s vetting processes and  procedures, which FMCSA refers to as the vetting program; FMCSA  policy memorandums on the new entrant safety assurance program and  the monitoring of potential chameleon new entrant motor carriers; and the  Field Operations Training Manual. Identifying Constraints on Taking Enforcement Action

To identify the constraints FMCSA faces in pursuing enforcement action  against suspected chameleon carriers and how it is addressing them, we  reviewed federal motor carrier safety laws and regulations related to  FMCSA enforcement actions (Notice of Claims and Notice of Violations);  an FMCSA summary of State Successor Liability Case Law (July 2010),  which describes corporate successor liability law for all 50 states; two key  decisions related to corporate successor liability—the Williamson  Transport decisions of January 2009 and July 2010; a multipage,  corporate successor liability worksheet used to gather evidence against a  suspected chameleon carrier; and a legislative proposal provided to  congressional reauthorization committees in 2011 that is intended to help  address FMCSA constraints. 2.
Why GAO Did This Study

The Federal Motor Carrier Safety Administrations (FMCSA) mission is to ensure motor carriers operate safely in interstate commerce. FMCSA partners with state agencies to conduct a variety of motor carrier oversight activities, which are carried out by certified auditors, inspectors, and investigators. Some motor carriers have registered under a new identity and begun to operate in interstate commerce, violating federal law in an effort to disguise their former identity and evade detection by FMCSA. Such carriers are known as chameleon carriers.
GAOs objectives were to examine (1) the prevalence of chameleon carriers; (2) how well FMCSAs investigative programs are designed to identify suspected chameleon carriers; and (3) what constraints, if any, FMCSA faces in pursuing enforcement actions against suspected chameleon carriers.
To address these objectives, GAO analyzed data on new applicants; reviewed investigative program guidance, federal motor carrier laws and regulations, GAO and other reports, and selected state corporate successor liability laws; observed two new entrant safety audits; and interviewed FMCSA headquarters and field officials, state officialsincluding law enforcement agenciesand motor carrier stakeholders.

What GAO Found

FMCSA does not determine the total number of chameleon carriers within the motor carrier industry. Such a determination would require FMCSA to investigate each of the tens of thousands of new applicants that register annually and then complete a legal process for some of these suspected chameleon carriers, an effort for which FMCSA does not have sufficient resources. Rather, FMCSAs attempt to identify chameleon carriers among new applicants, referred to as the vetting program, is limited to bus companies (passenger carriers) and movers (household goods carriers). These two relatively small groups, representing only 2 percent of all new applicants in 2010, were selected because they present consumer protection and relatively high safety risks. Through the vetting program, FMCSA conducts electronic matching of applicant registration data against data on existing carriers and investigates each application from these two small groups, but does not determine whether all other new applicants, including freight carriers, may be attempting to assume a new identity. Federal internal control standards direct agencies to assess the risks they face to determine the most effective allocation of federal resources, including how best to distribute resources for activities such as investigations and enforcement. GAO demonstrated how analysis of registration data can be used to assess risk by targeting all new applicant carriers that have attributes similar to those of chameleon carriersfor example, company registration data that match data for another carrier with a history of safety violations. Using FMCSA data, GAO found an increasing number of carriers with chameleon attributes, from 759 in 2005 to 1,136 in 2010. GAO also found that 18 percent of the applicants with chameleon attributes were involved in severe crashes compared with 6 percent of new applicants without chameleon attributes.
FMCSAs investigative programsthe vetting and new entrant safety assurance programsare not well designed to identify suspected chameleon carriers. The vetting program assesses all passenger and household goods carriers applying for operating authority, but it does not cover other groups of carriers, including freight truck carriers, which represented 98 percent of all new motor carrier applicants in 2010 and were more likely to be involved in fatal crashes than passenger carriers. The new entrant safety assurance programwhich involves a safety audit for all new entrants, including freight carriersentails a brief assessment of whether a carrier may be chameleon, but is primarily designed to educate new entrants about federal motor carrier safety regulations. The safety audit includes questions to elicit information on connections between new and previous carriers, but auditors lack necessary guidance on how to interpret the responses to distinguish chameleon carriers from legitimate carriers.
FMCSA faces several constraints in pursuing enforcement actions against suspected chameleon carriers. For example, as a result of a 2010 decision by an FMCSA Assistant Administrator, it is unclear whether FMCSA should use a state or a federal legal standard to demonstrate that a carrier is a chameleon. Thus, evidence is gathered to meet both a state and federal legal standard, which can lead to differing enforcement actions across states and has increased the time necessary to pursue chameleon carrier cases. FMCSA is pursuing several options to achieve a single standard, including providing input to Congress on a legislative proposal, monitoring chameleon carrier cases that could clarify the 2010 decision, and pursuing a separate rulemaking. Other constraints on FMCSA enforcement actions include a resource-intensive legal process, the inability to preclude carriers from obtaining multiple registration numbers, and low maximum fines.

What GAO Recommends

FMCSA should expand the vetting program using a data-driven approach; and provide guidance to improve the new entrant program. FMCSA generally concurred with our recommendations.