1 HEALTH AND PERSONAL CARE LOGISTICS CONFERENCE WASHINGTON UPDATE APRIL 2012 John M. Cutler, Jr. McCarthy, Sweeney & Harkaway, P.C K Street, N.W., Suite 700 Washington, DC (202)

OVERVIEW The good news is that the economy seems to be gaining strength -Reduced unemployment -Stock market gains -Inflation not much of a problem The bad news is that Congress is dysfunctional -Elections this fall causing worse than normal gridlock now -Elections this fall unlikely to lead to less gridlock next year 2

OVERVIEW Congress is trying enact a new Highway Bill before the November elections, as evidence that they are not worthless The Highway Bill leaves much to be desired While Congress is neutralizing itself through gridlock, FMCSA and other regulatory agencies are on the move 3

WASHINGTON FLY-IN Prompted by “War on Trucking” concerns “Stand Up for Trucking” was scheduled to coincide with ATA Executive Committee meeting Between 100 and 200 attendees, from H&PCLC, NASSTRAC, NITL, TIA, RILA, Coalition for Transportation Productivity Meetings with many key Senators, Representatives and Staffers 4

WASHINGTON FLY-IN Main focus on Highway Bill and funding (opposing higher tolls), Overregulation, and Education about importance of trucking Opponents were not idle Congressional offices ranged from knowledgeable to clueless, but appreciated hearing from carriers and shipper customers Efforts worthwhile, but more needs to be done 5

HIGHWAY BILL SAFETEA-LU, the $286 billion Highway Bill enacted in 2005, expired in 2009 but was extended repeatedly Everyone knows we need to spend more. Fuel taxes have not been increased since 1993 and are not indexed for inflation SAFETEA-LU required two transfers of money from the general fund DOT reported U.S. should spend $101 billion annually for 20 years to maintain highways and transit, and more than $150 billion for needed improvement Treasury Dept. study says we waste 2 billion gallons and spend $100 billion annually due to congestion 6

HIGHWAY BILL Many bipartisan studies urge higher fuel taxes, transition to a possible Vehicle Miles Traveled tax, and a greater focus on freight The House Transportation and Infrastructure Committee produced a draft 2009 Highway Bill that looked promising Funding was an insurmountable problem House T&I Chairman Oberstar, who spoke at the last H&PCLC meeting, was defeated in the 2010 elections, and the Republican Party gained a majority in the House of Representatives. The Oberstar bill died. 7

HOUSE HIGHWAY BILL T&I Chairman John Mica, Oberstar’s successor, originally proposed a 5-year Highway Bill 30% below SAFETEA-LU funding levels Mica subsequently introduced H.R. 7, the American Energy & Infrastructure Jobs Act, with spending at SAFETEA-LU levels, $260 billion over 5 years, or $52 billion a year The bill was approved by T&I in February. Unfortunately, provisions to increase truck weights to 97,000 lbs. nationwide, with an additional axle and wheelset, were removed through an amendment calling for a 3 year DOT study of truck size and weight issues. Bickering between conservative Republicans who want to spend less and Democrats who object to energy provisions has led to H.R. 7 being tabled 8

SENATE HIGHWAY BILL The Senate, where many bills have died during the last session of Congress, took a different approach to a new Highway Bill The Senate Environment and Public Works Committee developed and passed a bipartisan 2 year, $109 billion Highway Bill, S. 1813, Moving Ahead for Progress in the 21 st Century, or MAP-21. The Senate passed the bill in mid-March by a vote of Congress has extended SAFETEA-LU again, for 90 days, and the House may take up MAP-21, pass a version, and work with the Senate for enactment before the elections Or, the House may decide that enacting a Highway Bill this year involves too many compromises 9

MAP-21 PROVISIONS Funding aside, there are provisions in MAP-21 that could lead to important changes in policy -Truck size and weight study -Detention time study -Increased financial responsibility for brokers and freight forwarders -Civil penalties for unauthorized forwarders -National freight transportation policy and freight strategy performance plan -Bridge and tunnel toll fairness 10

