Appeals Court strikes down Trailer Standards

Trailer Standards

November 12 – According to a ruling by the District of Columbia Circuit Court of Appeals, trailers will not have to adhere to stricter emissions and fuel standards.
The EPA and NHTSA set new standards that went into effect in December 2017, but a lawsuit filed by the Truck and Trailer Manufacturers Association paused those standards during litigation.
Trailers would have likely been required to utilize costly aerodynamic technologies such as side skirts, automatic tire pressure systems, wheel covers and tail skirts in order to comply.
In its ruling, the Court of Appeals panel deemed that trailers are not self-propelled, and since the EPA regulates “motor vehicles”, the standards set by the Agency are outside of their authority. The EPA argued that the tractor-trailer as a whole should be considered the pertinent vehicle, but the court was not convinced. With regard to the NHTSA, the court found that the Administration can regulate “an on-highway vehicle with a gross vehicle weight rating of 10,000 pounds or more.” Since the term “vehicle” was not defined, the court based on the context, found that in this case the Administration’s reach is limited to machines that use fuel which negates the rule.
The three-judge panel was not unanimous in their decision as Circuit Judge Patricia Millett filed a dissent to the findings of NHTSA’s rule. Judge Millett, citing the Motor Vehicle Information and Cost Savings Act, argued that “vehicles” should be interpreted to• include trailers as it defines “motor vehicle” to include “vehicles” that are “driven or drawn by mechanical power”. The court ultimately vacated all portions of a 2016 final rule on greenhouse gas emission standards that apply to trailers.
Industry professionals have dodged a costly bullet that they claim was a one-size fits all solution and not appropriate for all trucking sectors. For example, fully-loaded trailers used for over-the-road applications will gain efficiencies whereas those operating in local deliveries are burdened with extra weight and will lose efficiency. Furthermore, these areas of efficiency are being achieved organically without the need of overreaching and costly regulatory interference.

Business Cost Increase:

Minimum liability insurance increase to significantly burden truckers’

Liability Insurance Increase

According to the American Transportation Research Institute (ATRI) fleet insurance costs rose 12% between 2017 and 2018, the second fastest year-over-year growth rate. The Institute also found that, “Given the substantial insurance cost increases over the last several years, it appears that the industry has reached a ceiling in its ability to continuously cover annual double-digit increases in insurance premiums”.
AND… here we go again, yet another regulatory overreach and a potential significant insurance increase under the guise of safety. This one we’ve seen more than once before – but the numbers still don’t seem to support the need.

A provision to increase the minimum level of liability insurance for truckers has reappeared once again in the “INVEST in America Act” (H.R. 3864) – the House’s version of a surface transportation bill. The provision is gently titled “Updating the required amount of insurance for motor vehicles”. The “Update” would require the minimum amount of insurance for motor carriers to be raised from $750,000 to $2,000,000 (167%) and to be adjusted for inflation every 5 years.

Supporters of the legislation claim that the increase is modest and necessary as it has not been increased since implemented in the 1980s.

The numbers:
In 2018, FMCSA data shows that there were approximately 560,000 crashes with large trucks and buses. Of those, 77.5% were property damage only, 21.6% were injury-related and 0.8% were fatal occurrences. Of those crashes, it is estimated that 0.6% may have not provided enough insurance to adequately compensate the other party(ies).It is unclear where the safety benefit comes into play with this “Update”, but supporters of the legislation point the finger at insurers for not better qualifying carriers. They allege that at higher liability levels, insurers would have more at stake and could be incentivized to make greater efforts to screen out unqualified carriers and adjust insurance rates accordingly. The assumption being that in doing so, they would price the bad carriers off of the roads.

Those in favor of the legislation also point to a 2013 report by the DOT which concluded that “at current levels, liability insurance does not appear to be functioning effectively as catastrophe coverage”. Notwithstanding those arguments, opponents of the legislation claim that doubling and tripling of the minimum insurance requirement is arbitrary and dangerous and would dramatically drive up insurance premiums that would likely cripple many carriers, increase delivery rates which increase the cost of goods to consumers with little to no safety benefit. Additionally, they allege this effort is less about safety and more about the support trial lawyers have in Congress.

