[House Hearing, 111 Congress]
[From the U.S. Government Publishing Office]



 
       ASSESSING THE IMPLEMENTATION AND IMPACTS OF THE CLEAN TRUCK 
             PROGRAMS AT THE PORT OF LOS ANGELES AND THE 
                            PORT OF LONG BEACH
=======================================================================

                               (111-110)

                                HEARING

                               BEFORE THE

                            SUBCOMMITTEE ON
                          HIGHWAYS AND TRANSIT

                                 OF THE

                              COMMITTEE ON
                   TRANSPORTATION AND INFRASTRUCTURE
                        HOUSE OF REPRESENTATIVES

                     ONE HUNDRED ELEVENTH CONGRESS

                             SECOND SESSION

                               __________

                              May 5, 2010

                               __________

                       Printed for the use of the
             Committee on Transportation and Infrastructure



                  U.S. GOVERNMENT PRINTING OFFICE
56-421                    WASHINGTON : 2010
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             COMMITTEE ON TRANSPORTATION AND INFRASTRUCTURE                JAMES L. OBERSTAR, Minnesota, Chairman

NICK J. RAHALL, II, West Virginia,   JOHN L. MICA, Florida
Vice Chair                           DON YOUNG, Alaska
PETER A. DeFAZIO, Oregon             THOMAS E. PETRI, Wisconsin
JERRY F. COSTELLO, Illinois          HOWARD COBLE, North Carolina
ELEANOR HOLMES NORTON, District of   JOHN J. DUNCAN, Jr., Tennessee
Columbia                             VERNON J. EHLERS, Michigan
JERROLD NADLER, New York             FRANK A. LoBIONDO, New Jersey
CORRINE BROWN, Florida               JERRY MORAN, Kansas
BOB FILNER, California               GARY G. MILLER, California
EDDIE BERNICE JOHNSON, Texas         HENRY E. BROWN, Jr., South 
GENE TAYLOR, Mississippi             Carolina
ELIJAH E. CUMMINGS, Maryland         TIMOTHY V. JOHNSON, Illinois
LEONARD L. BOSWELL, Iowa             TODD RUSSELL PLATTS, Pennsylvania
TIM HOLDEN, Pennsylvania             SAM GRAVES, Missouri
BRIAN BAIRD, Washington              BILL SHUSTER, Pennsylvania
RICK LARSEN, Washington              JOHN BOOZMAN, Arkansas
MICHAEL E. CAPUANO, Massachusetts    SHELLEY MOORE CAPITO, West 
TIMOTHY H. BISHOP, New York          Virginia
MICHAEL H. MICHAUD, Maine            JIM GERLACH, Pennsylvania
RUSS CARNAHAN, Missouri              MARIO DIAZ-BALART, Florida
GRACE F. NAPOLITANO, California      CHARLES W. DENT, Pennsylvania
DANIEL LIPINSKI, Illinois            CONNIE MACK, Florida
MAZIE K. HIRONO, Hawaii              LYNN A WESTMORELAND, Georgia
JASON ALTMIRE, Pennsylvania          JEAN SCHMIDT, Ohio
TIMOTHY J. WALZ, Minnesota           CANDICE S. MILLER, Michigan
HEATH SHULER, North Carolina         MARY FALLIN, Oklahoma
MICHAEL A. ARCURI, New York          VERN BUCHANAN, Florida
HARRY E. MITCHELL, Arizona           BRETT GUTHRIE, Kentucky
CHRISTOPHER P. CARNEY, Pennsylvania  ANH ``JOSEPH'' CAO, Louisiana
JOHN J. HALL, New York               AARON SCHOCK, Illinois
STEVE KAGEN, Wisconsin               PETE OLSON, Texas
STEVE COHEN, Tennessee               VACANCY
LAURA A. RICHARDSON, California
ALBIO SIRES, New Jersey
DONNA F. EDWARDS, Maryland
SOLOMON P. ORTIZ, Texas
PHIL HARE, Illinois
JOHN A. BOCCIERI, Ohio
MARK H. SCHAUER, Michigan
BETSY MARKEY, Colorado
MICHAEL E. McMAHON, New York
THOMAS S. P. PERRIELLO, Virginia
DINA TITUS, Nevada
HARRY TEAGUE, New Mexico
JOHN GARAMENDI, California
VACANCY

                                  (ii)



