Issue Updates - October 27, 2023
ISSUES WITH NEW INFORMATION SINCE THE LAST ISSUE UPDATE WILL BE COLORED IN BLUE SO YOU MAY VIEW ACCORDINGLY IF YOU WISH.
Earnings Before Interest, Taxes, Depreciation, & Amortization (EBITDA)
During the deliberation of the Tax Cuts and Jobs Act of 2017, TRALA was extremely active in securing favorable treatment for interest deductibility as part of the overall package. TRALA hired one of the country’s preeminent tax lobbyists to help make the case to leadership in Congress. Ultimately, Congress and the Trump Administration agreed to allow businesses to deduct interest up to 30% of adjusted income earnings before interest, taxes, depreciation, and amortization (EBITDA). Additionally, once the COVID-19 (coronavirus) pandemic began to cripple business, Congress chose to expand the interest deductibility provision temporarily to 50% of EBITDA until December 31, 2021 in an effort to help the economy. Unfortunately, the entire provision of EBITDA sunsets on December 31, 2021. In its place interest deductibility would be limited to 30% EBIT, with no depreciation or amortization included in the determination of what constitutes a company’s earnings and therefore the net sum of interest that may be deductible. This change would put capital-intensive and debt-reliant industries such as the trucking (among others) industry at an extremely disadvantageous position.
TRALA was contacted by Senator Roy Blunt’s (R-MO) office in January of 2021 to discuss the issue. TRALA, several other organizations, and many companies have made the case directly to Senator Blunt that changing the way businesses are taxed during an unprecedented pandemic made no sense and that the EBITDA provision should be made permanent. Senator Blunt agreed and promised to offer legislation that would make the 30% interest deduction of EBITDA permanent. Senator Blunt is an influential member of the Senate Republican leadership and the Chair of the Senate Republican Policy Committee so having him as the lead of this effort will greatly elevate the issue as Congress debates a tax bill later this year.
To View TRALA’s activities relating to EBITDA from 2021 – 2022, please click here.
On March 10, 2022, the Coalition for America’s Interest met with staff for Senator Debbie Stabenow (D-MI) regarding the effort to make interest deductible at 30% of EBITDA permanent. The staff expressed an interest in the idea but stressed the difficulty of the Senate calendar and finding a bill that could move which interest deductibility could be attached. Stabenow’s staff indicated that a future reconciliation bill could include a tax title that could possibly include interest deductibility permanency if enough support for the idea gained traction within Congress. TRALA will continue to meet with Members of Congress and their staff to lobby for interest deductibility permanence at 30% of EBITDA but TRALA remains skeptical that this is a realistic possibility in 2022.
On June 13, 2023, the House Ways & Means Committee marked-up and passed a number of tax-related pieces of legislation. Among those considered by the Committee, H.R. 3938 – Build It in America – is most important to TRALA members. This legislation included language on both the restoration of EBITDA and 100% Full Expensing. For EBITDA, the bill includes a temporary, four-year extension of the EBITDA standard for interest deductibility. Under the bill, taxpayers would be able to elect an EBITDA or EBIT standard for 2022, and EBITDA would apply across-the-board in 2023, 2024, and 2025.
TRALA remains very pessimistic that such a tax package could survive the full Senate let alone the fact that Biden would almost surely veto a bill such as H.R. 3938. That said, TRALA will continue to lobby in favor of its passage, including during its Fly-In on June 21, 2023, and will work with its allies in Congress and the business community to attempt to move the key issues forward with the possibility that in late 2024 or in 2025 passage of these tax issues may be possible.
LATEST ACTION: Members of TRALA's Board of Directors accompanied TRALA staff on a series of congressional office visits on June 21 to discuss the issue of EBITDA, full expensing, along with tort reform with key legislative offices. Multiple groups specifically discussed the need to move back to EBITDA for tax reporting vs. EBIT due to the capital-intensive nature of the truck renting and leasing industry. While most of the offices members met with were supportive, it was also made clear that no tax packages were likely to move in Congress in 2023. That said, the meetings were very productive in illustrating the impact the issue of EBITDA has on our industry.
As part of the 2017 Tax Cuts and Jobs Act, Congress sought to encourage investment by changing the expensing rules for businesses that purchase new property. Congress chose to eliminate Like-Kind Exchanges for property and instead allow for immediate 100% expensing of all new property. Congress elected to make this new 100% bonus depreciation of all new property available to companies for 5 years, with a phase out of 20% reduction in bonus depreciation each year beginning on January 1, 2023. While it was expected that Congress would maintain bonus depreciation at 100% and not allow the phase out reductions of bonus depreciation to begin, Congressional Democrats and President Biden have not endorsed an extension of 100% bonus depreciation. As a result, TRALA has joined a coalition of businesses to push for an extension of 100% bonus depreciation in a future tax bill.
On July 13, 2022, TRALA participated in a call of its coalition to maintain full expensing. The call focused on H.R. 2558, the Accelerate Long-Term Growth and Investment Now Act, which makes permanent 100% bonus depreciation also known as full expensing. The bill was authored by Rep. Jodey Arrington (R-TX) and has 117 cosponsors, all Republicans. During the call, the coalition discussed the potential for a tax extenders package after the election, and the need to identify Democrats to support the bill in order to give the effort to make full expensing permanent an option for an end of year tax extenders package. You may view H.R. 2558 by clicking here.
On September 15, 2022, TRALA joined other members of the Full Expensing Coalition in a conference call with Senator James Lankford’s (R-OK) office, who is a member of the Senate Committee on Finance. The group also met with staff for Senator Roy Blunt, who sits on the Committee on Commerce, Science, and Transportation on September 22, 2022. Both meetings were designed to begin to gather support in the Senate to introduce a companion bill to Rep. Jodey Arrington’s legislation that would make permanent 100% bonus depreciation (or full expensing). These meetings were a positive initial step in beginning to educate Senators on the importance of the permanency of 100% bonus depreciation and why phase out of 20% reduction in bonus depreciation each year beginning on January 1, 2023, would be harmful to businesses.
On December 9, 2022, TRALA joined with members of the Full Expensing Coalition in sending a letter to House and Senate leaders, along with the Chairs and Ranking Members of the House Ways & Means Committee and Senate Finance Committee, which urged Congress to maintain the current level of accelerated depreciation. In meetings with members of Congress and staff over the month of December, TRALA reminded them that keeping bonus depreciation at 100% only spurs investments and ensures that the United States is positioned to attract capital in a competitive global marketplace. Unfortunately, an extension was not included in any of the end of year legislative vehicles. To read the coalition letter, please click here.
On March 30, 2023, the bicameral companion legislation, Accelerate Long-Term Investment Growth Now (ALIGN) Act, was introduced in the Senate by Sen. James Lankford (R-OK) and in the House by Rep. Jodey Arrington (R-TX). If passed, H.R. 2406/S. 1117 would make full expensing permanent. TRALA will work with Senator Lankford and Congressman Arrington, as well as, a host of bipartisan lawmakers, to attempt to advance this legislation that drives American competitiveness, promotes job growth, improves supply chains, and bolsters the U.S. economy. That said, TRALA remains skeptical that any tax legislation can survive in the U.S. Senate given the current political climate in Washington, D.C.
On June 13, 2023, the House Ways & Means Committee marked-@ and passed a number of tax-related pieces of legislation. Among those considered by the Committee, H.R. 3938 – Build It in America – is most important to TRALA members. This legislation included language on both the restoration of EBITDA and 100% Full Expensing. For Full Expensing, the bill extends 100% immediate expensing, a solution recently introduced by Rep. Arrington (R-TX) in the ALIGN Act (H.R. 2406) that gives companies looking to purchase equipment the opportunity to expand operations.
TRALA remains very pessimistic that such a tax package could survive the full Senate let alone the fact that Biden would almost surely veto a bill such as H.R. 3938. That said, TRALA will continue to lobby in favor of its passage, including during its Fly-In on June 21, 2023, and will work with its allies in Congress and the business community to attempt to move the key issues forward with the possibility that in late 2024 or in 2025 passage of these tax issues may be possible.
LATEST ACTION: Members of TRALA's Board of Directors accompanied TRALA staff on a series of congressional office visits on June 21 to discuss the issues of full expensing, EBITDA, as well as tort reform. During these meetings, TRALA members were able to demonstrate the importance of full expensing to our industry and asked for support in a future tax package. While the meetings were very positive, staff and Members of Congress both indicated that no substantive tax bills were likely to be enacted in 2023 due to gridlock and an Administration that is currently uninterested in any pro-business measures.
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.
To view TRALA’s actions on autonomous trucks and data in 2017-2019 please click here.
On December 4, 2019 TRALA received several draft sections of the anticipated autonomous vehicle bill the Senate Committee on Commerce, Science, and Transportation has been drafting. As TRALA expected, the committee will once again not include trucks in their final autonomous vehicle legislation. The committee wants the focus of the bill to be on passenger vehicles and not on commercial trucks. TRALA is disappointed that the committee will not consider trucks in their autonomous vehicle legislation and it will continue to work with its partners to make sure that trucks are treated fairly as vehicles move towards greater levels of automation.
LATEST ACTION: On February 6, 2020, the United States Department of Transportation (DOT) published in the Federal Register their Automated Vehicles 4.0 program. This round of autonomous vehicle guidance further details the government’s expanding effort to incorporate autonomous vehicles into the transportation sector. The document builds upon previous autonomous vehicle guidance which established a baseline for OEMs and the government to follow as the industry builds towards autonomous vehicles. Autonomous Vehicle 4.0 expands upon the roles of all the government agencies which will be involved in regulating autonomous vehicles as well as establishing a set of guiding principles for the government to follow regarding autonomous vehicles. In its release the DOT states that its principles for autonomous vehicles will focus on:
I. Protect Users and Communities
1. Prioritize Safety
2. Emphasize Security and Cybersecurity
3. Ensure Privacy and Data Security
4. Enhance Mobility and Accessibility
II. Promote Efficient Markets
5. Remain Technology Neutral
6. Protect American Innovation and Creativity
7. Modernize Regulations
III. Facilitate Coordinated Efforts
8. Promote Consistent Standards and Policies
9. Ensure a Consistent Federal Approach
10. Improve Transportation System-Level Effects
The DOT has asked that stakeholders submit their comments within 30 days. You may view the AV 4.0 proposal in the Federal Register by clicking here.
