By Mike Kastner, NTEA Managing Director
This article was published in the October 2017 edition of NTEA News.
When taking office, the Trump Administration indicated it would review regulations approved in the waning days of the Obama Administration. Recently, it was announced two separate rules are under review and will be reconsidered — portions of the Phase 2 greenhouse gas (GHG) rules and Department of Labor (DOL) overtime amendments.
Phase 2 GHG
Environmental Protection Agency (EPA) and National Highway Traffic Safety Administration (NHTSA) issued a second phase of regulations in October 2016 addressing medium and heavy truck fuel efficiency and GHG emissions. For the first time, the GHG portion of the rules addressed trailers (these regulations are scheduled to begin taking effect in 2018). The new EPA rules also addressed glider kits.
In Phase 2, trailers were defined as being used in combination with tractors, including all lengths of dry vans, refrigerated vans, tanks, flatbeds and container chassis hauled by low, mid, and high roof day and sleeper cab tractors.
Trailer regulations primarily call for the addition of aerodynamic features to help increase fuel efficiency. EPA estimated that when fully phased in by 2027, tractor-trailers would recover additional costs associated with the proposed regulations within two years of ownership through a fuel use reduction of 24 percent for tractors and 8 percent from the more efficient trailers. The additional average cost increase for trailers would be 4 percent, or an average of $1,100 per trailer.
Glider kits are a tractor chassis with frame, front axle, interior and exterior cab, and brakes. A used/rebuilt engine and drivetrain components are added to complete the vehicle. These vehicles typically match an older pre-emissions engine with a new glider kit.
Phase 2 final rules phase-out the use of older engines in glider kits by 2021. In January 2017, glider vehicle builder production was capped at the manufacturer’s highest annual production of glider kits and glider vehicles for any year from 2010–2014. Any production beyond that limit must use engines certified as legal for the same year as the glider kit is built.
In 2018, engines in glider vehicles must begin meeting emissions standards corresponding to the year of the glider vehicle; however, there will be a limited small business exemption. This will allow certain businesses to produce up to 300 glider vehicles or their highest annual production volume for calendar years 2010–2014, whichever is less, with older engines.
Effective Jan. 1, 2021, the 2018 small business exemption will end and all glider vehicles will need to meet Phase 2 GHG standards.
Reconsideration
After Phase 2 regulations were announced, Truck Trailer Manufacturers Association (TTMA) filed suit asking that the regulations governing trailers be removed from Phase 2 rules. They argue that EPA is only authorized to regulate motor vehicle emissions — and trailers neither produce emissions nor meet the definition of a motor vehicle.
Similarly, glider kit interests petitioned for reconsideration, claiming EPA lacks authority over glider vehicles because they are not “new” motor vehicles and glider kits because they do not fall within the Clean Air Act’s definition of a “motor vehicle.”
In August 2017, EPA Administrator Scott Pruitt announced that in light of these issues, EPA will revisit provisions in the Phase 2 rule related to trailers and gliders. EPA will develop and issue a Federal Register notice of proposed rulemaking on the matter consistent with requirements of the Clean Air Act. EPA did not indicate a timeframe for the new proposal.
Concerns
Some truck manufacturers and users expressed concern over the EPA reconsideration. First is the timing of these decisions. With current Phase 2 rules set to take effect, manufacturers have been working to design vehicles based on the published regulations. If those are in question, the design process may be delayed.
The second issue is California, which has an exemption allowing the state to develop its own emissions rules. Other states can, if they choose, opt-in to the California-specific regulations. The current Phase 2 rules were negotiated with California, so if those are changed, the state could choose to promulgate its own rules, creating a patchwork effect.
DOL overtime
In May 2016, the Obama Administration announced significant changes to the overtime pay rules — requiring overtime pay for significantly more employees than today. These were originally scheduled to take effect in December 2016, but have been delayed.
The Department of Labor (DOL) rule effectively doubled the salary threshold for overtime — from $23,660 annually ($455 per week) to $47,476 per year ($913 per week). Hourly workers are generally guaranteed overtime pay regardless of earnings level. This new threshold will bring more salaried workers under the umbrella of overtime pay requirements.
In November 2016, a federal judge issued a preliminary nationwide injunction blocking implementation of the new rule. On Aug. 31, 2017, a U.S. District Judge concluded the overtime rule is invalid.
One concern expressed during the original rulemaking process and in the legal maneuvering after publication of the final rule is the “one-size-fits-all” approach. The regulation does not recognize salary differences by geographic regions.
The Labor Secretary has said the new salary threshold set by the Obama Administration was excessive and burdensome on many employers, but the current minimum salary level should be updated.
DOL has asked for input on whether the current threshold of $23,660 should be changed for inflation, and whether there should be multiple standard salary thresholds based on employer size, region, and other factors. The department also said it would consider eliminating the salary threshold, leaving overtime eligibility to be based on workers’ job duties.
NTEA will monitor these issues and keep members informed of any updates. Visit ntea.com/advocacy for the latest legislative and regulatory news.