                  SUBCOMMITTEE ON HIGHWAYS AND TRANSIT

                   PETER A. DeFAZIO, Oregon, Chairman

NICK J. RAHALL II, West Virginia     JOHN J. DUNCAN, Jr., Tennessee
JERROLD NADLER, New York             DON YOUNG, Alaska
BOB FILNER, California               THOMAS E. PETRI, Wisconsin
TIM HOLDEN, Pennsylvania             HOWARD COBLE, North Carolina
BRIAN BAIRD, Washington              JERRY MORAN, Kansas
MICHAEL E. CAPUANO, Massachusetts    GARY G. MILLER, California
TIMOTHY H. BISHOP, New York          HENRY E. BROWN, Jr., South 
MICHAEL H. MICHAUD, Maine            Carolina
BRIAN HIGGINS, New York              TIMOTHY V. JOHNSON, Illinois
GRACE F. NAPOLITANO, California      TODD RUSSELL PLATTS, Pennsylvania
DANIEL LIPINSKI, Illinois            BILL SHUSTER, Pennsylvania
MAZIE K. HIRONO, Hawaii              JOHN BOOZMAN, Arkansas
JASON ALTMIRE, Pennsylvania          SHELLEY MOORE CAPITO, West 
TIMOTHY J. WALZ, Minnesota           Virginia
HEATH SHULER, North Carolina         JIM GERLACH, Pennsylvania
MICHAEL A ARCURI, New York           MARIO DIAZ-BALART, Florida
HARRY E. MITCHELL, Arizona           CHARLES W. DENT, Pennsylvania
CHRISTOPHER P. CARNEY, Pennsylvania  CONNIE MACK, Florida
STEVE COHEN, Tennessee               JEAN SCHMIDT, Ohio
LAURA A. RICHARDSON, California      CANDICE S. MILLER, Michigan
ALBIO SIRES, New Jersey              MARY FALLIN, Oklahoma
DONNA F. EDWARDS, Maryland           VERN BUCHANAN, Florida
GENE TAYLOR, Mississippi             AARON SCHOCK, Illinois
LEONARD L. BOSWELL, Iowa             VACANCY
RICK LARSEN, Washington
JOHN J. HALL, New York
STEVE KAGEN, Wisconsin
SOLOMON P. ORTIZ, Texas
PHIL HARE, Illinois
JOHN A. BOCCIERI, Ohio
MARK H. SCHAUER, Michigan, Vice 
Chair
BETSY MARKEY, Colorado
JAMES L. OBERSTAR, Minnesota
  (Ex Officio)

                                 (iii)

                                CONTENTS

                                                                   Page

Summary of Subject Matter........................................   vii

                               TESTIMONY

Covarrubias, Jose M., Independent Truck Driver...................    84
Digges, Jr., Robert, Vice President and Chief Counsel, American 
  Trucking Associations, Inc.....................................    84
Holmes, Captain John, Deputy Executive Director, Operations, Port 
  of Los Angeles.................................................    45
Jack, James, Executive Director, Coalition for Responsible 
  Transportation.................................................    84
Johring, Frederick H., President, Golden State Express, Inc. and 
  Golden State Logistics, Inc....................................    84
Lytle, J. Chris, Deputy Executive Director, Port of Long Beach...    45
Perrella, Melissa C. Lin, Staff Attorney, Natural Resources 
  Defense Council................................................    84
Potter, Fred, International Vice President and Port Division 
  Director, International Brotherhood of Teamsters...............    84
Rajkovacz, Joe, Director of Regulatory Affairs, Owner-Operator 
  Independent Drivers Association................................    84

          PREPARED STATEMENTS SUBMITTED BY MEMBERS OF CONGRESS

Coble, Hon. Howard, of North Carolina............................   179
DeFazio, Hon. Peter A., of Oregon................................   180
Harman, Hon. Jane, of California.................................   182
Miller, Hon. Gary G., of California..............................   184
Mitchell, Hon. Harry E., of Arizona..............................   186
Oberstar, Hon. James L., of Minnesota............................   187
Richardson, Hon. Laura, of California............................   189

               PREPARED STATEMENTS SUBMITTED BY WITNESSES

Covarrubias, Jose M..............................................   196
Digges, Jr., Robert..............................................   212
Holmes, Captain John.............................................   232
Jack, James......................................................   276
Johring, Frederick H.............................................   294
Lytle, J. Chris..................................................   425
Perrella, Melissa C. Lin.........................................   445
Potter, Fred.....................................................   457
Rajkovacz, Joe...................................................   552

