Regulatory and Legislative Update - November 2024

Contents

Regulation and Enforcement

• Trump presidency to bring big labor, environmental policy changes
• FMCSA regulations might not change much under Trump
• President Trump nominates former Rep. Sean Duffy as DOT secretary
• FMCSA acts on broker transparency, SMS changes in election’s aftermath
• FMCSA plans to postpone elements of broker/forwarder financial responsibility rule
• States begin mandatory CDL downgrades for clearinghouse violations
• Truck Leasing Task Force meeting rescheduled for December 3

Legislation

• Lame duck session of Congress unlikely to produce much change for trucking

Courts

• Federal judge strikes down rule expanding overtime pay eligibility

Advocacy and Comment

Regulation and Enforcement

Trump presidency to bring big labor, environmental policy changes

The election of President Trump might not mean that much for motor carrier safety regulation in the near term, but it surely will bring major changes in two important areas for carriers: Labor and the environment.

Because the Biden administration was careful to finalize major rules months ago, reversing those policies might require entirely new rulemaking proceedings. However, Republican control of Congress might afford the Trump administration some workarounds in the interim, such as zeroing-out funding to enforce regulations. Moreover, some of the most controversial measures have been challenged in the courts, which have expanded authority to strike down federal regulations by virtue of a recent Supreme Court ruling. (See the July/August Regulatory Update.) Just this month, one of those lawsuits has resulted – for now, at least – in overturning expanded employee eligibility for overtime compensation. (See article under Courts below.)

Regardless of the mechanism, the highest priority – or at least tied with environmental policy – will be the reversal of Biden administration actions to promote labor unions and to discourage use of independent contractors instead of employees. In fact, the Department of Labor’s regulation on applying an economic realities test regarding contractors versus employees was implemented to undo a rule issued late in the first Trump administration.

Another labor regulation surely on the chopping block is the joint employer rule from the National Labor Relations Board, although that change might have to await probable changes in the board’s makeup. One question on labor policy is how far Republicans might be prepared to go in trying to prohibit or undermine state laws and regulations they oppose – laws such as California’s AB 5, for example.

Another area that will change is guidance issued by DOL. For example, shortly before the end of the first Trump administration, DOL issued guidance documents stating, among other things, that requiring independent contractors to adopt safety technologies was not a sign of control and that carriers were not required to pay drivers for time spent in sleeper berths. The Biden administration’s DOL promptly withdrew both guidance documents. Expect similar activity in January.

Changes in environmental policy appear just as inevitable as many Republican lawmakers have expressed a desire for a wholesale reversal of Environmental Protection Agency actions under President Biden. One complication might be the close alliance of President Trump and Tesla chief Elon Musk, but the political pressure from multiple parties to overturn or at least greatly slow down the push for electric commercial vehicles likely will win out.

However, a rollback of electric vehicle (EV) requirements at the federal level would not affect the Advanced Clean Trucks regulations already adopted by California – and copied by various other states – to force truck manufacturers to introduce zero-emissions vehicles (ZEVs) at increasingly higher rates over the coming years. The California rule is more aggressive than the federal greenhouse gas (GHG) reduction rule in numerous ways, not the least of which is its requirement for full ZEVs as opposed to percentage reductions in GHGs, which could be achieved by a mix of technologies – even fuel efficiency improvement in diesel trucks.

California still needs a waiver from EPA to move forward with its Advanced Clean Fleet rule, which is aimed at fleet operators’ use of equipment rather than truck manufacturers’ sales. EPA held a hearing on the waiver in August, and that certainly is one area where the Biden administration could act before Inauguration Day. If so, the authority of the Trump administration to reverse such a waiver is unclear, but it would be expected to try. In any event, battles between California and the Trump administration over both environmental and labor laws and regulations could a hallmark of the coming years.

The fate of one other important EPA regulation is less certain. Under a rule adopted in late 2022, EPA is requiring a significant reduction in the emissions thresholds for oxides of nitrogen (NOx). That rule takes effect in 2027 and imposes other obligations on truck and engine makers, such as a big increase in the warranty coverage for emissions-related components and systems. Although pricing is not yet available, most observers expect the rule to add $20,000 or more to the cost of a heavy-duty truck.

