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Regulatory and Legislative Update - September 2022

By Dan Boaz

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through October 15, 2022. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Regulation and Enforcement

Courts

Advocacy and Comment

 

Regulation and Enforcement

NLRB proposes joint-employer rule to undo Trump-era rule

The National Labor Relations Board has issued a notice of proposed rulemaking that would make it easier for workers to claim joint employment, reversing a February 2020 rule that made it more difficult for workers to make such a claim. The current rule states that employees could only claim to be employed by companies holding “substantial, direct and immediate control” over their employment. The proposal would loosen that standard to include employers that exercised such control over essential terms and conditions “directly or indirectly.”

Under the proposed rule, two or more employers would be considered joint employers if they “share or codetermine those matters governing employees’ essential terms and conditions of employment,” such as wages, benefits and other compensation, work and scheduling, hiring and discharge, discipline, workplace health and safety, supervision, assignment, and work rules. The NLRB proposal, therefore, would make it easier for employees of contractors or staffing firms. In announcing the proposal, NLRB said the proposal would ground the joint-employer standard in established common-law agency principles consistent with board precedent and guidance from the U.S. Court of Appeals for the District of Columbia Circuit. The proposal was advanced by a 3-2 vote of the board.

Comments on the NLRB proposal are due November 7. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-19181. Comments replying to comments submitted during the initial comment period must be received by the Board on or before November 21.

Trucking Alliance seeks exemption for including hair testing results in clearinghouse

FMCSA is requesting comments by September 23 on an application from The Trucking Alliance – a group representing 11 mostly large trucking companies – for an exemption to amend the definition of actual knowledge of drug us to include the employer’s knowledge of a driver’s positive hair test. Because the Department of Health and Human Services has yet to clear hair testing as an alternative to urine testing, hair test results cannot be reported to the drug and alcohol clearinghouse. In the Federal Register notice, FMCSA declared that it lacks statutory authority to grant the Trucking Alliance’s requested exemption until HHS amends its mandatory guidelines, but the agency said it is requesting public comment on the application as required by statute. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-18257.

FMCSA seeks comments on use and benefits of COVID enforcement relief

FMCSA is seeking comments by September 21 on the extent to which motor carriers currently rely on the COVID-19 emergency declaration and whether there has been any impact on safety. The agency has extended the emergency declaration through October 15, but it has signaled that it is at least questioning whether the declaration is still necessary.

Last September, FMCSA has asked carriers to report on the number of trips conducted under the declaration and the commodities transported. Based on a review of the carriers’ self-reported information, the primary categories transported are (1) food, paper, and other groceries for emergency restocking of distribution centers or stores; and (2) livestock and livestock feed. Meanwhile, two categories that have seen usage drop by almost 50% between October 2021 and July 2022 were (1) medical supplies and equipment related to the testing, diagnosis, and treatment of COVID-19; and (2) supplies and equipment necessary for community safety, sanitation, and prevention of community transmission of COVID-19. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-19304.

ELDorado ELD removed from list of registered ELDs

FMCSA has removed ELDorado ELD from the list of registered electronic logging devices (ELD) and placed it on the revoked devices list do to the company’s failure to meet the minimum requirements. The revocation is effective September 7. Carriers most immediately discontinue using the ElDorado ELD and revert to paper logs or logging software to record hours of service and must replace the device with a compliant ELD by November 7. The list of registered devices is available at https://eld.fmcsa.dot.gov/List.

FMCSA names members of Women of Trucking Advisory Board

FMCSA in late August announced the appointment of members to the Women of Trucking Advisory Board (WOTAB), which was established by last year's infrastructure package to encourage the recruitment, retention, support, and safety of female commercial motor vehicle (CMV) drivers. The WOTAB will provide recommendations to FMCSA. For the list of WOTAB members, visit https://www.fmcsa.dot.gov/advisory-committees/wotab/wotab-members.

Community colleges receive funds to train veterans as truck drivers

FMCSA has awarded $3.1 million to community colleges and training institutes through the Commercial Motor Vehicle Operator Safety Training (CMVOST) grant program. Grants will assist current and former members of the Armed Forces who want to pursue careers in trucking to get commercial driver’s licenses (CDLs) and the training they need to enter the profession. Changes to the program in fiscal 2022 allowed educational institutions to apply for funds without providing a local match. For a list of colleges receiving grants, visit https://www.fmcsa.dot.gov/mission/grants/cmvost-grant-recommendation-summaries.