                       SUBMISSIONS FOR THE RECORD

Covarrubias, Jose M., Independent Truck Driver:
      Documents regarding pay from Southern Counties Express.....    85
      Response to request for information from the Subcommittee..   207
DeFazio, Hon. Peter A., a Representative in Congress from the 
  State of Oregon, petition from 541 port truckers...............    98
Digges, Jr., Robert, Vice President and Chief Counsel, American 
  Trucking Associations, Inc., response to request for 
  information from the Subcommittee..............................   218
Duncan, Hon. John J., a Representative in Congress from the State 
  of Tennessee:
      American Association of Port Authorities, Kurt Nagle, 
        President and Chief Executive Officer, Comments for the 
        Record...................................................     3
      American Import Shippers Association, Hubert Wiesenmaier, 
        Executive Director, letter to the Subcommittee...........     7
      Clean and Sustainable Transportation Coalition, letter to 
        the Subcommittee.........................................     9
      California Trucking Association, Julie Sauls, Vice 
        President, External Affairs, letter to the Subcommittee..    14
      Harbor Truckers for a Sustainable Future, written testimony    17
      International Warehouse Logistics Association, Joel D. 
        Anderson, President and Chief Executive Officer, letter 
        to the Subcommittee......................................    25
      National Association of Manufacturers, Robyn M. Boerstling, 
        Director, Transportation and Infrastructure Policy, 
        letter to the Subcommittee...............................    27
      National Retail Federation, written testimony..............    28
      Retail Industry Leaders Association, Kelly Kolb, Vice 
        President, Global Supply Chain Policy, written testimony.    34
      Southern Counties Express, Brian Griley, written testimony.    39
      The Waterfront Coalition, Robin Lanier, Executive Director, 
        written testimony........................................    40
      U.S. Chamber of Commerce, R. Bruce Josten, Executive Vice 
        President, Government Affairs, letter to the Subcommittee    43
Griley, Brian, President, Southern Counties Express, response to 
  request for supplemental information from the Subcommittee.....   311
Hirono, Hon. Mazie K., a Representative in Congress from the 
  State of Hawaii, letter from Shay Chan Hodges, Owner, Maui 
  Child Toys and Books...........................................    80
Holmes, Captain John, Deputy Executive Director, Operations, Port 
  of Los Angeles, response to request for information from the 
  Subcommittee...................................................   239
Jack, James, Executive Director, Coalition for Responsible 
  Transportation, response to request for information from the 
  Subcommittee...................................................   287
Johring, Frederick H., President, Golden State Express, Inc. and 
  Golden State Logistics, Inc.:
      Letter to the Committee....................................    90
      Response to request for information from the Subcommittee..   301
Lytle, J. Chris, Deputy Executive Director, Port of Long Beach, 
  response to request for information from the Subcommittee......   437
Miller, Hon. Gary G., a Representative in Congress from the State 
  of California, Southern Counties Express, time cards of Jose M. 
  Covarrubias, Independent Truck Driver..........................   153
Nadler, Hon. Jerrold, a Representative in Congress from the State 
  of New York:
      Port Authority of New York and New Jersey, letter to Rep. 
        Nadler...................................................    62
      Letter to Chairman Oberstar and Ranking Member Mica........    65
Potter, Fred, International Vice President and Port Division 
  Director, International Brotherhood of Teamsters, response to 
  request for information from the Subcommittee..................   474
Rajkovacz, Joe, Director of Regulatory Affairs, Owner-Operator 
  Independent Drivers Association, response to request for 
  information from the Subcommittee..............................   580

                        ADDITIONS TO THE RECORD

113 Organizations in support of Clean Ports legislation, letter 
  to Chairman Oberstar and Ranking Member Mica...................   602
Clean Truck Coalition, LLC, written statement....................   611
Green Fleet Systems, Gary Mooney, President and Chief Executive 
  Officer, written testimony.....................................   612
Independent Owner-Operator, letter to Chairman Oberstar and 
  Chairman DeFazio...............................................   613
National Association of Waterfront Employers, Charles T. Carroll, 
  Jr., Executive Director, letters to Chairman DeFazio and 
  Ranking Member Duncan..........................................   620
Target, Rick Gabrielson, Director of International 
  Transportation, written testimony..............................   630
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ASSESSING THE IMPLEMENTATION AND IMPACTS OF THE CLEAN TRUCK PROGRAMS AT 
           THE PORT OF LOS ANGELES AND THE PORT OF LONG BEACH

