Issue Update - November 17, 2017
Electronic Logging Mandate (ELD)
The Federal Motor Carrier Safety Administration (FMCSA) announced on December 10, 2015 that it had finalized its rule to mandate electronic logging devices (ELDs) in commercial trucks. The rule requires drivers who currently are mandated to file hours-of-service (HOS) documentation, to do so through electronic means that connects directly to a vehicle's engine.
The rule covers technical specifications for ELDs, clarifies the supporting documentation that is required, and addresses technical provisions aimed at ensuring that the ELDs are not used to harass truck drivers. The actual rule was published the following day, meaning that the implementation date would be December, 2017.
TRALA was disappointed to learn that its formal comments regarding a rental vehicle exemption were not accepted by FMCSA for the final rule. TRALA's key concerns focused on trucks that may be rented to multiple consumer and commercial entities with varying obligations to comply with logging rules. In addition, TRALA expressed concern that different technology platforms used by so many different drivers and companies could be difficult to reconcile with no clear indication by FMCSA as to whether the owner of the vehicle or the operator would be required to maintain that data.
Even though the vast majority of TRALA-member customers would be exempt from the rules (due to the 100-mile and 150-mile radius exemptions), a certain percentage of those customers are mandated currently by HOS regulations. Thus, in effect, the ELD rule could require that every truck in a company's rental fleet be retrofitted and equipped with an ELD to ensure compliance, whether or not the rental customer needs to utilize the technology.
Another concern that TRALA and its members share is that he current technology does not necessarily allow for multiple platforms to be utilized in the same vehicle. Many TRALA members have telematics equipment already installed on their vehicle yet their customers - who under this rule would likely need to have their own portable ELD equipment - may not share that same information. What this means is that information needed by a TRALA member such as collecting miles traveled for IFTA compliance purposes may not work properly if another platform is being utilized by a customer. There is also seasonal rentals that often use multiple drivers and as of now, technology is not perfected to decipher between different drivers for the same vehicle, which means that it may be necessary for every driver - even part-time seasonal ones - to have their own ELD equipment. This could be an overwhelming expenditure for rental customers.
The final ELD rule can be seen in its entirety by clicking here. There is extensive discussion on TRALA's comments specifically starting on page 276.
TRALA's Government Relations Committee held a conference call on March 1, 2016 to discuss the issues that the ELD Mandate presents particularly to rental trucks. After the call, TRALA reached out to its members asking for input on potential exemptions and asked that they be sent to TRALA no later than March 17, 2016.
TRALA plans to meet again with government officials at FMCSA to ask for a specific type of exemption from having to file electronic logs for rental vehicles given the unique nature of their activities. It remains to be seen what that exemption would look like but TRALA's secondary approach will be to ask for a delay in enforcement for rental trucks to ensure that the proper technology is developed and works seamlessly by the time the law goes into effect.
On May 10, 2016 TRALA submitted a formal request to meet with FMCSA regarding the ELD mandate's implications on the industry. In its request TRALA asked that a meeting occur as soon as possible. Due to the short time frame to comply with the ELD mandate the meeting will need to happen soon in order to give FMCSA time to assess the request made by TRALA. TRALA plans to bring in a small group of members as well as some customers who would be most affected by the ELD mandate and the difficulty it poses for short-term rentals.
FMCSA has agreed to meet with TRALA, a few of its members, and another association that has seasonal customers of several TRALA members. The meeting will take place on Friday, June 10. TRALA will summarize the difficulties facing short-term truck rentals with regard to the ELD mandate and ask for an exemption for these vehicles during this meeting.
On Friday, June 10 TRALA led a meeting between the FMCSA and multiple TRALA members as well as another association that has seasonal customers of TRALA members. During the meeting, TRALA outlined the difficulties that the ELD mandate would cause to short-term truck rentals. These issues included interoperability concerns, break-down scenarios, multiple users with various platforms, and how TRALA customers would be able to comply if they are temporary or seasonal customers.
Because of all of these concerns, TRALA formally asked the FMCSA to consider issuing an exemption for all short-term commercial rentals of 30 days or less. FMCSA seemed very receptive to TRALA's arguments and admitted that internally their agency had more discussions revolving around the truck rental side than any other after the rule had been published due to TRALA and other organizations consistently raising questions about how this rule could be implemented given all the issues involving rented trucks.
At FMCSA's suggestion, TRALA agreed to produce two separate exemption requests and petition FMCSA to accept them later this year. The first would be for a simple exemption of rented trucks for less than 30 days. The second would be for an exemption for these trucks for up to five years before enforcement could begin. FMCSA stated that it is common to have simultaneous requests and that TRALA should mention the broader exemption within the five-year enforcement request.
TRALA plans to work over the next few months with its key members, customers, OEMs, and various other stakeholders to coordinate these formal exemption requests by TRALA.
TRALA has begun to formulate a petition to FMCSA asking for a full exemption for all short-term rented trucks, defined as 30 days or less. In addition to the full exemption, TRALA will request a five-year delay in enforcement if a final decision by FMCSA cannot be reached quickly so that there are assurances that regardless of the decision by FMCSA, short-term rentals will not have to comply with the ELD Mandate starting in December, 2017.
In addition to the petition, TRALA met with multiple congressional offices on July 21, 2016 asking that leaders of the Senate Commerce and House Transportation and Infrastructure Committees write to FMCSA supporting the TRALA petition for short-term rentals. The objective of the bi-partisan letters is to illustrate that Congress understands the technological and practical impossibilities that the ELD Mandate would place on these vehicles so as to give political support to FMCSA to render a positive decision on the TRALA petition.
TRALA anticipates the petition to be completed and filed in early September, 2016 and that the congressional letters of support of this petition to follow soon after. Lastly, TRALA will be working with a handful of allies asking that they also send letters of support of the TRALA petition to FMCSA later this year.
Following a handful of meetings between congressional staff and TRALA where TRALA had asked for a bipartisan letter to be sent to FMCSA in support of the petitions TRALA will file, staff asked if a joint call could be set up with all parties involved to better review the issue thoroughly. TRALA organized a conference call with FMCSA as well as House and Senate staff on August 15, 2016. During this call, a few members of the FMCSA team pushed back on the agreed-upon strategy of filing a petition for an exemption for short-term rentals. While this came as a surprise, TRALA and its members were able to counter every argument and issue that was raised from a technical and logistical perspective. Following this meeting, FMCSA reached out to TRALA directly asking to coordinate responses to a handful of questions the agency still had involving TRALA's concerns. They also asked TRALA to attempt to find telematics companies willing to go on the record affirming that the technical concerns TRALA had raised with FMCSA were accurate.
TRALA and member-company Ryder met with Senate Commerce Committee staff on August 31 to walk both minority and majority staff through the entire issue point by point. Senator Claire McCaskill (D-MO) also had staff included in this meeting. The general consensus from staff was that TRALA's petitions were reasonable and that they would work with TRALA to push FMCSA to provide TRALA with the questions that were promised weeks earlier. TRALA intends to use the answers to these questions as part of the focus of its formal petitions to FMCSA later this month. There was no promise of a letter to FMCSA in part because staff felt TRALA's position was so reasonable that they believe the agency may not need it but TRALA has already secured a Republican lead in the House for a letter to FMCSA and it will continue to speak to key Senate offices asking for a similar letter to be sent in support of TRALA's petitions.
On September 8, 2016 TRALA's Government Relations Committee held a conference call to review the latest developments on the ELD issue. During the course of the call, TRALA asked for assistance from some of its members in reaching out to the telematics manufacturers to try and collect a few additional letters (one telematics company has already provided a letter) expressing that not only does the ELD Mandate not work with short-term rental trucks, but that they have no intention of spending the money to try and make their equipment interoperable anytime in the near future.
Immediately following the call, TRALA sent out copies of the telematics company letter to FMCSA as well as a fact sheet on the issue that also provides a "myth vs. fact" section to better help all members of the Government Relations Committee discuss TRALA's goals with both their colleagues as well as their telematics providers.
On September 16, 2016 TRALA met with a representative of FMCSA to discuss TRALA's ongoing push for an exemption from the ELD Rule for short-term rental trucks. During this meeting, the FMCSA representative - who handles the political affairs for the agency - confirmed that he would push the policy shop at the agency to forward to TRALA a series of questions designed to help satisfy the issues involving short-term rental trucks and the use of ELDs. FMCSA had agreed to develop a small list of questions during the conference call held on August 15, 2016. In addition, he promised that TRALA's petitions would get a full review by the entire leadership and that TRALA would receive a "fair" chance at having either the full exemption or the five-year delay in enforcement enacted. There were no promises made but he agreed to help shepherd TRALA through the process.
On September 22, 2016 TRALA received word that in fact FMCSA had no additional questions and that they simply forwarded on information as to how TRALA could file each petition simultaneously. TRALA will finalize the two petitions sometime in the next 2-3 weeks with them both being filed no later than October 15, 2016. TRALA is also working with congressional staff on a letter of support for its exemption petition. The plan is to have a bipartisan letter sent from both Senate Commerce Members as well as House T&I Members to FMCSA supporting TRALA's petition. TRALA has already scheduled meetings with multiple congressional offices within in the next two weeks.
On a completely separate matter, Canada is following the lead of the U.S. and announced their plan at Transport Canada to finalize an ELD rule sometime in 2017. Before that, they had asked for comments from stakeholders on the merits of the rule. Usually with cases such as this, Canada aligns itself with the U.S. exactly so that cross-border issues are not problematic and TRALA anticipates the same for the ELD rule.
Because of this, TRALA issued preliminary comments with corresponding background documentation as well as the telematics letter that expressly agrees with our petition for an exemption for short-term truck rentals. The process at this point is much less formal in Canada but TRALA is working with its Canadian lobbyist to maintain an active dialogue with the Canadian government as it moves forward with an ELD rule.
You may view TRALA's exemption request submitted to Transport Canada by clicking here
You may view a fact sheet and background on the ELD mandate by clicking here
You may view a letter written by Teletrac Navman, supporting TRALA's exemption request by clicking here
On October 31, 2016 the U.S. Court of Appeals for the 7th Circuit denied a challenge of the Federal Motor Carrier Safety Administration's (FMCSA) Electronic Logging Device (ELD) rule. The challenge was filed by the Owner-Operator Independent Drivers Association (OOIDA), which had challenged the rule on multiple accounts including a failure to provide an adequate cost-benefit analysis, violation of the Fourth Amendment, harassment of drivers, and lack of automation. The court ruled against OOIDA on all of its claims, making it difficult for OOIDA to proceed with further court challenges to the rule. You may view the entire decision by the 7th Circuit by clicking here.
On November 1, 2016, TRALA submitted two formal petitions to the Federal Motor Carrier Safety Administration (FMCSA) requesting relief from the recently finalized Electronic Logging Device Rule (ELD) that is set to go into effect in December 2017. TRALA filed both an exemption petition as well as a five-year delay in enforcement petition from the ELD mandate for short-term rental trucks, defined as 30 days or less, due to technical and logistical concerns. TRALA believes the ELD mandate would be unworkable for this small but important sector of the trucking industry.
In its petitions, TRALA cites the technical reality that ELDs are not interoperable across multiple telematics platforms currently. This has caused TRALA members that use their own ELDs to track mileage and fuel usage for IFTA and IRP reporting to often lose their own data when a customer uses a different ELD platform for the rental truck. Another concern raised in TRALA's petitions is in regard to a breakdown. Whether leased, rented or owned, if a truck breaks down, a TRALA member often is hired to provide a temporary replacement vehicle. In this scenario, there is no way to capture the last seven days of hours-of-service (HOS) reporting required to operate the truck if the replacement truck's ELD is unable to access data from the original truck's platform. Lastly, the lack of interoperability would require seasonal and short-term customers that must keep track of their hours to purchase year-long ELD subscriptions even if their rentals occur once a year for less than 30 days. This is neither cost effective nor practical for the rental customer and it puts small businesses at a huge disadvantage.
TRALA's exemption requests would allow for commercial rental trucks which are not covered by the 100-mile or 150-mile radius exemptions to continue to use paper logs when reporting their HOS. Because the exemption would only apply to short-term rentals, the driver would be able to show a valid rental agreement as proof during a road-side inspection and then the inspector would know to look at the paper log. This would save time during an inspection and remove any doubt as to why the driver was using paper logs because there are already rules in place for trucks under a rental agreement for 30 days or less that law enforcement utilizes.
While there is no definitive timetable in place, TRALA has asked for an expedited review given the fact that the enforcement date is only a year away.
To view TRALA's petition for exemption, please click here.
On November 17, 2016, TRALA received word from the Federal Motor Carrier Safety Administration (FMCSA) that they would consider TRALA's petition to the ELD rule and that they would place TRALA's petition in the Federal Register and ask for comment. The formal comment period will last for 30 days once the petition has officially been published in the Federal Register. After receiving comments, FMCSA will then consider those comments along with its own internal review and make a final decision sometime likely within the first few months of 2017.
The fact that FMCSA responded so quickly to TRALA's petition could bode well for its acceptance but only if the agency hears from truck companies, manufacturers, customers, and industry partners. On November 21, 2016 TRALA sent out an email to its membership informing them that TRALA's petition will be published in the Federal Register and encouraged them to submit letters to the FMCSA supporting TRALA's exemption request.
TRALA provided its membership a sample letter to send to FMCSA. You may find the sample letter by clicking here.
This sample letter is simply a template to get TRALA members started. It is critically important to make sure that letters are personalized in such a way as to explain every member's company - i.e. the size, number of employees, the type of business , etc. - and then how this ELD Mandate could impact each business unless FMCSA adopts the petition filed by TRALA.
As of December 2, 2016, the petition has not been posted in the Federal Register however it could be any day. TRALA is encouraging each of its members to begin the process of writing their letters now and when the comment period opens, TRALA will inform its members of the notice. Once the notice has been published, letters can be finalized (with specific reference to the docket number, contact person, etc.) and electronically sent to FMCSA immediately. TRALA will provide all the necessary specifics to its members once the petition is placed in the Federal Register.
Lastly, TRALA recommends that its members share the sample letter with any of its seasonal, short-term, and over-flow customers that would be impacted by this mandate. Having letters from customers is just as important as from truck companies. The sample letter obviously would need to be altered by TRALA members' customers but many of the key arguments are in the sample letter for them to get started.
TRALA received word from FMCSA on January 12, 2017 that our petition would likely be placed in the Federal Register within the next three weeks. Once that occurs, TRALA will send out a notice to all its members asking that they put letters of support into the docket and urge their customers to do the same. There will only be 30 days to comment so TRALA will be focused on organizing the grassroots effort to ensure several companies and other industries and associations support the petition.
On January 20, 2017 President Donald Trump issued a memorandum placing a freeze on all new or pending regulations from all federal agencies. The memorandum instructed all federal agencies to hold all pending regulations for 60 days, which should give the administration time to review all pending or recently released regulations. While technically this hold does not need to impact the ELD Mandate rule, it has caused most issues at the agency to grind to a halt and in turn has delayed TRALA's petition from being published for comments. With significant turnover and new personnel arriving at FMCSA, as well as the agency still being without an Administrator, very little has come out of their offices for publication.
That being said, TRALA has had multiple conversations with current staff at FMCSA regarding its petition which was set to be published around the time the Trump Administration took office. In these conversations, TRALA has stressed the importance of a timely publication in the Federal Register in order for the FMCSA to review all comments and issue a final ruling with enough time for TRALA members to adjust before the ELD rule is set to go into effect in December of 2017. TRALA remains cautiously optimistic that its petition will be approved by the Trump Administration, once it has gone through the official process.
After reaching out to the Secretary's office at the Department of Transportation on March 8, TRALA received a response the next day from Secretary Chao's liaison to the FMCSA. The staffer asked to speak directly with TRALA on March 10 to get a better understanding of its petition that is being held up currently. Following this discussion, the staffer agreed to reach out to FMCSA officials to ask the status of TRALA's petition in an attempt to speed up the process.
TRALA's petition asking for a five-year enforcement exemption from the ELD Mandate for short-term rentals was published in the Federal Register by the FMCSA on March 22, 2017.Now that FMCSA has published TRALA's petition, there is a 30-day period in which anyone may issue comments in support or opposition to the petition. It is critical for all TRALA members, their customers, and allied companies and associations that use rental trucks to issue supportive comments as soon as possible. TRALA sent out a notice to all of its members immediately following the publication of its petition with a sample letter to be used as a template for those willing to send in comments.
In discussions with FMCSA the week of March 27, TRALA was told that once the comment period is completed on April 21, the agency would likely take between 30-45 days - if all goes smoothly - to determine whether or not to accept TRALA's petition, which means a final decision could be reached as early as June 1.