Small carrier seeks HOS exemption to deliver dry and bulk food grade products

FMCSA is requesting comments by October 3 on an application from Flat Top Transport LLC, a nine-truck carrier based in Holland, Michigan, for a four-month exemption from the hours-of-service regulations for “immediate and emergency delivery of dry and bulk food grade products to locations that supply stores and distribution centers nationally.” The carrier said that its main focus would be food-grade flour, corn meal, and salts used for the production of cereals, baked goods, canned goods, and meat processing. It said tight availability of those products is threatening food chain supply and producing shutdowns. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-18935.

FMCSA reaffirms denial of driver training exemption for UPS

FMCSA on reconsideration has again denied an application by United Parcel Service for an exemption from a provision in the entry-level driver training rule that requires two years of experience for training instructors. UPS argued that its process of preparing driver trainers exceeds any skill set gained merely by operating a tractor-trailer for two years. FMCSA said it has determined that the application lacked evidence that UPS’ alternative would ensure that an equivalent level of safety or greater would be achieved. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-19133.

ELD exemption renewed for short-term truck rentals

FMCSA has renewed, subject to conditions, the Truck Renting and Leasing Association’s exemption from the ELD installation and use requirements in situations where driver of property-carrying CMVs are rented for 8 days or less, regardless of reason. Drivers remain subject to the standard hours-of-service limits and must maintain a paper record of duty status (RODS) if required. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-19556.

 

Courts

Court formally dissolves AB 5 injunction; case to proceed on other grounds

U.S. District Judge Roger Benitez on August 29 officially implemented the U.S. Court of Appeals for the Ninth Circuit’s mandate overturning his preliminary injunction against enforcement of AB 5 against motor carriers. The order was a formality after the U.S. Supreme Court declined to review the appeals court’s decision.

Although the California Trucking Association and other plaintiffs in the case no longer can argue that the Federal Aviation Administration Authorization Act (FAAAA) preempts AB 5, they originally had argued other grounds for the law’s application to trucking. Because the judge had granted the preliminary injunction on FAAAA grounds, he did not consider the plaintiffs’ argument that California was barred from enforcing AB 5 due to their dormant Commerce Clause claim. The court now will consider that claim, giving plaintiffs until October 11 to file a renewed motion for a preliminary injunction. However, nothing prevents California from enforcing AB 5 on trucking in the interim.

 

Advocacy and Comment

NLRB’s proposed new rule could increase liability for carriers using fleet owners

Under the new proposed National Labor Relations Board rule, companies across industries could be held responsible for their contractor’s violation of labor laws. The proposed rule could have a far-reaching effect on franchisees, agents of all types and in particular fleets and owner operators which employ their own drivers and in turn lease their equipment with drivers to licensed carriers under the truth in leasing regulations.

The proposed “Co-Employer” rule could be used to facilitate collective bargaining and eliminate any barrier to tagging mega carriers with employee taxes and benefits in the event their independent contractors fail to comply or otherwise default.

Unfortunately, this new proposed rule tracks other pending administrative actions before the Department of Labor which evidence a partisan agenda that affects the opportunities currently available to small businessmen, and in our industry, owner operators in particular. ATRI’s recent studies show an overwhelming preference of independent contractors for the freedom of dispatch and entrepreneurial opportunities the independent contractor model provides.

As noted before, trucking is a unique industry which has traditionally enjoyed a carve-out for independent contractors under federal regulation. Changes in labor laws could de-incentivize entrepreneurial opportunities and result in less, not more, trucks and drivers, as the ATRI study suggests. Under the administrative process, small businesses have the opportunity to be heard and must be considered in promulgating any new rule. Now, before the mid-term elections, is the time for the industry to make clear to regulators that eliminating the independent contractor model and facilitating collective bargaining is against public policy and will exacerbate, not facilitate, the recruitment of more drivers.

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Regulatory and Legislative Update - August 2022

By Dan Boaz

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through August 31, 2022. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Courts

Regulation and Enforcement

Legislation

Advocacy and Comment

 

Courts

Appeals court upholds the latest changes to HOS rules

The U.S. Court of Appeals for the District of Columbia Circuit late last month rejected a challenge to the September 2020 changes in the federal hours-of-service rules for truck drivers. Three truck safety advocacy groups and the Teamsters Union had challenged two of the revisions. The parties argued that FMCSA had failed to adequately explain its conclusion that the new short-haul exemption was safety neutral with respect to collision risk and driver health and would not negatively impact regulatory compliance. They also argued that the agency had insufficiently explained how the modification to the 30-minute break requirement was safety neutral and would not impact driver health. The parties did not challenge other rule changes, including the split options for split rest and increased flexibility afforded drivers when operating in adverse conditions.

