In a state the prides itself on taking the lead on environmentally-friendly regulations and that is well-known for a rigorous regulatory environment around business, the trucking industry – a major source of air pollution in the state, particularly around ports and highways – is often one of the industries of focus for environmental and labor regulators. The industry in California is contending with a patchwork of rules and policies dictated by statewide agencies, local governments and air quality districts.
In the San Pedro Bay harbor area in Southern California, the drayage industry is centered around the ports of Long Beach and Los Angeles, which handle the majority of maritime trade coming into the United States. In addition to federal and state requirements regulating air emissions for the types of heavy-duty trucks that do business at the ports, the trucking industry is also subject to regulation by the ports themselves.
Chris Shimoda, vice president of government affairs for the California Trucking Association, told the Business Journal that even as the trucking industry is still trying to figure out how to pay for required upgrades to its vehicles to comply with current state regulations, it is already being forced to anticipate forthcoming additional rules.
The California Air Resources Board (CARB), a state agency tasked with creating regulations to curb air emissions, approved its Drayage Truck Regulation in 2007, with an update in 2011. That rule dictates what model year of trucks are allowed to move cargo to or from California’s ports and intermodal rail yards. Currently, trucks must meet model year 2007 engine emissions standards. On December 31, 2022, they must meet model year 2010 standards.
But the ports of Long Beach and Los Angeles have more ambitious requirements per their Clean Air Action Plan, which was updated in 2017. The ports’ Clean Trucks Program requires that, as of October 1, all new trucks registering with the ports must be model year 2014 or newer. Older trucks already on the registry that meet CARB’s specifications are allowed to continue operating at the ports, according to the plan. By 2035, all trucks doing business at the ports must operate on zero emissions.
Weston LaBar, CEO of the Harbor Trucking Association, took issue with the way these rules are structured. “I feel like finding an arbitrary [model] year does not necessarily mean that the truck is cleaner,” he said. “You can have an older truck that, if maintained or has certain sorts of retrofits on it, may actually be cleaner than a newer truck.” He added, “CARB has talked about moving forward with some sort of a smog check program for heavy duty trucks. We feel like that may be the better approach to set the standard; and if the equipment meets the standard, let it operate.”
The California Trucking Association remained neutral on the Clean Air Action Plan update, Shimoda said, noting that the plan essentially pushes up the deadlines to meet CARB’s requirements. “In a couple of years you’re going to need to bring in new equipment anyway. . . . I don’t think you’re going to hear much of an outcry from the trucking industry on that,” he explained.
Per the Clean Air Action Plan, beginning in mid-2020, trucks doing business at the ports that do not meet a near-zero or zero-emissions standard will be subject to a fee. CARB is currently working to create a definition of “near-zero emission.” For trucking companies attempting to make business decisions in advance, not knowing what this definition will entail complicates things.
“Our members are still sort of figuring out how they are paying for all these upgrades, and still going through the process of complying with everything that’s already on the books from the environmental side,” Shimoda said. “And while that’s happening, we’re starting to have those discussions about what new regulations might be imposed on the industry.”
“Quite frankly, we have been caught between a rock and a hard place as we advise member companies what they can or can’t buy,” LaBar said. “We don’t know if they bought brand new 2018 trucks today whether they would be charged a clean truck fee or a dirty truck fee, whatever they want to call it, at the ports.” He added, “We feel like sometimes we are being asked to do things blind.”
Shimoda noted that the United States Environmental Protection Agency sets new engine emissions standards. To ensure the cleanest trucks are operating on state roadways, CARB has instituted fleet turnover requirements to upgrade to newer trucks, he explained. Then there is the South Coast Air Quality Management District (SCAQMD) – an agency that monitors and regulates primarily stationary sources of air pollution in California’s South Coast Air Basin. The basin includes portions of Los Angeles, Riverside, San Bernardino and Orange counties.
In March 2017, SCAQMD’s board adopted the 2016 Air Quality Management Plan, which included directives to reduce emissions from vehicles associated with facilities – a concept referred to as “indirect source measures.” This May, the board directed staff to develop indirect source rules for warehouses, rail yards and airports. According to a presentation from an August SCAQMD working group meeting, an initial concept is to require the warehousing industry to do business with trucking fleets that “on average are cleaner” than CARB requires. Warehousing agencies would have to pay a fee if they did not comply with the new rule.
The proposal adds another layer of regulations and compliance measures for the trucks visiting the vast network of warehouses in the South Coast Air Basin, which includes the harbor area. “You are looking at increasingly more of a patchwork [of rules,]” Shimoda said. “You can’t just look at one single place and figure out what you’re supposed to do. You really need to keep your eye on all these various agencies to try to do your business planning.”
The trucking industry is also facing a challenge that could upend its entire business model. Many drayage firms employ truckers as independent contractors. But in recent years, that model has been called into question by national media reporting that revealed hundreds of labor violations on the part of trucking companies. The International Brotherhood of Teamsters formed a group, Justice for Port Truck Drivers, that has been picketing in earnest over the past two years in attempt to highlight what participants view as “indentured servitude.”
This year, a California Supreme Court case and a piece of state legislation directly addressed the issue. In the case of Dynamex Operations West, Inc. vs. Superior Court of Los Angeles, the supreme court established new rules to identify whether someone should be considered an employee of a company or an independent contractor. One stipulation notes that a worker is only an independent contractor if the work he or she conducts for a company is separate from that company’s usual course of business.
As Shimoda explained it, a truck driver would no longer qualify as an independent contractor, as his or her service is the usual course of business for trucking firms. “I think it’s early to say what the specific ramifications are going to be for businesses,” he said. He called the ruling the “number one” issue for the industry right now “by a long shot.”
The Western States Trucking Association has challenged the Dynamex ruling, filing a complaint with a federal court to rule the decision invalid. “We won’t have clarity on that issue for several years, is my guess,” LaBar said.
LaBar pointed out that recently passed state legislation, Senate Bill 1402, also stands to impact the trucking industry by penalizing its customers. The bill makes retailers, shippers and other companies jointly liable for labor violations made by trucking firms they employ for services. The bill by State Sen. Ricardo Lara attempts to address “exploitation of truck drivers who haul cargo from California’s ports.”
The California Division of Labor Standards Enforcement (DLSE) has awarded $45 million to more than 450 truck drivers for “unlawful deductions from wages and out-of-pocket expenses,” according to SB 1402.
As a result of the legislation, “I have members that have spoken with their customers who have asked them. . . to prepare plans of action for moving goods into another freight corridor, as opposed to L.A./Long Beach,” LaBar said. “That is a decision that cargo owners are going to make because now they feel there is a certain level of exposure for them.”
As the trucking industry continues to contend with existing and impending regulations, LaBar said that “collaboration is the key” in order to “make sure that the solutions we’re coming up with don’t create a system of winners and losers but create joint success for everybody.”