The Public Comment period for TRALA's exemption petition from the Electronic Logging Device (ELD) rule closes at 11:59 PM today, April 21. 2017. As of this morning, there are 287 total comments with only 6 comments opposed to TRALA's petition and the remaining all in support.
The vast majority of comments in favor of TRALA's petition only strengthen TRALA's argument for granting the exemption. TRALA was able to secure letters of support from some of the industry's largest and most influential associations and related groups that include the American Trucking Associations, the National Tank Truck Carriers, the American Truck Dealers, and the National Private Truck Council, among many others.
Once the public comment period has closed, TRALA expects the agency to spend 30-45 days to consider all comments before issuing a decision to grant TRALA's exemption request or not.
The Public Comment period for TRALA's exemption petition from the Electronic Logging Device (ELD) rule closed Friday, April 21, 2017. The final tally resulted in over 300 total comments with only approximately 10 comments in opposition to TRALA's petition.
Since the comment period has now closed, the agency is expected to spend 30-45 days considering all comments before reaching a final decision. TRALA has reached out to its contacts within the Executive branch of the government to urge their support and to push for an expedited ruling on the petition. TRALA hopes to have an answer to its exemption request by the end of June.
TRALA spoke to FMCSA's counsel the week of June 5 who informed TRALA that its petition is currently under review. She told TRALA that the hope was to have a final decision within 3-4 weeks but if nothing was announced within that time frame, she would help push the policy team at FMCSA to reach a decision as soon as possible given the time-sensitive nature of the mandate. TRALA has not been given any indication how the agency is leaning.
TRALA received word from one of the career employees at FMCSA on July 6, 2017 that the decision on whether to grant TRALA's ELD petition could take "four to six additional weeks." TRALA responded that with time running out until the December deadline, an answer needed to be given sooner or risk disrupting the entire trucking industry. Immediately following this, TRALA reached out to congressional staff, the counsel for FMCSA and its allies in an attempt to place pressure on the decision-makers over at FMCSA to make a formal decision on the TRALA petition quickly, particularly if the agency were to deny the petition outright.
The Commercial Vehicle Safety Alliance (CVSA) announced on August 28, 2017 that Commercial vehicle inspectors may issue citations to motor carriers operating vehicles without electronic logging devices beginning December 18, 2017 but will not place vehicles out of service until April 1, 2018. However, a failure to have an ELD installed in a commercial vehicle by December 18, 2017 still will result in points being assessed on a motor carrier's Compliance, Safety, Accountability program safety measurement system profile. The phased-in enforcement is intended to allow motor carriers to adjust to the new requirement and at the same not disrupt the flow of freight by placing drivers and vehicles out of service. CVSA said that some aspects of the phased-in enforcement may vary by jurisdiction. Some states may issue citations, while others may fine carriers without ELDs.
TRALA met with congressional staff regarding its petition to FMCSA during the August recess. Congressman Sam Graves' office personally reached out to the agency for a timeline for a decision to be made and let FMCSA know that the Congressman, among many others, supports TRALA's petition. In addition, TRALA reached out to both the agency's general counsel as well as its legislative affairs director urging that they make a decision on TRALA's petition soon. TRALA lobbied for their support of its petition cautioning that if denied, the entire trucking industry could be faced with significant issues resulting from the interoperability concerns that ELDs would face particularly for replacement and over-flow rental vehicles. TRALA was told a decision on its petition should be announced within the next few weeks.
TRALA had discussions with both career and political operatives at FMCSA during the week of September 18-22. TRALA once again urged the agency to make a final decision on its ELD petition. TRALA also reached out to allies to help make this a priority for the trucking industry. Through back channels, TRALA was told that its petition now sits at the Chief Counsel's office for final approval/denial. Although multiple people were told no decision had been made, those same sources told TRALA that a decision should be finalized within the next two weeks. Those same sources said that the counsel's office would not give any indication on whether they were leaning toward granting or opposing TRALA's petition.
TRALA met with FMCSA on October 5 to discuss the final decision on TRALA's petition for short-term rental trucks. The result of this meeting - which was given to TRALA in advance of the formal ruling - was a partial victory and partial defeat. According to FMCSA, they will grant break-downs the ability to not use ELDs for up to eight days, keeping consistent with other parts of the mandate. They will not grant non-break downs relief from the mandate but stated that because of the interoperability issue that persists, they will allow the last seven days of HOS for a driver to be printed out or downloaded and put into a rental truck and then that driver would be allowed to use the rental company's ELD or use a portable device they brought with them for the rest of the rental period.
TRALA is concerned about the administrative burden this will place on many of its members' customers in addition to the predictable confusion that it will place on law enforcement personnel. It also essentially means that all TRALA members would be advised to purchase ELDs for all their trucks that might be used as commercial rentals.
In response to TRALA's concerns and technical questions, FMCSA agreed to hold a conference call within the next two weeks with TRALA's membership so that the agency can answer very specific questions. TRALA was told that if technical information was brought to light that they could not solve, they would be open to looking at addressing that subsequently to their official ruling on TRALA's petition.
TRALA will send out a notice to its entire membership within the next few days regarding the date and time for this conference call with FMCSA.
TRALA hosted a conference call with FMCSA on October 19 to answer specific questions regarding the ELD Mandate, TRALA's petition, and what steps members can take to be in compliance by December 18, 2017 when the ELD Mandate officially becomes law. Issues involving technical concerns, enforcement, truck break-downs, and many others were discussed at length. The one issue that was not resolved was the most important one facing TRALA members - interoperability of ELD platforms. FMCSA was very clear that they decided when they produced the rule not to address this issue and now that the rule was being implemented, they had no intention of making any concessions or coming up with a national solution to help carriers that need to move between two or more different platforms. TRALA members pointedly mentioned this was why the association had asked for a 30-day exemption rather than only 8 days. FMCSA's General Counsel, Randi Hutchinson, said that TRALA would be welcome back to her office to discuss ongoing issues in hopes of finding a better way for rental trucks to abide by their decision but it remains unclear what options would be available to TRALA members since its 30-day exemption was only partially granted.
TRALA plans to hold a conference call with its Government Relations Committee the week of October 23 to discuss next steps and a strategy for going back in to speak to the political operatives at FMCSA who have stated on the record - and reiterated on the conference call - that they do not want to adversely impact businesses that use ELDs.
LATEST ACTION: TRALA met with the leadership of FMCSA on November 16, 2017 to further the discussion on how to gain more time to address the problems facing the truck rental industry as it pertains to the ELD Mandate. Joining TRALA were representatives from Ryder as well as from the US Chamber of Commerce, American Trucking Associations, and American Truck Dealers who represent many of our customers. The meeting reviewed all that TRALA members had been doing to try and comply with the December 18 deadline and how unrealistic it would be to expect a seamless transition to ELDs for rental trucks by that time.
During the meeting, TRALA asked the agency to grant short-term rental trucks a waiver from enforcement for 90 days - which would effectively take our industry until March 18, 2018. In addition, TRALA and FMCSA discussed the potential for filing a much shorter petition asking for even more time if TRALA - after speaking to its membership - feels that its members are unlikely to have all the issues addressed involving interoperability figured out by March 18. TRALA discussedanother 3-9 months from the March 18 time frame. While FMCSA did not officially grant TRALA's request for the waiver during the meeting, TRALA feels confident its rental companies will gain the 90 days sometime in the next two weeks. If that happens, after speaking to its leadership and other TRALA members to determine the need for more time in delaying the ELD Mandate for short-term rental trucks, TRALA will begin formulating a new petition sometime in December so that it is sent to FMCSA in January.
Comprehensive Federal Tax Reform
The Obama Administration and Congress have both publicly stated that comprehensive tax reform is needed as soon as possible. The Administration released a blueprint for tax reform that focused solely on corporate taxes while many in Congress have tried to include individual rates and expenditures into the discussion and debate so that any kind of tax reform is truly comprehensive.
To date, the Administration has either said specifically or let it be known to Hill insiders that it would like to close some "loopholes" it sees as troubling - many of which are vital to the TRALA members, their customers and the truck transportation industry. Issues including accelerated depreciation, the ability to deduct interest when utilizing debt financing, and LIFO accounting have all been targeted by the Obama Administration as "loopholes" that need elimination. In return, the Administration would like to focus on cutting traditional C-Corp tax rates but force many pass-through companies to file as a C-Corp as well, thus placing family-owned businesses into the world of double-taxation. In Congress, particularly in the House, the focus will be more on creating a level playing simplifying the tax code, and protecting small businesses.
To view TRALA updates on tax reform throughout 2013-2015 please click here.
On December 15, 2015 leadership of both the House and Senate announced an agreement on an omnibus bill which funds the government until October of 2016 and extends several expiring tax provisions. Congress took up the measure almost immediately with the House passing the tax extenders on December 17 by a wide margin and then the spending part on December 18. The Senate took up the combined spending and tax extenders package on December 18 and passed both parts cleanly. Passage of this legislation avoids having to retroactively reauthorize many expired tax provisions next year, saving time and effort for companies, including many TRALA members, which rely on some of these provisions.
The tax package part of this large omnibus bill makes several expiring tax provisions permanent, while extending other provisions through 2019. TRALA was pleased to see Section 179 expensing made permanent at $500,000 and $2,000,000 as well as indexing these levels to inflation. TRALA had worked with many of its allies urging Congress to include this provision in a final bill. Another key tax issue for TRALA members is the rule for S-Corporations - which requires them to hold on to assets for 10 years to avoid paying a tax on built-in gains - was changed by reducing that time to only five years and it was made permanent. Additionally, Congress extends the use of Bonus Depreciation through 2019 with a 50% depreciation for 2015-2017 and then a reduction in that level to 40% in 2018 and 30% in 2019.
The omnibus spending bill included several policy riders which had been stalled in Congress but made their way into the final legislation. Unfortunately, TRALA-supported provisions regarding joint-employers and a proposed rule from the Department of Labor on the expansion of overtime pay were not included. That said, the omnibus did include language requiring FMCSA to establish a safety and health standard for truckers before they can re-establish rules for Hours-of-Service restarts.
Many in Congress had stated that getting many tax extenders made permanent would help jump-start negotiations on a broad comprehensive tax reform bill. TRALA remains skeptical that anything substantial will happen until 2017 when a new Administration comes into office but TRALA does expect significant negotiations to begin in earnest with congressional staff in 2016 as they craft a blueprint for comprehensive tax reform.
On March 3, 2016 TRALA participated in a meeting with staff for Senate Finance Committee Ranking Member Ron Wyden (D-OR) regarding potential changes to the Modified Accelerated Cost Recovery System (MACRS) and Like-Kind Exchanges (LKEs). The committee staff briefed TRALA and other stakeholders on their proposals and requested input from those involved in the meeting. Their proposal is still in the working stages and committee staff is not ready to commit to a full proposal as of yet, but the plan would focus on the pooling of assets similar to a plan proposed by former Chairman Max Baucus (D-MT) during the last Congress a few years ago. TRALA argued that LKEs and MACRS are essential to the ability of TRALA members to operate their business efficiently and to continue to replace older trucks with newer ones once their effective life-span has been met and that it remains skeptical of any change to the current system unless rate reduction is part of the overall plan.
On April 13, 2016, TRALA attended a breakfast meeting with the Chairman of the House Ways and Means Committee Kevin Brady (R-TX). The meeting focused on comprehensive tax reform, specifically Like-Kind Exchanges (LKEs). TRALA and other industry stakeholders stressed the importance of maintaining LKEs, which are imperative for reinvesting in new technology. Additionally, it was stressed that any tax reform needs to be beneficial for pass-through corporations which the Chairman made it a point to agree to. During this meeting, the Chairman noted that there could be some form of a tax proposal introduced by the committee prior to the August recess.
On April 24, 2016 TRALA received a Discussion Draft from Senator Ron Wyden (D-OR), Ranking Member of the Senate Finance Committee on proposed changes to Like-Kind Exchange and Modified Accelerated Cost Recovery Systems (MACRS). This proposal was similar to what the staff had briefed TRALA and other affected members on in March. The Discussion Draft focused on consolidating MACRS and LKEs into 6 pools rather than depreciating property individually. The goal of the proposal is to allow all businesses to take advantage of MACRS and LKEs, which Senator Wyden feels many businesses find the current process too complex for small businesses to use. TRALA sent the proposal to its Tax Advisory Council and Board of Directors on April 27, 2016 asking for feedback on how the new pooling method would affect its companies.
On May 10, 2016 TRALA and other members of the Like-Kind Exchange Coalition sent a letter to the Senate Finance Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR). The letter urged the committee to maintain Like-Kind Exchanges in their current form when the committee begins to work on comprehensive tax reform. The coalition felt it necessary to send a letter supporting the current structure of Like-Kind Exchange after receiving the pooling proposal from Ranking Member Wyden. You may view the letter sent to the Senate Finance Committee by clicking here.
On June 15, 2016 TRALA and members of its Executive Committee met with over 20 Congressional offices to discuss the importance of preserving current methods for Like-Kind Exchange (LKE) and Modified Accelerated Cost Recovery Systems (MACRS). Many of these meetings were with Members and staff serving of the House Ways and Means Committee, including a meeting with staff for the Chairman of the Committee, Kevin Brady (R-TX). In these meetings, TRALA and its members stressed the important role both LKE and MACRS play in the operation of their businesses and that changes to these provisions would a dramatic effect on TRALA members' ability to operate their business efficiently.
On June 24, 2016 the Chairman of the House Ways and Means Committee Kevin Brady (R-TX) released "
A Better Way" which is his tax reform proposal. This proposal is focused on reducing the administrative burden of filing taxes by simplifying the code in order to create growth. As expected, this proposal is not on a granular level but rather an outline. This tax proposal does not include a National Sales tax or a Value-Added Tax (VAT) as a means to generate revenue and lower overall rates. Additionally, the plan does include specific proposals for both rates on corporate and individual filers, and the treatment of certain high-profile tax provisions.
On the individual tax side, the proposal compresses the current 7 tax brackets into three rate brackets for individuals at 12%/25%/33% and sets S-Corporations and other pass-through entities filing individually at 25%. By setting pass-throughs at 25%, those successful companies will no longer be required to pay at the top individual rate which is currently 39.6%. This proposal would repeal the Estate Tax, repeal the individual Alternative Minimum Tax (AMT) and it includes a 50% exclusion rate for capital gains. This would mean that capital gains are paid at rates of 6%/12.5%/16.5% based on your income bracket.
On the corporate side, this proposal would lower traditional C-Corporate tax rates to 20%, which would allow C-Corporations to have a lower rate than S-Corporations. Additionally, this proposal would repeal the corporate AMT, allow for 100% expensing of business investments except for land, eliminate the deduction for net interest expense, and eliminate "special interest" deductions and credits. The proposal does not go into detail as to which deductions and credits would be eliminated, but discussions with Chairman Brady in the past have focused on maintaining deductions and credits which promote economic growth.
One of the areas TRALA has been extremely active in is the preservation of Modified Accelerated Cost Recovery Systems (MACRS) and Like-Kind Exchange (LKE). This proposal eliminates the amortization tables and recovery systems and instead would allow a TRALA member to immediately deduct the total cost of the truck. It is assumed that since business investments will be allowed to be expensed at 100% there would be no need to defer taxes on reinvestment since a business would immediately expense 100% of the new investment. This new expensing model would be available for both tangible property like trucks and intangible property such as intellectual property; however land would not be able to be expensed at 100%.
TRALA believes that no tax reform bill will move in Congress this year however tax reform could very well move within the first 100 days of the next presidency. Because TRALA must be prepared for possible movement on tax reform early in 2017, it sent out this proposal to its Tax Advisory Council and Board of Directors on July 7, 2016 asking for comments later this summer.
You may view the full proposal from the House Ways and Means Committee by clicking here.
On November 29, 2016 TRALA along with other members of the Like-Kind Exchange (LKE) coalition, sent a letter to the Transition Team for President-Elect Donald Trump. The letter encourages the President-Elect to retain Section 1031 of the Internal Revenue Code as it currently operates, which allows for unlimited deferral of gain. The letter further expands upon the importance LKEs have had on business and the negative effects of eliminating LKEs. Due to President-Elect Trump's background in real estate, it is likely that he is well aware of the importance of LKEs on real estate, but it is also important to let him know the broad range of industries which use LKEs. You may view a copy of the letter TRALA and the coalition sent to the Trump Transition Team by clicking here.
During his campaign and since his election, Donald Trump has consistently mentioned comprehensive tax reform as one of his main policy goals as president. It is expected that any plan offered by the Trump Administration will focus on lowering marginal rates for businesses and individuals while broadening the base of taxpayers by eliminating tax credits and exemptions. Depending upon how far the administration wants to lower the rates determines how many credits and exemptions would need to be eliminated. This sentiment was echoed by Steve Mnuchin who has been nominated by Trump to be the next Secretary of the Treasury. Mnuchin has not gone into the details of the plan he will push for on taxes but has said that the plan will lower rates and eliminate credits and exemptions, and he will work with Congress to identify the exemptions and credits to eliminate.