Although the 43-page appeals court opinion goes into much more detail, the fundamental ruling was simple. “Because the modifications to the hours-of-service rules were sufficiently explained and grounded in the administrative record, we deny the petition,” the court said. For the opinion, visit https://www.cadc.uscourts.gov/internet/opinions.nsf and search 20-1370 under “Quick Search.”

Appeals court overturns ruling for Schneider in classification case

The U.S. Court of Appeals for the 7th Circuit has reversed a U.S. district court ruling in favor of Schneider National in a worker classification case and sent it back to the lower court for further proceedings. The district court had granted Schneider’s motion to dismiss all claims, which were that the carrier (1) violated minimum wage requirements under the federal Fair Labor Standards Act and Wisconsin law; (2) unjustly enriched itself under Wisconsin law; and (3) violated federal Truth-in-Leasing regulations.

The appeals court ruled that the district court had erred by giving decisive effect to the terms of Schneiders contracts. “In many areas of the law, the district court’s approach would be sound, but not under the Fair Labor Standards Act,” the appeals court said. “As explained below, in determining whether a person is an employee under the Act, what matters is the economic reality of the working relationship, not necessarily the terms of a written contract.” The appeals court concluded that the plaintiff’s allegations about the economic reality of his working relationship state a viable claim under FLSA and the other laws relies upon. For the opinion in the case, visit http://media.ca7.uscourts.gov/opinion.html and search for case No. 21-2122.

 

Regulation and Enforcement

Registration now open for younger driver apprenticeship program

About six months after publishing the requirements for the program, the Federal Motor Carrier Safety Administration has opened the Safe Driver Apprenticeship Program for carriers to apply for participation. The program, which was established by last year’s infrastructure legislation, allows 18- to 20-year-old individuals to drive commercial motor vehicles in interstate commerce under certain conditions. At any given time, FMCSA can allow only 3,000 drivers to participate. For more information and a link to the carrier application portal, visit https://www.fmcsa.dot.gov/safedriver.

FMCSA denies ELD exemption for elevator maintenance firm

FMCSA has denied an application submitted in 2019 by Harris Companies, Inc. for an exemption from the electronic logging device (ELD) rule for all its employees who are required to prepare records of duty status (RODS). The exemption would have included elevator technicians, electricians, other general laborers, and welders who operate commercial motor vehicles in interstate commerce. FMCSA said that the applicant has not demonstrated that it would likely achieve a level of safety that is equivalent to, or greater than, the level that would be achieved absent the requested exemption. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-15224.

School bus association seeks CDL testing exemption regarding engine compartments

FMCSA is requesting comments by September 12 on an application from the National School Transportation Association (NSTA) for an exemption from the “under-the-hood” testing requirement for commercial driver’s license applicants seeking a school bus endorsement. Drivers issued a CDL under the exemption would be restricted to intrastate operation of school buses only. For the Federal Register notice https://www.federalregister.gov/d/2022-17228.

FMCSA proposes to incorporate CVSA procedures into hazmat permit regs

FMCSA is requesting comments by September 7 on a proposal to incorporate by reference into the hazardous materials safety permit regulations the updated Commercial Vehicle Safety Alliance (CVSA) handbook containing inspection procedures and Out-of-Service Criteria (OOSC) for inspections of shipments of transuranic waste and highway route-controlled quantities of radioactive material. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-16510.

 

Legislation

Clean energy law includes tax credits for electric trucks

President Biden has signed into law the so-called Inflation Reduction Act (H.R. 5376), which includes various measures related to clean energy and health care. Among the legislation’s clean energy provisions is a “qualified commercial clean vehicle credit,” which provides a tax credit of up to $40,000 for qualified heavy commercial electric vehicles, or up to $7,500 for qualified commercial electric vehicles weighing less than 14,000 pounds. A separate provision provides a tax credit of up to $100,000 for installation of charging stations needed to support those vehicles.

For details of the legislation, visit https://www.congress.gov/bill/117th-congress/house-bill/5376. The provisions outlined above are Sections 13403 and 13404.

