OVERVIEW

1. HEALTH AND PERSONAL CARE LOGISTICS CONFERENCEWASHINGTON UPDATEAPRIL 2012John M. Cutler, Jr.McCarthy, Sweeney & Harkaway, P.C.1825 K Street, N.W., Suite 700Washington, DC 20006(202) 775-5560jcutler@mshpc.com

2. 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

3. 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

4. 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

5. 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

6. 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

7. 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.

8. 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

9. 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 21st Century, or MAP-21. • The Senate passed the bill in mid-March by a vote of 74-22 • 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

10. 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

11. 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

12. 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

13. 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

14. 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 2013

15. 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

16. 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 emails about seminars in which lawyers learn how to litigate truck accident cases

17. 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

18. 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

19. 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

20. 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