In a June 9 full committee markup of the legislation, there was an amendment to strike the insurance provision introduced by Rep. Mike Bost, R-Ill. The amendment failed a voice vote and a recorded vote was requested which also failed 38-30. If you’re not familiar, after an amendment to strike a provision is presented, there is a voice vote that is judged by level of sound (who was the loudest). In this meeting all votes fell mostly along party lines, i.e. regardless of sound the Democrat chair struck down the amendment.

The 19-hour hearing ended with the committee approving the five-year, $547 billion INVEST in America Act. The bill was sent to the House floor for further consideration. Be sure to contact your Representative and give your feedback on this very important issue.

Zero -Emissions Trucks Rule

Deadline to report EXTENDED to May 1st


In June of 2020, the California Air Resources Board (CARB) adopted a rule (Advanced Clean Trucks regulation) that requires truck manufacturers (from Class 2b to Class 8) to transition from diesel trucks and vans to electric zero-emission trucks beginning in 2024. By 2045, every new truck sold in California must be zero-emission. There is the start of a big push in the U.S. to transition away from diesel fueled vehicles to electrified vehicles. The “don’t get left behind” mentality will undoubtedly drive other states to adopt similar measures.

According to California governor Gavin Newsom, the new rule directly addresses disproportionate risks and health and pollution burdens affecting communities adjacent to the ports, railyards, distribution centers, and freight corridors. The goal is to put California on a path for an all zero-emission short-haul drayage fleet in ports and railyards by 2035, and zero-emission "last-mile" delivery trucks and vans by 2040 - especially in the Los Angeles region and the San Joaquin Valley.

According to CARB, trucks are the largest single source of air pollution from vehicles, responsible for 70% of the smog-causing pollution and 80% of carcinogenic diesel soot even though they number only 2 million among the 30 million registered vehicles in the state.

In the coming months, CARB will also consider two complementary regulations. The first sets a stringent new limit on NOx (oxides of nitrogen) requiring new trucks still using fossil fuels to include the most effective exhaust control technology during the transition to electric trucks. There is also a proposed requirement for larger fleets in the state to transition to electric trucks year over year.

To help CARB in developing policies and recommendations to accelerate this large-scale transition to zero-emissions, there will be a one-time reporting requirement for large entities that operate or direct vehicles in California. The reporting deadline is April 1, 2021. The final rulemaking package was submitted to the Office of Administrative Law (OAL) on January 29, 2021. The OAL approved the regulation on March 16.

For more information visit: ww2.arb.ca.gov

Drug And Alcohol Clearinghouse

Mandatory Compliance Date Jan 5

In 2017, the FMCSA established requirements for the Commercial Driver’s License Drug and Alcohol Clearinghouse (Clearinghouse), a database under the Agency’s administration that contains information about violations of FMCSA’s drug and alcohol testing program for the holders of commercial driver’s licenses (CDLs). This rule is mandated by the Agency’s MAP Act.

The Clearinghouse requires that: Employers must query the Clearinghouse for current and prospective employees’ drug and alcohol violations before permitting those employees to operate a commercial motor vehicle (CMV) on public roads. Additionally, employers are required to annually query the Clearinghouse for each driver they currently employ. All employers of CDL drivers must purchase a query plan in the Clearinghouse. This query plan enables employers, and their consortia/third-party administrators (C/TPAs), to conduct queries of driver Clearinghouse records. Query plans may be purchased from the FMCSA Clearinghouse only at https://secure.login.gov. The deadline for making those queries is January 5.

Owner-operators operating under their own authority must also run their first query by the deadline. FMCSA states that any employer who employs himself or herself as a CDL driver must comply with all Clearinghouse requirements imposed on both employers and employees.

DASHCAM VIDEO Renders Eyewitness Incompetent

Video evidence emerging as trump card in lawsuits

Consider this, you’re driving down the road and you hear a loud noise. A motorist just crashed into the back of your truck and was killed. Eyewitness testimony states that you swerved out of your lane and into the motorist’s lane putting you squarely at-fault for the crash. If it goes to trial, it’s highly likely that a jury will find you responsible for the crash and award policy limits to the claimant. If you’re a driver of a larger company, the award could be in the hundreds of millions.

This is a real and active scenario playing out in the state of Florida (Wilsonart, LLC vs the estate of Jon Lopez). However in this case the truck driver had a dashcam that was recording at the time of the crash which contradicts the eyewitness testimony.