TRALA has participated in several meetings with Members of Congress and staff regarding tax reform, including the treatment of Like-Kind Exchanges (LKE) and Modified Accelerated Cost Recovery Systems (MACRS). These discussions have focused on the importance of preserving the ability to use both tax expenditures in any tax proposal which may come from the White House or Congress. Tax reform is viewed as a major goal of the Trump Administration and TRALA expects plans to be released on tax reform sometime in the next few months.
On April 26, 2017 President Donald Trump released his proposal for comprehensive tax reform. President Trump's plan seeks to dramatically lower rates for corporations, small businesses, and individuals while eliminating most credits and deductions. Though the plan does not provide many details, there were issues that the Trump Administration focused on which included: lowering rates for C Corporations and S Corporations to 15%,creating a territorial tax plan for foreign income, and repealing the 3.8% Obamacare tax on investment income. For individuals, the plan would consolidate the seven current brackets into 3, and lower the top individual rate from 39.6% to 35%, with the other brackets set at 25% and 10%. Additionally, it would eliminate the Estate Tax, the Alternative Minimum Tax, and the deduction for state and local taxes.
On April 26, 2017 TRALA attended an event for Rep. Dave Schweikert (R-AZ) which also included House Ways and Means Chairman Kevin Brady (R-TX). Given the release of the Trump tax plan that day, Chairman Brady provided TRALA and others in attendance with some details on the next steps forward. Chairman Brady maintained that the White House, House, and Senate were working together on filling in the details of the plan so that tax reform could move quickly once a bill is introduced in the House. Additionally, Chairman Brady mentioned that outstanding issues that were mentioned in the House blueprint including full expensing of assets, interest deductibility, and other expenditures are still being worked on.
On May 3, 2017 TRALA's Tax Advisory Council (TAC) held a conference call regarding one issue in particular that TRALA has concerns could be impacted negatively by the upcoming tax reform legislation being developed in Congress. The issue is interest deductibility and how critical debt financing is for TRALA members. In last year's House Blueprint, the ability to deduct interest was eliminated but language within the Blueprint said new rules would be implemented for banks and leasing companies to address this change. Those rules were not spelled out at all. Because of this, TRALA recommended to the TAC that it is likely time to meet with high level staff and Members of Congress to either lobby to retain interest deductibility or to help craft the rules that would impact leasing.
Following the call, TRALA sent out a notice to TAC and Government Relations Committee members asking for volunteers to serve on a "Tax Reform Working Group" that will meet via conference call regularly over the next few months to determine what steps to take to ensure the truck renting and leasing industry is protected.
On May 16, 2017 TRALA held its initial call of the Tax Reform Working Group. The call focused on the steps the coalition will need to take, including whether or not to hire an outside tax expert, to address the issue of interest deductibility. During the call, it was decided by the coalition to move forward with bringing in an outside consultant. TRALA set up meetings with two highly-regarded tax consultants to discuss interest deductibility, and what the costs and benefits could be for TRALA. TRALA has also begun to engage with Members of Congress on the issue directly, discussing the issue with Senator John Thune (R-SD) and Congressman Pat Meehan (R-PA) the week of May 15. Both Members serve on either the House Ways and Means or Senate Finance committees which will oversee the deliberations on comprehensive tax reform in the coming months. TRALA also plans to speak to Members of Congress and their staff during TRALA's Executive Committee Fly-In event on June 7.
TRALA set up meetings the week of May 22 with two highly-regarded tax consultants to discuss interest deductibility, and what the costs and benefits could be for TRALA. TRALA expects to make a final decision on which consultant to move forward with sometime in the first two weeks of June.
TRALA entered into a one-year agreement with Ken Kies and the Federal Policy Group during the week of June 5. The Federal Policy Group will represent TRALA before Congress and the White House in deliberations that are ramping up with regards to comprehensive tax reform. Ken is a former Chief-of-Staff for the Congressional Joint Committee on Taxation as well as Co-Managing Partner of the Washington National Tax Services office of PricewaterhouseCoopers. Ken's relationships and contacts on Capitol Hill are significant and he already understands the issues facing TRALA, particularly the issue of interest deductibility.
Kies met with the TRALA Executive Committee on June 8 to introduce himself and give an overview of tax reform and the possibilities of having Congress pass major tax legislation in the next 12 months. It was agreed at this meeting that Kies would, through his expertise and knowledge of the inner workings of tax reform, produce parameters for which members of the TRALA Tax Reform Working Group could input potential tax changes into their own businesses in order to model likely results from these changes in order to determine their impact. Subsequently, TRALA met with Kies and it was decided to hold a meeting on July 17 in Washington DC which would be open to members of the TRALA Tax Reform Working Group to discuss findings in order to better decide a strategy going forward in dealing with Congress and the U.S. Treasury.
TRALA's Tax Reform Working Group met with the Federal Policy Group on July 17, 2017 to discuss probable tax reform items that are being deliberated behind closed doors on Capitol Hill. After going through the status of tax reform legislation, members were asked to evaluate the impact of losing interest deductibility if a new tax plan lowered corporate rates, gave up-front full expensing, and lowered individual rates as well to help pass-through entities. Following the four-hour meeting, TRALA's consultant Ken Kies promised the working group that he would provide new modelling information by the end of July so that they can get a better sense of how this would work with individual companies. Following the release of the new modelling information - expected to be on Monday, July 31, 2017 - TRALA will host a conference call sometime in August to flush out results and determine a strategy going forward to ensure our industry is protected.
TRALA's Tax Reform Working Group held a conference call on August 22, 2017 to review modelling performed by the Federal Policy Group with regard to interest deductibility and other probable tax changes to determine the impact those would have on the truck renting and leasing industry. Following the call, TRALA and the Federal Policy Group met with congressional staff over at the House Ways and Means Committee to discuss a plan for moving forward and what they would want from TRALA in order to help facilitate more dialogue as they begin the writing process for the House tax bill. The meeting was very successful and the result was to consider sharing with the tax-writing staff the modelling done by the Federal Policy Group to show what portion of a lease should be considered interest and therefore exempt from future taxes.
On September 7, 2017 the TRALA Tax Reform Working Group met again via conference call to discuss the final modelling numbers and what the strategic plan would be for lobbying Congress for acceptance of its plan. Following this call, TRALA and the Federal Policy Group plan to follow-up with the tax-writing staff on Capitol Hill and urge their adoption of special rules impacting lease or rent payments as they pertain to interest deductibility - but only after a final proposal is sent to the Working Group by the Federal Policy Group with input required by COB September 12, 2017.
TRALA's Tax Reform Working Group had another conference call on September 12, 2017 to sign-off on the strategic plan set forth by the Federal Policy Group. After unanimous support of the modelling and strategy described by Ken Kies, TRALA's official rules for interest deductibility were sent to the House Ways and Means Committee staff on September 14 for their review. TRALA anticipates lobbying the staff with the Federal Policy Group over the next few weeks as tax reform legislation continues to be drafted by staff. The goal is to have TRALA's language and formula as part of the initial draft legislation whenever it is officially introduced later this year.
On September 27, 2017 a tax reform framework was released. This framework was an expansion on the first statement of principles put out by the Trump Administration in April. Though short on key details, the framework focuses on reforming the tax code for individuals, corporations, and international businesses. The main goal is to eliminate tax preferences and lower rates for corporations, and individuals. The framework seeks to consolidate the current 7 tax brackets for individuals into 3, with rates set at 12%, 25%, and 35% however the framework does not yet determine where the income levels will be set for these rates. Additionally, the framework seeks to lower the corporate tax rate down to 20%, which is higher than the initial goal of 15% set out by the Trump Administration but still significantly lower than the current 35%. In addition, the plan aims to lower the rate for S-Corporations to 25%.
TRALA had been focusing on 4 key areas of tax reform, interest deductibility, Like-Kind Exchanges (LKEs) coupled with Modified Accelerated Cost Recovery Systems (MACRS), elimination of the Federal Excise Tax, and ensuring that S-Corporations were treated fairly in comparison to traditional C-Corporations. Of particular focus has been the issue of how to treat interest for renting and leasing companies. On that issue, TRALA was pleased that the language used in the framework was consistent with what it has been hearing from its meetings with Ways and Means staffers. The framework calls for the limitation of interest deductibility and said that it will consider the treatment for net interest. Additionally, the framework is silent on how interest from lease/rental income shall be treated but TRALA has been working with congressional staff through the Federal Policy Group to educate and explain TRALA's specific proposals on the subject.
On expensing, the framework mirrors language in the tax blueprint released last year, which proposes replacing MACRS with immediate full expensing of depreciable assets which are not buildings. TRALA supports this proposal as it would simplify the process of depreciation. The framework lowers the rate for S-Corporations to 25%, which though still higher than C-Corporations (set at 20%) it still maintains competitiveness for pass-through entities. Finally, the framework is silent on the Federal Excise Tax, and overall solvency of the Highway Trust Fund. TRALA continues to take meetings with Members of Congress and their staff to urge them to fix the Highway Trust Fund, and eliminate the FET as a part of comprehensive Tax Reform.
Congress has mentioned wanting to take an aggressive timeline with passing tax reform, hoping to have the bill signed by President Trump before the end of the year. TRALA remains skeptical that Congress can meet such an aggressive deadline, but it will continue to discuss its goals for tax reform with members of both the House and Senate as discussions continue to heat up.
TRALA's Tax Reform Working Group will hold a call on Monday, October 23 to receive an update from Ken Kies on the latest developments on federal tax reform as well as what he has heard regarding TRALA's proposal to have special rules written with respect to interest deductibility for renting and leasing.
On October 19, 2017 the Senate approved a budget resolution for fiscal year 2018. The budget authorizes funding levels for the government and allows for the House and Senate Appropriations Committees to begin the process of funding the government for 2018. The Senate budget also includes instructions for budget reconciliation of a $1.5 trillion increase of the budget stemming from tax reform. The House has indicated a willingness to just pass the Senate budget rather than having its own budget brought to the floor for consideration. This would avoid the need to go to a conference on both the House and Senate budgets, which could slow down the legislative process. Having a budget in place is essential for Congress to begin debate on comprehensive tax reform. Due to the Senate Reconciliation process a bill which meets the reconciliation rules in the Senate budget can avoid a filibuster and be brought to the floor of the Senate and pass with only 51 votes. Since Senate Democrats have indicated that they will not support any tax reform proposals being considered by Republicans, the only way Congress can pass tax reform is through the use of Budget Reconciliation.
LATEST ACTION: On November 2, 2017 the Chairman of the House Ways and Means Committee Kevin Brady (R-TX) released H.R. 1, The Tax Cuts and Jobs Act. The bill seeks to comprehensively reform the United States Tax Code for the first time in 30 years, by consolidating tax brackets, eliminating tax credits, and lowering rates for C-Corporations and pass-throughs. You may view H.R. 1 by clicking here. Subject to the reconciliation rules included in the budget, a tax bill can only be passed with 50 votes under reconciliation if it reduces revenues by $1.5 trillion or less. The Joint Committee on Taxation (JCT) originally scored H.R. 1 as a $1.487 trillion reduction in revenue over the 10 year budget window, which means that it complies with the reconciliation rules. This summary focuses on the House bill as it was introduced, TRALA fully expects changes to the bill, but many of the agreed upon parameters should remain in place.
Some of the highlights of the bill are:
- Consolidates the current 7 tax brackets for individuals into 4
- Lowers the rate for C-Corporations to 20% and pass-throughs to 25%
- Allows for 100% immediate expensing for qualified property purchased after January 1, 2018 and before January 1, 2023
- Repeals the Alternative Minimum Tax (AMT)
- Doubles the threshold for the Estate Tax from $5 million to $10 million and sets it on a glide path to full repeal beginning in 2023
- Retains the Mortgage Interest Deduction for existing mortgages, and limits the deduction to $500 thousand on new mortgages
- Allows for the deduction of net-interest if the amount of net interest does not exceed 30% of adjusted taxable income.
The Brady plan lowers the tax rate paid by C-Corporations down from 35% to20%, and creates a rate of 25% for companies filing as pass-throughs. Additionally, the Brady plan includes "safeguards" to exclude "professional service" income from claiming the 25% rate. This would exclude companies which rely on the reputation or skill of its employees as its main asset. Companies relying on "professional service" are doctors, lawyers, engineers, architects, performing arts, sports, consulting and similar trades. These businesses or individuals would be forced to pay their income at the individual rates based on income. Additionally, the bill includes a 70/30 split on wages and profits from a non-professional service pass-through. The Brady bill would limit a business owner or shareholder who receives a salary from the business to cap 30% of their salary and profits from a business at the 25% rate, the rest of the income and profits would be paid at the individual rates.
The Brady proposal allows for the immediate expensing of qualified property which is putin to service after September 27, 2017 and before January 1, 2023. The language excludes the immediate expensing of real property. Real property is defined as non-residential real property, residential rental property, and any railroad grading, tunnel, or bore. Additionally, the inclusion of immediate 100 percent expensing, makes Section 1031 Like-Kind Exchange (LKE) obsolete for qualified property. LKEs are still available for real property.
The Brady bill chose not to touch the Highway Trust Fund (HTF), despite earlier reports of efforts to use repatriation to cover shortfalls in the HTF. The House chose to focus on lowering rates and widening the base. Since the House is not touching the HTF, it chose not to eliminate the Federal Excise Tax (FET). TRALA and a group of trucking stakeholders have been meeting for months with members of the House and Senate to educate them on the negative impacts of the FET, which is a 12% tax on the sale of medium andheavy duty trucks. Despite interest in repealing the tax, Congress will have to use a potential infrastructure bill as a way to fix the HTF and repeal the FET.
The Brady proposal limits interest deductibility to deducting net interest if it is less than 30% of their adjusted taxable income and business interest income. Adjusted taxable income means taxable income net of (1) non-business income or deductions, (2) business interest expenses or business interest income, (3) Net Operating Loss, and (4) depreciation, amortization, or depletion expenses. The provision allows the IRS to provide other adjustments to arrive at "adjusted taxable income." Under this proposal, a corporation that is engaged in the business of leasing or renting trucks, the bill would limit the corporation's deduction for interest paid to the sum of its business interest income plus 30 percent of its adjusted taxable income. This limitation does not affect small businesses which have less than $25 million in gross receipts over a three year period. These small businesses would be able to fully expense all interest. There is also no grandfathering for existing interest. For pass-through businesses, interest must be separated from investment interest as only business interest may be deducted. Additionally, the interest income would be determined at the tax filer level, for a pass-through business that would be at the partnership level. Furthermore, any interest that was disallowed may be carried forward for 5-years.
Congress chose not to include specific rules for income generated from leases or rentals, but they did address many of TRALA's concerns by limiting net interest to 30% of adjusted taxable income. For a morein depth analysis of the interest deductibility portion of the bill, you may click here.
On November 16,2017 the House of Representatives passed H.R. 1 by a vote of 227-205. No Democrats voted for the House tax bill and 13 Republicans voted no. The majority of Republicans who voted against the bill represent high-tax states and were opposed to the limitation of the State and Local Tax Deduction. The House will now wait for the Senate to pass its tax reform bill before both the House and Senate can move to a conference.
THE SENATE VERSION OF TAX REFORM
On November 16,2017 the Senate Finance Committee approved its tax reform proposal by a vote of 14-12. The Senate bill included significant changes from both the tax framework and the House bill.
On the business side, the Senate bill lowers the tax rate for C-Corporations down to20%, but delays the decrease to January 1, 2019. The Senate bill creates a deduction for pass-through corporations up to 17.4%, which would continue to be taxed at the individual level. Additionally for pass-throughs, the bill eliminates the State and Local Tax Deduction. Furthermore, the Senate bill includes 100% immediate expensing for qualified property until January 1, 2022, and limits Like-Kind Exchanges to real property. Finally the Senate bill repeals the Corporate Alternative Minimum Tax (AMT).
On the issue of interest deductibility, the Senate veers from the House in a significant and concerning way. While the House limits the deductibility of net interest to 30% of Earnings Before Interest Taxes Depreciation and Amortization (EBITDA), the Senate limits the deductibility of net interest, to 30% of Earnings before Interest and Taxes (EBIT). The Senate decided to adjust their net interest deductibility purely for the additional revenue it raises. Immediately after releasing their language on interest deductibility, TRALA and a large number of businesses and trade associations immediately began to weigh in with Senators about their concern with the Senate's language on interest deductibility. TRALA has met with multiple Senate offices and encouraged them to simply adopt the Houselanguage on interest deductibility. TRALA and members of the Tax Reform Working Group will continue to aggressively lobby both Senate and House offices to ensure that the final law includes the House language on interest deductibility.