The added cost to a truck due to the EPA rule would seem to make it a target, but there are other forces working against throwing out the rule. One is the time required to conduct another rulemaking if Congress cannot muster enough votes to counteract it. Perhaps a greater issue is truck manufacturers’ steadfast opposition to any changes in NOx standards once they have been adopted given the huge investments in development and engineering that are needed to comply with the rules. A potential middle ground might be to roll back the warranty provisions, which could reduce the ultimate cost of new trucks without changing the emissions standards. Stakeholders would be looking for clarity soon since many carriers are expected to accelerate their truck purchases in 2026 and perhaps even in 2025 to avoid the higher-cost equipment.

Another expected change of note is expansion of oil drilling and pipeline opportunities. Whether such flexibility will drive down diesel prices is an open question, but at a minimum it should limit upward pressure on prices due to geopolitical developments, such as what happened with diesel prices in March 2022 due to the invasion of Ukraine by Russia.

FMCSA regulations might not change much under Trump

Unlike the situations with the Department of Labor and the Environmental Protection Agency, regulations under FMCSA’s jurisdiction may not be a high priority for the Trump administration. FMCSA has issued few final rules of consequence under the Biden administration. The agency has some degree of ongoing rulemaking activity in several areas. However, it’s not clear that any of those efforts will survive the change in administrations, including the very recent proposed rule on broker transparency. (See article below.)

The first Trump administration never addressed the merits of speed limiters on heavy-duty trucks. FMCSA essentially shelved an early-stage speed limiter proceeding without formally withdrawing it. However, the Republican-controlled House approved a fiscal 2025 DOT appropriations bill that blocks adoption of speed limiters, so the presumption would be that speed limiters are off the table.

Another big issue has been potential changes in safety fitness procedures. The fate of this rulemaking is more muddled. On the one hand, the first Trump administration withdrew a rulemaking proceeding on the topic in 2017. Loosening hours-of service regulations might seem a logical target for Republicans, but the first Trump administration already made various changes in the regulations that are still in place today.

FMCSA’s biggest focus this year has been on revamping its registration process to move all interactions to a more secure online environment. That effort has not been subject to rulemaking and is being fast tracked by the Agency without findings of fact or conclusions of law. No cost benefit analysis has been done but it is scheduled for early implementation.

President Trump nominates former Rep. Sean Duffy as DOT secretary

If confirmed by the Senate, the next secretary of the Department of Transportation will be Sean Duffy, a Republican member of Congress from Wisconsin from 2011 to 2019 and most recently co-host of The Bottom Line on Fox Business. Before being elected to Congress, Duffy served as district attorney of Ashland County, Wisconsin, from 2002 to 2010.

During his time in Congress, Duffy did not serve on any committees directly related to transportation. However, he did co-sponsor several bills related to trucking, including measures to loosen truck size and weight restrictions, expand hours-of-service exemptions for agricultural commodities, allow motor carriers to use hair testing for controlled substances, and encourage greater use of drivers under 21 years old.

In keeping with usual procedures, Senate hearings on Duffy’s nomination likely will occur in January, followed by prompt confirmation.

FMCSA acts on broker transparency, SMS changes in election’s aftermath

In moves that appear prompted – at least in their timing – by the countdown to the Trump administration, FMCSA published in the November 20 Federal Register two regulatory and enforcement items that have been lingering issues for a few years. One action is a proposed rule, so there’s no presumption that the incoming Trump administration will pursue it further once the comment period ends. The other action is not even a regulation but rather a package of changes related to enforcement policy that presumably could be reversed or changed if the Trump administration were inclined to do so.

In one action, FMCSA issued a notice of proposed rulemaking (NPRM) regarding broker transparency in response to petitions the agency had granted in March 2023. The current regulation in 49 CFR 371.3 requires brokers to maintain records of each transaction, including the amount of compensation received. The regulation states that each party to a brokered transaction has a right to review the record, but those seeking rulemaking argued that brokers often forced carriers to waive that right to obtain loads.