In-vehicle dashcams are becoming more commonplace with private motorists and commercial truckers should be weighing the decision to do the same. We’ve all seen first-hand the ability of video evidence (VE) to change/shape opinions such as with the high-profile death of George Floyd and they can help in accident scenes (like the one above) as well.

Evidence in a courtroom is what wins cases and VE is the Ace in the deck. VE can show and often prove fault or innocence instead of simply your word against theirs or in this case false testimony. VE cuts down on fraudulent claims that increase premiums, hurt your loss ratio and your ability to work. VE can also give your insurance company added reason to fight your case in court rather than simply settling the claim without a trial.

In the case above, the judge initially handed down summary judgement (without a trial) in favor of the trucker because of the VE. The dashcam video was presented showing that the driver maintained a straight line of travel and did not swerve into another lane rendering the eyewitness testimony as incompetent evidence. The judge later reversed his decision based on an appeal by the Lopez estate claiming a jury should decide the legitimacy of their witness and expert testimony. However, in the absence of the VE, the trucker would have likely been found 100% at-fault.

This and many other scenarios can be challenged with VE and we feel you should have that tool in your toolbox. For less than $200 you can have a camera installed in your vehicle. Be sure that any camera you purchase has the ability to time/date stamp the video and offers a continuous recording feature. If you do install camera(s), be sure to take action on critical events. If you don’t utilize that data properly, lawyers can use that against you in court.
STAY SAFE!

Comprehensive Safety Program

The existence of your operation doesn’t just depend on profitability

So, your insurance company is pressing you about the details and contacts of your safety program. Do you roll your eyes and think, “Safety Program!!!”, “How can I make this go away so I can just drive and earn a living”, or do you have a meaningful plan in place? A comprehensive safety program is a must for mitigating losses and goes a long way towards portraying you as a responsible carrier that over time reduces the operational risk and protects employees.

From the ever-increasing cost of equipment to sophisticated insurance fraud rings and nuclear jury awards, insurance companies are finding it harder than ever to reduce the financial volatility of a claim. Because of this, it is imperative that you as a motor carrier have controls in place for closely managing the safety of your operation.

Insurance companies are in the business of transferring risk from you to them. How much risk they take is the variable, but it is not a guessing game. Every insurance company has a set of standards that create their preferred risk. Any deviation from that criteria makes you a less common risk and often a less desirable risk which could mean higher premiums, declination or cancellation/non-renewal of your policy(ies). Each at-fault claim that a motor carrier incurs raises the percentage of money paid in premiums compared to money the insurance company pays to settle those claims. Once the insurance company pays out an amount on the carrier’s behalf that exceeds their level of tolerance for that risk, they become less desirable and will surely incur repercussions.

An alarming trend over the past number of years has been the way law firms have used the advertising of large awards to solicit new clients. Especially how those firms portray the trucking industry as reckless and irresponsible. The insurance industry is all too familiar with the trend and is continuously looking for ways to slow the onslaught. The result of those awards materialise as raised premiums, cancelled/non-renewed policies, risk reduction and tighter risk selection by ensuring the client is as risk-free as possible and has a safety program in place.

A recent study by the Transportation Research Institute (ATRI) attempts to make sense of out-of-control jury awards against the trucking industry. Interviewees from the ATRI study generally concurred that the more safety activities motor carriers engaged in to prevent crashes the lower the likelihood that a nuclear verdict would result. It was also commonly noted that motor carriers typically do not allocate enough resources toward safety and crash prevention.

There are many factors that play a role in determining fault and awarding large payouts – many of which are out of the control of trucking companies. Nevertheless, motor carriers need to focus on those areas that they can control such as: meeting/exceeding FMCSRs, equipment maintenance, inspections, citations/violations, cargo securement, driver training, and properly maintaining log books.

Plaintiff attorneys will frame FMCSRs as minimum standards and juries are less forgiving when plaintiffs can document that additional reasonable steps to prevent a crash could have been taken, regardless of compliance with FMCSRs. The ability of defense attorneys to have documented safety activities that exceed FMCSRs carries great weight with juries. This also makes you a better risk in the eyes of an insurance company. According to the ATRI, a key strategy among plaintiff attorneys is to emotionally charge a jury against a motor carrier by painting them as careless and unsafe. However, a motor carrier that has not only met FMCSRs but exceeded them, reduces the ability of the plaintiff attorney to stigmatize them. This is where a safety program can validate responsible safety efforts.

