U.S. Legislative News

Continuing Resolution Passage – DOT Funding – Potentially Tax Credits

All-Electric California Bus Fleet by 2040

The California Air Resources Board (CARB) announced the approval of the Innovative Clean Transit regulation on December 14, which mandates that public transit agencies statewide will need to transition to zero-emission bus fleets by 2040. In a statement, CARB Chair Mary D. Nichols said, “Putting more zero-emission buses on our roads will also reduce energy consumption and greenhouse gases, and provides cost savings for transit agencies in the long run.” This move is in line with California’s push towards sustainability and emission reductions and is the first regulation of its kind in the U.S.

There are just 153 all-electric buses operating in public transit agencies in California today, while the total public transit bus fleet in California is resting at 12,000 vehicles. CARB is hoping to reach 1,000 all-electric buses by 2020 and is directing all public transit agencies to begin drafting implementation plans for the transition. Additionally, there will be zero-emission purchase requirements set for agencies in the coming years to ensure they are acquiring the number of vehicles needed to hit the 2040 goal.

This move is likely to rile natural gas bus manufacturers who are heavily invested in the public transit fleet market at present. Electric bus manufacturers and battery suppliers have welcomed this move by CARB, given the expected increases in demand, this regulation will create for their products. This step towards electrification will require significant investments in charging infrastructure. However, CARB sees the long-term savings on fuel and maintenance, as well as the positive environmental and health benefits, as a worthwhile tradeoff. As has been the case with many environmental mandates that began in California, it is not unlikely that other jurisdictions around the country will look at this regulation as a model for their own initiatives in the future.

 

Lawsuit Filed Against Hyundai and Kia Over Engine Fires

A class-action lawsuit was filed by Hyundai and Kia owners against the companies on December 14, alleging that a dangerous defect affecting certain vehicle models can cause premature engine failure and spontaneous fires in the engines. According to the lawsuit more than 350 consumer complaints were reported to the U.S. National Highway Traffic Safety Administration over non-collision fires in Hyundai and Kia vehicles as result of the automakers’ “concealment of the defect.” Hyundai and Kia have recalled about 1.6 million vehicles in the U.S. made between 2011 and 2014 related to engine problems. The customers’ lawsuit argues that a defect restricts oil flow to core engine parts, causing premature wear and failure and eventually resulting in engine seizure and fire.

In May 2017, the NHTSA opened a formal investigation into the recall of nearly 1.7 million Hyundai and Kia vehicles over engine defects and is still ongoing. The Senate Committee on Commerce, Science, and Transportation was scheduled to hold a hearing on the reports of engine fires on November 14, 2018, and invited the CEOs of both automakers to attend. The hearing was put on hold by the committee, but members have expressed that they are looking to have a hearing involving Hyundai and Kia to examine vehicle fire safety at a later date.

 

FMCSA Denies ELD Exemption Requests

On December 7, the Federal Motor Carrier Safety Administration (FMCSA) publicly announced the denials of 10 electronic logging device (ELD) exemption requests made by various trade organizations and associations that felt their business operations were unduly burdened by the hours of service (HOS) regulations that require the use of ELDs. Some exemption requests cited various concerns related to unique operations that are more conducive to paper records of duty status (RODS) use, while others sought compliance deadline extensions. The FMCSA found that in all cases there was not enough evidence that an exemption would provide requisite levels of safety, given concerns regarding the potential for hours falsification.

Safety advocacy groups expressed strong support of the FMCSA’s decisions in these exemption requests, due to the potential dilution of a rule that helps curb the rising levels of truck crash deaths on U.S. roadways. However, trucking advocacy groups have expressed concerns that ELDs can potentially cause heightened stress levels among drivers as they complete their routine order of business, which can negatively contribute to driver wellness and satisfaction.

 

Year-End Legislative Update

As the second session of the 115^th Congress adjourns, this is a good time to recap NAFA’s advocacy efforts in Washington, D.C., and to look toward 2019 and the 116^th Congress.

Tax Extenders

Extension of the federal tax credits for alternative fuels and biodiesel remains in flux. These credits have helped to make the business case for biodiesel and alternative fuel vehicles. Without these credits, it is often difficult for a fleet to justify the purchase of these fuels and vehicles.

The federal tax credits for biodiesel, natural gas, and propane were extended through 2017, but are now expired. These credits include the $0.50 per gallon alternative fuel tax credit (AFTC) for compressed natural gas, liquefied natural gas, propane autogas, and other alternative transportation fuels; the $1.00 per gallon tax credit for biodiesel; and the 30 percent alternative fuel infrastructure tax credit.

In September, NAFA wrote to the leadership of the House and Senate tax committees urging Congress to extend the incentives for five years. In October, NAFA encouraged Members to contact their individual Senators and Representatives.

Any action by Congress on the extenders will be delayed until sometime this year. NAFA continues to work with NGV America, the National Biodiesel Board, and NPGA on the extenders.

 

Vehicle Tariffs

NAFA members are seeing increased vehicle and repair costs stemming from the steel and aluminum tariffs imposed earlier this year under Section 232 of the Trade Expansion Act. Added to this, the latest round of China 301 tariffs imposes a 10 percent tariff (possibly increasing to 25 percent in March) on over 100 car parts, including tires, brake rotors, batteries, filters, and wiper blades, among others, imported from China. Of even more concern is the potential for additional tariffs on automobiles and auto parts from any county, pursuant to the Administration’s Section 232 national security investigation.

In June, NAFA submitted comments to the U.S. Department of Commerce in response to the Department's "Section 232 National Security Investigation of Imports of Automobiles, Including Cars, SUVs, Vans and Light Trucks, and Automotive Parts.” In November NAFA wrote to the leaders of the Congressional tax committees to advise that NAFA Members will potentially face staggering increases in acquisition and repair/maintenance costs over the next few years.