National Labor Relations Board
The National Labor Relations Board (NLRB) had taken multiple actions during the Obama Administration that were 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. The Trump Administration spent four years trying to un-do those changes by returning the NLRB to a closer version of its historic self. Now that the Biden Administration is taking control in 2021, TRALA expects many of the same battles to ensue and issues that impact the trucking industry as a whole could take center stage.
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.
On November 29, 2022, the NLRB granted TRALA and CDW’s request for an extension to the comment period on the Board’s representation-case procedures proposed rulemaking to February 2, 2022. This represents a 30-day extension beyond the originally provided 60 days.
In its request, CDW asked the Board to provide the extension to ensure the regulated community has an opportunity to weigh in on the potential impact the proposed changes could have on business operations, the workforce, and the economy generally. As explained in the request, businesses – and especially smaller entities – likely will not be able to redirect resources and valuable time during the holiday season to provide meaningful comments to the Board. Moreover, resources are already limited due to the current economic environment.
TRALA and CDW will be filing comments on the proposal, which:
- Brings back the “blocking charge” policy, which halts union representation or decertification elections if the union alleges the employer committed unfair labor practices until those charges are resolved;
- Eliminates the 45-day window that allows workers to challenge union representation via a secret ballot election if the employer voluntarily recognizes the union based on signed authorization cards; and
- Rescinds amendments that required unions in the construction industry to maintain proof of majority support if they want an exclusive collective bargaining relationship that is resistant to challenge.
Assembly Bill 5 dramatically restricts the ability of employers to hire traditional independent contractors, forcing many companies to now classify these workers as employees in the state under the use of an “ABC” test. The ABC test requires employers to prove that an employee is: A) free from control and direction in connection with the performance of a service B) the service is performed outside of the usual course of the business of the employer C) the individual is customarily engaged in an independently established trade, occupation, profession, or business of the same nature as that involved in the service performed.
Under the new filing, the CTA cited that the state did not explain how a motor carrier is supposed to comply with the law especially as it pertains to the B prong. The CTA also explained that the “ABC” test negatively impacts fleets and owner-operators who rely on the leased owner-operator model for their business which is codified under federal law in the Truth in Leasing regulations. The CTA also claims that Assembly Bill 5 violated the Dormant Commerce Clause under the United States Constitution.
TRALA supports the CTA’s new preliminary injunction against Assembly Bill 5 and will continue to monitor the case closely. A hearing will occur on May 1, 2023, at the United States District Court for the Southern District of California in San Diego to address the CTA’s new arguments against the law.
On February 2, 2023, TRALA, as a member of the CDW, filed comments on the National Labor Relations Board’s proposed rulemaking which would alter representation election processes. The changes in the Notice of Proposed Rulemaking would target three provisions: the blocking charge rule, voluntary recognition bar, and voluntary recognition in the construction industry. In the comments, the CDW explains how the changes would “negatively affect the Board’s representation case jurisprudence, undermine the Agency’s statutory goals and reputation, diminish employee free choice, and upset the balance of countervailing interests.”
You may view the comments by clicking here.
On February 28, 2023, Congressional Democrats reintroduced H.R. 20, the Richard L. Trumka Protecting the Right to Organize Act of 2023. The bill is a wish list of radical labor policies that would infringe on workers and employers’ rights, would diminish opportunities for entrepreneurs and small business owners, and devastate the economy.
Through its active membership in CDW, TRALA and its allies will soon be sending a letter to all Members of Congress, urging them to strongly oppose this legislation.
You may view a draft of the upcoming letter by clicking here.
On March 23, 2023, TRALA and CDW sent a letter to Congress which requests that it oppose the Protecting the Right to Organize (“PRO”) Act (H.R. 20, S. 567). The bill would “limit workers’ right to secret ballot elections, trample free speech and debate, jeopardize industrial stability, threaten vital supply chains, limit opportunities for small businesses and entrepreneurs, cost millions of American jobs, and greatly hinder the economy,” among other things. The letter points out numerous dangerous provisions of the bill, the substantial public opposition to some of the bill’s key features, and the economic toll it would have on businesses if it were to pass Congress.
You may view the letter by clicking here.
On May 15, 2023, TRALA and 34 other organizations wrote to all 100 United States Senators to express its opposition to Secretary of Labor nominee, Julie Su. Ms. Su’s track record as California’s Secretary of Labor raises legitimate questions about her ability to lead the U.S. Department of Labor (DOL), particularly at a time when the U.S. faces supply chain challenges, inflation, and workforce shortages. Moreover, current labor negotiations at the West Coast ports and upcoming negotiations elsewhere could, without adequate leadership, effectively shut down the nation’s economy. At a recent hearing held by the Senate Committee on Health, Education, Labor and Pensions, Ms. Su failed to adequately address questions about her record and her plans to address the nation’s challenges in a manner that advances the collective goals of reducing inflation, ensuring stable supply chains, and supporting economic opportunities for employers and employees alike. Confirming a labor secretary with a track record of putting roadblocks in the way of solving the current workforce shortage would negatively affect every American, every business (particularly small businesses), and the economy.
To view the letter, please click here.
On June 2, 2023, President Joe Biden announced his intent to renominate Gwynn Wilcox (D) to another term on the National Labor Relations Board. Wilcox has been a key figure in advancing radical policies that upended precedent that had stood for decades and efforts to alter the Board’s processes to help tip the scales in favor of unions. TRALA, and the Coalition for a Democratic Workplace (CDW), will draft an opposition letter to her nomination urging policymakers to hold her accountable for everything the Board has been doing over the last 2+ years.
On June 13, 2023, On June 13, the Board issued its decision in The Atlanta Opera, overturning the Trump-era SuperShuttle decision and reinstating the Obama-era FedEx Home Delivery standard for determining whether a worker is an employee or independent contractor under the National Labor Relations Act (NLRB).
The decision abandons the emphasis on entrepreneurial opportunity established in SuperShuttle. It also ignores the DC Circuit’s rebuke of FedEx Home Delivery, in which the court criticized the Board for its attempt to implement a narrow independent contractor standard beyond what was permissible by common law.
On June 21, 2023, the Senate Health, Education, Labor, and Pensions (HELP) Committee held a markup on three labor and employment bills, including the PRO Act, Senate Bill 567. The bill was approved by the Committee down party lines, with all Democrats supporting passage and all Republicans voting against the legislation. There were numerous amendments offered by Republican Members, but they all failed.
You may view Senate Bill 567 by clicking here.
You may view a summary of the PRO Act by clicking here.
On July 11, TRALA, as a member of the Coalition for a Democratic Workplace (CDW) sent a letter to the Senate Health, Education, Labor, and Pensions (HELP) Committee urging them to delay their vote on Wilcox’s nomination. The delay would then allow the Committee to hold a hearing and question her on the actions the Board has taken while she has been a member. In addition, the next step would be to force the Biden administration to pair her nomination with a Republican candidate. There is currently a vacancy left by Republican Board member John Ring’s departure in December 2022.
You may view the letter by clicking here.
On July 12, 2023, the HELP Committee passed Gwynne Wilcox’s nomination out of committee without a hearing, thereby denying Senators an opportunity to question Wilcox about her troubling tenure on the Board, including overturning long-standing precedent and ignoring the stakeholder community.
On July 27, Senate Majority Leader Chuck Schumer filed cloture on Gwynne Wilcox’s nomination to serve another term on the National Labor Relations Board (NLRB). The full Senate vote is expected to occur shortly after the August recess. Her current term, however, expires in August, so TRALA expects the Board to issue several cases before she leaves.
In fact, the NLRB recently confirmed that it will publish the joint employer final rule in August, meeting its target release date set in the Spring 2023 Regulatory Agenda. TRALA expects the final rule will closely mimic the Board’s proposal. TRALA, through CDW, filed comments on the proposal, highlighting that the changes proposed will create more confusion for the regulated community. Through CDW, TRALA emphasized that the proposal violates the common law interpretation of the joint employer standard and that the Board does not have authority to implement these changes.
On Aug 24, 2023, the NLRB issued a final rule altering the procedures for representation elections. The rule reverses changes made under the Trump Administration, which in turn had reversed the Obama-era ambush election rule. There are ten provisions in the final rule, all of which drastically shorten the time between a union filing a petition for election and the holding of that election.
The Board issued this rulemaking without going through the formal notice-and-comment process, giving stakeholders no opportunity to weigh in with their concerns.
At the end of August 2023, Board member Gwynne Wilcox’s term officially ended, leaving the Board with a 2-1 Democratic majority.
Also on August 24, 2023, the White House Office of Information and Regulatory Affairs (OIRA) completed its review of OSHA’s Worker Walkaround Representative Designation NPRM. The regulation could be released any day now. This policy was originally attempted during the Obama Administration via a 2013 Letter of Interpretation, but that Letter was struck down by a court as part of a suit by NFIB and later withdrawn by the Trump administration.
Shortly thereafter, as expected, the Occupational Safety and Health Administration (OSHA) published the proposed regulation that will allow union representatives to accompany OSHA inspectors on walk around inspections at non-union workplaces. The proposal focuses on allowing third party representatives to participate in OSHA inspections, if requested by an employee, on the basis that they have “relevant knowledge, skills, or experience with hazards or conditions in the workplace or similar workplaces, or language skills of third-party representative(s) authorized by employees who may be reasonably necessary to the conduct of a CSHO's physical inspection of the workplace.” There is scant mention of this opening the door for union representatives, but there is no question that will be the primary effect of this regulation if implemented. Comments are due 10/30/23 (a 60 day comment period) and TRALA, as a part of the Coalition for a Democratic Workplace (CDW), has requested an extension so that more substantive comments may be submitted.