A reasonable and responsible safety program should have appropriate, documented disciplinary actions. Per the ATRI study, in situations where there was any history of alcohol or drug use by the truck driver, it became much easier to convince a jury that the truck driver was at fault for the crash – even when the crash causal factors were unclear or tenuous. So, a responsible action might be to have documentation
that meets or exceeds what is expected before hiring or returning a driver to active duty following a positive test – regardless of time between the test and return to duty.

To begin drafting a safety program, begin by answering some questions you might be asked following a crash such as:

What steps have you taken to ensure your drivers are roadworthy?

What operational, safety or training factors could have prevented the crash from happening?

What actions have you taken following previous crashes?

Do you have training sessions/driver meetings?

Do you have a vehicle maintenance schedule?

Are your pre- and post-trip inspection reports handled properly?

Do you audit logbooks?

Are your inspections clean or are there patterns in violations?

Plaintiff attorneys are not paid by the hour but by the size of the award. Following a crash, you should expect that every aspect of your operation from maintenance to meal breaks will be scrutinized for the sole purpose of applying fault. Be proactive and have a comprehensive safety program in place. If you need help, contact your insurance agent or a loss prevention specialist.

California becomes first state to ban the sale of fossil-fuel burning cars and trucks

What first started in Europe in 2017 has now made its way to the U.S. In a move to accelerate the state’s efforts to combat global warming, California Governor Gavin Newsome announced through executive order that 100% of in-state sales of new passenger cars and trucks, off-road vehicles and equipment will be zero-emission by 2035. Additionally, 100% of medium- and heavy-duty vehicles in the state will be zero-emission by 2045 for all operations where feasible and by 2035 for drayage trucks. According to the International Council on Clean Transportation, seventeen countries including France, the U.K. and Germany have adopted goals to phase out internal combustion passenger cars.
Citing climate change as a crisis that is profoundly impacting California and affecting the health and safety of its residents, Newsome’s executive order requires the State to accelerate actions to mitigate and adapt to climate change. To slow down fossil-fuel production even more, Newsome has called on the state Legislature to ban the use of hydraulic fracturing.
California is not alone in its ambitions. Voicing solidarity with California, Oregon Gov. Kate Brown stated, “I will be following the California requirement and looking into policies here in Oregon to accelerate transportation electrification”. Brown is chair of the Western Governors’ Association which includes governors from Arizona, Colorado, Idaho, Montana, Nevada, New Mexico, Utah, and Wyoming. Governors from the above-mentioned have collectively agreed on creating an Intermountain West electric vehicle corridor to make it possible to drive an electric vehicle across major transportation corridors in the West.
The challenge for the automotive industry is to produce highly functional electrified vehicles by 2035 that will support replacing fossil-fuel vehicles and be affordable to the public. However, the list of things needing to happen for that to become a reality is nothing short of daunting. Below are some
top-of-the-list tasks facing the endeavor and the possibility of success.
1) Increase charging stations throughout the State’s infrastructure and in neighboring states. In view of the Western Governors’ Association pledge, this appears to be well on its way to becoming a reality.
2) Incentivize people to afford/purchase electric vehicles. The ability and desire amongst western states to dish out money when needed or generate money from tax revenue, bonds and hidden coffers has never been a roadblock. For those that will be unable to afford these vehicles, Newsome’s executive order also seeks to increase public transportation options that negate the need for vehicle ownership.
3) Switch to an alternate tax to replace tax revenue from fossil-fuels. A Vehicle Miles Tax (VMT) has been a desire of lawmakers for years, but who never felt the public support to be able to push it through. With a sizeable lead in polls, a presidential win for Biden combined with a generation of environmentally-conscious youth would almost guarantee a VMT in place of a fuel tax in the very near future.
4) Deal with the affects to the oil industry i.e., loss of jobs, loss of business and tax revenues. This is a big hit to the state. California is the 3rd largest oil-producing state (7.1%) with roughly 50,000 people directly employed in the petroleum sector. Support from contributing industries is mixed. A frustrated statement from the Alliance for Automotive Innovation reads “neither mandates nor bans build successful markets”. Automobile makers such as Ford Motor Company, Scion, Honda, Volvo, BMW and Volkswagon are touted by Newsome as being on-board with his order.
5) Convince the remaining states to adopt similar standards and beef-up their carbon-free infrastructure. Considering that 10 western states have signed a memorandum of understanding that pledges to build a West Coast Electric Highway, additional support is surely welcomed but not critical for success. All eyes around the country will be watching and waiting to see if longer battery ranges can be achieved or possibly regional electric highways will need to be built.
6) Upgrade the state’s electrical grid to accommodate more demand. For years, California residents have dealt with rolling electrical blackouts due to increasing demand and utility shutdowns that aim to reduce the likelihood of sparking wildfires. Additionally, some gas-fired power plants have retired due to state and environmental policies – not because of a lack of need. California has not successfully replaced the power generated by power plant closures. Accommodating more demand for electricity will likely require significant changes in the way electricity is generated, used and delivered throughout the state.