T&I Committee approves bill to fund truck parking expansion

The House Transportation & Infrastructure Committee has advanced legislation (H.R. 2187) that would authorize $755 million over five years to build additional commercial truck parking facilities. The bill not only would cover construction of commercial truck parking spaces at rest areas and weigh stations along highways but also would cover expansion of parking adjacent to truck stops and travel plazas, at publicly owned freight facilities such as port terminals. For more information on the bill, visit https://www.congress.gov/bill/117th-congress/house-bill/2187.

Rep. Mast introduces a package of bills to loosen restrictions, taxes on trucking

Rep. Brian Mast (R-Florida) has introduced five bills that to address the supply chain crisis by reducing regulatory burdens and taxes on the trucking industry, linking them as steps to address the ongoing supply chain crisis. The tax-related bills include one (H.R. 8413) that is similar to bills that have been introduced by others in Congress over the years. H.R. 8413 would repeal the 12% federal tax on truck chassis, which Mast says would “lower the cost of entry for aspiring truckers and get more trucks on the road.” For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8413. The other tax-related bill (H.R. 8413) would repeal the 24.3-cent excise tax on diesel fuel. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8414.

The other three bills address issues that are more controversial, even within the trucking industry itself. H.R. 8411 would extend the permissible length of each twin semitrailer from 28 to 33 feet to allow truck combinations to haul more cargo. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8411. The idea of allowing longer doubles became a big issue about seven years ago and sharply divided truckload and LTL carriers.

H.R. 8412 would increase the permissible weight of a semitrailer from 80,000 pounds to 97,000 pounds. For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8412. While generally supported by shippers and some major private fleets, the idea of allowing heavier trailers has been controversial within the truckload industry because many carriers fear that customers would pressure them into replacing existing trailers without adequate compensation and also while rendering the prior trailers obsolete.

The final bill, H.R. 8417, would permanently repeal the hours-of-service regulations, although it would require carriers to allow truck drivers to take at least 10 hours off duty “when such driver informs the motor carrier or motor private carrier that such driver needs immediate rest.” For more information, visit https://www.congress.gov/bill/117th-congress/house-bill/8417. This bill is most controversial of all, although Mast argues that FMCSA’s actions to rescind HOS rules during the height of the pandemic demonstrate that the regulation is unnecessary.

Senate bill would loosen requirements for VA funding of commercial driver training

Sen. Deb Fischer (R-Nebraska) has introduced legislation (S. 4766) that would exempt commercial driver training from some of the requirements governing allocation of funds for veterans educational assistance by the Department of Veteran Affairs (VA). For details on the legislation, visit https://www.congress.gov/bill/117th-congress/senate-bill/4766.

 

Advocacy and Comment

Dispatch Services

Exhaustive comments were filed by 13 stakeholders in the FMCSA’s open docket considering the future of “dispatch services.” Most commenters supported the retention of the existing definition of “Broker” which includes third parties who arrange for transportation for compensation and are not exclusively representing one carrier.

The 13 areas of inquiry presented by the Agency opens the door for an analysis of DOT’s obligations to enforce the National Transportation Policy and prevent identity theft, larceny by fraud, and double brokerage scams, all of which are serious demonstrative problems that are currently unaddressed. Unlike the Federal Maritime Commission which exercises its regulatory authority over unreasonable practices in ocean freight, other than record industry complaints, the FMCSA does not actively investigate and police fraudulent and felonious conduct notwithstanding statutory and regulatory authority to do so.

The explosive growth in spot market booking of freight has increased the opportunity for “catfishing” where the internet persona of the potential logistics partner cannot be trusted.

At the Department level it is DOT’s responsibility to enforce the National Transportation Policy and ensure that all stakeholders can rely on a competitive marketplace in which properly licensed, authorized and insured brokers and carriers can be identified and used. Maybe the dispatch service docket will afford the industry the opportunity to demonstrate a more active policing of the industry, not less in the public’s interest and that a special appropriation and task force should be set up by DOT to readdress these issues.

AB5 Goes Viral – Infects New Jersey

As predicted, the Supreme Court’s decision not to hear the appeal of AB5 has already resulted in increased virulence. In the past week, the State of New Jersey has issued two unfavorable decisions. In one, its Department of Labor has refused to apply a decade old carve-out from employee status for independent contractors which are paid based on productivity (i.e., either by the mile or on percentage). This legislation, which was intended to track the federal owner operator leasing rules, has been declared ineffective because the carrier augmented the owner operator’s base pay with pass through payments and deductions contemplated by the very federal rules the carveout was intended to facilitate.