On September 6, 2023, the Senate voted to confirm Gwynne Wilcox to serve another term on the NLRB. The final vote was 50-49, with Sen. Murkowski (R-AK) being the lone Republican to vote in her favor and Sen. Manchin (D-WV) being the lone Democratic voting against her nomination. TRALA, through CDW, sent a letter to the Senate urging them to oppose the nomination due to her concerning tenure while on the Board. The Board will now have a guaranteed 3-1 Democratic majority through at least December 2024, when Chair McFerran’s (D) term expires.
With Wilcox back on the Board, the Democratic majority is free to issue its joint employer final rule. As a reminder, we expect the rule will dramatically expand who qualifies as a joint employer under the NLRA, making them liable for any bargaining responsibilities and unfair labor practices committed against the shared employees.
LATEST ACTION: On October 26, 2023, the NLRB issued its final rule altering the standard for determining joint employer status under the NLRA. The rule replaces the Board’s 2020 final rule, which had addressed the damaging standard adopted by the Obama-era Board in Browning Ferris Industries (BFI).
At first glance, the final rule appears to be very closely aligned with the Board’s NPRM and represents a drastic expansion to joint employer status for purposes of the Act. Notably, the final rule explicitly states that either possessing the authority to control one or more essential terms and conditions of employment (regardless of whether it is exercised) OR exercising the power to control indirectly one or more essential terms and conditions of employment (regardless of whether the power is exercised directly) is sufficient to establish an entity’s status as a joint employer. This means that either indirect or reserved control may stand alone as basis for the finding of a joint employer relationship, and the existence of either – without regard to the extent of the reserved or indirect control – indicates joint employer status. This standard extends beyond the harmful policy adopted in BFI and as Member Kaplan notes in his dissent, the rule “is potentially even more catastrophic ... as well as more potentially harmful to our economy, than the Board’s previous standard in BFI."
TRALA staff will review this decision and continue to work with CDW and its allies to fight against this and other overreaching anti-business proposals by the current NLRB.
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 released a white paper in order to go into great detail about its concerns.
To view TRALA’s actions on tolling from 2014-2022, please click here.
On January 24, 2023, members of the Alabama Toll Road, Bridge, and Tunnel Authority approved proposals from the Mobile River Constructors and Kiewit-Massman-Traylor for the construction for adding tolls to Interstate 10 on the Mobile River Bridge and Bayway. The Mobile River Bridge project has an estimated cost of almost $1.5 billion and $1 billion for the Bayway project. Additionally, the project has proposed toll rates of $2.50. The Authority’s approval will allow the Mobile River Bridge and Bayway tolling project to move forward under the framework created by the Eastern Shore and Mobile Metropolitan Planning Organizations (MPO) in 2022. TRALA continues to work with the Alabama Trucking Association (ATA) to ensure that its members are not unfairly targeted under the toll rates.
On February 10, 2023, the Rhode Island Department of Transportation (RIDOT) filed an appeal requesting that the ruling, which deemed that the trucks-only tolling program is unconstitutional, be reversed. The trucks-only tolling scheme was created under former Governor Gina Raimondo’s (D) RhodeWorks program that sought to generate $4.7 billion for infrastructure projects across the state. TRALA had supported the American Trucking Associations (ATA) and other interest groups in the lawsuit against the tolling program that would have collected the majority of its revenue from trucks only.
RIDOT’s appeal argues that the court should grant oral arguments citing that the court struck down a state statute under the Constitution as it relates to federalism and the Commerce Clause. While TRALA does not anticipate that the court would overturn its ruling, it will continue to engage with its allies in case it should need to act in the future.
On February 15, 2023, TRALA received an update from the Pennsylvania Motor Truck Association (PMTA) which said that the Pennsylvania Department of Transportation (PennDOT) is moving forward with the Public-Private Partnerships (P3) project to replace six bridges without any tolls. In 2021, PennDOT released a list of bridges that should be considered for tolling to generate funding through tolling for infrastructure-related projects across the state. TRALA’s main concern was that PennDOT’s proposal called for the use of electronic tolling that would be collected through use of an E-ZPass device or license plate billing, putting the truck renting and leasing industry at risk for being held completely responsible for toll violations.
The decision to repair the bridges without the addition of tolls comes after the Legislature passed Senate Bill 382 in 2022 which rescinds the P3 Board’s action that approved the P3 Major Bridge Initiative. The bill states that PennDOT may continue work on the nine bridges, while preserving preliminary designs and engineering plans, but prohibits tolling as the source of revenue to pay for the projects as previously proposed. TRALA applauds that the state recognized the ill effects of adding tolls to existing highways and that the law will prevent a similar situation from occurring in the future by requiring increased transparency and oversight.
On February 28, 2023, the United States Department of Transportation (DOT) announced that it will award $60 million in Mega Grant funding to widening Interstate 10 (I-10) in Diamondhead, Mississippi and $150 million to the new construction of a bridge on I-10 over the Calcasieu River in Louisiana, but there would not be any funding to the Mobile River Bridge and Bayway tolling project which is estimated to cost $2.7 billion.
The Alabama Department of Transportation (ALDOT) applied to receive funding from the Mega Grant program that was created under the Infrastructure Investment and Jobs Act which President Joe Biden signed into law at the end of 2021. ALDOT announced that the project would be funded through bonding in the amounts of $250 million in state funds and $125 million through the federal Infrastructure for Rebuilding America (INFRA) Act which was awarded to the department in 2019. Additionally, tolling will be the main source of repaying a federal loan of $300 million; however, tolls will not be added to existing routes.
ALDOT announced that the toll rates for the bridges project will be $18 for a 5-axle truck with an ALGO sticker and $31.75 without one. TRALA is working with the Alabama Trucking Association (ATA) to ensure that EZ-Pass transponders are compatible. Additionally, TRALA and ATA are advocating for a monthly pass for commercial vehicles.
ALDOT anticipates that the project will be constructed by 2028. ALDOT is in negotiations with Omaha-based Kiewit Infrastructure on a joint-venture team to oversee the design and construction of the new bridge with the expectations that a separate design-build contract will be rewarded later this spring on the Bayway portion of the project.
LATEST ACTION: On June 1, 2023, TRALA filed, with a handful of other federal trade associations and nearly every state trucking association, an amicus brief in support of the American Trucking Associations in their case vs. the Rhode Island Turnpike and Bridge Authority.
As you may recall, TRALA supported the original case with the Rhode Island Trucking Association in their suit against the anti-truck tolling program that went into effect a few years ago. The tolling plan only targeted trucks on Interstate highways and bridges, making it unconstitutional. A federal court judge ruled in favor of TRALA and its allies and now the Rhode Island Turnpike and Bridge Authority has appealed that decision. The Scopelitis law firm handled the brief and worked with TRALA and others to craft the key arguments for why the original decision was correct.
You may view the amicus brief by clicking here.
Federal Environmental Rules and Regulations
Climate change has become a major political issue over the past decade and as a result, both the federal government and some states have taken active roles in reducing emissions from cars and trucks. The states in particular have been led by California which, through its Air Resources Board (CARB), has been aggressively targeting the car and truck market through emissions rules. As a result, the federal government through the Environmental Protection Agency (EPA) has attempted to work with CARB to ensure a single environmental standard for Original Equipment Manufacturers (OEM) to follow. However, with the Trump Administration in office CARB has taken a more aggressive path in trying to shape environmental policy in the United States. TRALA continues to work with the EPA to make sure that any new environmental rules are both attainable for OEMs as well as to ensure they set a level playing field for the industry to follow.
TRALA expects several initiatives from the Biden Administration will impact environmental regulations in the coming months and years to be more aggressive on emissions rules that could impact the trucking industry.
To view TRALA’s actions on environmental rules and regulations from 2014-2021, please click here.
EPA NOx Rule
On March 7, 2022, the Environmental Protection Agency (EPA) released their long-anticipated Notice of Proposed Rulemaking (NPRM) for the Clean Trucks Plan. The rule is extensive and seeks to significantly reduce the federal standard for NOx from the current level of 0.2 to either .02 or .05, putting it more in line with the NOx rule produced by the California Air Resources Board (CARB). Furthermore, the rule seeks to tighten the Greenhouse Gas (GHG) emissions standards created by the Obama Administration beginning with Model Year 2027. The EPA has set a public comment period of 46 days upon the rule being published in the Federal Register.
The EPA is proposing two options for reducing NOx for the public to comment. Option 1 is the more stringent of the NOx standards and would be a 2-step process that would ultimately reduce NOx by 90% to .02 in Model Year 2031, putting the EPA at the same level as CARB’s NOx standard. Option 2 would require manufacturers to reduce their NOx by 75% to .05 in 2027, setting a national standard that is higher than CARB’s. The proposed rule would also make changes to testing requirements, warranties, and it extends the useful life of an engine to maintain the new NOx standards.
TRALA has significant concerns with the Biden Administration’s proposal to set a drastically lower national standard for NOx, while simultaneously tightening GHG Phase II standards. You may view the proposed rule in its entirety by clicking here.
On May 13, 2022, TRALA formally submitted its comments to the Environmental Protection Agency (EPA) on their Clean Trucks Plan. TRALA incorporated suggestions from its membership as well as suggestions from its friends at the Truck and Engine Manufacturers Association (EMA) and some of the individual OEMs.
In its comments TRALA focused on the economic and technological implausibility of the 90% reduction in NOx proposed by Option 1. Furthermore, TRALA encouraged the EPA to amend Option 2, which called for a 75% reduction in NOx but would not prevent CARB from adopting a different standard, and to make it a national standard. This would require the EPA to force CARB as well as several other states that typically follow California’s lead to amend their NOx rules to meet the 75% reduction in NOx proposed in Option 2. Finally, TRALA encouraged the EPA to use a national standard for NOx to establish a national Clean Idle Standard set at .05
You may view TRALA’s comments on the Clean Trucks Plan by clicking here.