$4,923,154 Minimum Financial Responsibility Limit Proposed

7/16/2019 – A bill (H.R.3781 ) has been introduced in the House which seeks to increase the minimum levels of financial responsibility by 556% for transporting property, and would index future increases to changes in inflation relating to medical care.

At a press conference in Washington D.C., Representative Jesus Garcia (D-Ill) proclaimed “we’ve seen how victims, their families, hospitals, and our strained social safety net are forced to foot the bill for irresponsible driving.” Garcia was joined by members of the Truck Safety Coalition and accident victims to announce the bill and to introduce the Safe Roads Act. The legislation would require Automatic Emergency Braking technology as standard features on commercial vehicles.

This is not the first go-around for increasing minimum insurance limits. In April of 2014, the FMCSA examined the appropriateness of the current financial responsibility requirements. The agency concluded that catastrophic crashes involving CMVs are relatively rare occurrences. When catastrophic and severe/critical injury crashes do occur, the costs of resulting property damage, injuries, and fatalities, can far exceed the minimum levels of financial responsibility. Based on that research, the FMCSA announced a Advance Notice of Proposed Rulemaking (ANPRM). After a public comment period and hearing from its own Advisory panel (Motor Carrier Safety Advisory Committee), in November 2014 it withdrew its ANPRM due to insufficient data or information to support an increase.

The newly proposed legislation does not point to any new data to further support its cause. According to Section 2 of the legislation’s text, it finds that increasing financial responsibility is to encourage the carriers to engage in practices and procedures that will enhance the safety of their equipment so as to afford the best protection to the public. Accordingly, it also states that the $750,000 minimum amount set in 1980 equates to $4,923,154 in today’s dollars.

On this subject, the American Trucking Association previously revealed data (through 2012) obtained from the Insurance Services Office (ISO), under nondisclosure agreements, from two of the 10 largest trucking insurers covering all their large truck (over 26,000 lbs) policies. That data showed that only 6.5% of insurance policies for those trucks are written at limits under $1 million, while 83% are written at $1 million, and the remaining 10.5% are written over $1 million. Analyzing the data further, it was found that there is a 1.40% chance of a claim exceeding $500,000, a 0.73% chance of a claim exceeding $1 million, and a 0.31% chance of a claim exceeding $2 million.

EAST – WEST – TRUCK – RAIL

Rough waters ahead!

