Waynes World - December 2010
PORTS LOOK TO CLOSE TWO LOOPHOLES,
SAD STATE OF AFFAIRS IN CA, AND...
FMCSA ORDERS CARRIER
TO INSTALL EOBR'S
by Wayne Schooling
CARRIER ORDERED TO INSTALL EOBR’S
If you haven’t heard, the FMCSA last month announced it has ordered a carrier out of Greeley, CO to install electronic on-board recorders (EOBRs) on its entire fleet of over 700 commercial trucks by March 2011 or pay $81,780 in civil fines. In the final settlement agreement, the agency cited the company for 102 counts of falsifying hours-of service records and 3 counts of allowing drivers with a suspended, revoked or canceled driver’s license to operate a motor vehicle. This company must also train current and future drivers on the proper use of EOBRs, and develop a safety management system that incorporates EOBR data into their regular hours-of-service oversight.
In my opinion, the fine was not enough. If one rounds out the fine to a flat $82,000 and then divides that figure by the number of trucks the company shows on SafeStat (772), the fine only comes to about $106 per truck. Based on what I have found, it just might be cheaper to pay the fine than do the EOBR installations. Further, if you use the “Revenue Necessary to Pay for Accident Losses” chart that FMCSA uses, it shows that for a $100,000 hit on a carrier whose operating ratio is 5%, the carrier needs to generate an additional $2,000,000 to cover this loss. But, again, based on the number of trucks the company has, this would amount to just $2,591 per truck, or just $215.89 per month – one good short haul load!
To further prove my point, the FMCSA has identified the RouteTracker system, a monitoring device offered by XATA Turnpike that combines GPS information with engine diagnostics, as the least expensive solution that meets the agency’s performance specs, coming in at about $600 a year (for each truck). This would equal $463,200 a year. This is kind of a no-brainer. Why would this carrier pay $463,200 to install and use EOBRs in all of their trucks when they can just pay a fine of less than $82,000? Now, don’t get me wrong – I am all for safety and everyone playing on a level playing field, but this time the FMCSA fails my Economic Business Course 101 miserably!
SOME PORT LOOPHOLES TO BE CLOSED
California regulators plan to plug a pair of loopholes in the state’s drayage regulation that allows some operators to circumvent the new “clean truck” program at the ports. Apparently, some truckers found a way to bend a few of the rules. Some companies are using a small number of “clean” tractors to shuttle the containers out of the harbor, then drop the unit outside the port, where another non-compliant tractor picks up the container and makes the delivery. When the container is empty, they just do the same procedure in reverse to return it.
Another loophole is that some carriers are using non-compliant Class 7 trucks to pick up loads at the ports. When the clean truck program was written, it was assumed that only Class 8 tractors would be used. The California Air Resources Board (CARB) stated that Class 7 tractors are exempt from the port emissions reduction program, so they cannot be banned from the ports, no matter how old they are.
CARB is going to initiate an amendment to make it illegal to use Class 7 tractors in the ports and illegal to shuttle containers out of the ports. The change would expand the definition of a drayage truck to include “trucks hauling cargos, containers or chassis that are either bound from or destined for a port or intermodal rail yard.” If the amendment is approved, violators could be fined $1,000 for the first offense and $1,800 for the second offense. Stay tuned!
SAD STATE OF AFFAIRS IN CALIFORNIA
Recently, I saw an article in the Wall Street Journal that called California the “Lindsay Lohan of states” – a prima donna who once showed some talent but is now too wasted to do anything with it. Well, as some people see it, California is run by a brothel of environmentalists, lawyers, public-sector unions and legislative bums. Jerry Brown will be our new (old) governor. The is the same man (Attorney General Jerry Brown) who sent a task force to Southern California last September in an attempt to crack down on six trucking companies who were using independent contractors. They tried to bully them around so that they would declare these honest, hard-working, independent truckers as employees so that he could collect more taxes. Well, now he is back, and facing a $40 million dollar a day problem.
California’s fund for paying their unemployment insurance is broke, and with one of every eight workers out of a job, the state is borrowing billions of dollars from the federal government to pay benefits at the rate of $40 million a day, according to the Los Angeles Times. The unemployment insurance fund has depended on the same revenue source since 1984 – a tax based on a worker’s first $7,000 of annual wages, the minimum level allowed by federal law. The debt, now at $8.6 billion, is expected to reach $10.3 billion for the year, two-thirds greater than last year. Worse yet, the program’s deficits are projected to hit $13.4 billion by the end of next year and $16 billion in 2012, according to the California Employment Development Department (EDD), which runs the program. Interest on that debt will soon start piling up, forcing the state to come up with a $362 million payment to Washington by the end of next September.
So, Brown will have two choices – raise taxes or find new taxpayers. Getting any tax increases through the legislature will be a daunting task, but not impossible, but, more than likely, he will pick the second choice. Now that Brown is governor, he can just instruct the new attorney general to continue that task force that is cracking down on the independent contractors. And, with two very recent court cases last September involving companies using independent contractors, trust me, this issue is far from dead! Again, stay tuned for updates on this issue.
~ NTA is a name and organization you can trust. Not only is our website (www.ntassoc.com) an official US DOT Internet Training Site, but we are also the administrators of a Nationally Accredited Drug and Alcohol Program. If you have any questions, call me at (562) 279-0557 or send me an e-mail at wayne@ntassoc.com. Until next month, “Drive Safe – Drive Smart!”