On December 20, 2022, the EPA adopted its final NOx rule entitled, “Control of Air Pollution from New Motor Vehicles: Heavy-Duty Engine and Vehicle Standards.”
The EPA believes this final rule will set “stronger emissions standards to further reduce air pollution, from heavy-duty vehicles and engines starting in Model Year (MY) 2027.” Lastly, the EPA projects that, by 2045, this final rule will reduce Nitrogen Oxide (NOx) emissions from the in-use fleet of heavy-duty trucks by almost 50%.
The new EPA standards require heavy-duty commercial vehicles to limit NOx emissions to 0.035 grams per horsepower-hour during normal operation, 0.050 grams at low load, and 10.0 grams at idle.
The new emissions standards also impact vehicles by forcing more stringent standards for a longer period of time of when these engines operate on the road. EPA estimates that the new NOx rules will increase the useful life of heavy-duty trucks by 1.5 to 2.5 times and will yield emissions warranties that are 2.8 to 4.5 times longer. These longer useful lifespans and warranty periods in theory should guarantee that as target vehicles age, they will continue to meet the EPA's more stringent emissions standards for a longer period.
This final rule is the first of three major actions being taken under EPA's Clean Trucks Plan. By the end of March 2023, the EPA intends to release the proposals for the remaining two steps in the Clean Trucks Plan:
- Proposed “Phase 3” GHG standards for heavy-duty vehicles beginning with MY 2027
- Proposed multipollutant standards for light- and medium-duty vehicles beginning with MY 2027.
The EPA will likely prioritize releasing decisions on the three pending heavy-duty program waiver requests from the state of California in early 2023. TRALA will continue to work with its allies to address the EPA's drastic emission reduction rules for trucks.
You may view the final rule in its entirety by clicking here.
On January 24, 2023, the EPA published its final NOx rule entitled, “Control of Air Pollution from New Motor Vehicles: Heavy-Duty Engine and Vehicle Standards.” There were no changes to this published rule from the December 20th pre-published version. TRALA will continue to monitor activity as it relates to the NOx rule.
On February 9, 2023, Sen. Deb Fischer (R-NE), along with 33 Republican cosponsors, introduced S.J. Res. 11, a joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Environmental Protection Agency relating to "Control of Air Pollution From New Motor Vehicles: Heavy-Duty Engine and Vehicle Standards." If adopted, this joint resolution would nullify the EPA’s final NOx rule, which was published on January 24, 2023. The nullification would be made possible by a legislative oversight tool known as the Congressional Review Act, which is used to overturn final rules issued by federal agencies. TRALA believes this action to be more “messaging” in nature rather than a legitimate attempt to overturn the EPA rule. That said, even though on the surface, TRALA would welcome the supportive measure by Congress, it would not prevent states like California from enacting their own more draconian measures and thus, this joint resolution could be seen as the federal government abdicating its authority over emissions and environmental matters to the states which TRALA would oppose vigorously.
On April 12, 2023, the Environmental Protection Agency (EPA) announced its proposed Phase 3 greenhouse gas (GHG) emissions standards rule for heavy-duty vehicles beginning with model year 2027. Specifically, this rule would apply to heavy-duty vocational vehicles (such as delivery trucks, refuse haulers, public utility trucks, transit, shuttle, school buses, etc.) and tractors (such as day cabs and sleeper cabs on tractor-trailer trucks).
The proposed rule, which would also set further stringent CO2 standards for model years 2028 through 2032, builds upon the 2011 Phase 1 GHG rule and the 2016 Phase 2 GHG rule. Additionally, the EPA issued a proposed rule that would reduce GHG emissions for light- and medium-duty vehicles.
TRALA anticipates that comments will be due around June 1, 2023. The EPA plans to hold a public hearing prior to the comment period deadline, which will occur on May 2 and May 3. A separate hearing on the light- and medium-duty vehicles rulemaking will be held on May 9 and 10. TRALA will work with its environmental consultant and its allies to ensure it fully addresses how these rules will impact its membership.
You may view the proposed heavy-duty vehicle rule in its entirety by clicking here and the light- and medium-duty rule by clicking here.
LATEST ACTION: On April 27, 2023, the Environmental Protection Agency (EPA) officially published its proposed Phase 3 greenhouse gas (GHG) emissions rule for heavy-duty vehicles in the Federal Register. This action formally began the agency’s 50-day public comment period, which lasted until June 16th.
First and foremost, the Phase 3 rule will increase up-front truck purchase prices. However, EPA does expect that this upfront cost increase will be recouped due to reduced operating and fuel savings, even though industry experts are not convinced this will occur with the first generation of electric vehicles. .
Second, the proposed Phase 3 rule revises the previously-approved Model Year (MY) 2027 GHG standards to be more stringent for vocational vehicles and day cab tractors. In addition, it introduces new standards for vocational vehicles and day cab tractors for MYs 2028 through 2032 that will be progressively more stringent. For sleeper cab tractors, the proposed Phase 3 rule introduces new, more rigorous GHG standards for MYs 2030-2032. Like the Phase 2 GHG rule, the Phase 3 standards are differentiated by vehicle type and use. Lastly, it’s important to note that the proposed standards do not mandate the use of a specific technology.
While the EPA has a history of underestimating industry costs, they do believe that the MY 2032 average per-vehicle cost increase will be between $8,000 and $11,400 per tractor. In addition, due to the extra layers of complexity involving added vehicle weight, recharge times, and vehicle range, fleets will likely need to utilize additional zero-emission vehicles (compared to the number of diesel-fueled vehicles) to ensure they can fulfill the hauling needs of their customers.
During the comment period, TRALA staff and its environmental consultant worked with the membership to develop TRALA’s formal comments for submittal. In its comments, TRALA highlighted that the truck renting and leasing business model is far different than the more traditional sale/purchase model for fleets acquiring trucks. TRALA’s 24-page comment letter addressed several issues with this latest proposed rule. TRALA highlighted the disproportionate impact zero-emission vehicle (ZEV) purchases will have on small trucking companies, in addition to their residual resale value. In addition, TRALA made clear that transitioning to a zero-emissions future is not about flipping a switch. Such unprecedented efforts will not occur overnight and must consider the fact that internal combustion engines will remain necessary for the trucking industry nationwide for decades to come and that electric infrastructure is not remotely ready to accept the number of vehicles that EPA anticipates moving away from diesel.
To view TRALA’s formal comments, which were submitted on June 16, 2023, to the Environmental Protection Agency, please click here.
On June 14, 2023, President Joe Biden vetoed S.J. Res. 11, a joint resolution providing for congressional disapproval under chapter 8 of title 5, United States Code, of the rule submitted by the Environmental Protection Agency relating to "Control of Air Pollution From New Motor Vehicles: Heavy-Duty Engine and Vehicle Standards." Subsequently, the United States Senate attempted to override the President’s veto on June 21, 2023, but his veto was sustained with a vote of 50-50. These actions come on the heels of S.J. Res. 11’s passage in both chambers of Congress earlier this spring.
National Electric Vehicle Infrastructure (NEVI) Formula Program
On September 26, 2022, the Biden Administration approved electric vehicle (EV) infrastructure development plans for all fifty states as well as for the District of Columbia and Puerto Rico under the National Electric Vehicle Infrastructure (NEVI) Formula Program. The program, which provides grants to states and jurisdictions to begin constructing EV charging stations, was established and funded by the infrastructure law known as the Infrastructure Investment and Jobs Act that was signed into law by President Joe Biden in November 2021. The funding under the law provides $5 billion over 5 years to the program and the approval by the administration provides access to at least $1.5 billion through the next fiscal year that will go directly to building electric vehicle chargers across the nation.
Funding for the NEVI Formula Program can be used towards the following projects related to the charging of a vehicle:
- Upgrades of existing and construction of new EV charging infrastructure;
- Operation and maintenance costs of these charging stations;
- Installation of on-site electrical service equipment;
- Community and stakeholder engagement;
- Workforce development activities; EV charging station signage;
- Data sharing activities; and,
- Related mapping analysis and activities.
SEC Emissions Rule
On March 21, 2022, the Securities and Exchange Commission released its proposed rulemaking on climate-related disclosures. The rule seeks to require publicly traded companies to report to shareholders and potential investors on their impact on climate change. The rule will require the largest companies in the U.S. to report climate-related information in line with the rule in their FY24 annual report, with large companies following in FY 25 and smaller companies in FY26.
Under this rule, companies will be required to evaluate how any climate-related risks identified by the company have had or are likely to have a material impact on its business and consolidated financial statements over the short, medium, and long term, including how those risks have affected or are likely to affect company strategy, business model, and outlook. The rule outlines two types of risk: Physical Risk, which requires companies to report on how and where there business is impacting climate change, and Transition Risk, which requires a business to report on the cost associated with mitigating its impact on climate change. Furthermore, all companies will be required to disclose Scope 1 (direct) and Scope 2 (indirect) GHG emissions, and most companies will be required to disclose Scope 3 (value chain) emissions information.
Of significant concern to TRALA is Scope 3 which deals with emissions from a company’s value chain, this would include the emissions generated from the transportation of a company’s goods. TRALA is concerned that its members with customers who are public companies would have to produce the emissions information to its customer. Furthermore, this emissions information would have to be subject to a 3rd party audit in order to be included on an annual report, creating significant liabilities for TRALA members.
TRALA has significant concerns with this rule and is working with the United States Chamber of Commerce and other industry allies to submit comments in opposition to this rule. Unless an extension is approved, the comment period for this rule will close on May 20, and a final rule is expected to be produced before the end of 2022. This short time frame will not give many companies time to set up an accounting system in order to comply with this rule.