On the Individual side, the Senate bill maintains the current 7 tax brackets however they lower the rates and lower the thresholds in order to provide tax relief. Additionally, the Senate tax rates are notpermanent, and are set to expire on January 1, 2025. This Sets up a future fight for Congress to take in the future in order to make these rates permanent. The Senate bill like the House bill doubles the Standard Deduction for single filers to $12,000, and $24,000 for joint-filers. The Senate bill increases the trigger for the Estate Tax, but does not eliminate it, and maintains the Mortgage Interest Deduction at $1 million. However, the Senate language does eliminate the ability to deduct Home Equity Lines of Credit from your taxes.
One final piece of the Senate bill was the repeal of Individual Mandate to buy health insurance. The repeal was included in the original Chairman's mark raises $300 billion and allowed the Senate to lower the rates formiddle class tax payers. The addition of the Individual Mandate repeal makes it less likely that Democrats from states won by President Trump will support the bill, and it may cause problems for Senators who opposed previous attempts to repeal Obamacare earlier this year. Additionally, Senator Ron Johnson (R-WI) has come out in opposition to the bill in its present form. Senator Johnson has concerns that the bill favors C-Corporations too much over Pass-Throughs. It is likely that more changes will be needed to be made on the floor during the amendment process in order to get 50 votes plus the Vice President in order for this bill to pass the Senate.
You may view the latest version of the Senate bill byclicking here.
The Senate adjourned for the Thanksgiving break yesterday, and they will not return until after Thanksgiving. It is very likely that the Senate will attempt to move their bill on the Senate floor the week of November 27. If the Senate is able to pass their bill, both the House and Senate could move to appoint conferees to agree on the differences between the two bills and bring a final bill to both the House and Senate for final passage, before being sent to President Trump for his signature.
TRALA plans to intensively lobby both House and Senate Conferees as well as the leadership in both Chambers during the weeks of November 27 and December 4 in order to press upon them the importance of accepting the House version with regards to interest deductibility.
California Meal & Rest Break/Hours of Service Issue
In 1994, Congress included language in the Federal Aviation Administration Authorization Act (FAAAA) which prohibited states from enacting or enforcing policies related to "price, route, or service of any motor carrier". This law established that the federal government was responsible for setting a consistent standard for motor carriers to follow when operating in interstate commerce. Since then, courts have repeatedly recognized that this language is expansive and applies to anything with a significant effect either directly or indirectly on motor carriers prices, routes or services.
Despite being upheld by other courts since its enactment, in 2014 the Ninth Circuit Court ignored the FAAAA provision and allowed a California law to set mandatory times for when meal and rest breaks must be taken. This ruling went beyond regulating meal and rest breaks for intrastate trucking by forcing these rules on interstate trucks once they enter the state of California. This issue became not only a threat to federal preemption laws, but also created safety concerns for truck drivers operating in the state. Additionally, there are concerns that other states have begun to act similarly to California and set their own meal and rest break rules for trucks. This has begun to create a patchwork of states which have differing rules for meal and rest breaks instead of simply following the federal hours-of-service regulations. This has caused havoc for TRALA members and others in the trucking industry and it is now leading to lawsuits by trial lawyers looking to profit from this patchwork.
In support of one of its members, TRALA wrote an amicus brief to the United States Supreme Court in February, 2015 asking for this case to be heard, but given the number of preemption cases brought each year, the court declined to take up the case, which meant that the law stood and it would need a legislative fix by Congress to ensure their original intent was upheld.
On November 5, 2015 the United States House of Representatives considered H.R. 22, the Fixing America's Surface Transportation Act. During consideration, an amendment was offered by Rep. Jeff Denham (R-CA) at TRALA and other trucking allies' request which would reestablish the fact that the federal government regulates hours of service and that no state should be allowed to alter this federal law. This amendment was agreed to by a bipartisan vote of 248-180 and was included in the House version of the highway bill. Immediately after final passage of H.R. 22, the House and Senate went to a conference to reach an agreement on a final highway bill. TRALA, along with other industry stakeholders, pushed hard on House and Senate conferees to preserve the Denham amendment in the final conference report. Despite a large push by the industry, Senate and House negotiators were persuaded by Senator Barbara Boxer (D-CA) to remove the Denham amendment from the final bill. The main reason Republicans relented on this issue was that they needed Boxer to deliver Democrat votes for the final bill.
On February 3, 2016 House Transportation and Infrastructure Committee Chairman Bill Shuster introduced H.R. 4441, the Aviation Innovation Reform and Reauthorization (AIRR) Act. This bill is a multi-year reauthorization of the Federal Aviation Administration (FAA) which sets policies for the aviation sector in America. TRALA and its allies were pleased that Chairman Shuster included TRALA-supported language in Section 611 of his bill. The language in this section re-establishes the federal role that says no state may interfere with federal hours or service rules nor impact the existing prohibition of states to alter rates or routes of Interstate Commerce.
Section 611 prohibits a state, political subdivision of a state, or political authority of two or more states from enacting any law, regulation, or other provision which would alter the rules and regulations for Hours of Service or alter wages paid on a piece rate basis.
On February 11, 2016 the House Committee on Transportation and Infrastructure held a markup on H.R. 4441 the Aviation Innovation Reform, and Reauthorization Act (AIRR). During consideration of the bill, an amendment was offered by Rep. Grace Napolitano (D-CA) which would have removed TRALA-supported Section 611 from the overall bill. TRALA and its allies were able to successfully push back on this amendment and keep section 611 in the final bill. Rep. Napolitano's amendment was defeated by a vote of 27-31.
While having section 611 included in the final bill is encouraging, to enact the preemption language into the final law that is sent to the President's desk it must pass the Senate and be agreed upon during conference between the two chambers. In addition, there remain other contentious items in the AIRR Act that face significant opposition, which could threaten passage of the entire FAA bill in the Senate.
On March 9, 2016 the Senate introduced an 18-month reauthorization of the FAA which did not include the TRALA-supported FAAAA provision dealing with rest and meal breaks. The Senate is looking to move an FAA reauthorization through the end of Fiscal year 2017, which indicates it wants to wait to deal with difficult issues like Air Traffic Control Reform after the election when a new President and Congress have been sworn in.
On March 10, 2016 House Transportation and Infrastructure Committee introduced a short-term extension of the FAA which would expire on July 15, 2016. Since the FAA is set to expire at the end of March it is almost certain that a short-term extension will need to be passed before a longer-term bill can be negotiated. The House Transportation and Infrastructure Committee has shown strong support for fixing the FAAAA issue and indications are that this provision is not holding up the bill from moving forward, but the difficulties in moving the AIRR Act through the House pose problems for getting the FAAAA into a conference committee.
TRALA signed onto an industry-wide letter that was sent to members of the House and Senate Appropriations Committees asking that language be inserted into the upcoming 2017 appropriations bill that would address the FAAAA issue to resolve the issue.
Congressmen Kevin Yoder (R-KS) and Henry Cuellar (D-TX) - both members of the House Appropriations Committee - agreed to take the lead on this in the House and wrote a letter on March 17, 2016 to the Chairman and Ranking Member asking that the TRALA-supported language be added to the upcoming appropriations bill. You can see a copy of the letter by clicking here.
In the Senate, Senators Jerry Moran (R-KS) and Jon Tester (D-MT) also submitted an appropriations request letter to the Chairman and Ranking Member of the Senate Appropriations Committee asking that they include the FAAAA language in the Senate's version of the appropriations bill set for deliberations in the coming months.
TRALA and its allies were able to have meal and rest break language (that was retroactive) included in the House Transportation and Urban Development appropriations (THUD) bill that passed the House Appropriations Committee on May 24, 2016. The language did not address the issue of piece rate which has been tied to the meal and rest breaks language from the beginning. The language was not included in the Senate version of their THUD bill being considered in that chamber. With not a lot of legislative working days left on the calendar, it is uncertain when the full House and Senate would vote on their competing THUD bills.
The meals and rest break language continues to remain in the FAA short-term extension that runs out at the end of July but as with the THUD bill, no meals and rest break language exists in the Senate counterpart bill.
On June 15, 2016 TRALA and a few of its members met with Rep. Jeff Denham (R-CA) to discuss efforts to fix the FAAAA problem. Rep. Denham has been a champion for the industry on this issue as he has sponsored multiple efforts to correct this problem. During this meeting, Rep. Denham mentioned that there had been some movement towards including his language on the FAA extension that the House and Senate had been negotiating.
Additionally, on that day in a discussion with Senate Commerce Committee Chairman John Thune (R-SD), he mentioned that he was negotiating a clean extension of the FAA bill. Though TRALA is encouraged by the attempts to add FAAAA language to an FAA extension, TRALA remains skeptical that the Senate would accept this language. Though not a member of the Senate Commerce Committee, Senator Barbara Boxer (D-CA) remains a staunch opponent of this fix and it is believed that she would be willing to shut down the overall FAA bill over this provision. Additionally, since this extension would include a tax title, it is unlikely that policy fixes would be added to an extension as it could open up the bill to several other amendments on issues unrelated to the FAA.
TRALA has been in discussions with a broad coalition of companies and associations working on the meal and rest break issue over the congressional recess. TRALA expects a bipartisan letter from a handful of Members of Congress that serve on the House and Senate Appropriations Committees to be sent to their respective Appropriations Committee Chairs and Ranking Members asking that language be included in the next THUD appropriations bill to solve this issue. TRALA expects the letter to be completed and sent before Congress leaves for their next recess.
TRALA continues to work with its allies to find a legislative solution to the meals and rest break issue and is working to find the best piece of legislation that our language can be attached to in the first few months of 2017.
On February 2, 2017 TRALA along with other industry stakeholders sent a letter to Members of the Senate Appropriations Committee, urging them to include language fixing the California Meal and Rest Break issue in the final Fiscal Year 2017 funding bill. TRALA and some of its members signed onto the letter encouraging the Senate to reestablish federal primacy over interstate commerce.
TRALA has met with key Members of the House Appropriations Committee to push for the inclusion of the fix to the Meal and Rest Break issue as well as the Piece Rate issue in any upcoming appropriations bill. In these meetings TRALA stressed the extreme nature of this law and how it negatively impacts the free flow of Interstate Commerce, which is supposed to be regulated by the federal government and not an individual state. Last Congress multiple amendments were passed in the House to reassert the federal government's primacy in regulating interstate commerce, however all these efforts failed in the Senate due to opposition from Senate Democrats.
During these meetings with members TRALA and the coalition it is working with has been distributing letters to Members of Congress from local companies explaining the impacts of the Meal and Rest Break Issue. You may view the letter TRALA has provided to Members of Congress by clicking here.
On May 4, 2017 Congress cleared the final Fiscal Year 2017 budget which funds the government through the end of the fiscal year. It was expected that this would be the vehicle for reasserting federal primacy with respect to the meal and rest break issue, as well as making this language retroactive to the original FAAAA language for pending lawsuits. Unfortunately, the final FY 17 budget did not include a fix for the meal and rest break issue. Despite a strong push by the trucking industry and Members of Congress, the final negotiations kept the meal and rest break language out of the bill.
While extremely disappointing, TRALA and the rest of the trucking industry will attempt to include the meal and rest break language on several other transportation bills which are expected to be considered this year. This could include a reauthorization of the Federal Aviation Administration, a large infrastructure stimulus bill, or the Fiscal Year 2018 Transportation, Housing and Urban Development Appropriations bill.
On June 27, 2017 the House Committee on Transportation and Infrastructure held a markup on the Federal Aviation Administration's (FAA) reauthorization. This bill sets policy for the aviation industry and is also the preferred bill for moving the meal and rest break fix. During the markup, Rep. Jeff Denham (R-CA), after discussions with Chairman Bill Shuster (R-PA) and the trucking industry, decided to hold off on introducing an amendment which would fix the meal and rest break issue as well as making the law retroactive to the original FAAAA law. The reasoning was to get the bill out of committee and move the amendment on the floor, where it has passed several times before. Additionally, TRALA has had direct discussions about the importance of addressing the FAAAA issue in the FAA bill, with Speaker of the House Paul Ryan (R-WI) and Senate Commerce Committee Chairman John Thune (R-SD).
On June 29, 2017 The Senate Committee on Commerce, Science, and Transportation held a markup on S. 1405 which is their reauthorization of the FAA. During consideration, an amendment was offered by Senator Deb Fischer (R-NE) which would correct the meal and rest issue; however it would not make the fix retroactive. This amendment was agreed to by voice vote, and the entire FAA bill passed. The bill has now been sent to the Senate floor for consideration by the entire Senate. TRALA is pleased that the Senate has included a fix for meal and rest break language in their bill and hopes that the House will pass their amendment when the full House considers the FAA bill. If both bills pass in their chambers, the House and Senate will move to a conference committee where the issue of meal and rest breaks, retroactivity, and piece rate would be addressed further before a final outcome is reached.
On July 10, 2017 the House Subcommittee on Transportation, Housing, and Urban Development (THUD) released their 2018 THUD Appropriations Bill. This bill included language which would re-establish federal preemption with respect to meal and rest breaks for trucks operating in Interstate Commerce. Additionally, this language also included reach back language which would make this statute retroactive to the original meal and rest break language from 1994. Furthermore, the Appropriations Committee announced that they will hold a markup on the THUD Appropriations Act on July 17, at 7 PM.
You can view the THUD Appropriations Act by clicking here.
TRALA welcomes the Appropriations Committee moving forward with their fix of the meal and rest break issue however the preferred path is still a legislative fix in the FAA bill. TRALA and members of the FAAAA coalition have been reaching out to both Republicans and Democrats in order to get them to support Congressman Denham's floor amendment on meal and rest breaks as well as retroactivity. Leadership has informed the coalition that we will need strong bi-partisan support in order to be included in any conference report should the House and Senate each pass their FAA reauthorizations. TRALA expects the House to move their FAA reauthorization on the floor the week of July 17.
LATEST ACTION: On July 17, 2017 the House Appropriations Committee held a markup on the Fiscal Year 2018 Department of Transportation, and Housing and Urban Development, and related agencies Appropriations Act which was sponsored by Rep. Mario Diaz Balart (R-FL). This bill included a policy rider which would provide for a fix to the meal and rest break, and provide retroactivity for pending lawsuits in California. During the markup, an amendment was offered by Rep. David Price (D-NC), which would have stripped "objectionable" policy riders from the bill, including the meal and rest break, and retroactivity language. The amendment failed 20-31 with all Republicans and Rep. Henry Cuellar (D-TX) voting against the Price Amendment. The bill is currently awaiting further consideration by the entire House of Representatives. The House of Representatives is set to adjourn for the traditional August Recess on July 28, 2017 and it is unlikely the House will consider the Transportation, Housing and Urban Development Appropriations Act until Congress returns in September.
Autonomous Trucks and Data
Automation in the transportation industry offers a transformational technology for all types of vehicles and the driving public. Up until recently, autonomous vehicles had been seen as more of a down-the-road technology which would take years of development and testing before ever coming to the market but that has changed. Federal officials have taken a more hands-off approach to regulation and legislation as it relates to the development of this technology, leaving several states to put in place laws and regulations to encourage Original Equipment Manufacturers (OEM) to develop and test their autonomous vehicles in their individual states. Though the states have given OEMs different environments to work in, it became increasingly clear that more substantive federal rules would be needed to provide OEMs with a more concise and consistent framework within which they could develop and test autonomous vehicles.
TRALA has increased its focus on Autonomous Vehicles and other future technology over the past year. During its Annual Meeting in April of 2017, TRALA held a business session with members from Mack, Cummins, and Ryder who discussed what future technologies were coming to the trucking industry in the near and long-term, and the potential impacts these technologies could have on the truck renting and leasing industry. In the summer of 2017, TRALA - working through its Industry Council - joined a Data Access Coalition, which is focused on increasing awareness on the importance of maintaining access to data generated by autonomous vehicles, and lobbying on potential threats to data access.
On September 6, 2017 the United States House of Representatives passed H.R. 3388 the SELF DRIVE Act by voice vote. The SELF DRIVE Act requires the National Highway Transportation Safety Administration (NHTSA) to implement safety rules for the OEMs to follow for the design of autonomous vehicles at or under 10,000 pounds. OEMs will be required to submit data to NHTSA once the rules are in place. Additionally, H.R. 3388 prohibits any state from implementing rules for design, construction, or performance of a Highly Autonomous Vehicle (HAV) or component, which exceeds the federal guidelines. Additionally, this bill continues to allow states to set their own rules for the licensing, registering, safety training, and insurance requirements for autonomous vehicles.