In its NPRM, FMCSA said that the current “right to review” language did not clearly bar property brokers from requiring carriers to waive that right and that the proposed rule addresses that issue by making disclosure a regulatory obligation. The agency noted, however, that brokers could still contractually bind carriers not to disclose to third parties the information contained in the records. The key provisions of the proposed rule would:

• Require brokers to keep the required records in an electronic format;
• Revise the required contents of brokers' records, including date of payment for brokered service and elimination of the distinction between brokerage services and non-brokerage services;
• Clarify that brokers must provide records upon request; and
• Require brokers to provide records electronically within 48 hours of request.

Comments are due January 21, 2025. For the Federal Register notice, visit https://www.federalregister.gov/d/2024-27115.

The other action published on November 20 represents a continuation of its tweaks to the Safety Measurement System (SMS). The agency published proposed changes to SMS in February 2023, allowing carriers to preview the changes and inviting comment.

In the latest notice, FMCSA announced enhancements to SMS and responded to public comments on its February 2023 notice. The agency adopted the seven changes it had proposed and adopted two other changes based on analysis conducted and issues identified during the preview and comment period. One was a reorganization of violations. The other is a plan – if deemed feasible – to provide more frequent updates to inspection and crash data on the SMS website than the current monthly upload.

FMCSA said that further opportunities for more information, including a webinar series on the changes, would be announced at https://csa.fmcsa.dot.gov/prioritizationpreview. The agency said a follow-up notice in the Federal Register will announce the launch date of the enhanced SMS website. For the Federal Register notice published November 20, visit https://www.federalregister.gov/d/2024-27087.

It’s unclear whether the Biden administration has other actions in mind related to trucking before President-elect Trump’s inauguration on January 20, 2025. In any event, actions that the Biden administration were to take at this point presumably would be subject to reversal. For example, the agency could grant waivers of preemption to California and Washington, allowing them to subject interstate truck drivers to their meal and rest break requirements. FMCSA about a year ago invited comments on waivers from preemption declarations issued during the Trump administration. However, even if FMCSA were to issue such waivers, the Trump administration certainly would reverse them promptly.

Otherwise, the White House Office of Management and Budget currently has only one FMCSA measure under review – a proposed rule related to motor carrier operation of automated driving system-equipped commercial motor vehicles. The most significant proposed rule that theoretically could move to the final rule stage is one that would require automatic emergency braking systems on heavy vehicles, but the Biden administration does not have enough time to complete action on it.

FMCSA plans to postpone elements of broker/forwarder financial responsibility rule

Citing its ongoing revamp of the agency’s registration system as the reason, FMCSA proposed extending for one year until January 16, 2026, the compliance dates for certain provisions of its November 2023 rule concerning broker and freight forwarder financial responsibility. Given the fast-approaching implementation data, FMCSA initially set a November 19 comment deadline, but it extended the deadline to November 27 in response to a request from the Small Business in Transportation Coalition.

FMCSA said that only its forthcoming online registration system, which will not be ready by mid-January, will be used to accept filings and track notifications, arguing that adding that functionality to its legacy systems “would not be an efficient use of resources.” Also, without certain automated processes under development in the new system, effective compliance management would be compromised, FMCSA said. Furthermore, postponing compliance will “provide regulated entities time to begin using and familiarizing themselves with the system before compliance is required.”

Some elements of the regulation already were scheduled to take effect in January 2026. The provisions affected by the extension are:

• Immediate suspension of broker/freight forwarder operating authority when financial security falls below $75,000;
• Surety or trust responsibilities in cases of broker/freight forwarder financial failure or insolvency; and
• Enforcement authority and penalties for financial responsibility providers who do not comply with the regulations.

For the Federal Register notice, visit https://www.federalregister.gov/d/2024-25517. For information on FMCSA’s registration system revamp, visit https://www.fmcsa.dot.gov/registration/resources-hub.

FMCSA plans to postpone elements of broker/forwarder financial responsibility rule

Citing its ongoing revamp of the agency’s registration system as the reason, FMCSA proposed extending for one year until January 16, 2026, the compliance dates for certain provisions of its November 2023 rule concerning broker and freight forwarder financial responsibility. Given the fast-approaching implementation data, FMCSA initially set a November 19 comment deadline, but it extended the deadline to November 27 in response to a request from the Small Business in Transportation Coalition.