                              ----------                              


                         Wednesday, May 5, 2010

                  House of Representatives,
              Subcommittee on Highways and Transit,
            Committee on Transportation and Infrastructure,
                                                    Washington, DC.
    The Subcommittee met, pursuant to call, at 10:00 a.m., in 
room 2167, Rayburn House Office Building, the Honorable Peter 
A. DeFazio [Chairman of the Subcommittee] presiding.
    Mr. DeFazio. The Subcommittee on Highways and Transit will 
come to order.
    Today we are holding a hearing on assessing the 
implementation and impacts of the Clean Truck Programs at the 
Ports of Los Angeles and Long Beach.
    I would ask unanimous consent that the gentleman from 
Maryland, Mr. Cummings, be allowed to participate in today's 
hearing.
    Hearing no objection, so ordered. He is Chairman of another 
important Subcommittee, and we value his interest in this 
subject.
    I spent quite some time with the testimony, reading through 
the testimony and consulting with staff, and I find some things 
that are disturbing and quite contradictory within the various 
testimony we are going to receive; and hopefully, as we move 
through this process of the hearing today, we will achieve some 
additional clarity regarding the best path forward.
    So I am going to really abbreviate my remarks. I think we 
have quite a bit of ground to cover. I do apologize in advance; 
at some point I will have to step out for votes on a bill I 
have on the Resources Committee, but, otherwise, I intend to be 
here for the entire hearing.
    Mr. DeFazio. With that, I turn to the gentleman from 
Tennessee, Mr. Duncan.
    Mr. Duncan. Well, thank you very much, Mr. Chairman. I may 
need to go for those same votes on the Resources Committee, so 
we will have to work around that. But I want to thank you for 
calling this hearing to assess the implementation and impact of 
the Clean Truck Programs at the Ports of Los Angeles and Long 
Beach, and I want to thank all of the witnesses for coming long 
distances to attend today's hearing.
    The goal of the Clean Truck Programs is to reduce the 
emissions of trucks servicing the ports by more than 80 percent 
by 2012; and, to accomplish this goal, these programs seek to 
transition all trucks servicing the ports to equipment that 
meets 2007 Federal emission standards.
    Both programs have been up and running since 2008. The Port 
of Los Angeles estimates that 86 percent of the port's cargo 
moves by clean trucks, and emissions have been reduced by 70 
percent.
    The Port of Long Beach has an even more impressive story: 
90 percent of Long Beach's cargo is moved by clean trucks, and 
the port has already reached its goal of reducing truck-related 
emissions by 80 percent, two years ahead of schedule.
    I certainly want to congratulate and applaud the ports for 
the success these programs have had in improving the 
environment.
    Unfortunately, I have concerns about a requirement that the 
Los Angeles Clean Truck Program would like to implement. The 
Port of Los Angeles would like to require trucking companies 
that service the port to use employee drivers. This requirement 
to use employee drivers is being challenged in court on the 
grounds that it violates Federal law preempting State and local 
governments from regulating the trucking industry.
    For fear that this litigation may not go in their favor, 
some have asked Congress to change this Federal law and allow 
the ports to regulate the trucking industry and require 
employee drivers. Many people are very concerned about this. It 
has been reported that of the 800 trucking companies with 
agreements to service the port, 80 percent are small businesses 
with fewer than 50 trucks.
    History has shown throughout many different industries 
that, if an industry is very highly regulated, small businesses 
often go by the wayside, and then even medium-sized businesses 
sometimes have trouble surviving; and we are left, then, with 
only a few large companies dominating the market. This reduces 
competition, hurts small businesses, and results in higher 
prices.
    As I stated previously, the goal of these Clean Truck 
Programs is to reduce truck emissions. Because both ports have 
been very successful to date, this drastic step toward re-
regulating the trucking industry is a solution in search of a 
problem; it is fixing something that isn't broken.
    Mr. Chairman, I have received written testimony from many 
organizations interested in today's hearing, and I ask 
unanimous consent that their testimony be entered into the 
record. I also would like to ask unanimous consent that the 
hearing record be kept open for 30 days so that other 
organizations can submit testimony for the record.
    Thank you very much.
    Mr. DeFazio. Without objection.
    [The information follows:]
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    Mr. DeFazio. Representative Harman had wished to be here to 
introduce Captain Holmes. Unfortunately, she is detained in 
another markup, so we will just dispense with that.
    We are honored to have Captain Holmes here and Mr. Lytle, 
and I would just have you go ahead with your testimony.
    The order, for whatever it matters, is that Captain Holmes 
would go first. However, if you prefer, it doesn't matter.