On September 13, 2017 the Senate Commerce, Science, and Technology Committee held a hearing on Autonomous Trucks. The hearing focused on whether trucks should be included in the AV START Act, which is the Senate version of the SELF DRIVE Act. Though both bills are different, they were similar in only focusing on motor vehicles 10,000 pounds or less. The majority of the witnesses at the hearing pushed for the inclusion of trucks in the AV START Act, citing the safety benefits of HAVs and the recognition that the technology used for HAVs - whether for trucks or automobiles - will be generally the same. TRALA attended the hearing and worked with a coalition of fleet owners and OEMs to meet with multiple Senate offices to push for the inclusion of trucks in the AV START Act.
LATEST ACTION: On October 4, 2017 the Senate Commerce, Science, and Transportation Committee held a markup of the AV START Act. During the markup an amendment supported by TRALA was offered by Senator Jim Inhofe (R-OK) and cosponsored by Senators Cruz (R-TX), Fischer (R-NE), Young (R-IN), Wicker (R-MS), Gardner (R-CO), Heller (R-NV), and Moran (R-KS). Senator Inhofe also introduced several letters of support for his amendment into the record, including a letter of support from TRALA. Despite support from the trucking industry and some safety groups, the amendment did not have enough votes to pass and Senator Inhofe withdrew the amendment in order to continue to work with Chairman John Thune (R-SD) and Ranking Member Bill Nelson (D-FL) on a path forward for trucks. The AV START Act passed out of committee by a voice vote and is expected to be brought to the Senate floor sometime in October. You may see a copy of the letter TRALA submitted in support of the Inhofe Amendment by clicking here.
TRALA will continue to work with its coalition of allies to push both the House and Senate to take up HAV legislation for trucks so that the OEMs can move forward with development and testing. TRALA expects any autonomous truck bill to face strong opposition from the International Brotherhood of Teamsters who has been strongly opposed to Autonomous trucks. TRALA expects the Teamsters to push Democratic allies to outright prohibit autonomous trucks, and others in Congress are also likely to push for wage requirements for drivers and other programs to help drivers who may eventually lose their jobs due to automation.
National Labor Relations Board Anti-Business Issues
The National Labor Relations Board (NLRB) has taken multiple actions in the past few years that are unprecedented in the history of the organization. The NLRB majority has been led by far-left, pro-union members in their attempts to enact "Card Check" through the regulatory process since President Obama took office.
Four issues in particular have been pushed by the NLRB that TRALA has opposed through its active membership in the Coalition for a Democratic Workplace (CDW). These issues include:
- "Micro-unions." This would reverse 50 years of law by allowing sub-groups within a workforce at a single company to unionize.
- "Ambush elections." This rulemaking would reduce the number of days an employer can respond to an attempted unionization from 60 days to as few as 10.
- "Persuaders." This rule would force any attorney or consultant that gives advice for a company under a union push to file several reports with the Department of Labor.
- "Notice Posting requirement." This rule would require nearly all businesses to post notices telling employees that they have the right to form unions.
To view TRALA updates on the NLRB throughout 2013-2015, please click here.
The Department of Labor (DOL) sent its persuader rule to the Office of Information and Regulatory Affairs (OIRA) for review the week of December 7. While the Fall Regulatory Agenda has the persuader rule scheduled to be finalized in March 2016, DOL is not even planning to propose changes to a critical component of the persuader reporting process (Form LM-21) until September 2016. Because of this, TRALA and several other organizations working with the CDW is formulating a letter asking DOL to consolidate these two rulemakings because they are so intertwined. This letter will reference an earlier letter that TRALA and others sent to DOL and asks OIRA to send the persuader regulations back to DOL in order to be consolidated with the pending changes to the reporting process.
Unfortunately, an attempt to add language into the omnibus bill disallowing a rulemaking from taking place on the overtime pay rule, the joint employer rule or the persuader rule did not survive into the final omnibus legislation.
TRALA participated in a lobbying committee meeting with the CDW on March 7, 2016. The meeting focused on legislative and regulatory issues affecting employers and the efforts to alleviate some of the pressure being placed on employers by the DOL and NLRB. Much of the meeting focused on the impending Persuader Rule which is expected to be released by the DOL later this month. It is expected that multiple lawsuits will be filed challenging the Persuader Rule once it is introduced due to the reporting requirements placed on law firms and trade associations which advise its membership. Additionally there will be a strong push to get policy riders placed in the Department of Labor, Health and Human Services Appropriations Act for Fiscal Year 2017 if it is brought to the floor for a full vote. TRALA along with CDW are working on a member letter which would be sent to Chairman Hal Rogers (R-KY) and Chairman Tom Cole (R-OK) urging them to include limitation amendments on the Persuader Rule, Joint-Employer Rule, Ambush Elections Rule, and Micro-Unions in the Labor Health and Human Services Appropriation Bill.
The NLRB released its final Persuader Rule on March 23, 2016. This rule targets companies that hire outside counsel to advise them on labor policies or union organizing efforts. The goal of this rule has been to force any adviser on labor policy to disclose to the government who they are advising as well as who their clients are. This is a broad expansion of the rule which was originally intended to focus on outside employees who were brought in to discuss unionization efforts with employees. TRALA is currently reviewing the rule in its entirety and expects to discuss the details more thoroughly with CDW in the coming weeks. TRALA fully expects there to be lawsuits filed in different federal courts challenging this rule.
In the wake of the Persuader Rule being finalized, three separate lawsuits have been filed in three different federal districts challenging this rule. TRALA is working through the Coalition for a Democratic Workplace (CDW) which filed suit in Arkansas challenging the "advice" section of the rule. The advice section is so broadly written and subject to interpretation it could make it very difficult for a business to receive any information regarding union organizing from outside counsel or associations. Additionally, the National Federation of Independent Businesses and an association representing law firms have filed separate lawsuits against the Department of Labor.
On April 27, 2016 the House Committee on Education and Workforce held a hearing entitled "The Persuader Rule: The Administration's Latest Attack on Employer Free Speech and Worker Free Choice". The hearing focused on the recently finalized Persuader Rule which seeks to drastically limit the amount of advice an employer can receive from outside counsel on unionization efforts. Additionally, Rep. Bradley Byrne (R-AL) has introduced a resolution under the Congressional Review Act which would nullify the Persuader Rule. The hope is that this resolution will be voted on this summer before Congress adjourns in July.
On May 10, 2016 TRALA signed onto a letter sent by the Coalition for a Democratic Workplace (CDW) to the House of Representatives supporting H.J. Res 87 sponsored by Rep. Bradley Byrne (R-AL). This joint resolution allows congressional disapproval and nullification of the Department of Labor's final Persuader rule under the Congressional Review Act. The final Persuader Rule, which was released on March 23, 2016 seeks to drastically reign in the amount of information a business can receive from outside counsel. Additionally, the letter encourages Congress to act quickly in approving this resolution. You may view the letter sent to Congress by clicking here
On May 18, 2016 the House Education and Workforce Committee marked-up H. J. Res 87 sponsored by Rep. Bradley Byrne (R-AL). This joint resolution nullifies the recently finalized Persuader rule offered by the Department of Labor. H.J. Res 87 passed in the Committee along a party line vote and is awaiting further action by the full House of Representatives.
Also, on May 18, 2016 the Department of Labor issued its final Overtime Pay Rule. The new rule raises the earnings threshold for salaried employees from $23,600 per year to $47,476 annually, which represents a dramatic increase in the exemption level. Additionally, this new rule fails to take into account how work is performed in today's society, as workers could qualify for overtime simply by checking their email while at home.
Currently, there are companion bills in both the House and Senate which state that the Overtime Rule would cease to have any force or effect on employers. H.R. 4773 introduced by Rep. Tim Walberg (R-MN) and S. 2707 introduced by Senator Tim Scott (R-SC) have been referred to committee and are awaiting further review. It is also anticipated that multiple lawsuits will be filed challenging this increase in overtime pay once the rule has been fully implemented.
On June 10, 2016 the Fifth Circuit upheld the NLRB's "ambush" election rule, saying that the rule comports with federal labor law and that the NLRB was within its bounds to create such a rule. There is likely to be an appeal following this decision and TRALA will consult with the CDW and its industry allies to determine what next steps can be taken.
On June 2, 2016 the US Court of Appeals for the 5th Circuit upheld the NLRB's ruling in Macy's, which applied the Specialty Healthcare decision, permitting a bargaining unit consisting solely of the cosmetics and fragrance department in the Saugus, Massachusetts Macy's. The decision did place some limits on the Board stating, "Where the Board 'rigorously weigh[s] the traditional community-of-interest factors to ensure that the proposed unit was proper under the NLRA, the overwhelming 'community of interest' does not conflict with the Act."
To date the Fourth, Fifth, and Sixth Circuit Courts have upheld the Specialty Healthcare decision, and the DC Circuit also upheld a consistent decision in Blueman Group. In all cases, the courts have put some limitations on the Board. The Constellation, another case, is still pending before the 2nd Circuit.
On June 22, 2016 the Minnesota District Court ruled against the plaintiff, Labnet, in its request for a Preliminary Injunction (PI) against the Department of Labor's (DOL) persuader rule. A PI is used to prevent a party from taking action (i.e. stop the persuader rule from being implemented), while the court deliberates on the merits of the case. The court ruled against the PI because the plaintiff failed to show irreparable harm. That said, the court did find that the plaintiff was likely to succeed in its challenge to the rule on the ground it conflicts with the Labor Management Reporting and Disclosure Act (LMRDA). Therefore, while the request for a PI was denied, the chances of having the rule eventually overturned by the District Court are fairly high.
On June 27, 2016 the U.S. District Court for the Northern District of Texas granted a preliminary injunction in the National Federation of Independent Business, et al V Perez. The injunction prohibits the Department of Labor from implementing the changes to the Persuader Rule, which were set to take effect on July 1, 2016. This injunction will remain in place until the District Court rules on the case, or if the Department of Labor appeals the injunction to a higher court and the lower court is overruled. Additionally, in the decision, the judge stated that it is likely that the plaintiffs were likely to win on the merits of the case. While it is unclear what the scope of the victory in this case could be, TRALA is pleased that the Persuader Rule has been placed on hold until a final decision can be made. You may view the decision from the Northern District of Texas by clicking here.
On July 6, 2016 the House Appropriations Committee released its Fiscal Year 2017 Labor and Health and Human Services, Education, and Related Agencies Appropriations Act. This bill contained policy riders which would prohibit any funds for the Department of Labor to enforce the rules on electronic voting, ambush elections, the new joint-employer standard and micro unions. Due to the injunction issued by the Northern District of Texas on the Persuader Rule, the committee did not include the Persuader Rule in its list of policy riders. It is important to note that this is just the Committee draft and that each of these riders will most certainly face an amendment challenge if and when this bill is marked up by the committee. You may view the entire bill by clicking here, the policy riders are located on page 133.
On July 11, 2016 the NLRB ruled in a 3-1 decision on Anderson and Miller, which dealt with Joint Employers. This ruling altered existing precedent from 2004 requiring consent from both employers before attempting to organize. This new ruling declares that "employer consent is not necessary for units that combine jointly employed and solely employed employees of a single employer". This means that a company which has union employees and uses contractors for a temporary purpose could lead to unfair labor practices if the contract workers attempted to unionize as joint employees and the contracting company refused to negotiate with them. The lone dissent came from the only Republican on the board Phillip Miscimarra who stated that this decision "will only make it more difficult for parties to anticipate whether, when or where this new type of multi-employer/non-employer bargaining will be required." You may view the full decision by clicking here.
On July 13-14, 2016, the House Appropriations Committee marked up the Fiscal Year 2017 Labor, Health and Human Services, Education and Related Agencies Appropriations Act. This bill included policy riders withholding funds for the implementation of the NLRB's joint employer standard, ambush election rule, and efforts to recognize micro-unions. During this markup, an amendment was offered by Rep. Barbara Lee (D-CA) which would have removed all of these riders from the bill. This amendment failed on a largely party line vote. The full bill passed out of the committee by a vote of 31-19.
On August 27, 2016 Kent Hirozawa's term on the NLRB expired leaving only three members currently - two Democrats and one Republican. Phil Miscimarra's (the Republican) term expires in December, 2017 and if no appointments have been made by that juncture, the NLRB would lack a quorum. With that being said, TRALA expects whoever is elected President in November to successfully appoint and have confirmed a new Board member to fill the vacancy left by Hirozawa.
In other news, the CDW filed a brief in support of summary judgment in its challenge to the Persuader Rule in the federal district court in Arkansas on August 26, 2016.
You may view the entire brief by clicking here.
On September 20, 2016 the Attorney General of Nevada Adam Laxalt filed a lawsuit on behalf of the state of Nevada and 20 additional states challenging the Overtime Rule released by the Department of Labor. The rule which is set to go into effect on December 1, 2016 would increase the threshold for salaried employees earning upwards of $47,476 to receive overtime pay. This increase would more than double the current salary threshold set at $23,660.
The lawsuit, which was filed in the Eastern District of Texas, argues that the rule is unconstitutional because it dictates what wages individual states must pay employees for government functions and exceeds congressional authority. Additionally, the lawsuit alleges that the increased number of employees receiving overtime compensation would upset the budget process by making it more difficult for states to pay their employees. It remains unclear how this lawsuit will affect the implementation of the overtime rule at the end of this year.
You may view the entire lawsuit by clicking here.
On Tuesday, November 22, 2016 Federal District Judge Amos Mazzant placed a nation-wide Preliminary Injunction on the Department of Labor's Overtime Rule, which was set to go into effect on December 1, 2016. This Preliminary Injunction prohibits the rule from being implemented until a final decision on the legality of the rule can be determined by the court. The Overtime Rule increases the salary threshold from $23,600 annually to $47,476 for salaried employees who are eligible to receive overtime pay for time worked in excess of 40 hours in a week. Additionally, the new rule requires that the salary threshold automatically increases every 3 years.
This decision is in response to a lawsuit being filed by the Attorney General for the state of Nevada, Adam Laxalt and 20 other states who alleged that the increase would dictate wages for state employees, and that it circumvents Congressional authority. Additionally, the lawsuit argues that this dramatic increase would put an undue strain on state government budgets. You may view the lawsuit by clicking here.
TRALA and a wide coalition of the business community have strongly pushed back against this rule since it was released by the Department of Labor. Specifically, TRALA had concerns about the large increase of the salary threshold which would make an estimated 4 million employees eligible to receive overtime pay, and the vague definition of what is considered work. TRALA, and many other groups believe under this expansion of the overtime rule, employees could receive overtime pay for simple tasks such as checking their work email from home. Additionally, this rule has forced many companies to drastically change their employees' salary and benefits packages, change employees from being salaried to hourly, and reduce employee hours to be in compliance with the upcoming rule.
While this injunction does not permanently end the Overtime Rule, the delay could allow for enough time to pass for the Trump Administration and Congress to permanently end the Overtime rule early next year. You may view the decision by Judge Mazzant byclicking here.
On December 1, 2016 the Department of Labor filed an appeal of Judge Mazzant's ruling with the U.S. District Court for the Eastern District of Texas. However, despite the appeal of the ruling, it is expected that the Trump Administration will take a strong look at the overtime rule and could eliminate the rule completely.
On November 30, 2016, TRALA, signed onto a letter that will be sent to the Trump Transition Team and is being circulated by the Coalition for a Democratic Workplace (CDW). The letter encourages the Trump Administration to act quickly in appointing to new members to the National Labor Relations Board (NLRB).
During the Obama Administration many anti-business rulings have been issued by the NLRB. These rulings have ended up in court costing millions of dollars in litigation fees and causing logistical headaches for TRALA members and others seeking to determine how to comply with the latest ruling. By placing two new members on the board, it is believed that balance could be restored to the NLRB. Additionally, the letter calls for President-Elect Trump to nominate Phillip Miscimarra as the next Chairman of the NLRB. Miscimarra has served as the lone Republican on the board for the past three years.
On January 26, 2017 President Donald Trump appointed Philip Miscimarra as the Acting Chairman of the National Labor Relations Board (NLRB). Miscimarra will replace Mark Gaston Pierce, who was the chair of the board under President Obama. Currently, there are two open spots on the 5 person board which as of yet have not been filled by President Trump. In December, TRALA and other industry groups sent a letter to Vice President-Elect Mike Pence urging the Presidential Transition Team to act quickly on the two open slots on the NLRB. You may view the letter sent to Vice President Pence by clicking here.
Under President Obama the NLRB issued several unfavorable rulings for TRALA members including an expansion of the Joint-Employer Rule, the Ambush Election Rule, the creation of Micro-Unions, and the Persuader Rule. TRALA will be working with the Coalition for a Democratic Workplace (CDW) to get these Board positions filled quickly and on long-stalled legislative fixes from Congress that had been blocked by the Obama Administration which could ease some of the burdens placed on businesses by the NLRB.