On May 9, 2022, the Securities and Exchange Commission (SEC) announced that it was extending the comment period on its climate-related disclosure rule for an additional 30 days. The new deadline to comment on the SEC’s climate rule is now June 17.
TRALA has had conversations with many of its members regarding the impact this rule will have on the renting and leasing industry and TRALA plans to submit joint comments with its allies at the American Car Rental Association (ACRA) and the American Automotive Leasing Association (AALA). These comments will focus on the unique impact this rule will have on companies who rent and lease cars and trucks to public businesses who have to file environmental disclosures. Additionally, TRALA is working with the United States Chamber of Commerce on a joint trades letter which will allow a large swath of businesses and different industries to comment together on the negative impacts of this rule.
You may view the notice in the Federal Register extending the comment period for the SEC’s rule by clicking here.
On June 15, 2022, House Energy and Commerce Committee Chairwoman Cathy McMorris Rodgers (R-WA) and House Financial Services Committee Chairman Patrick McHenry (NC-R) led a letter that was signed by 129 fellow Republican Members and sent to the Securities and Exchange Commission (SEC) Chair Gary Gensler about the Commission’s proposal that would require climate-related disclosures from public companies.
In the letter, House Republicans urged the Chairman to immediately rescind the proposal so that the Commission can instead focus on its “statutory tripartite mission to protect investors, maintain fair, orderly, and efficient markets, and facilitate capital formation”. The letter argues implementing any climate-related rules would exceed the SEC’s authority and fall outside of the scope and expertise of the Commission. Furthermore, the letter explains that it is Congress’ job to write environmental policies and that they should be handled as such.
You may view the letter by clicking here.
On June 17, 2022, TRALA joined the American Automotive Leasing Association (AALA) and the American Car Rental Association (ACRA) in submitting a letter to Secretary Vanessa Countryman of the Securities and Exchange Commission (SEC) regarding its proposed rules on The Enhancement and Standardization of Climate-Related Disclosures for Investors.
In the letter, TRALA urges the SEC to reconsider major elements of the proposed rule. TRALA argues that the SEC’s proposed rule would likely increase compliance costs for reporting and non-reporting TRALA members and may create uncertainty in emissions data reporting. TRALA also highlights how the proposed rule goes well beyond the SEC’s authority and how inconsistency in mandates could create confusion for companies. Lastly, TRALA noted that the proposed rule is unclear in how or when the Commission would take reasonable enforcement actions based on the required information that would need to be reported by companies.
You may view the letter by clicking here.
On July 14, 2022, TRALA agreed to support Republican Ranking Member Blaine Luetkemeyer of the House Committee on Small Business in a letter he intends to send to the Securities and Exchange Commission regarding its proposed rule known as the Enhancement and Standardization of Climate-Related Disclosures for Investors. The letter, which all Republican Members of the Small Business Committee have co-signed, specifically outlines the harmful impact the rule would have on small businesses.
TRALA released a statement in support of the letter saying: “The Truck Renting and Leasing Association applauds Ranking Member Luetkemeyer for his leadership in supporting businesses that would be impacted by the SEC’s climate disclosure proposal. This rule would negatively affect nearly all of our 475 member companies as well as the millions of small businesses across the country they serve. While our industry copes with unprecedented inflation and supply chain disruptions, this rule would simply add to the difficulties facing our industry.”
You may view the letter by clicking here.
On July 20, 2022, Rep. Blaine Luetkemeyer (R-MO), who is the Ranking Member on the House Committee on Small Business, formally submitted his TRALA-supported letter to the Securities and Exchange Commission (SEC). In his letter, Ranking Member Luetkemeyer urges the SEC to rescind its environmental disclosure rule due to its impact on public businesses and the small businesses who supply them. The SEC’s proposal would require TRALA members to provide publicly traded companies who lease or rent trucks with the amount of greenhouse gases produced by those trucks, and this data must meet auditing standards. TRALA pushed back hard against this proposal, by submitting comments urging the agency to rescind this proposal given its impact on the renting and leasing industry. Additionally, TRALA has worked with the Chamber of Commerce, its allies, and Members of Congress to urge the SEC to abandon this proposed rule.
You may view the letter that was sent by Ranking Member Luetkemeyer by clicking here.
LATEST ACTION: On Saturday, October 7, 2023, Gov. Gavin Newsom (D-CA) signed both SB 253 and SB 261 into law, requiring businesses to publicly disclose their greenhouse gas emissions in hopes of increasing transparency and, in the bill authors' view, to combating climate change. SB 253, known as the Climate Corporate Data Accountability Act, will require US businesses operating in California and with revenues greater than $1 billion to report their emissions. The emission reporting requirements include scopes 1, 2, and 3, beginning in 2026. For a complete text of the bill, click here. California Senate Bill 261 requires large corporations operating in California with annual revenues over $500 million, to disclose climate-related financial risks and mitigation strategies annually. For the full bill text, click here.
How similar (or different) these new laws will be to the highly anticipated SEC emissions disclosure final rulemaking is still unknown as it has yet to be posted. TRALA staff will continue to monitor the SEC's rulemaking and the implementation of SB 253 and SB 261.
Tort Reform/Optional Equip Legislation
The trial bar has begun a systematic attempt to circumvent the Graves Amendment by claiming lessors are now liable for actions of their customers if the vehicle involved in an accident did not have every possible “safety” equipment installed at the time of the accident. This is being called “failure to equip” by trial lawyers or “optional equip” by TRALA and its allies.
This issue has become one of the most consequential for TRALA as it has multiple members now that have been sued, including a few cases that went to summary judgment, for millions of dollars. The trial lawyers’ arguments claim that lessors should retrofit a vehicle, even if a customer does not want optional safety equipment, to ensure the vehicle exceeds federal requirements. TRALA members have argued that they abide by all federal safety regulations and have their customers spec the trucks/equipment that most enhance their business model and thus have no additional responsibility to add more safety features to a vehicle. Even if members were able to retrofit all the vehicles in their fleet (which is an impossibility), under this trial lawyer theory, they could simply change their demands at a future time to claim liability against a lessor if another piece of safety equipment could have been added. NHTSA and FMCSA take safety seriously and thus test different pieces of safety equipment over many years to determine if they are useful, enhance safety, and do not cause any unforeseen problems. To make lessors more liable than OEMs is to put leasing and rental companies at a specific disadvantage over other trucking companies and represents a threat to the entire industry.
TRALA has been working with its members and state trucking associations and allies to determine opportunities to strengthen the Graves Amendment at the state level by introducing legislation that would essentially codify vicarious liability to include optional equip language, thus making it impossible for the trial bar to sue a lessor solely for ownership and the decision to only equip a vehicle with federally mandated safety equipment but nothing beyond that.
TRALA and one of its members supported Texas HB 4218, which would make it state law to disallow any lawsuits against a lessor based on the optional equip mantra the trial bar has focused on recently. TRALA helped negotiate a final landing spot for the language included within HB 4218 by sitting down with the state’s trial lawyers association after TRALA testified before the House Judiciary Committee on March 27, 2023. The decision was made to place the optional equip language within the product liability statute, rather than the original plan to place it within tort reform legislation that passed in 2021.
HB 4218 passed out of the House Judiciary Committee unanimously 8-0 on April 3, 2023. It now moves to the full House and Senate once it clears some procedural issues.
On May 4, 2023, Texas HB 4218 passed the full House by a vote of 219-20. On May 17, 2023, Texas HB 4218 passed the Senate by a vote of 31-0. Now that the bill has been passed by both chambers it will head to the governor's desk. While there is no guarantee Governor Abbott will sign the bill into law, TRALA has no reason to believe the Governor will not sign HB 4218. TRALA, therefore, remains very optimistic that this important piece of legislation will become Texas law within the next few weeks.
You may view the text and vote history for HB 4218 by clicking here.
LATEST ACTION: On June 10, 2023, as TRALA anticipated, Texas Governor Greg Abbott (R) signed HB 4218 into law with an effective date of September 1, 2023.
TRALA and its allies were able to have legislation introduced that would make it impossible to sue due to the optional equip theory being trolled by the trial bar. HB7055 was expanded by the Judiciary Chairman to encompass more than just leasing and rental companies with respect to optional equip language. TRALA testified at the Judiciary Committee hearing (using an attorney to represent the industry) on April 4, 2023. HB 7055 passed out of the House Judiciary Committee on April 6, 2023 by a vote of 16-7. It now moves to the full House and if passed, the Senate.
LATEST ACTION: On April 19, 2023, HB 7055 was pulled by the Judiciary Committee Chairman and will not be considered during this session of the legislature. The abandonment of the TRALA-supported bill had nothing to do with the substance of the language, but rather reflected the political realities currently in Tallahassee. It had become clear that additional amendments that were being proposed would weaken HB7055 and time was simply running out. In addition, the fights in the legislature that have made headlines (i.e. Disney) had come to dominate the House and Senate and therefore, TRALA will now have to reconvene in the fall of 2023 or January of 2024 to address this issue and attempt to have it passed and signed into law.
California Air Resources Board (CARB) Zero Emissions
On April 29, 2015, the Governor of California, Jerry Brown (D) signed an Executive Order establishing a goal of reducing Greenhouse Gas (GHG) emissions in the state by 40% below 1990 levels by 2030. Later that year, in October 2015, the state of California adopted Senate Bill 350, the Clean Energy and Pollution Reduction Act of 2015. This law seeks to codify Governor Brown’s Executive Order by placing new requirements on state public utilities to reduce the state’s GHG production by 40% below 1990 levels by 2030.
Additionally, the law established 5 policy goals for public utilities to incorporate into their GHG reduction plans: Integrated Resource Planning, Energy Efficiency, Renewable Energy, Transportation Electrification, and Disadvantaged Communities. The law also stated in its findings that it is the policy of the legislature to encourage greater adoption of electric vehicles including light-, medium-, and heavy-duty trucks in order to reduce GHG emissions and petroleum use. The Zero Emission Vehicle (ZEV) program built on these initial goals through the 2016 Mobile Source Strategy which assumed 2.5% of all new sales of class 3-7 trucks would be ZEV, which would increase to 10% by 2025.
