WASHINGTON UPDATE John Cutler, Mike Regan and Ben Gann

KEY POINTS Don’t expect major changes affecting transportation and logistics from 2016 elections Do expect continued gridlock on Capitol Hill Do expect continued regulatory burdens Learn what’s coming and make your voice count

ELECTION YEAR NOTES Many candidates call for infrastructure investment This is largely lip service without increased funding, and no one has proposals that are likely to meet our needs Bipartisan resistance to increasing fuel taxes Biggest impact of 2016 Presidential election for transportation and logistics is likely to result from Executive Branch appointees

NEWS FROM CAPITOL HILL We did get a Highway Bill, the FAST Act, in late 2015 Funding of $305 billion over 5 years is welcome, but not enough, and prospects for long-term stable funding at needed levels are poor Tax reform, corporate revenue repatriation and refinery taxes may help, but don’t hold your breath

FAST ACT AND REGULATION FAST Act also included regulatory initiatives. FMCSA says 20 new rulemakings mandated, and FMCSA is also moving ahead in some pending proceedings HOS restart relief continued, pending study. No 1am- 5am rest period requirement, but glitch needs fixing. Congress was critical of FMCSA truck and safety regulation, providing for new restrictions on rulemaking, new challenges to existing rules, and required studies

FAST ACT AND REGULATION Permitting of highway construction should be streamlined, though not enough Hiring young veterans as truck drivers should be easier, assuming success in pilot program FAST Act also included rail provisions and a call for port performance monitoring, in light of recent port labor slowdowns. Since then, progress has been made toward a Port Performance Freight Statistics program.

LEGISLATION STILL NEEDED We pushed (again) for larger and/or heavier trucks, but Congress did not relax the 80,000lb GVW limit except in a few areas We pushed for twin 33s. That effort also fell short. No National Hiring Standard for motor carriers, but new developments at FMCSA may help reduce “negligent hiring” lawsuits No federal preemption of state meal and break rules

CSA PROBLEMS Compliance, Safety, Accountability (CSA) and Safety Measurement System (SMS) are FMCSA’s main tools for finding unsafe truckers Everyone supports the goal of identifying problem carriers and forcing them to improve or shut down, but poor data, poor analysis, nitpicking, and blaming carriers for crashes they could not prevent lead to skewed results. This harms carriers, shippers and 3PLs who support safety.

CSA REFORM EFFORTS Congress noted industry and government criticism of CSA and ordered improvements FAST Act requires new study of CSA, followed by a corrective action plan from FMCSA which DOT Inspector General must approve Until then, much controversial CSA data off FMCSA website, including BASICs and “golden triangles”. Carrier crash data still displayed.

LATEST FMCSA ACTIONS Claiming to comply with FAST Act, FMCSA has proposed new “Unfit” safety fitness determination in place of Satisfactory, Conditional and Unsatisfactory Data issues still need to be remedied “Beyond Compliance” should help safest carriers Contracts and state laws will need to be updated if single “Unfit” rating is adopted, but result might be less “negligent hiring” exposure

LATEST FMCSA ACTIONS “Unfit” rating more like pass-fail grading, making it harder for tort lawyers to claim you should have used better carrier. System will also let more carriers be assessed. You should look out for “Proposed Unfit” carriers. A carrier actually found Unfit will probably be out of service. FMCSA estimates 2800 carriers annually will be Proposed Unfit. Another 3000 carriers per year may be designated “High Risk”. DO NOT USE THEM.

ELECTRONIC LOGGING DEVICES FMCSA’s final rule on ELDs requires most paper logbooks to be replaced by prescribed “black boxes” by 12/17. Many carriers which already use them will get extra time for updates. ELDs will automatically record locations, miles driven, engine hours, etc. They are projected to increase safety (through reduced HOS violations) and improve efficiency (through reduced paperwork and better performance monitoring). OOIDA has filed a court challenge, which seems like a long shot A bigger concern is whether smaller carriers will go along with the ELD mandate, given the costs and burdens. Check compliance.

DRIVER COERCION FMCSA’s proposed rule prohibiting driver coercion by carriers, shippers, receivers and 3PLs is in effect now, with fines up to $16,000 per incident Civil penalties aside, imagine facing a jury trial involving accident victim severely injured by driver who blames accident on coercion by someone at your company Thanks to NASSTRAC and others, final rule was toned down. BUT, if you have to yell at someone about a missed delivery schedule, yell at carrier, not driver.

DRIVER COERCION Driver may file coercion complaint with FMCSA within 90 days after incident, even if attempt to coerce failed. No documentation needed. Train your people who deal directly with drivers, and consider procedures for getting prompt notice of driver concerns in hands of knowledgeable people at your company. Preventing complaints is safest approach.

OTHER REGULATORY ISSUES Speed Limiters. No proceeding yet but 65mph discussed. Many carriers already limit truck speeds. Loading and Unloading Delays. FMCSA, drivers and carriers complain about shippers and receivers who delay loading and unloading. FAST Act sets parameters for studying issue, and new rules could follow. Insurance. If FMCSA wants higher liability insurance, it must study impacts on safest and truckers, and availability of more coverage

OTHER REGULATORY ISSUES Driver Training. FMCSA proposes 30 hours behind the wheel training for Class A CDL, 15 hours for Class B Driver Health. Sleep apnea testing, substance abuse testing Using hair follicles, and other health issues may worsen driver shortage Licensing Rules. Requirements for 3PL officers, penalties for unauthorized operators, website changes FMCSA does not see adequacy of capacity as its job

QUESTIONS? Thank you for attending this Meeting and this Session, and we’ll try to answer any questions.