On February 9, 2017 TRALA and other members of CDW sent a letter to members of the House Education and Workforce Committee. The letter urges members to act on legislation which would correct a decision in 2015 by the NLRB which overturned decades of precedent as it relates to Joint-Employers. In their decision, the NLRB amended and made vague the definition of a Joint-Employer to include employers who have "indirect" control over an employee. The decision has mostly focused on contract employees whose could lose their job if a contract was not renewed by an employer. Under the charter of the NLRB, the President gets to appoint 3 of the 5 members of the NLRB however decisions are not binding and future boards can overturn previous decisions. That is why changing the law to overturn the decision of the NLRB on indirect employers is critical. Additionally, TRALA and other members of CDW have been holding meetings with Members of Congress and their staff, to impress upon them the effect many of these rulings by the NLRB have had on business. You may view the draft letter sent by TRALA and CDW by clicking here.
On February 14, 2017 the House Education and Workforce Committee Subcommittee on Health, Employment, Labor, and Pensions held a hearing on
"Restoring Balance and Fairness to the National Labor Relations Board".
In preparation to that hearing, TRALA and other members of the Coalition for a Democratic Workplace held several meetings with members of the Subcommittee to discuss the multiple rulings from the NLRB which have negatively impacted businesses. In particular these meetings focused on the expansion of the Joint-Employer rule which now includes indirect employers to the list of employers who can now be held liable for unfair labor practices. Additionally, these meetings encouraged lawmakers to push for the Trump Administration to quickly fill the two vacant slots on the NLRB.
On May 23, 2017, the Department of Labor (DOL) sent to the Office of Management and Budget's Office of Information and Regulatory Affairs a new proposed rulemaking rescinding the Obama administration's persuader rule. OIRA will now review the proposed rule. Once approved, DOL will publish the proposal in the Federal Register and open it up to public comment. TRALA will be coordinating with the CDW to file comments on the proposed rule supporting the Department's decision.
On May 24, 2017 Senator Johnny Isakson (R-GA) and Representative Francis Rooney (R-FL) introduced companion bills in the House and Senate. H.R. 2629 was referred to the Committee on Education and Workforce and S. 1217 was referred to the Health, Education, Labor, and Pensions Committee. These bills would reverse the Specialty Healthcare Decision by the National Labor Relations Board (NLRB) and eliminate Micro Unions. Under the Specialty Healthcare Decision, the NLRB reversed 80 years of precedent by allowing certified nurse assistants to form a union. Since that decision, other groups have sought to form their own Micro Union, which would alter the ability for management to negotiate contracts with their employees.
On June 12, 2017, the Department of Labor's Office of Labor-Management Statistics' issued a new
notice of proposed rulemaking (NPRM) to rescind the Obama administration's persuader rule. The public will have 60 days to provide input, with comments being due August 11, 2017. TRALA and its allies, through the CDW, will be submitting comments.
The persuader rule made significant changes to the reporting and disclosure requirements for employers, attorneys and other experts under the Labor Management Reporting and Disclosure Act. The rule drastically limited the "advice" exemption, in which employers and the experts they hire were exempt from the reporting requirements if the experts did not directly communicate with employees, essentially only providing legal advice to the employer on labor relations and the intricate laws governing those interactions. The changes provided no benefit to employees but made it very difficult for attorneys to maintain client confidentiality and small businesses to obtain confidential and critical legal counsel on labor relations matters. The rule was designed to silence employers and was, in TRALA's opinion, unlawful.
Additionally, the persuader rule was challenged in court. In November 2016, a federal judge in Texas issued a permanent injunction against the rule, preventing it from taking effect. The Trump administration is expected to drop its defense of the rule.
On June 21, 2017 President Donald Trump formally nominated Marvin Kaplan to be the newest member of the five-person National Labor Relations Board (NLRB). TRALA, along with the Coalition for a Democratic Workplace (CDW), have been urging the Trump Administration to appoint new members to the board quickly, in order to begin to unwind many of the anti-business, precedent-breaking decisions that the NLRB ruled on during the Obama Administration. TRALA expects the Trump Administration to announce another candidate for the other vacant seat on the Board in the coming weeks. Now that he has been formally nominated, Marvin Kaplan must go through the confirmation process in the Senate, which has moved at a much slower pace compared to previous administrations.
On June 28, 2017 President Donald Trump nominated William Emmanuel to be the newest and final member of the five-person NLRB. On Thursday, July 13, the Senate HELP Committee held a confirmation hearing for the nominations of Marvin Kaplan and William Emanuel to serve on the NLRB. TRALA and the Coalition for a Democratic Workplace (CDW) support the Trump Administration's appointments so that the NLRB can begin to address the dozens of anti-business decisions put in place by the Bureau during the Obama Administration.
A Texas federal judge invalidated the Obama Administration's controversial rule expanding overtime protections to millions of white collar workers, saying the U.S. Department of Labor used a salary-level test that was too high to determine which workers are exempt from overtime compensation. U.S. District Judge Amos Mazzant granted summary judgment to the Plano Chamber of Commerce and more than 55 other business groups who had challenged the Obama Administration's 2016 rule that raised the minimum salary threshold required to qualify for the Fair Labor Standards Act's "white collar" exemption to just over $47,000, more than doubling what it had been set at prior.
On September 13, 2017 the Senate Health, Education, Labor, and Pensions Committee and the House Education and Workforce Committee held a joint hearing on H.R. 3441, the Save Our Local Business Act. H.R. 3441 removes employers with indirect control over employees from the definition of a joint-employer. This became necessary after the NLRB under the Obama Administration dramatically changed the Joint-Employer standard to include employers with indirect control. This change has had a significant effect on franchise companies and companies which contract out some of their services. TRALA, as a member of the Coalition for a Democratic Workplace, sent a letter to the Chairs of the Committees in support of H.R. 3441. You may view a copy of the letter sent by CDW by clicking here.
On September 15, 2017 President Trump nominated Peter B. Robb to serve a 4-year term as the General Counsel for the NLRB. Robb has served as a labor and employment counsel for the Downs, Rachlin, and Marin Law Firm. As the General Counsel for the NLRB, Mr. Robb will play an integral role in selecting which cases for the NLRB to act. This could expedite the process for the NLRB to reverse many hostile decisions made by the NLRB under the Obama Administration which have led to massive unfair labor practice lawsuits.
On September 13, 2017 the Senate Health, Education, Labor, and Pensions Committee and the House Education and Workforce Committee held a joint hearing on H.R. 3441, the Save Our Local Business Act. H.R. 3441 removes employers with indirect control over employees from the definition of a joint-employer. This became necessary after the NLRB under the Obama Administration dramatically changed the Joint-Employer standard to include employers with indirect control. This change has had a significant effect on franchise companies and companies which contract out some of their services. TRALA, as a member of the Coalition for a Democratic Workplace, sent a letter to the Chairs of the Committees in support of H.R. 3441. You may view a copy of the letter sent by CDW by clicking here.
On September 15, 2017 President Trump nominated Peter B. Robb to serve a 4-year term as the General Counsel for the NLRB. Robb has served as a labor and employment counsel for the Downs, Rachlin, and Marin Law Firm. As the General Counsel for the NLRB, Mr. Robb will play an integral role in selecting which cases for the NLRB to act. This could expedite the process for the NLRB to reverse many hostile decisions made by the NLRB under the Obama Administration which have led to massive unfair labor practice lawsuits.
LATEST ACTION: The U.S. Senate has confirmed Republican Peter Robb to replace Democrat Richard Griffin as National Labor Relations Board General Counsel (GC). The NLRB GC is the Board's chief prosecutor. The GC enjoys significant power to direct, among other things, whether and when unfair labor practice charges are pursued to resolution by the five-member NLRB. The GC also decides the issues on which his office will focus its resources (including what legal theories to pursue or abandon), directly affecting how his and local NLRB offices scrutinize certain issues. It is likely Robb will oversee cases to the NLRB that seek to reverse the unprecedented anti-business practices, decisions, and proposed rulings that dominated the Obama Administration's tenure of the NLRB.
Federal Excise Tax
TRALA has supported a reduction or elimination of the 12% federal excise tax (FET) on the purchase of new trucks and equipment. This excise tax has been in place since the adoption of Title 26, Section 4051 of the Internal Revenue Code of 1982 and was reestablished under the Internal Revenue Code of 1986.
Last year, House Concurrent Resolution 33 was introduced in the U.S. House of Representatives, led by Congressman Reid Ribble (R-WI) and Tim Walz (D-MN). HCR 33 would put Congress on record in opposition to any increase in the FET on heavy-duty trucks and trailers. HCR 33 can be viewed in its entirety by clicking here.
A few years ago, TRALA supported federal legislation that would have replaced the 12% FET with an increase in the diesel fuel tax. That bill faced opposition from Members of Congress unwilling to sign a tax increase of any kind into law even though it had an elimination of another tax because there was concern that diesel prices were already historically high and that even with an offset of repealing the FET, many felt it was a politically difficult idea to move in Congress.
With diesel prices now significantly lower and a growing sense that the Highway Trust Fund is in need of help from non-traditional methods, TRALA is once again going to engage in a proposal to replace the FET with an increase in the diesel tax.
TRALA met with Congressman Earl Blumenauer (D-OR) on January 8, 2016 to discuss a strategy for building support for the plan to replace the FET. At this meeting the Congressman asked TRALA directly for assistance with Republican Members of Congress that would be willing to co-sponsor the legislation at introduction which he has targeted for this spring. TRALA has begun to reach out to its allies in Congress to gauge their support in this effort. TRALA will also work with some of its members to meet with a coalition of companies and Members of Congress sometime in February.
TRALA met with staff for Congressman Mike Kelly (R-PA) the week of February 14 and he has agreed to be a cosponsor for the future FET repeal legislation TRALA is supporting. He and Congressman Blumenauer have asked the Joint Committee on Taxation to determine how much the diesel tax would need to be raised in order to create a revenue-neutral bill. That is likely to take a month or two at which time TRALA has agreed to help organize a meeting with both Congressmen and supporters of the measure.
The Joint Committee on Taxation released its determination of the cost to eliminate the FET. Their analysis for this "score" was flawed in that it only looked at the past few years - when the sales of heavy trucks and equipment were high - and illustrates the problem that relying on the FET has in funding the Highway Trust Fund. The cost to eliminate the FET was estimated at just over 12 cents per gallon. TRALA was asked to meet with Congressman Blumenauer on April 29, 2016 to further discuss the political impact this score will have on Congress and map out a plan to move forward.
On April 29, 2016 TRALA and other industry groups met with Congressman Earl Blumenauer (D-OR) about the Joint Committee on Taxation score and the next steps forward. In the meeting TRALA stressed that its preference is to introduce a bill and begin educating members on the difficulties created by the Federal Excise Tax. It is clear to TRALA that many Members and staff do not fully grasp how counterproductive the FET is as a revenue source. By introducing a bill TRALA plans to educate members on the benefits of replacing the FET.
On May 24, 2016 Senator Cory Gardner (R-CO) introduced S. Con. Res 40. This concurrent resolution expresses a sense of Congress that the 12% Federal Excise Tax (FET) on trucks should not be increased. Though not legally binding, this resolution would allow Senators to be on record opposing any increase to the FET while at the same time giving supporters an opportunity to explain in more detail the problems created by the FET.
You may view this resolution by clicking here.
On June 15, 2016 TRALA and Members of its Executive Committee met with over 20 Congressional offices to discuss a repeal of the Federal Excise Tax (FET). TRALA met with senior members of the Ways and Means Committee as well as the Transportation and Infrastructure Committee which have primary jurisdiction over the FET. TRALA was able to educate members and their staff on the regressive nature of the FET, and how repealing it would allow businesses to operate more efficiently and purchase newer, safer, and more technologically advanced trucks. As expected, many staff and members were not familiar with the FET and these meetings served as an excellent opportunity to educate them on the tax.
On January 10, 2017 TRALA and other trucking groups held an industry meeting to discuss a variety of issues affecting the overall industry. One of the main topics discussed was the path forward for repealing the Federal Excise Tax (FET). In this meeting, TRALA stressed that its preferred option is to push for a full repeal of the FET as a part of the broader effort towards comprehensive tax reform. Both Congress and President-Elect Donald Trump have focused on both infrastructure spending and comprehensive tax reform and they have positioned both issues to be high-priority goals for 2017.
TRALA believes that Congress will only be able to make the Highway Trust Fund solvent with the revenues generated from comprehensive tax reform and this could include a repeal of the FET in exchange for other revenues including a possible increase in the diesel tax. Last Congress, TRALA and its allies were able to get Rep. Earl Blumenauer (D-OR) to agree to sponsor a bill repealing the FET in exchange for an increase in the diesel tax. However, due to the way the Joint Committee on Taxation scored the bill, we were unable to secure a Republican lead for the bill in an election year. TRALA feels strongly that the FET stands a better chance of being repealed this year now that the elections are over and there is a stronger consensus for tax reform.
On April 17 and April 20, TRALA led meetings with congressional staff to educate them on the negative impact that the FET has on the trucking industry. TRALA, and representatives from the truck dealers, truck manufacturers, and other trucking associations met with senior staff for Members of the House Ways and Means Committee. Since the meetings were educational, the coalition focused on the benefits to the transportation sector of repealing the FET, and how the current FET hurts the industry and creates problems for the Highway Trust Fund. TRALA and the other industry partners plan to meet with more Members of the House Ways and Means Committee and their staff over the next few weeks as the committee begins to consider tax reform.
During the week of April 24-28, TRALA led meetings with House Ways and Means Members and senior committee staff to discuss eliminating the FET. The meetings focused on the advantages of repealing the FET and currently how the funds generated by the FET do not benefit the Highway Trust Fund consistently each year. As the Ways and Means Committee prepares for a possible comprehensive tax reform bill, TRALA will remain engaged with Members and committee staff through meetings on Capitol Hill.
On June 21, 2017 Rep. Doug LaMalfa (R-CA) introduced H.R. 2946, which repeals the 12% Federal Excise Tax (FET) on new trucks. This legislation does not include a method of paying for the lost revenue in the Highway Trust Fund; rather it encourages Congress to address the shortfall in the trust fund through comprehensive tax reform. TRALA has long supported a repeal of the FET however previous bills which TRALA has supported have included an increase in the diesel tax which would offset the lost revenue in the trust fund. As Congress begins to shift its focus towards addressing tax reform in the fall, TRALA plans to participate in meetings with Members of Congress and their staff on the importance of eliminating the FET without putting an added strain on the Highway Trust Fund.
On September 19-20, TRALA and industry allies met with staff for members of the Senate Finance, House Ways and Means, and House Transportation and Infrastructure Committees to educate them on the Federal Excise Tax (FET). In these meetings, TRALA focused on the negative effects the FET has on the new truck market, the huge cost this tax places on fleet owners, and the need for a more equitable tax to fund the Highway Trust Fund (HTF). TRALA encouraged members to fix the long-term funding problems plaguing the HTF, while at the same time eliminating the FET, which could save the trucking industry billions of dollars on the front end of new purchases. TRALA will continue to meet with House and Senate members of the tax writing committees, encouraging them to permanently fix the HTF and eliminate the FET as a part of comprehensive tax reform.
LATEST ACTION: TRALA continues to meet with House congressional offices with its allies regarding the repeal of the FET with meetings held both the week of October 9 as well as October 16. While TRALA supports H.R. 2946, the critical issues that are being discussed in these meetings revolve around ways to repeal and replace the tax as part of federal tax reform given that H.R. 2946 is not going to pass as a stand-alone bill. Some of the meetings are for educating staff on the tax itself and for others that are well versed in its detrimental impact to the trucking and manufacturing industries, the discussions focus more on how the FET could be replaced from a strategic standpoint as well as how this could be achieved through the legislative process.
Toll operators all across the country are beginning to work towards implementing nationwide tolling interoperability, in order to comply with a mandate from Congress that was contained in the latest highway bill. As part of the MAP-21 highway reauthorization bill, Congress mandated that a nationally interoperable system for collecting tolls electronically be established within four years. One of the publicly stated goals of the toll operators is for states to be able to suspend both in-state and out-of-state registrations for vehicles that have outstanding toll violations. TRALA has concerns with this and other practices of the tolling industry that have plagued the vehicle renting and leasing industry for years, so TRALA has released a white paper in order to go into great detail about its concerns.
TRALA sent its white paper to the American Association of Motor Vehicle Administrators (AAMVA) on January 15, 2014. AAMWA is helping to formulate an interoperability strategy in accordance with the mandate from Congress. TRALA intends to work together with AAMVA leading up to the implementation of nationwide tolling interoperability to address the challenges its members face.