FMCSA said that only its forthcoming online registration system, which will not be ready by mid-January, will be used to accept filings and track notifications, arguing that adding that functionality to its legacy systems “would not be an efficient use of resources.” Also, without certain automated processes under development in the new system, effective compliance management would be compromised, FMCSA said. Furthermore, postponing compliance will “provide regulated entities time to begin using and familiarizing themselves with the system before compliance is required.”

Some elements of the regulation already were scheduled to take effect in January 2026. The provisions affected by the extension are:

• Immediate suspension of broker/freight forwarder operating authority when financial security falls below $75,000;
• Surety or trust responsibilities in cases of broker/freight forwarder financial failure or insolvency; and
• Enforcement authority and penalties for financial responsibility providers who do not comply with the regulations.

For the Federal Register notice, visit https://www.federalregister.gov/d/2024-25517. For information on FMCSA’s registration system revamp, visit https://www.fmcsa.dot.gov/registration/resources-hub.

States begin mandatory CDL downgrades for clearinghouse violations

As of November 18, state driver’s licensing agencies (SDLAs) must begin downgrading to prohibited status the commercial driver’s licenses (CDLs) of drivers who are barred from driving under the Federal Motor Carrier Safety Administration’s drug and alcohol clearinghouse. States must downgrade CDLs within 60 days of being informed that a driver is in prohibited status. They also must query the clearinghouse before issuing new CDLs or renewing or transferring existing ones.

The latest data from FMCSA indicates that as of October 1, nearly 179,000 of the more than 267,000 drivers with a clearinghouse violation since January 2020 are still in prohibited status. However, if motor carriers are abiding by their obligations to query the clearinghouse when hiring drivers and to conduct annual checks on their own drivers, very few of those 179,000 drivers should still be operating.

CDL drivers that are downgraded can recover their CDL privileges by successfully completing a return-to-duty (RTD) process, which involves counseling, training, and follow-up drug testing. A little more than half of the drivers flagged with a violation since January 2020 have not even begun the RTD process.

Truck Leasing Task Force meeting rescheduled for December 3

FMCSA’s Truck Leasing Task Force has postponed until December 3 a virtual meeting originally scheduled for November 20. The agenda includes a final report from the Consumer Financial Protection on its analysis of leases submitted to FMCSA and their implications for predatory leasing of trucks to commercial motor vehicle drivers. Also, the task force’s drafting subcommittee will present its recommendations for the task force’s final report to FMCSA. For the Federal Register notice, visit https://www.federalregister.gov/d/2024-25517. For more information and a link to registration, which is required by November 22, visit https://www.fmcsa.dot.gov/tltf.

Legislation

Lame duck session of Congress unlikely to produce much change for trucking

Current control of the House by Republicans likely will thwart significant legislative activity in Washington for the rest of the current Congress as Republicans know they will get more favorable provisions once they have control of the White House and both the House and Senate. Congress returned November 12 for a so-called “lame duck” session. One must-do item is continuing funding for the federal government beyond December 21, but early indications are that Congress likely will just continue current funding levels and kick a final version of the funding until next year. Indeed, during the first year of the first Trump administration, the omnibus appropriations act for 2017 wasn’t enacted until May.

Even if the lame duck session were to adopt trucking-related provisions that are in the House version of the bill, it likely would not change the policies that would have been adopted by the new administration anyway. The two significant measures would block speed limiters and take certain actions regarding federal preemption of state regulation of drivers that presumably would not be necessary under a Trump administration. Even if FMCSA were to grant California and Washington waivers as is under consideration, those actions surely would be reversed promptly.

Several other measures related to trucking either have passed the Senate or have been approved by the House Transportation & Infrastructure Committee, although there have been no indications that any of them are in line for action during the lame duck session of Congress. A Senate-passed bill (S. 3475) would authorize FMCSA to designate an authorized operator of the commercial driver’s license information system. House T&I has approved H.R. 8505, sponsored by Del. Eleanor Holmes Norton (D-D.C.) and Rep. Mike Ezell (R-Mississippi), which would clarify FMCSA’s authority to issue civil penalties for violations of commercial regulations and would strengthen the mandate on FMCSA to ensure that entities registering for authority have physical principal places of business that are truly their bases of operation.

