Regulatory and Legislative Update - August 2022

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

• Appeals court upholds the latest changes to HOS rules
• Appeals court overturns ruling for Schneider in classification case

Regulation and Enforcement

• Registration now open for younger driver apprenticeship program
• FMCSA denies ELD exemption for elevator maintenance firm
• School bus association seeks CDL testing exemption regarding engine compartments
• FMCSA proposes to incorporate CVSA procedures into hazmat permit regs

Legislation

• Clean energy law includes tax credits for electric trucks
• T&I Committee approves bill to fund truck parking expansion
• Rep. Mast introduces a package of bills to loosen restrictions, taxes on trucking
• Senate bill would loosen requirements for VA funding of commercial driver training

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.