MAP-21 PROVISIONS ON RAIL Relief caps in small rail rate cases would increase significantly Rail rate cases at the STB would be expedited A study of railroad revenue adequacy would be mandated Positive Train Control deadlines could be extended Effort to eliminate rail antitrust immunity stalled 11

OTHER RAIL ISSUES STB is considering how to deal with $8 billion acquisition premium paid by Berkshire Hathaway for BNSF STB is considering arguments for and against increasing competition in the rail industry Railroad efforts to shift costs, burdens and risks to shippers are being challenged Railroads are nevertheless doing very well, though future of coal business raising questions 12

HOURS OF SERVICE FMCSA issued its decision revising truck driver Hours of Service rules in December -FMCSA kept maximum 11 hours daily driving time, which carriers and shippers, including H&PCLC, argued for -Administrator Ferro promptly announced her desire to keep pursuing a 1 hour reduction -FMCSA ordered that 34-hour restart must include two 1 am - 5 am rest periods -FMCSA mandated at least one 30 minute break 13

HOURS OF SERVICE All in all, carriers and shippers dodged some bullets Rules are now the subject of an appeal by ATA, which is challenging the restart rule changes Public Citizen, Truck Safety Coalition and others have also appealed, to argue for less driving time per day and per week H&PCLC has intervened in the Public Citizen case to defend the good parts of the FMCSA decision Appeals have been consolidated and a court decision not likely until

PORT DRAYAGE APPEAL In 2011, a court of appeals in California held that Port of LA cannot require independent owner-operator truck drivers to become trucking company employees Port of LA decided not to appeal ATA decided to seek Supreme Court review of aspects of Port of LA plan upheld by California appeals court Supreme Court recently asked U.S. Solicitor General to file on issue, a hopeful sign We also need to monitor Clean Ports Act, pending in Congress 15

OTHER COURT NEWS Court cases involving allegations of vicarious liability and negligent hiring continue to make news In Oregon, a jury awarded $5.2 million in a wrongful death action against a broker, finding it failed to exercise due diligence in hiring a trucker with no insurance or operating authority In Illinois, jurors awarded $27 million to a woman paralyzed in an accident with a tractor trailer, who sued the motor carrier, the 3PL, and the shipper. The jury rejected the contention that the carrier was an independent contractor I’ve been receiving s about seminars in which lawyers learn how to litigate truck accident cases 16

OTHER FMCSA NEWS FMCSA has still not issued its NPR on the Compliance Safety Accountability (CSA) program. When it does, H&PCLC will participate The program should reduce the number of bad drivers and bad carriers, increasing safety and reducing liability exposure Too many carriers are unrated or only conditionally rated 17

OTHER FMCSA NEWS FMCSA has drawn fire from the trucking industry for delaying crash accountability reviews, which would avoid penalizing truckers for non- preventable crashes FMCSA’s strategic plan, which called for expanding jurisdiction to “shippers, receivers, brokers and forwarders” appears to have been removed from its website FMCSA announced plans to emphasize hazmat issues under CSA and downplay cargo securement 18

AIR CARRIERS FAA Reauthorization Bill finally enacted in February, after more than 20 extensions of the last FAA Act Provides funding for Next Gen air traffic control system Resolves National Mediation Board issue, reversing NMB attempt to favor unionization EU has just announced $225 million in fines on 13 forwarders for price fixing as to international air cargo rates, peak-season surcharges and currency adjustments Forwarders considering appeals 19

NAFTA NEWS Trucking across the U.S.-Mexican border continues to be controversial FMCSA approved cross-border trucking, consistent with NAFTA treaty obligations. Mexico dropped punitive tariffs Teamsters, OOIDA, Public Citizen and Sierra Club are challenging FMCSA decision in California court of appeals We may see a decision later this year 20