The same week, the New Jersey Supreme Court, in a rush to facilitate the ABC Test, ruled that there would be no court appeal of a New Jersey DOL ruling in favor of application of the ABC test in an unrelated industry.

Wow! So much for due process and judicial appeal in New Jersey. By now, it should have become obvious that the ABC test endorsed by CA in AB5 is a killer of small business opportunities and that there is no easy way to contain its spread. Isn’t it ironic that two states, California and New Jersey, with among the highest state tax burdens and great dependence on the owner operator model for intermodal port traffic should be the first in line to stifle blue collar entrepreneurship.

Unfortunately the decision of the 7th Circuit in the Schneider case may be a harbinger of things to come. Hopefully the Court’s remand will not encourage a renewal of vexatious class action suits alleging that retention of owner operators under the federal leasing regulations somehow violates well established precedent.

Stay tuned! Clearly there is more to come on this issue.

Read More »

Regulatory and Legislative Update - July 2022

By Dan Boaz

Contents

FMCSA has extended its emergency declaration regarding COVID-19 through August 31, 2022. For the latest version and other guidance related to COVID-19 is available at www.fmcsa.dot.gov/COVID-19. Note that use of the declaration now requires monthly reporting by carriers.

Courts

Regulation and Enforcement

Legislation

Advocacy and Comment

 

Courts

Leased owner-operator model outlawed in California as Supreme Court denies cert

The legal battle over whether trucking companies can use leased owner-operators ended June 30 when the U.S. Supreme Court chose not to disturb a federal appeals court decision overruling an injunction against enforcement of AB 5 against motor carriers. U.S. District Judge Roger Benitez, who had issued the injunction in January 2020, on July 8 acknowledged the mandate of the U.S. Court of Appeals for the Ninth Circuit, thereby formally allowing the state to enforce the law. The California Trucking Association, which had led the legal challenge to AB 5, estimates that the Supreme Court’s denial of a writ of certiorari affects approximately 70,000 owner-operators in the state. See Advocacy and Comment below for discussion of important issues.

Supreme Court refuses to consider preemption of broker negligent selection lawsuits

The U.S. Supreme Court on June 27 declined to consider an appeals court ruling that state common-law tort liability claims against brokers for negligent selection are not preempted by federal law. As was the case with the California Trucking Association’s challenge of AB 5, the U.S. Court of Appeals for the Ninth Circuit case, which involved C.H. Robinson, revolved around the scope of the Federal Aviation Administration Authorization Act (FAAAA) in preempting state action. FAAAA explicitly exempts from preemption acts of “safety regulatory authority of a State with respect to motor vehicles.” The appeals court had concluded that state common-law tort claims were exempt from preemption. See Advocacy and Comment for Discussion

 

Regulation and Enforcement

FMCSA removes Arion Tech’s ArionT ELD from list of registered ELDs

Carriers relying on Arion Tech Inc.’s ArionT electronic logging device (ELD) have until August 24 to replace those devices with another registered device. Effective June 24, FMCSA placed the ELD on its list of revoked devices due to the company’s failure to meet the minimum requirements established in 49 CFR part 395, subpart B, appendix A. In addition to switching to a new device by the deadline, carriers must stop using the revoked device and revert to paper logs or logging software to record required hours-of-service data until the ArionT ELD is replaced. For a list of registered and revoked devices, visit https://eld.fmcsa.dot.gov/List. For other ELD resources, visit https://www.fmcsa.dot.gov/hours-service/elds/electronic-logging-devices.

Comment period ends on broker, bona fide agent definitions

The comment period closed July 11 on FMCSA’s request for input into the guidance the agency is required to issue clarifying the distinctions between brokers and bona fide agents. Under a provision in the Infrastructure Investment and Jobs Act, FMCSA’s guidance must consider the extent to which technology has changed the nature of freight brokerage, the role of bona fide agents, and other aspects of the freight transportation industry.

In joint comments, a group of 13 stakeholders agreed that there were serious problems surrounding intermediaries, they argued that what was needed was stronger enforcement, not more regulation. “There is no effective cop on the block protecting shippers, brokers and carriers against unauthorized operations, frauds, scams, and identity thefts involving the abuses of intermediaries in regulated truck transportation, the stakeholders said. FMCSA and DOT “have the unique authority to enforce uniform rules of commerce, police the industry, and prosecute fraud involving intermediaries.” Among other things, they recommended that DOT and/or the agency should establish and staff a permanent task force to monitor complaints and establish a proactive prosecutorial staff to enforce existing rules.