Truck renting and leasing companies are often held financially responsible for toll transactions or violations incurred by their customers. Toll violations incurred by vehicle operators are often enforced by checking the rented or leased vehicle's license plate to find the registered owner, which is the renting and leasing company, who then receives a notice of violation for the toll, plus penalties. In most states, TRALA members have some statutory authority to transfer liability for the violations from themselves to the vehicle operator so the toll operators can invoice the responsible party. However, in many cases, that is generally where the process breaks down.
Whether it is the lack of a response or action by toll operators upon receipt of transfer of liability paperwork, or the lack of a timely notice to lessors in the first place, TRALA members have generally found the current practices for attempting to absolve themselves from violations incurred by the actual vehicle operators to be inadequate.
TRALA, along with some of its members, met with the AAMVA on February 27, 2014 to discuss concerns with tolling practices that negatively impact the truck renting and leasing industry, and to ask that AAMVA support the needed changes outlined in TRALA's white paper as they work towards implementing interoperability in order to address TRALA's concerns. AAMVA said that it understood many of the issues TRALA raised and would like to work cooperatively to find solutions that could help mitigate the concerns TRALA raised in its white paper.
In other tolling news, The Alliance for Toll-Free Interstates (ATFI), of which TRALA joined at the end of 2013, released links to their Facebook and Twitter accounts espousing the new coalition and the work they are doing to end tolling on existing Interstates. You can follow ATFI by clicking on the following links:
ATFI on Facebook
ATFI on Twitter
TRALA participated on an ATFI-hosted strategic planning conference call on December 12, 2014 to discuss its approach in the next Congress. It was decided that an ATFI letter to members of Congress would be drafted to reiterate the alliance's position that it opposes tolling existing interstates. The Alliance will also push members of Congress to introduce legislation that would repeal the Federal tolling pilot program law that authorizes up to three states to toll existing interstates. Lastly, TRALA will take part in a workshop on January 29, 2015 hosted by the ATFI that will be attended by House Transportation and Infrastructure Committee staff members to further educate them on the problems with tolling existing interstates.
TRALA has learned that the Senate Environment and Public Works (EPW) Committee Chairman James Inhofe (R-OK) is leaning toward supporting an expansion of the federal pilot project which allows states to toll existing interstates as part of the next federal highway bill. This news comes after Chairman Inhofe had repeatedly told the Alliance for Toll-Free Interstates (ATFI), of which TRALA is a member, that he did not want the "distraction" of including toll-related provisions in the highway bill. TRALA has been told that Chairman Inhofe's proposal would expand the number of states eligible to toll existing highways under the pilot program from the current allotment of three states, up to five states.
TRALA, through ATFI, is working to convince Chairman Inhofe to withdraw this proposal. The alliance is also pushing other members of the EPW Committee to oppose this effort. There is a markup of the legislation scheduled for June 24, 2015 so TRALA and the alliance will continue to urge opposition to any proposal to expand the ability to toll existing interstates in advance of the markup.
TRALA and the Alliance for Toll-Free Interstates (ATFI) aggressively lobbied the U.S. Senate Environment and Public Works Committee (EPW) Members in response to their reported plan to expand the federal pilot project that allows states to toll existing interstates as part of the proposed highway bill known as the DRIVE Act. The current pilot project, known as the Interstate System Reconstruction & Rehabilitation Pilot Program (ISRRPP), has been law for 17 years, and has provided up to three states the opportunity to toll existing interstates, yet no state has successfully implemented such tolls. The EPW Committee had been planning to expand the pilot program from three to five states, but outreach by TRALA and ATFI forced them to abandon that plan. However, the bill approved by the EPW Committee lowers the bar for approval of a state application to toll an existing interstate, and it also implements time restrictions designed to serve as a "use it or lose it" incentive, with the goal being to prevent states from holding one of the slots in the pilot project but not actually implementing tolls.
The bill would also create a "toll credit marketplace" pilot project, with as many as ten states potentially being allowed to participate in the program. Per current law, toll credits are excess funds generated from a toll that can be used as a substitute for a state match in financing a federal transportation project. Under the pilot program, states would be able to sell or transfer toll credits to other states, and use the proceeds for any project that is eligible under the surface transportation program established by Congress. The main goal of the proposed toll credit marketplace program is to determine if such a system might be feasible to implement nationwide.
The language lowering the bar for a state to toll existing interstates, as well as the "use it or lose it" provisions are in the current version of the Senate's highway bill. There have been rumors that the House Transportation and Infrastructure Committee might move to adopt similar language as part of a highway bill. The House recently passed a five month extension of the current highway authorization, which did not include the language relating to the tolling pilot project. However, if the extension is ultimately agreed to by the Senate, it is likely that later this year the House will work on crafting a long term highway bill, and that is where the House might look to include the language that expands the tolling pilot project. Accordingly, TRALA and ATFI feel that now is an appropriate time to officially get "on the record" with House members to state opposition to expanding the tolling pilot project in any way. TRALA and other ATFI members are putting the finishing touches on a letter that will be sent to House Transportation and Infrastructure Committee Members. TRALA also has been, and will continue to, directly urge Members to oppose tolling expansion.
TRALA has heard that the House transportation reauthorization bill that is scheduled to be introduced the week of September 13 with a tentative markup date of September 17 will have a tolling expansion included in its text. TRALA, working in conjunction with other ATFI members plan to activate a grassroots effort to contact the House T&I Committee urging them to reject interstate tolling expansion. TRALA has also been asked to be quoted in a letter being circulated to key legislators arguing that tolling is a failed revenue generation method and inefficient compared to fuel taxes.
TRALA was pleased that the House's highway reauthorization bill differed from the Senate in its views on tolling. The House bill does not expand the program to additional states, and it places additional requirements on states attempting to toll existing highways under the Interstate System Reconstruction & Rehabilitation Pilot Program. Additionally the House removes federal participation from the initial construction of new bridges or tunnels that are tolled. TRALA continues to push both the House and Senate to abandon the idea of expanding tolling to existing Interstate highways and instead embrace other funding mechanisms that are more efficient.
The final highway reauthorization bill that came out of conference adopted the House language regarding the Interstate Reconstruction and Rehabilitation Pilot Program, which allows three states to place tolls on existing interstate. The conferees create parameters for the three current states enrolled in the program to either come up with a plan or be removed from the pilot program. TRALA had lobbied Congress to ensure that the program was not expanded to include additional states.
TRALA met with the Executive Director and current President of the International Bridge, Tunnel and Turnpike Association (IBBTA) to discuss the ongoing concerns TRALA has with tolling violations by lessees. At this meeting, TRALA indicated that many tolling authorities do not issue timely notices of violations and that because of this, oftentimes TRALA customers cannot be held accountable and the lessor then must pay the fine/toll. TRALA inquired as to whether IBBTA would be interested in partnering to attempt to find a solution through a national database that would include not only interoperability, but also instant notification for violators. If this was achieved, lessors could immediately charge its lessees with fines/tolls and the tolling authorities would receive their payments much quicker. IBTTA agreed that there is a serious problem and promised to complete more research on the issue and re-connect later this year with TRALA to see if an agreed-upon solution can be reached.
On January 12, 2017 TRALA attended a meeting of the Alliance for a Toll Free Interstate of which TRALA is a member. The meeting included a briefing from the Ranking Member of the House Transportation and Infrastructure Committee, Peter DeFazio (D-OR), as well as presentations from several stakeholders in the coalition. Ranking Member DeFazio discussed the need for greater funding in the Highway Trust Fund, which is set to run out of funds in 2020. Additionally, he discussed the options for tolling and a vehicle-miles-traveled charge (VMT) which has had a pilot program in his home state of Oregon. Rep. DeFazio said that tolling would work in certain areas but did not feel that it was a fix for the entire Trust Fund problems and is a strong supporter of increasing the gas tax and indexing it to inflation.
In the addition to the remarks from Rep. DeFazio, there was a broad discussion of the Interstate Reconstruction and Rehabilitation Pilot Program which gave authority to three states to implement plans to toll existing interstates in order to bring those sections into a state of good repair. The states, Virginia, North Carolina, and Missouri so far have not been able to implement a plan to toll existing highways and could be removed from the pilot program if they do not implement a plan soon. TRALA is concerned that there could be a push to remove these states and replace them with other states like Arizona, Connecticut, Indiana, South Carolina, and Wisconsin which are working on plans to toll existing highway under this program. Additionally, TRALA is concerned that there could be a push to expand the pilot program to more states in a potential infrastructure bill that President-Elect Trump has been pushing for. TRALA, and others lobbied against expanding the pilot program to additional states in the FAST Act, and we were successful in keeping the program at only three states.
On February 8, 2017 TRALA as a member of the Americans for a Toll Free Interstate (ATFI) sent a letter to members of the Senate Environment and Public Works Committee (EPW). The letter pushed back on efforts to toll existing highways and movements to devolve infrastructure authority to the states. Currently, three states - Virginia, North Carolina, and Missouri - are authorized to toll existing highways in order to bring those interstates up to a state-of-good-repair. As of yet these states have been unable to come up with a plan, and could be removed from the pilot program. You may view a copy of the letter sent by ATFI by
TRALA, along with other members of the Americans for a Toll Free Interstate (ATFI), has participated in meetings with the majority and minority staffs of both the House Transportation and Infrastructure Committee and the Senate Environment and Public Works Committee. These meetings took place on March 7 and March 9, and the focus was to urge against the use of tolling to pay for the possible infrastructure plan that has been discussed recently by the Trump Administration. Though details on funding for this plan have been scarce, Members of Congress and the Trump Administration have openly mentioned financing much of the highway projects through tolling. In the recent Hill meetings, TRALA voiced its concerns with tolling as an inefficient and punitive method of raising revenue and advocated for instead raising the gas tax as a simpler and more efficient solution to closing the shortfall in the Highway Trust Fund. Additionally, TRALA has explained the difficulty many TRALA members have faced over the years with old toll violations from customers which were never paid, and the logistical problems this has created for them. TRALA plans to meet with additional House and Senate offices in the coming weeks to push back against using tolling as the main source of funding for an infrastructure bill.
On March 21, 2017 TRALA and other members of the Americans for a Toll Free Interstate held several meetings with Members of Congress and staff. These meetings focused on educating new Members of the House Transportation and Infrastructure Committee about the inefficiency of tolling. Much of the reaction from these meetings was positive, as Congress is still in the early stages of planning an infrastructure bill. The coalition plans to meet with more Members and their staff in the coming weeks.
LATEST ACTION: On April 24 and 25, 2017 TRALA and other members of the Americans for a Toll Free Interstate held meetings with House Ways and Means Committee Members and their staff to discuss the possible solutions to infrastructure funding without tolling existing highways. TRALA continues to receive mostly positive feedback from Members and staff in these meetings. TRALA and the ATFI Coalition will continue to meet with more House Ways and Means Committee Members and their staff in the coming weeks as Congress begins to plan an infrastructure bill.
Registration Fee Increase
The state of Indiana is currently considering a large overhaul of their transportation trust fund to close a $1.2 billion shortfall in their fund. In January, House Bill 1002 was introduced which included a variety of fee increases and taxes to raise the necessary revenue in order to close the shortfall. Among those provisions is one which would be very detrimental to TRALA members. The first fee would be a $15 Transportation Infrastructure Improvement Fee (TIIF). This fee would be assessed on all vehicles registered in the state of Indiana. TRALA is concerned that this will include all power units that are base plated in Indiana under the International Registration Plan (IRP). Part of TRALA's concern with this fee is that vehcles that could be subject to this fee under the IRP might not be able to apportion the fee based upon miles under the IRP, meaning any power unit base plated or operating in Indiana could be required to pay the full $15 registration fee.
TRALA is working with its allies in Indiana to push back against this proposal, as it would represent a significant fee increase for many TRALA members operating under the IRP. H.B. 1002 is scheduled to have a hearing on January 25, 2017 and TRALA and other stakeholders are working to have individuals testify before the committee on the harm this provision would have on the entire transportation industry. TRALA is also engaged with its allies to come up with alternative legislative language that could replace the existing language currently in H.B. 1022.
After much discussion among stakeholders, a solution was agreed upon which raised the necessary revenue for the state while allowing trucks operating in the IRP to apportion the new fee. However, TRALA was concerned that the first amended proposal would have only allowed trucks in the IRP that are over 26,000 pounds to apportion this fee and that all trucks at or under 26,000 that were in the IRP would have been forced to pay the full $15 fee. After discussing the issue with other stakeholders as well as the Scopelitis law firm, TRALA was successful in having the language changed to allow all vehicles operating in the IRP the ability to apportion this fee.
On January 25, 2017 the Indiana legislature held a joint-committee hearing of the Roads and Transportation and the Ways and Means Committees in order to discuss and vote on H.B. 1002. During the hearing, Rep. Edmond Soliday (R-4), who chairs the House Roads and Transportation Committee, introduced an amendment to his bill which included the TRALA-supported language that allows for the TIIF to be apportioned for all IRP vehicles. TRALA also arranged for Richard Harris from member-company Penske Truck Leasing Company to attend the hearing representing the entire truck renting and leasing industry and to be available for questions if needed. In addition, American Trucking Associations' Bob Pitcher testified on behalf of the overall trucking industry in support of the amended version of H.B. 1002 during the hearing.
H.B. 1002 passed out of the Roads and Transportation Committee by a vote of 8-5 immediately following the hearing. The legislation now moves to the House Ways and Means Committee where TRALA has been told it will likely hold a vote within the next 2-3 weeks. Once that occurs, the legislation will be debated in the Senate. TRALA will be in constant contact with state legislators as well as the state trucking association and other stakeholders to ensure H.B. 1002 moves forward without any substantive changes made to the language impacting our industry.
If you would like to see the amended language please click here.
On February 9, 2017 a Proposed Amendment was offered, which would strike a recently proposed renewal fee for trailers and semi-trailers. This renewal fee resulted from large-scale changes at the Bureau of Motor Vehicles and the Department of Revenue. TRALA has worked with a large group of industry allies to fix this renewal fee, and because of this large outreach, it is expected that this amendment will be adopted by the Committee.
H.B. 1002 passed out of the House Ways and Means Committee on February 9, 2017 and is now headed to the full House for a final vote before moving to the Senate. TRALA remains in contact with the bill's key sponsors and has been told the language and amendments supported by TRALA should survive until sent to the governor for adoption.
On February 14, 2017 House Bill 1002 was considered on the floor of the Indiana General Assembly. After two days of amendment debates, the bill was passed by a vote of 61-36. The final Assembly bill included TRALA-supported language which apportions the $15 fee for the Transportation Infrastructure Improvement Fund (TIIF). The bill has now been sent to the Senate where it was referred to the Committee on Tax and Fiscal Policy, for further consideration. TRALA feels confident that if the Senate passes HB 1002 or amends it, the apportioning language for the TIIF will remain.
On March 27, 2017 during a markup in the Senate Tax and Fiscal Policy Committee, an amendment was offered to HB 1002. This amendment makes significant changes to the funding portion of HB 1002. The amendment increases the Transportation Infrastructure Improvement Fund (TIIF) from $15 to $100 for trucks over 26,000 lbs, increases IRP registration fees by 50%, adds a $5 fee on tire sales, eases some of the requirements for tolling existing highways, and increases the gas tax. TRALA is particularly concerned with the increase of the TIIF from $15 to $100 and the dramatic increase in IRP registration fees. TRALA has discussed the amended Senate language with its lobbyist in Indiana. TRALA has stressed that rather than focusing so much of generating revenue from trucks registered in Indiana it would be smarter and more equitable to raise the revenue on IRP trucks operating in the state. TRALA is pursuing a legislative fix which would eliminate the TIIF and wheel tax for IRP trucks and instead increasing the IRP registration fee. This would lessen the burden for individual carriers while still generating the same amount of revenue for the state.
Any changes made by the Senate would need to be agreed to by the General Assembly and signed by the governor, but the large increases by the Senate are concerning. Additionally, the Indiana legislature is scheduled to end its session on April 29, however due to several large events in Indiana many of the hotels in Indianapolis are booked and the legislature may have to end its session a week earlier due to a lack of hotel space.
On April 27, 2017 Governor Eric Holcomb (R-IN) signed H.B. 1002 into law. This bill seeks to raise revenue in order to close a $1.2 billion shortfall in the state's highway trust fund. This new law will raise revenue by increasing the gas tax, instituting a Transportation Infrastructure Improvement Fund (TIIF), increasing International Registration Plan (IRP) registration fees, and potentially looking at tolling. This ends months of negotiations between the legislature and the trucking industry. While the final bill does represent an increase in costs to members, the final bill is significantly more palatable compared to initial proposals which could have cost the industry tens of millions of dollars more. Additionally, several other fees in Indiana were either eliminated or simplified reducing cost and compliance burdens in the state.