The committee also has approved a bill (H.R. 3356) that would give motor carriers access to driver safety performance information on current drivers and owner-operators and establish a process under the DataQs program for drivers to challenge information in their records. However, the committee vote on that measure was highly partisan and, thus, would not seem likely to be approved in a lame duck session.

Courts

Federal judge strikes down rule expanding overtime pay eligibility

A U.S. district judge in the Eastern district of Texas has invalidated the Biden administration’s changes in overtime compensation requirements that the Department of Labor (DOL) had finalized in April. In 2017, the same federal court in Texas blocked a similar rule that had been finalized by the Obama administration.

Under the DOL rule, overtime compensation eligibility was extended as of July 2024 to certain executive, administrative, or professional employees making almost $44,000 a year, up from more than $35,000 previously. The rule further raised the threshold for exemption to nearly $59,000 as of January 2025. Starting in 2027, the salary threshold would be adjusted every three years based on contemporaneous earnings data.

In essence, Judge Sean Jordan ruled as the court had done in 2017 that DOL exceeded its authority under the Fair Labor Standards Act by adopting a standard that is essentially based on salary rather than the duties of specific categories of employees. Furthermore, Jordan cited as support for his review a new wrinkle in favor of being more critical of DOL’s action – the Supreme Court’s ruling in Loper Bright Enterprises vs. Raimondo, which overturned the so-called Chevron doctrine of granting deference to regulatory agencies.

Advocacy and Comment

As mentioned above, the outcome of the November elections will have positive implications for the trucking industry with respect to labor policy, the independent contractor status, and other Federal and state initiatives like compliance costs.

With respect to prosecution of criminal fraud, both FMCSA and OIG have no appetite for investigating supply chain fraud or helping prosecute criminal fraud in conjunction with other agencies. Congress previously weighed in to request answers from the Agency and the issue has not been addressed. Now is the time for a grassroots initiative to gain congressional support for addressing this issue in the new Congress.

Similarly, the congressional mandate for a new comprehensive safety determination rule has been pending for over 25 years. The Agency’s efforts to develop CSA/SMS has repeatedly failed to pass muster with Congress, the National Academy of Sciences, and DOT itself. The scores were removed from publication, the Agency withdrew its own petition for rulemaking after opposition.

Yet the Agency has continued to tout the flawed methodology even though it acknowledged in a court settlement that “Unless a carrier is placed out of service our found to be unsatisfactory, it is fit to operate on the nation’s roadways.” The settlement makes clear that it is ultimately the government’s job to make a safety fitness rating for all carriers. Although SMS methodology is run in the background without approval in a final rule to profile carriers for objective audits, the Agency has not been able to demonstrate that the methodology works. Crashes and highway fatalities involving trucks continue to increase, and the Agency, even with SMS profiling, can only give safety ratings to less than 5% annually.

Rather than act on pending rulemaking which, with congressional support, could provide for objective pre-grant testing of applicants for both safety and fraud compliance, the Agency has yet to present a rule or attempt to establish a record to meet the requirements of administrative process and the Administrative Procedure Act.

In this regard, the outcome of the Fall elections may have a positive influence on advocacy. The Agency has continued to develop SMS methodology for its own use only, touting its improvements but without instituting rulemaking which will be essential if the reboot of SMS is to become law. Thus, the new administration will be responsible for endorsing and shepherding the often criticized methodology through its legislative and judicial approvals, offering stakeholders opportunities for comment which have gone ignored in Agency responses to stakeholders’ comments.

Advocacy before appellate courts is an important remedy to address bureaucratic overreach and the standards of appeal are set forth in the Administrative Procedure Act and rules of due process designed to protect small businesses. The current Supreme Court has overruled “Chevron deference” which suggests that it will base future decisions upon judicial precedent without deferring to an administrative agency’s point of view on questions of fact or precedent.

Readers should please consider these issues and contact your participating trade association if you wish to participate.