Washington Update

1. Washington Update National Shippers Strategic Transportation Council Policy Conference June 10, 2019 Karyn.Booth@Thompsonhine.com

2. Topics • Washington Update……In the Background • Infrastructure Modernization • Trucking Updates • FMCSA Preemption • CA Joint and Several Liability • Hours of Service • FMC Final Report on Port Demurrage/Detention Practices

3. Washington Update • Democratic control of the House of Representatives post-election • Means more investigations of President Trump and a need for compromiseto achieve legislation

4. Washington Update • Survival of the longest partial Government Shutdown (35 days)—due to disagreement over funding for the Border Wall ($1.375 billion vs. $5.7 billion) • Mueller Report: No Russia collusion BUT…. • Border Security

5. The 2020 Race Begins • A crowded field….23 Democratic Presidential Candidates so far • BIDEN and BERNIE leading the pack • Iowa Caucus is Feb. 3, 2020 • Means limited time for legislation to be achieved in 2019

6. Infrastructure Modernization • INFRASTRUCTURE MODERNIZATION is key issue where potential compromise is possible • Trump and Pelosi talks about a deal include theatrics related to Congressional investigations • Key issue is FUNDING $$$ • Sen. Schumer statements seek to tie infrastructure funding to climate change

7. Infrastructure Modernization • House and Senate Committees have held hearings • Focus is on country needs and funding mechanisms, including • Fuel tax increases • Federal guarantees for state and local borrowing—TIFIA expansion, infrastructure bonds, and P3s • User fees, e.g. vehicle miles traveled • Interstate tolling • Carbon tax

8. Infrastructure Modernization • Current Surface Transportation bill expires in March 2020 • If a deal is not reached fairly early, 2020 Presidential election likely to complicate a solution • Neither side wants the other to get credit, and neither side wants to be blamed for a possible tax increase……

9. Truck Transportation: FMCSA Preempts California CMV Driver Meal and Rest Break Rules • Dec. 21st - FMCSA determined that CA’s meal and rest break rules as applied to CMV drivers are preempted • Preemption applies to drivers in CA who are subject to DOT HOS rules • CA requires a 30 minute rest break prior to each 5 hours on-duty and a 10 minute break for each 4 hour period on duty, preferably in the middle of such period, i.e. after 2 hours • ATA petitioned FMCSA seeking preemption of the CA rules based on the effect on interstate commerce and concerns over a patchwork regulatory system with different state rules

10. Truck Transportation: FMCSA Preempts California CMV Driver Meal and Rest Break Rules • FMCSA specifically found that the CA Rules: • “Are more stringent than DOT’s hours of service regulations” • “Have no safety benefits that extend beyond those already provided by the Federal Motor Carrier Safety Regulations” • “Are incompatible with the Federal hours of service regulations” • “Cause an unreasonable burden on interstate commerce”

11. Truck Transportation: FMCSA Preempts California CMV Driver Meal and Rest Break Rules • Preemption decision effective as of January 1, 2019 • Teamsters Local 2785 have appealed the decision to the Ninth Circuit Court of Appeals • stay petition was filed by the Teamsters in April 2019 • absent a “stay” the preemption decision remains in effect during the appeal

12. Truck Transportation: drayage customers in ca jointly liable for driver labor judgments • A customer (i.e. the shipper) that engages or usesa port drayage motor carrier in California shall be jointly and severally liable with the motor carrierfor driver claims when a final judgment exists for: • all unpaid wages • unreimbursed expenses • damages and penalties • applicable interest • Applies if you use a drayage operator contracted by an ocean carrier or if you contract directly with the drayman

13. Truck Transportation: drayage customers in ca jointly liable for driver labor judgments • CA Division of Labor Standards for Enforcement: • will post on its website, and update monthly, a list of the port drayage motor carriers who have failed to pay final judgements • shall provide at least 15 business days’ prior notice via to the port drayage motor carrier information as to unpaid judgements

14. List of Port Drayage Motor Carriers with Unsatisfied Court Judgments, Tax, Assessments of Tax Liens Published June 5, 2019 14

15. Truck Transportation: drayage customers in ca jointly liable for driver labor judgments • Exceptions: • (1) use of a port drayage motor carrier whose employees are covered by a collective bargaining agreement; or • (2) if the customer and port drayman had a contract for port drayage at the time the dray operator is listed on the website and the customer undertakes to terminate the contract, then no liability until the contract expires or 90 business days following the listing, whichever is shorter

16. Truck Transportation: drayage customers in ca jointly liable for driver labor judgments • What to do? • Attempt to negotiate protections in your contracts where port drayage in CA is involved • responsibility to monitor the website • restrictions on use of operators listed on the website • notice provisions • indemnification

17. Truck Transportation: FMCSA’s Driver HOS ANPRM

18. Truck Transportation: FMCSA’s Driver HOS ANPRM • Trucking market is experiencing reduced capacity and driver shortages, which is driving up costs • In response to requests from Congress and the public, FMCSA issued an ANPRM on driver Hours of Service • FMCSA is interested in evaluating if revisions to the HOS rules would alleviate unnecessary burdens on drivers while maintaining safety on the highways

19. Truck Transportation: FMCSA’s Driver HOS ANPRM • FMCSA’s ANPRM identified 4 areas for potential reform: • Short-haul HOS limit: FMCSA is considering whether to expand the 100 air-mile “short haul” exemption from 12 consecutive hours on duty to 14 consecutive hours on duty • HOS exception for adverse driving conditions: FMCSA is considering whether to expand the 14-hour on-duty window to 16 hours if a driver encounters adverse driving conditions (driving time is already expanded from 11 to 13)

20. Truck Transportation: FMCSA’s Driver HOS ANPRM • FMCSA’s ANPRM identified 4 areas for potential reform: • 30-minute rest break provision: FMCSA is considering whether to eliminate or modify the current 30-minute rest break requirement which applies after 8 consecutive hours of on-duty • Split Sleeper Berth: FMCSA is considering whether to increase flexibility under the rules and announced its Pilot Program to Allow Commercial Drivers to Split Sleeper Berth Time on June 6, 2017

21. Truck Transportation: FMCSA’s Driver HOS ANPRM • Stay tuned….FMCSA is expected to issue an NPRM with specific proposals to modify the HOS rules in the areas identified

22. Ocean Transportation: FMC Final Report on Demurrage/Detention Practices • 9 month “factual investigation” regarding ocean carrier and marine terminal demurrage/detention practices • Commissioner Dye served as the fact-finding officer • Substantial data and information collected from ocean carriers, marine terminals, trucking companies, importers, exporters and 3PLs • Record also supplemented by hearing testimony and written comments and briefs

23. Ocean Transportation: FMC Final Report on Demurrage/Detention Practices • Key Findings: • problems are more systemic than episodic • demurrage/detention charges create valuable incentives for prompt pickup of cargo and drop-off of equipment • practices should help to improve throughput velocity at seaports and efficient asset utilization • goals of demurrage/detention can be best achieved by focusing on actual container availability

24. Ocean Transportation: FMC Final Report on Demurrage/Detention Practices • Recommendations: FMC will establish Innovation Teams comprised of industry leaders to address “commercially viable” practices concerning: • Standardization of terminology • Billing practices, Dispute resolution and Evidentiary guidelines • Notice of container availability • Shipper Advisory Board

25. Ocean Transportation: FMC Final Report on Demurrage/Detention Practices • Innovation teams are now established • Team meetings held in Washington, DC in early April • Implementation of proposed solutions will be determined by the FMC after the team meetings

26. Thank You!Karyn Booth202.263.4108karyn.booth@thompsonhine.com