As a result of the ZEV program, the California Air Resources Board (CARB) has been aggressive in introducing proposals that would target the trucking industry to reduce their emissions in order to achieve their goal of having ZE everywhere feasible by the year 2045. These proposals are specific to the state of California and they include the Advanced Clean Truck (ACT) Rule, the Low NOx Heavy-Duty Omnibus Regulation, the Clean Fleet Rule, and the Inspection and Maintenance Program.
You may view more information on these proposals by clicking here.
To View TRALA’s Activities with respect to CARB Zero Emissions from 2020-2022 please click here.
On October 28, 2022, the state of North Carolina adopted the California Air Resources Board CARB’s Advanced Clean Trucks (ACT) rule under the direction of Executive Order 271 which was signed by Governor Roy Cooper (D). The ACT rule requires manufacturers with vehicles weighing 8,500 pounds or more to participate in a credit/deficit program that aims to increase the number of zero-emission vehicles (ZEVs) sold in the state beginning in 2025 through 2035, while the fleet requirement rule sets a one-time reporting requirement to collect information about the in-state operation of fleets with vehicles weighing 8,500 pounds or more.
Oregon, the state of Washington, New York, New Jersey, and Massachusetts are among the other states that have also adopted the ACT rule. They are part of the 15 states and the District of Columbia that signed onto a joint memorandum of understanding agreeing to advance and accelerate the market for electric medium- and heavy-duty vehicles with an interim 30 percent ZEVs sales by 2030 and 100 percent by 2050.
TRALA anticipates that many of the remaining states that signed onto this MOU will continue to adopt CARB's clean trucking standards over the next year.
You may view the Governor’s signed executive order by clicking here.
On February 3, 2023, The California Air Resources Board (CARB) released its Preliminary Updates to the Draft Regulatory Text for the Proposed Advanced Clean Fleets Regulation (ACF) in advance of the upcoming CARB Workshop scheduled for February 13th. The ACF rule aims to advance the transition to zero-emission vehicles (ZEVs) for in-state fleets and fleets with vehicles operating in California beginning as early as 2024. TRALA submitted comments twice with respect to the original two version of the regulation and CARB took some of TRALA’s ideas and suggestions into consideration when they put out their third version. While certain language changes have been made to provide greater compliance flexibility and clarity to fleets and CARB accepted the idea to average rental fleet numbers, this groundbreaking rule remains one of the more complex and onerous environmental regulations ever imposed on the trucking industry. Please find a general summary of the latest draft provisions pertaining to truck renting and leasing companies:
- The rule generally applies to any entity that owns, operates, or directs one or more vehicles in California on or after January 1, 2024, and that meets any of the following criteria:
- Is an entity or combination of entities operating under common ownership or control that have $50 million or more in total gross annual revenues;
- Is a fleet owner that owns, operates, or directs 50 or more vehicles in the total fleet, excluding light-duty package delivery vehicles;
- Is a fleet owner or controlling party whose fleet in combination with other fleets operated under common ownership and control total 50 or more vehicles in the total fleet, excluding light-duty package delivery vehicles.
- For vehicles that are rented or leased from a business that is regularly engaged in the trade or business of renting or leasing motor vehicles without drivers, including truck leases that are part of a bundled service agreement, the “owner” subject to the rule requirements is presumed to be the rental or leasing entity for purposes of compliance, unless the rental or lease agreement for the vehicle is for a period of one year or longer and the terms of the rental or lease agreement or other equally reliable evidence identifies the renting operator or lessee of the vehicle as the party responsible for compliance with state laws.
- Infrastructure Construction Delay Extension. Fleet owners may receive an extension for up to 2 calendar years to delay delivery of ordered ZEVs that would be reliant on the ZEV charging or fueling infrastructure if they request and obtain an extension.
- Infrastructure Site Electrification Delay Extension. Fleet owners may receive an extension for up to 5 calendar years from the ZEV purchase requirements to delay delivery of planned ZEV orders for vehicles being replaced at the site for which the extension is requested until the infrastructure is ready.
- “Vehicle purchase” or “purchase” includes a fleet owner entering into a lease agreement with a contract term of one year or more for a ZEV.
- In calculating the number of rental vehicles comprising an owner’s California fleet, interstate rental fleet owners may choose the option to report the average number of rental vehicles operating in California using the quarterly averages of rental trucks operating in the state. Rental vehicles operated in California are those that are under contract to leave California, to be picked up and dropped off in California, and those that are not under contract while in California on the date of the snapshot. In lieu of counting rental vehicles under contract, rental fleet owners must supply telemetry data showing each rental vehicle that is in California on the snapshot dates. Each vehicle should only be counted once for purposes of each snapshot. Fleet owners utilizing this provision must report the average number of rental vehicles and keep records of snapshots taken and supporting documents.
- 2036 ZEV Sales Requirement. Beginning with the 2036 model year, all vehicles produced by manufacturers that are produced and delivered for sale to the ultimate purchaser in California must be ZEVs.
On April 10, 2023, TRALA co-authored a letter that opposes California Assembly Bill 627, which would prohibit a person from operating a diesel-fueled heavy-duty truck on city streets or county roads virtually across the entire state. The bill was recently amended to institute a 2035 ban on diesel truck traffic on streets within cities that have both disadvantaged communities and any portion of the city in the highest 10% of diesel particulate matter exposure according to the CalEnviroScreen tool. The TRALA-supported letter explains how a diesel truck ban in the top ten most populous cities in California, along with 16 of the top 20, could result in medical, food and bank cash shortages around the state. Additionally, the letter notes that the bill is likely preempted by multiple federal laws. The Federal Clean Air Act preempts states from promulgating standards related to new engine emissions. The Federal Aviation Administration Authorization Act of 1994 preempts state laws related to motor carrier prices, routes and services.
You may view the bill by clicking here and the letter by clicking here.
On April 28, 2023, CARB approved its Advanced Clean Fleets (ACF) rule which requires new medium- and heavy-duty vehicles in a fleet’s California operations be zero-emission beginning as early as 2024.
The final regulation applies to in-state fleets performing drayage operations; those owned by state, local and federal government agencies; and high priority fleets. High priority fleets are entities with $50 million or more in gross annual revenue and that own, operate, or control at least one vehicle in the state with a gross vehicle weight rating (GVWR) greater than 8,500 pounds, or are entities that own, operate, or control a total of 50 or more vehicles with a GVWR greater than 8,500 pounds and own, operate, or direct at least one vehicle in California.
TRALA members that lease a vehicle are able, under this rule, to put the onus on the lessee for compliance if the lease agreement is for one year or longer and the agreement identifies the party responsible for compliance. Renting and leasing businesses are afforded some flexibility under the rule including the ability to calculate the number of rental vehicles comprising their California fleet through quarterly averaging of in-state vehicle use; individual vehicles rented less than 180 calendar days under contract with California origins/destinations do not need to be reported when using quarterly averaging; and vehicle rentals/leases are treated the same as purchases for fleets when determining California fleet sizes.
CARB will provide fleets’ compliance flexibility on several fronts including granting five-day state vehicle usage passes; exceptions for zero-emission vehicle delivery delays and unavailability; and more time to comply if confronted with fueling (charging/hydrogen) infrastructure construction or power delays. The rule will next be reviewed by the California Office of Administrative Law (OAL) which will likely approve the rule in the coming months. It still remains unclear whether CARB will seek formal approval from EPA to implement the rule under the federal Clean Air Act. TRALA and its environmental consultant will continue to meet with both CARB and EPA officials to ensure the final rule considers the unique nature of TRALA’s members.
On Monday, June 5, 2023, 19 states sought appellate court review in a challenge to the Environmental Protection Agency (EPA) waiver granted to California’s Advanced Clean Trucks Rule. The petition, which was filed in the U.S. Court of Appeals for the District of Columbia, challenges the waiver that was granted by the EPA and posted to the Federal Register on April 6th. Furthermore, the filing argues that federal law establishes the D.C. Court of Appeals as an “exclusive venue” for challenges to agency actions that could be deemed “nationally applicable” or if an action has “nationwide scope or effect.” The states in the legal action against the EPA are Alabama, Arkansas, Georgia, Indiana, Iowa, Kansas, Kentucky, Louisiana, Mississippi, Missouri, Montana, Nebraska, North Dakota, Ohio, Oklahoma, South Carolina, Utah, West Virginia and Wyoming.
In addition, on June 8, 2023, CARB made the following Clean Truck Check Announcement:
Please note that vehicles not equipped with on-board diagnostics (OBD) systems have different compliance test requirements relative to OBD equipped vehicles. Non-OBD vehicles are required to perform the Vehicle Emissions Control Equipment Inspection (visual inspection) and a smoke opacity test using a SAE J1667-compatible smoke meter when issued a Notice to Submit to Testing as part of the Clean Truck Check. These same compliance test requirements will apply to non-OBD vehicles when periodic testing requirements begins in the 2024 timeframe.
Non-OBD vehicles are those with:
- 2012 and older model year diesel engines or diesel hybrid diesel engines;
- 2017 model year and older alternative fuel engines or hybrid alternative fuel engines; and
- Any on-road vehicle equipped with an off-road engine.
- Vehicles with engines manufactured by Cummins, Detroit Diesel, Navistar, and Paccar predominantly follow the Society of Automotive Engineers (SAE) J1939 (9-pin) protocol for OBD submission.
- Vehicles with engines manufactured by Ford, GM, Hino, Isuzu, and Volvo predominantly follow the SAE J1979 (16-pin) protocol for OBD submission.
You may view the credentialed tester training video by clicking here.