Groups involved in the joint comments were the Air & Expedited Motor Carriers Association (AEMCA), Airforwarders Association (AfA), Alliance for Safe, Efficient and Competitive Truck Transportation (ASECTT), Auto Haulers Association of America (AHAA), American Home Furnishings Alliance (AHFA), Apex Capital Corp, National Association of Small Trucking Companies (NASTC), PFA Transportation Insurance & Surety Services, Sompo International, Transportation & Logistics Council (T&LC ), Specialized Furniture Carriers, The Expedite Association of North American (TEANA), and the Transportation Loss Prevention and Security Association (TLP&SA). For comments filed in response to FMCSA’s notice, visit https://www.regulations.gov/docket/FMCSA-2022-0134.

Comment period on speed limiters closes July 18

After having been extended from its original closing date in early June, comments are due July 18 on FMCSA’s advance notice of supplemental proposed rulemaking concerning the potential mandate that motor carriers use speed limiters installed on their trucks. To view the advance notice, file comments, or view comments, visit https://www.regulations.gov/document/FMCSA-2022-0004-0001.

SBTC seeks exemption from language skills requirement

FMCSA is requesting comments by July 15 on an application by the Small Business in Transportation Coalition (SBTC) for an exemption that would allow carriers to use drivers who are not capable of reading and speaking the English language sufficiently to communicate with the public, understand highway traffic signs in English, to respond to official inquiries, etc. SBTC does not actually support such a policy but rather argued in a March 18 letter that if FMCSA continues to allow states to administer knowledge tests in languages other than English, it might as well repeal the requirement altogether. SBTC requested the exemption on behalf of all motor carriers in North American Industry Classification System (NAICS) category 484230 (long-distance specialized freight trucking except used goods) with revenues under $30 million. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-12874.

FMCSA seeks comments on several bids for driver training exemptions

In separate notices published on different dates in June, FMCSA has requested comments on various applications for exemptions from portions of the entry-level driver training (ELDT) regulations. Entities applying for exemptions include the Western Area Career and Technology Center (https://www.federalregister.gov/d/2022-12873); State of Alaska (https://www.federalregister.gov/d/2022-14446); Railsback HazMat Safety Professionals, LLC (https://www.federalregister.gov/d/2022-14509); and the National Ground Water Association ( https://www.federalregister.gov/d/2022-14507.

Stevens Transport seeks CDL-related exemption as FMCSA renews two others

FMCSA seeks comments by July 14 on an application by Stevens Transport, Inc. for an exemption from the requirement that a commercial learner's permit (CLP) holder to be accompanied by a commercial driver's license (CDL) holder with the proper CDL class and endorsements seated in the front seat of the vehicle while the CLP holder performs behind-the-wheel training on public roads or highways. The exemption would allow a CLP holder who has passed the skills test but not yet received the CDL document to drive a Stevens CMV accompanied by a CDL holder who is not necessarily in the passenger seat, provided the driver has documentation of passing the skills test. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-12810.

Meanwhile, the agency separately has renewed for five years two similar exemptions held by New Prime Inc. and C.R. England. For the New Prime notice, visit https://www.federalregister.gov/d/2022-13709. For the C.R. England notice, visit https://www.federalregister.gov/d/2022-12921.

FMCSA denies HOS exemption for pipeline contractors

FMCSA has rejected an exemption requested by the Pipe Line Contractors Association (PLCA) from certain hours-of-service (HOS) regulations for drivers of a variety of CMVs employed by its member companies. FMCSA said it analyzed the exemption application and public comments and determined that the application lacked evidence that would ensure a level of safety equivalent to, or greater than, the level that would be achieved absent such exemption. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-12872.

Minnesota loses bid for reconsideration of CDL skills test exemption denial

FMCSA has denied the State of Minnesota’s request for reconsideration of the agency's 2017 denial of an exemption from the regulations governing the commercial driver's license (CDL) skills testing procedures and practices. Minnesota had sought relief from the requirement to use the American Association of Motor Vehicle Administrators' (AAMVA) 2005 Test Model Score Sheet and from the requirement that skills tests be conducted in three parts. FMCSA said that it finds no additional information to persuade it to allow a two-part skills test. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-12875.

