The California Air Resources Board: Dr. Jekyll and Mr. Hyde

Chris Burroughs | Transportation Intermediaries Association

The California Air Resources Board, commonly known as CARB, is a governing body of the State of California and is responsible for protecting the public from the harmful effects of air pollution. The agency has also been charged with developing programs and actions to fight climate change. CARB has been able to promulgate regulations on the motor carrier and 3PL industries because it has been granted several waivers by the U.S. Environmental Protection Agency (EPA) under the Clean Air Act of 1970 and it has received subsequent waivers since then.

As it relates to 3PLs, CARB could also be compared to the infamous Dr. Jekyll and Mr. Hyde of whom Scottish author Robert Louis Stevenson wrote. TIA has never been a proponent of CARB’s  regulations that affect 3PLs outside the State of California. Since 2011, TIA has had a solid, working relationship with CARB officials and has worked to provide a level of understanding in terms of the regulations.

In 2011, TIA began working with CARB officials on the Transport Refrigeration Unit (TRU) Airborne Toxic Control Measure (which includes an “interstate commerce” provision for 3PLs) to ensure reasonable requirements were fairly developed for 3PLs that utilize CARB-compliant motor carriers. The original plan proposed by CARB was to have 3PLs physically inspect the reefer unit on each motor carrier that would be traveling on a California highway, something that was obviously not feasible. Beneficial dialogue from both sides led to reasonable requirements that were agreed to by both parties. This good work continued with the requirements developed for the Truck and Bus and Greenhouse Gas Tractor-Trailer Regulations that affect California-based brokers.

Several years later, TIA and CARB held a series of conference calls to discuss a proposed idling regulation that included a 3PL component, but it was ultimately eliminated before being sent to the Resources Board for approval.

The above are good examples of the 3PL industry experiencing CARB’s Dr. Jekyll personality. The two sides may not always agree with each other, but work together to find common-sense solutions.

Recently, however, the 3PL industry has been faced with the other personality, or Mr. Hyde, who seems to be changing the rules on 3PLs.

This brings us to the current state of play and the definition of a California-based broker. Recently, CARB penalized two 3PLs, Marten Logistics and Roadrunner Transportation Systems, with fines of $100,000 and $52,250 respectively, for violating a record-keeping regulation associated with CARB’s Truck and Bus Rule. Under the regulation, a motor carrier or broker must maintain bills of lading and other documentation identifying the motor carrier or broker that hired or dispatched the vehicle and the vehicle itself. The documentation must include the name and contact information of the hiring business entity and vehicle information, including license plate number and “other information.”

In a news article published about the fines, a CARB official stated that, “Brokers are California-based when they broker loads in California, regardless of where the broker is physically located.”

The Truck and Bus regulation does include language on California-based brokers, which is defined as:

Recently, however, the 3PL industry has been faced with the other personality, or Mr. Hyde, who seems to be changing the rules on 3PLs.

California-Based Broker, means a person, with operations based in California, who, for compensation, arranges or offers to arrange the transportation of property by an authorized motor carrier. A motor carrier, or person who is an employee or bona fide agent of a carrier, is not a broker when it arranges or offers to arrange the transportation of shipments which it is authorized to transport and which it has accepted and legally bound itself to transport.

TIA staff made multiple attempts to follow up with CARB after the news article was published and finally received a response. The CARB official TIA spoke to, who TIA had not worked with in the past, gave the impression that it has always been the case that brokers are considered California-based when brokering loads in California. Based on TIA’s previous workings and understandings, this is inaccurate and misleading. This is the first time that this definition has been misconstrued to include a non-California-based broker. Based on TIA’s discussions with CARB over the past several years, the California-based broker definition could include someone with a remote office or an agent in California, but was never intended to cover “trucks being dispatched into California.” Recently, CARB has changed its interpretation to say that “operations” includes arranging trucks on California highways.

TIA staff have always been aware of one regulation, the Transportation Refrigeration Unit (TRU) Airborne Toxic Control Measure (ATCM), which includes 3PLs/brokers nationwide. The definition of a broker in that regulation perfectly demonstrates the difference between the two regulations and the “role” of the broker.

Freight brokers and freight forwarders: Section 2477.8 applies to freight brokers and freight forwarders (as defined in section 2477.4) that arrange, hire, tender contracts for, or dispatch the transport of perishable goods on California highways or railways in trucks, trailers, shipping containers, or railcars that are equipped with TRUs or TRU gen sets.

TIA staff and the Environmental and Hazardous Materials Subcommittee, which has jurisdiction over these issues, will continue to work with CARB to put pressure on them to revert to the original intended definition of a California-based broker while also working with Congress and the EPA to address these concerns. Some relief might be on the way as leadership within the EPA have turned their sights on the federal waiver that allows California to pursue its own tough exhaust pipe emissions standards and allows other states to opt-in to California’s standards rather than the federal one.

The State of California has regulated vehicle tailpipe emissions long before 1970, when the EPA and the federal Clean Air Act came into force. As a result, Congress wrote an exemption into the landmark Clean Air Act: California could seek waivers to set its own limits for pollutants from cars if its rules were at least as tough as federal standards. Since then, Democratic and Republican administrations have renewed California’s waiver dozens of times. A Trump administration challenge would revive an abortive 2007 effort by the Bush administration to block California’s power to set its own emissions rules.

This would by no means be an easy task as it would be a tough legal battle with the State of California, which certainly has time on its hands with this nearly 50-year-old waiver. Nevertheless, TIA will be ramping up its congressional efforts to get this on Congress’s radar. TIA will fight hard to protect its members’ businesses from harmful regulations, especially those with a moving
goal post.

If you have any questions or comments, please contact Chris Burroughs at burroughs@tianet.org or 703-299-5705.

Chris Burroughs is Senior Director of Government Affairs with Transportation Intermediaries Association.