Currently, modern commercial ships run on fossil fuels which have a high content of sulphur (3.5%) – known to be harmful to humans and the environment. Beginning January 1, 2020 low-sulfur fuel (0.5%) is required for those ships that are not equipped with air scrubbers. The added cost of the new fuel could have serious implications for all modes of delivery around the world. Here in the U.S., the East Coast vs West Coast battle for business is about to heat up.
In 2016, the International Maritime Organization (IMO), the regulatory authority for international shipping, set January 1, 2020 as the compliance date for the reduction in the sulphur content of shipping fuel oil.
Roughly 90% of international trade is carried by the shipping industry where it is delivered by commercial ships to a port of choice (the “long mile”). Once off the ship, that delivery continues over land to long distance destinations often through rail (“middle mile” 15.5% of goods). Shorter distances finish the delivery through the use of trucking (“final mile” 65.5% of goods).
A whole slew of factors go into choosing a port for delivery i.e., the route(s), the direct port cost(s), the size of the ship vs the port, the costs of fuel, rail and truck, and labor issues, etc. Currently, the cost of shipping fuel is estimated around 3% of the value of the cargo. The new low-sulfur fuel is projected to nearly double that cost.
For certain areas of the world e.g. China (the largest importer to the U.S.), delivering to the U.S. West Coast is closer by half than the East Coast. The burn on fuel to the East, as some analysts claim, makes West an easier choice and will divert shipments West. However, considering recent tariff increases on Chinese goods as well as a doubling of the fuel cost, no stone will be left unturned in finding the best routes, modes and efficiencies to complete those shipments. Alternate ports of origin that deliver to the East coast are likely options.
Enter into the equation the Panama Canal.
The Panama Canal benefits when ships choose their locks to travel to the Eastern U.S. and beyond and they are not sitting idly by losing that business. Beginning January 1, 2020, a new set of transit tolls will take place for shippers traversing the Canal’s locks which will incentivize carriers based on the amount of containers they bring.
For container shippers that transit between 1.5-2 million TEU of total capacity in a 12-month period, they will receive a $3 per TEU reduction in tariffs for one month; those with 2-3,000,000 TEU receive a $3.25 reduction; and those exceeding 3 million TEU, a $5 reduction.
While some analysts are adamant that West ports will continue their dominance over East, in spite of the tariff war, Deutsche Bank’s transportation analyst Amit Mehrotra believes otherwise. In April, Deutsche Bank downgraded JB Hunt (JBHT – NasdaqGS) from Buy to Sell based on their research that U.S. import volumes will shift east, shrinking the middle mile and forcing the company to compete with trucking. Mehrotra highlights year-over-year declines in the length of haul for the “middle mile”, substantial infrastructure investments by eastern ports, statistics from companies like JB Hunt and the simple fact that the majority of the U.S. population resides in the East to support his opinion. Mehrotra believes the reduction in middle-mile distance is a trend that will not only send ships east, but favor trucking over rail as it remains a better fit for shorter distances.

Dirty Diesel

Dirty Diesel
Dirty Diesel

Rising levels of carbon dioxide and other greenhouse gases such as methane and nitrous oxides, are fueling the pace of climate change legislation around the world. Those efforts in the U.S. continue to heat up and right now, the trucking industry is directly in the cross hairs.
California is aggressively targeting greenhouse gas emissions from all sources throughout the state, and at the moment the trucking industry’s primary fuel source, diesel, is being labeled “Dirty”.

Senate Bill 44, also known as the Ditching Dirty Diesel bill, is designed to phase out the use of diesel-fueled medium- and heavy-duty trucks and buses in the state over the next three decades. The bill would mandate that the California Air Resources Board (CARB) come up with a plan to reduce greenhouse gas emissions in commercial trucks by 40% in 2030 and 80% by 2050. The bill also requires CARB to develop their strategy for targeted trucks by Jan. 1, 2021. The proposed legislation has far reaching consequences that would include trucks entering California from other states.

The state of Oregon has initiated similar legislation (HB2007) which declares an emergency related to diesel emissions. The bill would require the Environmental Quality Commission to adopt federal diesel engine emission standards for medium-duty and heavy-duty trucks. It would also require truck owners entering into the state to maintain evidence that their engines meet those standards. Taking it a step further, HB2007 would also require certain public improvement contracts to require the use of 2010 model year or newer diesel engines in performance of the contract. The bill would be effective January 1, 2020. But wait, Oregon is not done yet. The state is doubling down on their emergency declaration by simultaneously introducing a greenhouse gas cap and trade program as a compliance mechanism. That legislation would take effect January 1, 2021.

On the other side of the country, a coalition of nine states (Connecticut, Delaware, Maryland, Massachusetts, New Jersey, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington, D.C.) announced their intent to design a low-carbon transportation policy proposal. The proposal would cap and reduce carbon emissions from the combustion of transportation fuels, and invest proceeds from the program into the transportation infrastructure. It also sets a goal of completing the policy design process within one year, after which each jurisdiction will decide whether to adopt and implement the policy.