TRALA began lobbying the state legislature after the initial draft for H.B. 1002 included a $15 non-apportioned TIIF on all vehicles registered in Indiana. TRALA and a coalition of motor carriers, the Indiana Motor Truck Association, and the Scopelitis law firm, were able to get an amendment included during the House markup of the bill which would apportion the $15 TIIF for all IRP vehicles including vehicles under 26,000 lbs. The amendment was accepted by the committee on January 26, 2017. The bill passed the full House on February 16, 2017 and it was sent to the Senate for further consideration.
Once it arrived in the Senate, it was referred to the Tax and Fiscal Policy Committee where it was amended and passed on March 30, 2017. The amended version proposed to dramatically increase the cost to TRALA members. The Senate proposal called for an increase in the TIIF for trucks over 26,000 pounds from $15 to $100, a 50% increase in the IRP registration fee, a $5 per tire tax, and a 10 cent increase in the diesel tax. The Senate proposal passed on April 4, 2017. With two competing bills, the House and Senate each appointed conferees to negotiate a final bill.
TRALA and its allies immediately began pushing the conferees to adopt language which would allow the state to generate the revenue they needed without dramatically increasing the costs on carriers in Indiana. TRALA's belief was that the Senate version went too far and that instead of a large TIIF, and other trucking targeted taxes, the state should just increase the IRP registration fee in order to make sure everyone who operated in Indiana paid their fair share.
The Conference Report was released on April 21, 2017 and it included a 25% increase in IRP registration fees for all trucks over 26,001 pounds and a $15 non-apportioned TIIF for all trucks less than 26,001 lbs. Additionally, the report included a 10 cent increase in the gas tax, the diesel surcharge will now be assessed at the pump, the $8.75 trailer renewal fee was eliminated, and the $5 tire tax was removed. Furthermore, the bill required the governor and the budget committee to approve any efforts to toll existing highway in the state, and it required a public comment period on any tolling project.
TRALA strongly opposes the $15 non-apportioned TIIF for trucks under 26,000 lbs. TRALA was the strongest voice for apportioning the TIIF for trucks less than 26,000 lbs during the initial House negotiations. The TIIF does not go into effect until January 1, 2018 and TRALA will be working with its allies in the state in an attempt to change this language to make it apportioned for commercial trucks under 26,000 operating in the IRP.
You may view the final infrastructure bill by clicking here.
TRALA is working to arrange a meeting with the Indiana Department of Revenue, TRALA, and the Indiana Motor Truck Association to address the $15 non-apportioned TIIF for trucks weighing less than 26,001 lbs. We expect the meeting to take place later this summer where we will explain the impact that the TIIF will have on our industry if not remedied before it goes into effect in 2018.
LATEST ACTION: TRALA hosted a conference call on July 19, 2017 with the Indiana Motor Truck Association and coalition partners to discuss how to proceed with an attempt to repeal the $15 TIIF on trucks weighing 26,000 pounds or less. A meeting was scheduled with Indiana's Department of Revenue (DOR) on July 27, 2017 at which time TRALA and its industry partners pushed the agency to rescind the fee on light-duty trucks by issuing a letter to the state legislature expressing their feeling that the intent of the original legislation was not to impact only in-state vehicles and thus they would not collect the fees. If this were to be successful then TRALA would work with the state legislature to pass legislation clarifying the intent of the original bill. If the IN DOR or the state legislature balks at this proposal, TRALA would support apportioning the TIIF fee to more fairly impact those vehicles using Indiana roads and bridges.
Rental Truck Anti-Ramming Legislation
The state of New York has released a new report on the rising increase of attacks carried out by vehicles, specifically rental vehicles. This report was likely in lieu of the horrific terrorist attack on October 31, 2017 in Manhattan where a terrorist used a Home Depot rental truck to maliciously plow over pedestrians; killing eight people and injuring eleven.
Following this attack in Lower Manhattan, the Independent Democratic Conference has proposed the "Vehicle Ramming Prevention Act" consisting of four items to prevent potential attacks like this one in the future. One of the four proposed terms is to require the Division of Homeland Security and Emergency Services to create a communication line between authorities and rental companies to inform them if they suspect suspicious rental activity. The second is to have the Division of Homeland Security and Emergency Services, as well as other necessary agencies, to develop a guidance document for employees of rental companies. The third term of the legislation would require rental companies as well as commercial truck companies to create prevention plans. These plans would evaluate technology, initiate plans for companies to monitor their trucker's routes, and require companies to create employee-training programs geared towards educating employees on spotting suspicious activity. Lastly, the Independent Democratic Conference will advocate to the state to find funding for infrastructure investments to prevent these attacks, such as the installation of pedestrian barriers.
TRALA remains very concerned with any attempts to mandate specific call numbers for rental companies to call into or the idea that TRALA members would follow their customer's routes in real time. Terrorism is a national issue and TRALA believes strongly that the federal government and not state entities are best suited to address these situations. Many TRALA members are also national in nature so creating a precedent that could result in 50 different state numbers to call in case of a security or terror-related issue would cause huge confusion and disruptions to TRALA members.
This follows in the wake of "sting" operations that the NY DHS office has conducted this year at the direction of the governor's office. These operations consist of NY officials pretending to be terrorists who arrive at a consumer rental company asking for a truck and give out multiple red flags in an attempt to see if the rental employee does in fact rent that truck or not. Multiple TRALA members have been targeted and while well-intentioned, these have not been coordinated with all of law enforcement nor the security leadership at TRALA member companies. Because of this, these operations have caused significant disruption in member company businesses and the NY officials often come back several hours later, leaving companies in confusion and the potential for other law enforcement being kept out of the loop meaning safety could be risked. TRALA sent a letter to NY DHS in July earlier this year expressing our desire to work together and not against one another. To date the letter has not been answered. To view a copy of the letter, please click here.
LATEST ACTION: TRALA has discussed the proposed New York anti-ramming legislation with some of its largest New York members over the past two weeks and will hold a call on November 20, 2017 to determine how to politically address the issue. Multiple TRALA members have relationships with key legislators and while TRALA would prefer no reactionary legislation be adopted, it appears that given the October 31 attack in New York City, the legislature will want to pass something that attempts to address vehicle ramming. TRALA will work with its members as well as state legislators to try and ensure any future legislation contains neither additional liability placed on truck rental companies, nor any overly burdensome administrative consequences.
Portland Weight Tax
Earlier this year, Oregon offered a ballot initiative that called for a 10 cent increase of the gas tax in the city of Portland in order to close a $10 million budget shortfall. However, due to concerns over "fairness" the city council decided to look at additional methods to raise the revenue without increasing the gas tax. The council settled on a 2.8% increase of the weight and mile tax on holders of Portland business licenses. The weight and mile tax is charged per mile on all trucks greater than 26,000 pounds which drive in the state of Oregon.
TRALA has significant concerns with this legislation, as it not only would raise taxes for TRALA members, but it also creates administrative and logistical constraints for TRALA members and their customers that operate in Portland. TRALA is working with its lobbyist in Oregon to determine whether the next step is to file a legal challenge to this tax or to propose a simpler method of collecting the money needed for road construction. It is clear that the city of Portland is determined to raise their revenue from the trucking industry, but the current method is not a viable solution.
Since anyone who delivers goods to a business in Portland is required to hold a Portland Business License, this new change could affect TRALA members and customers inside or outside of the state, regardless of whether or not they are operating within the Portland city limits frequently. Additionally, this could be seen as a precedent in Oregon where other cities decide to tax total miles in the State to help raise their own revenue.
You can view a fact sheet for this resolution by clicking here.
TRALA plans to discuss other proposals with state legislators and its allies during the next several months to attempt to find an alternative to this ill-advised proposal.
LATEST ACTION: TRALA has had discussions with multiple attorneys about the potential for a lawsuit, challenging the ability of the Portland City Council to amend the state's weight and mile tax and direct funds into the city's infrastructure program. In those discussions, the attorneys have expressed doubt on the outcome of such a lawsuit because there is no prohibition on a local jurisdiction taxing a business outside of its jurisdictional boundaries under the Oregon Constitution. As a result of these discussions, it is unlikely that a legal challenge will be able to solve the problems created by the Portland City Council. TRALA and its allies in Oregon are working with the city council to attempt to find an alternative funding source to this tax. TRALA believes that there is a path to change this plan as the sponsor of the bill Steve Novick lost his re-election bid and Portland has a new mayor which could allow for new negotiations to take place.
MFR on Rental Trucks
TRALA is lobbying to have legislation introduced that would correct a conflict between two separate insurance statutes in Wisconsin law. The issue first came to TRALA's attention when one of its members was involved in a court decision where the court ruled that a consumer rental truck must meet the Federal Minimum Financial Responsibility (MFR) requirements for common and contract carriers transporting property, instead of Wisconsin law which deals with MFR for rented or leased vehicles. Wisconsin law requires an insurance policy of $25,000 for the injury or death of one person, $50,000 for the injury or death of more than one person, $10,000 for property damage (25/50/10), whereas federal law for common and contract carriers transporting property by motor vehicle in excess of 10,000 pounds GVWR requires a $750,000 policy.
The statute which sets the 25/50/10 limits is W.S.A.§ 344.51, which deals with financial responsibility for rented or leased vehicles. The other statue in question is W.S.A. § 194.41, which deals with contract of liability for damage to persons or property. This area of law is primarily concerned with the registration and insurance requirements required of common and contract motor carriers and it references the federal law which states that the minimum financial responsibility for transporting property by motor vehicle in excess of 10,000 pounds GVW is $750,000.00.
The reason that the minimum insurance limits of $750,000 incorporated by reference into W.S.A. § 194.41 could be mistakenly interpreted to apply to consumer truck rentals is because the first line of W.S.A. § 194.41(1) reads, "(1) No permit or registration may be issued to a common motor carrier of property, contract motor carrier, or rental company..." if they do have an insurance policy to comply with the federal minimum. It is uncertain why the phrase "rental company" was included in that line.
TRALA is working to have the Chairman of the Wisconsin State Senate Transportation Committee, Jerry Petrowski, introduce legislation that would simply remove "rental company" in order to resolve the conflict in statute. Chairman Petrowski had indicated in the past that he might favor legislation that defines "rental company" for purposes of that section of law, in order to remove the threat the rental vehicles could be subject to the federal $750,000 minimum. However, TRALA is adamant that he should take the easiest approach and simply eliminate "rental company" from that section, which would bring Wisconsin back in line with the 49 other states that do not hold rental companies liable for meeting the federal $750,000 minimum that applies to for-hire carriers.
TRALA's lobbyist has met with Chairman Petrowski and he has agreed to introduce legislation to resolve the rental truck issue. Because of pushback from the Wisconsin Department of Transportation, instead of simply removing "rental company" from the existing statute, the legislative language will instead offer a definition of rental company that will in essence, remove TRALA member trucks from the requirements to hold $750,000 in insurance as a minimum. This legislation would move consumer rental trucks into the same class as they currently are in all other states. TRALA expects legislation to be introduced within the next several weeks.
On February 9, legislation was introduced in the state Senate at TRALA's request to clarify that consumer rental trucks are not subject to the federal minimum financial responsibility requirements. Senate Bill 710 was introduced by Senator Petrowski who also is Chairman of the Senate Transportation Committee which has jurisdiction over this issue.
On February 10, TRALA learned that a hearing will be held by the Senate Transportation Committee on Wednesday, February 17. TRALA was asked to provide a member company to testify on the impacts this change in law would have on the industry. TRALA has secured Mike Schneider of U-Haul to testify on the industry's behalf.
On February 17, a hearing was held where Mike Schneider of U-Haul, representing both his company as well as TRALA, delivered testimony arguing for the adoption of Senate Bill 710. There was no recorded opposition during the hearing. Following this, TRALA was informed that a paper ballot would likely be introduced for both Senate Bill 710 and the subsequent companion bill in the House, to be voted on by the State legislature. That was expected to happen in mid-March right before the legislature adjourns for the session. TRALA remains optimistic that it has the votes to secure the legislation's passage.
Senate Bill 710 was passed out of the Senate Transportation and Veterans Affairs Committee along party lines on March 9, 2016 by a vote of 3-2. The vote advances the bill forward where TRALA hopes it can be passed by the entire Wisconsin Senate. However, TRALA has learned that some trial lawyers in Wisconsin have begun pushing Democrats in the legislature to oppose the bill which could turn the bill into a partisan piece of legislation. That said, TRALA is confident that there is enough strong leadership behind the bill which should help it to pass in the Senate.
Unfortunately, TRALA has learned that the Assembly does not plan to consider AB 941 - the companion bill to SB 710 - during this session. AB 941 was introduced by Representative John Spiros (R-86) a few weeks ago at TRALA's request. This turn of events is not due to a lack of interest in the bill, but rather time constraints and procedural issues due to the session nearing a close on April 7, 2016. While TRALA is disappointed that it appears now the overall legislation is unlikely to be adopted this year, TRALA believes that passing the bill in the Senate this year will help to move legislation more quickly when the legislature reconvenes in January of next year.
TRALA was disappointed to learn that the Wisconsin Legislature plans to end its legislative session early without considering a full vote on SB 710. There is significant concern about the upcoming election, and as a result, leadership in the state legislature is letting members leave early this year so that they can work on their campaigns. TRALA is working with both its House and Senate sponsors to make sure that this MFR fix is ready to go at the beginning of the legislative session in 2017. Getting companion bills introduced, and passing one of them out of committee are significant steps which should allow TRALA the ability to move the bill faster next session, but the results of the November elections could change the political dynamics on the ground.
TRALA discussed last year's bill with Chairman Petrowski in late December and he was inclined to reintroduce the legislation in 2017. TRALA plans to work with the Chairman and his staff to have the bill filed early in 2017 and to coordinate similar hearings as were held last year in hopes of having this issue put up for a vote.
TRALA has received confirmation by both Representative John Spiros (R-86) and Senator Jerry Petrowski (R-29) that they have agreed to reintroduce their bills which would address the statute that incorrectly requires a rental company to carry $750,000 in insurance minimums. Both bills have been drafted and are seeking cosponsors currently. A copy of the notice that went out to fellow legislators can be viewed here. The industry can expect push-back from trial lawyers and thus, TRALA will coordinate with its members to find two individuals willing to testify on behalf of the legislation later this year.
TRALA has received word from its lobbyist that there are now five cosponsors committed to the TRALA-supported legislation and because of this support, the bills in both the House and Senate are expected to be introduced within the next two weeks with hearings likely scheduled soon after. It is now customary to have at least three people testify for each piece of legislation, thus TRALA will work with its membership to have two individuals prepared to testify later this year once a hearing is scheduled. TRALA has already received word that the trial lawyers most likely would be the third party to testify in opposition.
On April 10, 2017 Wisconsin Assembly Bill 207 and Wisconsin Senate Bill 156 were introduced. The Senate version was introduced by Senator Jerry Petrowski (R-29) and referred to the committee on Insurance, Housing, and Trade. The Assembly version was introduced by Representative John Spiros (R-86), and it was referred to the Committee on Insurance. Since their introduction, TRALA has been working to have both bills included in a hearing, where TRALA has arranged for representatives from two TRALA member companies to testify in support of these bills. TRALA has learned that both the Senate and Assembly versions could be marked up as early as May 4, 2017. TRALA expects opposition from the trial lawyers however, TRALA has heard that the Chairmen of both committees are supportive of the bills and will help to move them both out of their respective committees.
You can view the Senate Bill here.
You can view the Assembly Bill here.
On June 1, 2017, the Senate Committee on Insurance, Housing, and Trade held a hearing which included Senate Bill 156. TRALA arranged for its members Mike Schneider of U-Haul and Eric Hoffman of Enterprise to testify in support of the legislation. During the hearing TRALA faced opposition from the Independent Insurance Agents of Wisconsin. This group testified against the bill, arguing that "trucks" would have lower limits than appropriate if the bill were to pass and that the legislation was not consistent with other vehicles such as party buses and limousines. This of course confuses vehicles that require a CDL vs. consumer rental trucks that do not. TRALA is planning to schedule a meeting with the committee Chair, the bill's author, and the Independent Agents organization in an attempt to clarify the specifics of Senate Bill 156. Until this meeting occurs, the Chair has decided not to allow a final vote in committee.
LATEST ACTION: TRALA advised its lobbyist in Wisconsin during the week of October 9 to attempt an administrative fix to the issue if a legislative fix proves unlikely. TRALA is attempting to organize a meeting between the Senate Committee Chair, the bill's author, TRALA, and the Independent Agents of Wisconsin in order to educate them on the specifics of Senate Bill 156 and how the requested change in statute would have no impact on insurers and is in fact in-line with the other 49 states currently. The goal is to have a meeting held before the end of 2017.