FMCSA renews towing group’s tie-down exemption

FMCSA has renewed for five years the exemption held by the International Institute of Towing and Recovery that allows CMV operators to secure automobiles, light trucks, and vans using a total of four tiedowns – two fixed and two adjustable – instead of two tiedowns, both of which need to be adjustable. For the Federal Register notice, visit https://www.federalregister.gov/d/2022-12739.

 

Legislation

House bill would repeal excise tax on trucks and trailers

Rep. Doug LaMalfa (R-California) introduced legislation (H.R. 8116) that would repeal the 12% excise tax on the retail sale of heavy-duty trucks and trailers. As has typically been the case with similar proposals, the bill states that the excise tax discourages the replacement of older, less environmentally friendly, and less fuel-efficient vehicles. For more information on the bill, visit https://www.congress.gov/bill/117th-congress/house-bill/8116.

House panel approves DOT funding bill

The House Appropriations Committee has approved legislation (H.R. 8294) that funds the Department of Transportation, including FMCSA, for the fiscal 2023, which begins October 1. The bill does not include any controversial legislative provisions related to FMCSA, but the committee report (H Rept. 117-402) address several notable policy issues, including the 2016 hours-of-service rule; the large truck crash causation study; FMCSA’s antiquated information systems; unlawful brokerage activities; hair testing for controlled substances; the safety driver apprenticeship pilot program; the motor carrier safety fitness determination rulemaking; and commercial zone boundaries. For more on H.R. 8294, including a link to the committee report, visit https://www.congress.gov/bill/117th-congress/house-bill/8294.

 

Advocacy and Comment

The Owner Operator Model and Up-Supply Chain Liability

The decision of the Supreme Court to not consider overturning California’s AB 5 legislation and the separate decision not to consider conflicting Circuit decisions on the application of state law negligent standards in accident litigation have serious consequences for the trucking industry. California’s AB 5 legislation will become the law in that state and carriers and owner operators are scrambling to find alternatives which will save the small carrier independent contractor model. With the defeat of C.H. Robinson’s Appeal, the question of up-supply chain liability will remain unsettled and premiums for truckers will remain unabated.

Both cases were appealed on the basis of a single issue, the application of the Federal Aviation Administration Authorization Act (FAAAA) restrictions on state law. The Supreme Court in its recent reversal of Roe v. Wade demonstrates a high value placed on the exercise of state rights when the issues are not specifically in the province of the federal government under the U.S. Constitution. Hence, any possible further court challenge to preserve the owner operator model or establish uniform federal selection standards in litigation must refocus the issue on the Commerce Clause and the over-arching need for uniformity in the regulation of interstate commerce.

he Constitution makes clear that interstate commerce is an area in which Congress has the power “to regulate commerce … among the several states.” See U.S. Constitution Article I, Section 8, Clause 3. On both the issues of the future of the independent contractor owner operator model and the enforcement of a uniform federal standard, implicit and explicit exercise of its preemptive power can be demonstrated.

There is ample support in the statutes and regulations governing both independent contractors and the federal government’s exclusive obligation to certify carriers as safe to operate to continue opposition to reclassification of owner operators as independent contractors and the application of state law to the implicit reliance on the FMCSA’s safety fitness determination in carrier selection issues.

The future of the owner-operator independent contractor model

“Gasoline has been poured on the fire that is our ongoing supply chain crisis,” CTA said in a statement on the day of the Supreme Court order. “We are disappointed the Court does not recognize the irrevocable damage eliminating independent truckers will have on interstate commerce and communities across the state. The Legislature and Newsom Administration must immediately take action to avoid worsening the supply chain crisis and inflation.”

The crux of the case was AB 5’s so-called ABC test for worker classification, specifically language stating that a worker can be treated as an independent contractor only if he or she “performs work that is outside the usual course of the hiring entity’s business.” Given that a leased owner-operator inherently has an ongoing relationship with the trucking company performing the same work – i.e., transporting freight by truck – it has been widely acknowledged that AB 5’s ABC test outlaws the model. The Ninth Circuit’s ruling did not really dispute that point but rather argued that AB 5 was a generally applicable labor law that did not interfere with carriers’ rates, routes, or services. CTA had contended that AB 5 was preempted by the Federal Aviation Administration Authorization Act (FAAA), which bars states from adoption laws or regulations related to motor carriers’ prices, routes, or services.