NAFA is working closely with the Alliance of Automobile Manufacturers and the Motor and Equipment Manufacturers Association. NAFA has also been asked by congressional staff to keep them apprised of cost increases experienced by fleets.

 

Connected Vehicle Technology

NAFA supports dedicated short-range communication (DSRC) devices for the purpose of vehicle-to-vehicle (V2V) and vehicle-to-infrastructure (V2I) communications. NAFA works with the Safety Spectrum coalition in support of Advanced Driver Assistance Systems (ADAS) technologies and for preserving the 5.9 GHz spectrum for DSRC (Dedicated Short-Range Communications). The coalition includes the Global Automakers, ATA, and the National Safety Council.

A proposed rule from NHTSA would mandate all newly manufactured light vehicles to include DSRC devices for the purpose of V2V safety communication by 2023. Meanwhile, the Federal Communications Commission is currently evaluating the potential for future unlicensed operations in the spectrum allocated for DSRC. Additionally, the DOT issued a request for comment (RFC) in mid-December seeking input on the ways recent technological developments could impact V2X communication. V2X communication collectively refers to V2V, V2I, and vehicle-to-pedestrian (V2P) communication.

 

Autonomous Vehicles

NAFA is closely monitoring federal activity regarding autonomous vehicles. In October, the National Highway Traffic Safety Administration announced the latest update to DOT's voluntary guidelines for self-driving vehicles.

Congress was unable to reach final agreement on legislation to facilitate the development of self-driving cars. The House of Representatives passed H.R. 3388, the SELF Drive Act, while Senate action stalled on similar legislation, S. 1885, the American Vision for Safer Transportation through Advancement of Revolutionary Technologies Act (AV START Act). NAFA supported this legislative effort which will begin again in 2019.

 

Vehicle Generated Data

The development of connected vehicle and self-driving technologies has raised the issue of who owns and has access to vehicle-generated data. NAFA has urged Congressional leaders to recognize the principle that the owner or lessee of the vehicle should have direct, real-time access to data collected, generated, recorded or stored by the vehicle including data for emissions control, diagnosis, repair, and maintenance.

NAFA has stressed that vehicle-generated data is a critical part of fleet management. Whether vehicles are owned or leased, the fleet manager relies on direct access to the data to monitor the engine, the vehicle, and driver.

S. 1885 (AV START Act) included a NAFA-supported amendment which creates an HAV Data Access Advisory Committee to discuss access, use, privacy, and ownership of data generated by highly automated vehicles (HAVs). The Committee would be comprised of a broad cross-section of HAV policy stakeholders, including fleet managers. However, Congress did not pass the autonomous vehicle legislation before it adjourned for the year. As a result, the data access amendment will also be delayed.

NAFA participates in the U.S. Data Access Coalition which also includes AALA, ACRA, AAA, the Auto Care Association, Consumer Federation of America, Safelite Auto Glass, and the National League of Cities. NAFA also participates in the Global Alliance for Vehicle Date Access (GAVDA) in order to track privacy issues in Europe and North America.

The U.S. Data Access Coalition is developing a stand-alone legislative proposal for 2019.

 

Privacy

An individual’s privacy rights will be a significant legislative topic in 2019. The combination of cybersecurity threats, smartphones, and connected vehicles has already resulted in privacy laws that could impact fleet management. Privacy concerns over Facebook, Google, etc., make federal privacy legislation even more likely.

NAFA is closely following privacy issues in Europe because of possible implications for U.S. fleets. The European Union’s General Data Protection Regulation (GDPR) took effect on May 25, 2018. The purpose of the GDPR is to provide a comprehensive regulatory framework for the protection of personal data of EU citizens.

GDPR extends the definition of personal data to include digital identifiers such as IP addresses. Identifiers in telematics systems that correlate data and drivers, including information on location, speed or driving events, may thus be considered to be personal data. Some interpret the GDPR direction as requiring driver consent via a positive opt-in. Others go further, saying consent cannot be given in an employment relationship. Instead, an organization would need to show it has a legal basis for collecting the employee data.

Meanwhile, a new California law creates elaborate disclosure requirements for personal data collected by companies on employees who are California residents. Although the new law seeks to protect the privacy of “consumers,” the law is broad in scope, extending not just to an individual’s role as a consumer, but also the individual’s role as an employee.

Privacy legislation at the federal level is likely in 2019. NAFA will work to ensure that such legislation ensures that a fleet continues to have a legal basis for collecting driver behavior information through telematics.

 

Federal Excise Tax on Heavy Duty Trucks

NAFA continues to support repeal of the 12 percent federal excise tax (FET) on the retail sale of most new heavy-duty trucks. The FET depresses new heavy-duty truck purchases and delays the deployment of cleaner, safer, and more fuel-efficient trucks. The FET on heavy-duty trucks was originally imposed in 1917 to help defray the cost of World War I. This tax on most new heavy-duty trucks, tractors, and trailers has grown from three percent when it was incorporated into the Highway Trust Fund (HTF) in 1955 to 12 percent today. The FET is the highest excise tax on a percentage basis that Congress levies on a product.

Legislation to repeal the tax was introduced but not acted on in 2018. The legislation will be reintroduced in 2019.

 

Mileage-Based User Fees

In 2019, Congress will consider establishing a national mileage-based user fee (MBUF) pilot program aimed to restore long-run solvency of the Highway Trust Fund. An MBUF is a user charge based on miles driven in a specific vehicle as opposed to the current federal excise tax on fuel consumed. While NAFA has not taken a position on an MBUF, the Association has met with congressional leaders to provide input on the elements that fleets would want to see incorporated into a national pilot.