In late August 2023, CARB posted a Fact Sheet: Clean Truck Check Database Reporting Requirements on their webpages. This Fact Sheet lists information that vehicle owners (or designees) will be required to report in 2023 in the Clean Truck Check database when creating their accounts to comply with the Heavy-Duty Vehicle Inspection and Maintenance regulation.
As a reminder, CARB approved the nation’s first-ever state maintenance program for trucks in December 2021. Known as the CARB Clean Truck Check (CTC), the rule requires nearly all non-gasoline vehicles with a gross vehicle weight rating (GVWR) over 14,000 pounds that operate in California to conduct periodic emissions testing to ensure that heavy-duty vehicles in the state remain equipped with properly functioning emissions controls, and when malfunctioning, that systems get repaired in a timely manner.
For rental vehicles operating in the state, the responsibility for compliance will be on vehicle owners. For leased vehicles, the responsibility for compliance will be on the lessee if the leasing agreement is for a term longer than a year and it is specified in the leasing agreement. All vehicles that are subject to the CTC must be reported in the Clean Truck Check database once it goes live. The following are key CTC requirements:
- January 2023 -- CARB deployed in-state roadside emissions monitoring equipment to screen for vehicles operating with potentially high emissions. Vehicles identified as potential high emitters receive a Notice to Submit to Testing (NST) and are required to submit a passing compliance test to CARB within 30 days of receipt of the notice.
- October 1, 2023 -- Vehicles subject to the CTC will have three months to meet initial reporting requirements into the CARB Clean Truck Check database system and to pay annual vehicle compliance fees of $30.00 per vehicle. The $30.00 fee would be payable directly through the database system using traditional payment methods such as major credit cards, debit cards, and electronic fund transfers.
- July 2024 -- Periodic vehicle compliance testing is projected to begin in July 2024. (The high-emitter vehicle screening efforts that began in January 2023 will remain in effect as these additional program phases are implemented). This requirement means that a passing compliance test would need to be submitted to CARB within 90 days prior to a vehicle’s compliance deadline. For example, if a vehicle has a compliance deadline on July 1, 2024, a passing compliance test would need to be submitted between April 2, 2024, and July 1, 2024.
To receive notification of future CARB training webinars to learn how to use the CTC database system and to receive other important CTC updates, subscribe at: California Air Resources Board (govdelivery.com). CARB staff plans to offer database training webinars for fleets starting in October 2023.
More information on the CTC can be learned by reading CARB’s June 2023 guidance document at: https://ww2.arb.ca.gov/resources/documents/june-2023-guidance-vehicle-owners-upcoming-requirements.
Continuing with a busy month for CARB, they noticed an upcoming Executive Officer Hearing for the Proposed Amendments to the Heavy-Duty Engine and Vehicle Omnibus Regulation on October 20, 2023 at 10:00 a.m. (PST). This hearing is primarily being held so as to codify the July 7, 2023 agreement between OEMs, CARB and the EPA that would align the CARB NOx rule with the EPA NOx rule in 2027.
On September 23, 2023, CARB established an effective date of December 31, 2023, for California Code of Regulations, title 13, sections 2196.1, subdivision (f), 2196.8, 2197, and 2197.2, subdivision (b), within the Heavy-Duty Inspection and Maintenance Regulation.
Under the CARB Clean Truck Check Rule (CTC) – formerly called the Inspection and Maintenance Rule (I&M) – CARB is required to give 90-day notice prior to specific effective dates under the rule. The Notice of Regulatory Effective Date reinforces that owners of vehicles subject to the rule must report their vehicles to CARB and pay their annual compliance fees by December 31, 2023. Vehicle owners can complete these processes through CARB’s HD I/M database starting in October of 2023. CARB workshops for fleets will commence in October, as well. Any truck entering the state must pay annual fees and conduct bi-annual emissions testing. Unfortunately, despite TRALA’s efforts, there are no carveouts for rental vehicles, however, there are for vehicles leased for a year or more and the lease agreements include language that compliance is the responsibility of the lessee.
LATEST ACTION: On October 16, 2023, the California Trucking Association (CTA) asked a federal court to block the implementation of the Advanced Clean Fleets (ACF) regulation. The lawsuit, filed in the U.S. District Court for the Eastern District of California, requests both a preliminary and permanent injunction to stop the California Air Resources Board (CARB) from enforcing the rule. The CTA argues that California exceeded its authority in creating the ACF.
The lawsuit mainly argues that CARB never received a waiver from the Environmental Protection Agency (EPA) allowing it to implement standards on emissions that are stricter than federal rules.
Members may view the lawsuit by clicking here.
TRALA will monitor this lawsuit’s movement and continue to be supportive of CTA’s efforts on behalf of our larger industry.
Rolling Stock Exemption
The state of Massachusetts repealed its sales and use tax exemption for rolling stock in the 1990s, making it more expensive to operate interstate trucks in the state. Over the years multiple efforts have been made to reinstate the rolling stock exemption and reduce the cost of operating in the state.
TRALA has been extremely active in attempting to reinstate the rolling stock exemption over the past two years.
You may view TRALA’s actions with respect to the Rolling Stock Exemption bill between 2020-2022 by clicking here.
On November 2, 2022, TRALA was informed that the Massachusetts legislature decided against acting on any broad and industry specific tax initiatives within the bill. As a result, the rolling stock initiative was not included within the economic development bill. The Massachusetts legislature will advance a compromise economic development bill that largely amounts to one-time investments. TRALA was informed that the exclusion of the rolling stock initiative had nothing to do with the initiative itself. Its omission from the bill was the result of the legislature choosing to leave out all tax proposals from the package.
On January 17, 2023, TRALA received an update from the Trucking Association of Massachusetts on its efforts for reinstating the rolling stock tax exemption for the state in 2023.
House Minority Leader Brad Jones (R) and Senate Minority Leader Bruce Tarr (D) will both file legislation to support the initiative. TRALA and TAM will target a wide variety of cosponsors.
In addition to the standalone legislation, TRALA is closely watching the tax relief / tax reform discussion as it has been made a priority for 2023 by Senate President Karen Spilka (D) and Governor Maura Healey (D). The Governor has stated that she may package her tax relief / tax reform ideas as part of her FY 2024 budget proposal. Since this is her first term, she has until March 8th to prepare and file. The House will then take their budget proposal up in April followed by the Senate in May.
Given the presence of a new Administration, TRALA and TAM will also undertake two additional actions:
- Send a letter to the Governor that requests she include the initiative as part of her tax reform initiatives; and,
- Conduct outreach to the Department of Revenue (DOR) for guidance relative to the application of the sales / use tax on rolling stock.
On February 10, 2023, TRALA and TAM sent a letter to Governor Maura Healey (D) with the coalition’s updated legislative submissions and fact sheets requesting that the rolling stock tax exemption be included in any tax relief/tax reform proposal from the state Legislature. In the letter, TAM and TRALA explain that the exemption will “produce additional tax revenue in the future while strengthening the trucking industry in Massachusetts in a manner that also improves the environment and public safety”.
You may view the letter by clicking here.
On March 1, 2023, TRALA received an update from TAM on its efforts to reinstate the rolling stock tax exemption in the state.
The Healey-Driscoll Administration filed a tax relief/reform package with large and small initiatives including, but not limited to: estate tax reform, an increased childcare tax credit, a reduction in short term capital gains, as well as a variety of other proposals. The total tax package of the Governor’s proposals amounts to approximately $859 million. TRALA and TAM previously sent Governor Maura Healey (D) a letter asking that she include the rolling stock initiative in any tax relief/reform package. Now that the Governor’s tax proposals have been filed, the Massachusetts House will begin to develop and considers its own plans for the Fiscal Year 2024 budget which will be unveiled and debated in April.
The Governor’s filing of her proposed plan is a positive development because it puts the issue of tax relief / tax reform front and center early in the legislative session. TRALA and TAM will be meeting with a variety of House leadership over the next month to encourage them to include the rolling stock initiative in any tax package that they put together. Through prior conversations with the Speaker’s office, the legislature wants to make sure that any tax initiative included in their package demonstrates what the impact will be on the economy. TRALA and TAM sent a letter to Speaker Ron Mariano (D) and House Ways and Means Chair Aaron Michlewitz (D) asking that they continue to support the rolling stock tax exemption initiative.
You may view the letter by clicking here.
The next step will be determining how to navigate the various rolling stock bills through the committee process. While the tax relief / tax reform debate will be a primary target, there is a second opportunity with standalone bills due to the specialized nature of this initiative. To that notion, the Massachusetts Senate and the Massachusetts House of Representatives made their leadership appointments in February (without changes to the respective Ways and Means committees):
- The Joint Committee on Revenue appointed rolling stock friendly legislators Representative Mark Cusack and Senator Susan Moran;
- The Joint Committee on Transportation will be led by returning House Chair, Representative Bill Straus, and now appointed for a full term, Senator Brendan Crighton, one of the lead rolling stock sponsors;
- The Joint Committee on the Environment will be led by Representative Dan Cahill, another rolling stock supporter, and Senator Becca Rausch, who was the previous Senate Chair;
- The Joint Committee on Public Safety, where a variety of trucking matters also appear, will be helmed by Representative Carlos Gonzalez and Senator Walter Timilty, who support the rolling stock initiative; and,
- The Joint Committee on Economic Development appointed House Chair Jerry Parisella, a rolling stock supporter, and new Senate Chair Barry Finegold.
On March 24, 2023, TRALA received an update from the Trucking Association of Massachusetts (TAM) on its efforts to reinstate the rolling stock tax exemption in the state.