Weighing options
The focus now shifts to how trucking companies will comply. Carriers certainly can simply stop operating in California, but that alternative clearly is extreme for operations that are based there or are intrinsically linked to the state, such as drayage operations serving the nation’s largest port complex in Southern California. Converting owner-operator drivers to employee drivers – either using company owned equipment or under an “two-check” arrangement whereby the carrier pays the truck owner separately for use of the equipment – is another option, of course. However, many carriers will find that approach financially undesirable while many owner-operators will find it contrary to their desires to be their own bosses.

One alternative that could preserve entrepreneurship and an arm’s length relationship between truck owners and entities engaging them would be to transition to a brokerage model. Leased owner-operators could obtain their own truck insurance and satisfy other requirements to obtain for-hire operating authority and accept individual loads tendered to them without an ongoing relationship. Some carriers began shifting to such a model at least for California operations even before AB 5 was enacted. However, the cost of insurance premiums and the expense and hassle of regulatory compliance currently handled by the larger operation in a lease agreement likely would be overwhelming for many single-truck operators.

In theory, another option would be to comply with the “business-to-business exemption” within AB 5 itself. The exception specifies that a worker and hiring entity can establish an independent contractor relationship based on satisfying all of 12 specified conditions. Indeed, the U.S. government’s brief before the Supreme Court opposing cert argued, among other things, that the court’s review of the Ninth Circuit opinion would be premature because the trucking industry had not tested in court whether the exemption offered a viable alternative.

In its reply brief before the Supreme Court, CTA called the business-to-business exemption “a red herring.” The association argued that at a minimum an owner-operator could not realistically hold itself out to the public as available to provide the same or similar services it offers to carriers. First, owner-operators do not advertise to the public at all, CTA said. Moreover, truck drivers cannot provide services to the general public without holding a motor carrier license, which would mean that they are no longer owner-operators in the sense that they are today, it said.

Beyond California
Although the Supreme Court’s denial of cert technically does not represent a ruling on the merits of CTA’s challenge, other states surely will interpret it as such. Various states already use ABC tests for classifying workers, but they typically have not required all three prongs of the test to be satisfied as California does. That situation might change now. New Jersey already has pursued essentially the same approach as California and appeared to be waiting until the AB 5 issue is resolved before proceeding.

Even if California’s approach does not spread at the state level, the industry could face federal action that accomplishes much of what AB 5 does. For example, the Protecting the Right to Organize (PRO) Act (H.R. 842), which has passed the House, includes an ABC test that is essentially the same as California, and it does not even include a business-to-business exemption.

The PRO Act is highly unlikely to pass in the current Congress, and passage seems even less likely after mid-term election. However, that is not the end of the story. The Department of Labor already has begun working on a regulatory proposal to reverse a Trump administration rule on worker classification. A Biden administration rule on the matter certainly would attempt to undermine use of independent contractors.

Dispatch Services

Ironically, while the Supreme Court’s recent decisions demonstrate the importance of the supremacy clause in the context of a federal regulations and statutes, the Agency is soliciting comments aimed at creating a whole new class of intermediaries which would be exempt from the broker regulations and presumably exempt from the duties, rights and remedies imposed on brokers and forwarders.

If the future of the owner operator model and up-supply chain liability are the biggest issues facing trucking, clearly the unheralded third issue is the unabated fraud resulting from scams which result in stolen freight, carriers cheated out of promised payment, identity theft, and carrier safety fitness issues.

At Congress’ direction, the FMCSA put out a request for comments on allowing commissioned sales agents to work for multiple carriers without obtaining a broker’s bond and complying with the broker regulations. Among the questions asked was whether state law remedies were available and whether the sole purpose of the broker rules was to ensure proper transmission of freight charges if a third party agent billed and collected the funds.

Many comments were filed. In the comment filed by 13 stakeholders including shippers, brokers, carriers, a factor and two bondsmen, the point was made that the broker regulations clearly apply to dispatch services which are not bona fide agents under the existing regulations. This filing also makes the case that rather than changing the existing regulations, the FMCSA should recognize the magnitude of the problems and exercise its statutory and regulatory power to address multi-state scams. The sheer volume of spot market freight, the increasing number of new carriers and the vetting problems caused by real time load matching have exacerbated this problem which includes an increase in collection agency activity to proliferate litigation against up-supply chain victims of fraudulent double brokerage.

Hopefully the Agency will leave the existing rules in place and be proactive in their enforcement.  The comments of the 13 stakeholders points out that only the DOT and FMCSA have the delegated power and duty to enforce relevant statutes and regulations and the policing power to address this serious issue. For more information see https://www.regulations.gov/document/FMCSA-2022-0134-0001.

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