The Massachusetts legislature’s Joint Committee on Revenue has scheduled the Governor’s tax reform initiative for a public hearing on March 28, 2023. In addition to the Governor’s bill, they will be hearing bills related only to those initiatives in her bill as a means of reducing duplicative testimony later in the session. TRALA believes that the House will likely split the broad “big ticket tax relief” items (i.e. broad application; >$40M) from the “small ticket tax relief” items (i.e. industry specific; <$40M). In doing so, the House will likely take up a broad tax package before the budget and then take up the smaller, industry specific tax initiatives, through a separate economic development bill. However, stakeholders’ preference would be for one larger tax initiative, but as one elected official noted, “this provides two bites at the apple from a practical and political perspective.” Where the House and Senate collaborated together before the tax discussions / economic development bill last session, it’s been a little more separate thus far. TAM, plans to submit written testimony to the Committee as a precursor to the issue and the standalone bill.
TRALA and TAM have continued meeting with House and Senate leadership with a focus on the House since it is where all tax initiatives start from a legislative perspective. Multiple meetings with the House Chair of the Joint Committee on Revenue Mark Cusack (D) and House Ways and Means Chair Aaron Michlewitz (D) have occurred where both reiterated their support of the rolling stock initiative. Through these meetings, it was requested that the coalition receive an updated tax revenue figure from the Massachusetts Department of Revenue (DOR). In subsequent meetings with both House Minority Leader Brad Jones (R) and the staff of Senate sponsor Brendan Crighton (D), there is a willingness to send a request over to the agency for a response.
TRALA has worked with TAM to gain more co-sponsors this session, and TRALA is pleased that it has doubled the amount of Senate and House cosponsors we had at this time last session, with a wide range of Republicans, Democrats, progressives, and conservatives..
The DOR has finally issued a policy statement on what the de minimis application of the sales/use tax means, which can be found by clicking here. In short, “[w]here a taxpayer demonstrates that rolling stock that it owns or leases for 12 months or longer was used or stored in Massachusetts for no more than six days during a 12-month period, the Commissioner will consider the in-state use to be de minimis and will neither impose, nor require the taxpayer to pay, use tax on the use or storage of the rolling stock in Massachusetts for that period.” The directive goes on to provide a variety of examples as well as how the agency distinguishes the taxation of rolling stock under different scenarios. TRALA and TAM have requested a meeting with the DOR to review the directive and raise some trucking industry concerns and questions.
On March 30, 2023, the Department of Revenue (DOR) issued a policy statement on what the de minimus application of the sales/use tax means. In short, “[w]here a taxpayer demonstrates that rolling stock that it owns or leases for 12 months or longer was used or stored in Massachusetts for no more than six days during a 12-month period, the Commissioner will consider the in-state use to be de minimis and will neither impose, nor require the taxpayer to pay, use tax on the use or storage of the rolling stock in Massachusetts for that period.” The directive goes on to provide a variety of examples as well as how the agency distinguishes the taxation of rolling stock under different scenarios. TAM, with TRALA’s help, requested a meeting with the DOR to go over the directive and raise some trucking industry concerns and questions.
On June 6, 2023, TAM, with TRALA’s help, testified at a public hearing held by the Joint Committee on Revenue regarding the rolling stock initiative. TAM discussed the financial impact and benefit to the Commonwealth that would occur if the rolling stock tax exemption were to be reinstated. Additionally, TAM, with TRALA’s assistance, has scheduled a meeting with the Department of Revenue (DOR) on June 26, 2023, to further support the initiative.
On June 8, 2023, The Massachusetts state Senate released its version of tax relief / tax reform package which includes increase child and dependent tax credits, rent deductions, the Earned Income Tax Credit, the senior circuit breaker tax credit cap, the annual cap for the Housing Development Incentive Program and the annual authorization of the low-income housing tax credit. The proposal also exempts estates valued under $2 million from the estate tax and seeks to eliminate the "tax cliff," when any estate above the threshold triggers taxes on the entire value rather than just the overage.
With respect to industry specific tax relief, Senate Minority Leader Tarr and House Minority Leader Jones have indicated that the Senate will likely put forward other omnibus (economic development, transportation, etc.) bills. TRALA expects Senator Tarr to file an amendment to the tax plan in order to ensure Senate leadership stays focused on the issue. TRALA will continue to support TAM as it seeks to reinstate the rolling stock tax initiative.
LATEST ACTION: On July 5, 2023, TRALA received an update from the Trucking Association of Massachusetts (TAM) regarding the rolling stock tax initiative following TRALA’s support for TAM in a recent meeting with the Massachusetts Department of Revenue (DOR) to discuss Directive 23-1, relative to a de minimis standard for the sales/use tax application on rolling stock.
While the DOR was not particularly flexible towards changing the Directive or forthcoming as to the reasoning behind certain standards, they did express appreciation for the industry reaching out to the agency to provide feedback and reflection. During the meeting, TAM specifically asked for the following:
- the industry seeks to comply with all applicable taxes as incurred; as such, uniformity and consistency across the various standards makes this more likely and timely;
- consideration should be given to what the DOR’s enforcement standards mean for keeping the trucking industry alive and active within the Commonwealth, and;
- the varying costs/ability for companies – whether small, medium or large – to meet the DOR’s standards for data / information should be acknowledged.
Finally, TAM expressed an interest in having a DOR representative identified to whom they could direct future tax inquiries towards. (Note: the agency reiterated their preference for all inquiries to be submitted by the taxpayer via the means identified on the DOR website.).
The key takeaways from the meeting include:
- Rationale for Directive.
- The DOR wants to create a uniform, bright line rule to assist in the determination of what is exempt from taxation.
- Calculation of a “Day”.
- For purposes of calculating time “in-state”, a “day” is defined as the named day. (i.e. come in at 11:55PM on a Monday; leave 12:05AM on Tuesday … it’s two days; arrive on a Sunday, but the facility doesn’t open until Monday … it’s two days; etc.). According to DOR, this answers all of TAM’s “days calculated” questions. While sympathetic to some of the scenarios presented by the trucking industry, the DOR believes its interpretation is the most straightforward and clear.
- Rationale for the use of the 6-day term instead of any other standard.
- The DOR stated that they would not get into the reasons/rationalization for choosing the 6-day standard versus any other standard. When asked about that, the agency adhering to a 12-day standard in another directive as it is the usual standard in other states, the DOR simply reiterated that it would not explain its reasoning.
- Duration of Leases and Ownership of Vehicles.
- The DOR explained that they were trying to make things simpler for industry by creating a bright-line rule. From their experience, drawing a distinction between a 12-month lease term and something shorter provides clarity to auditors and industry alike. There was little explanation of the different scenarios presented on our spreadsheet relative to usage of a vehicle within 11 months of a month-by-month lease versus other monthly configurations. The DOR said that their auditors have seen all types of lease arrangements, and this seemed most logical.
- Application of the 6 month and a day rule to the 12-month review standard.
- The DOR believes that the interaction of these two principles, while novel, is largely illusory. (i.e. apples and oranges). The two thresholds both exist, but do not directly intersect in their application for determining the application of the “use” tax in Massachusetts.
- Use of GPS data.
- The DOR highlighted that a taxpayer may use more than GPS pings to identify the location of their trucks/trailers. Specifically, the DOR cited that the Directive references the term “such as” to reflect other means for demonstrating the location of a vehicle / trailer. Examples provided included driver logs or other information indicating a vehicle’s / trailer’s location.
Ultimately, the meeting let the industry know that the DOR is unwilling to alter their thinking enough to provide trucking interests with solutions that help our industry. TRALA’s remedy, through TAM, remains legislative – exempting the taxation of rolling stock.
New York City Idling
For the last several years, New York City has encouraged its citizens to file complaints against trucks that are idling illegally in the city through the Citizens Air Complaint Program. The program allows citizens to send in videos of trucks that are idling for more than three minutes. The city will then pay the citizen who reported the incident, a sum of 25% of the fine that can range from $350 to $2,000 for a repeat offense. The program is designed so that it is not only extremely easy to find violators, but also an easy process for filing complaints with the incentive of receiving money for very little effort. Therefore, this program makes it almost impossible for truck drivers to complete necessary deliveries throughout the city without the risk of being reported for simply doing their jobs.
Of particular interest to TRALA, the program does not have a provision that allows for the transfer of liability for leasing companies so that the liable party is held responsible and bad behavior is discouraged. TRALA is working with the Trucking Association of New York (TANY) and the coalition to allow the option for leasing companies to transfer responsibility for the violation (with an opportunity to defend itself) to the individual or company responsible. Under NYC’s Department of Finance’s (DOF) system, lessors register with DOF as a lessor and file a copy of the blank form lease. DOF then sends a weekly list of parking tickets to which a lessor responds within 30 days with the name and address of lessee for each ticket. DOF then transfers liability to the lessee.
You may view a summary of the issues and proposed solutions surrounding NYC’s idling program by clicking here.
On May 31, 2023, TRALA signed a coalition letter organized by the Trucking Association of New York (TANY) to oppose NYC’s idling program. The letter will soon be sent to New York City officials and TRALA will share once that happens.
On June 14, 2023, the coalition spoke with NYC’s Department of Environmental Protection (DEP). The DEP relayed that several types of trucks are exempt from the idling law:
- Trucks that use the motor vehicle engine to run a truck’s lift gate when being used to ACTIVELY load and unload product are allowed to keep the engine running;
- A vehicle operating a processing device is also exempt. That is a device that accomplishes the function for which the vehicle or equipment was designed, other than transporting goods or people, via a mechanical connection to the engine; including but not limited to operating a lift, crane, pump, drill, hoist, or mixer; or
- A system that controls the environment of temperature-sensitive cargo or substances, provided that such cargo or substances are being transported in a vehicle designed for the transportation of such materials.
LATEST ACTION: On July 11, 2023, TRALA joined TANYin sending a letter to New York City Mayor Eric Adams regarding the trucking industry’s concerns with the Citizens Air Complaint Program. There were close to 200 businesses and organizations that signed on to the letter, which sends a strong and unified message as to the effect this program has had on NYC trucking companies.
You may view a copy of the letter by clicking here.
TRALA will support TANY as it works on a media and public relations campaign, which will include a video. Additionally, there will be a hearing later this summer or in the early fall regarding the program.