 TESTIMONY OF CAPTAIN JOHN HOLMES, DEPUTY EXECUTIVE DIRECTOR, 
  OPERATIONS, PORT OF LOS ANGELES; AND J. CHRIS LYTLE, DEPUTY 
             EXECUTIVE DIRECTOR, PORT OF LONG BEACH

    Mr. Holmes. Thank you. Chairman DeFazio, Ranking Member 
Duncan, Members of the Subcommittee, thank you for the 
opportunity to appear today. With your permission, I would like 
to submit a statement for the record and provide a brief 
summary and answer any questions at this time.
    My name is John Holmes. I am Deputy Executive Director of 
the Port of Los Angeles, responsible for the day-to-day 
operations of the port. Prior to this appointment, I was the 
Coast Guard Captain of the port for the Los Angeles-Long Beach 
Port complex. I served in this capacity from 2000 to 2003 and 
was in charge of port safety and security on and after the 9/11 
terrorist events. On behalf of the mayor of Los Angeles, it is 
an honor to appear before you today.
    The purpose of my testimony is to provide an overview of 
the Clean Truck Program at the Port of Los Angeles and describe 
how it is helping to transform port trucking into a cleaner, 
safer, and more sustainable system that contributes to the 
long-term competitiveness of our port.
    Most of the trucks that provide regular pickup and delivery 
of containers at the Port of Los Angeles make short-distance 
hauls of less than 50 miles to warehouses and rail yards in the 
southern California area. This short-haul trucking is referred 
to in the trucking industry as drayage operations. These trucks 
are similar to the heavy duty vehicles you see on the road, but 
in our case they are dedicated to this type of short-haul 
service at the port.
    Between 5,000 and 15,000 cargo moves are made at the Port 
of Los Angeles each day by a fleet of 10,000 drayage trucks. 
When we started our Clean Truck Program, the average drayage 
truck was over 11 years old and had more than 1 million road 
miles of operation. These older trucks generated a substantial 
amount of harmful air emissions and, for many in poor 
condition, presented safety risks.
    Using a system of progressive bans of trucks by model 
years, our Clean Truck Program is phasing out older trucks and 
replacing them with trucks that meet U.S. EPA 2007 standards. 
The new trucks, which now are an average of five years old, 
generate 80 percent less harmful diesel emissions than their 
older counterparts.
    We have also implemented a concession program to require 
direct accountability from the trucking companies to the port. 
These truck concessions, similar in concept to taxicab 
concessions at airports, give us something we never had before 
the Clean Truck Program: a direct relationship with the 
hundreds of motor carriers doing business on our property. The 
concessions provide the port with a more effective means of 
enforcement of emissions, safety, and security requirements.
    To assist with the replacement of trucks, we have provided 
nearly $60 million in public incentives to trucking companies 
and designed our plan in such a way that it encourages motor 
carriers to make private investment in new trucks and build 
their own truck fleets. We believe that asset-based trucking is 
a sustainable model that will provide companies the ability to 
replace the current trucks without public money in the coming 
years. Accountability, enforceability, and sustainability; 
these are the key elements of the L.A. Clean Truck Program.
    As the largest goods movement complex in the most extreme 
non-attainment area in the United States, the Port of Los 
Angeles must reduce emissions to continue to grow and survive 
the future global competition among seaports. Today, a year and 
a half after the Clean Truck Program launch, more than 6,600 
clean trucks are in operation. With well over 70 percent truck 
emissions reduction, we are two years ahead of our goal. We 
have succeeded in reducing emissions equivalent to that 
produced by 250,000 automobiles each year.
    Paradoxically, in our effort to comply with the 
environmental aspect of Federal law, we are faced with a legal 
challenge involving transportation law. The ambiguity of the 
Federal transportation law, specifically the Federal Aviation 
Administration Authorization Act of 1994, jeopardizes our 
continued success toward clean air. Without clarification of 
the FAAAA by Congress, key elements of the Port of Los Angeles 
Clean Truck Program will not function as intended. Without the 
program intact, the ability to achieve and sustain the 
program's goals over the long term is threatened.
    To clean up the port, we realize we had to create a new 
system that would provide the port with responsible trucking 
companies that had the means to maintain trucks regularly and 
reliably control drivers. This was critical in order to achieve 
emissions reductions, improve public safety, reduce congestion, 
ensure availability of drayage services, and enhance the 
security of the port.
    We need the emissions reductions made possible by the Clean 
Truck Program to continue our economic competitiveness and our 
role as one of the largest hubs in our national transportation 
system. Unless the emissions reductions of the Clean Truck 
Program are sustained, the port will be forced to delay future 
expansion of our facilities and the jobs that such expansion 
brings.
    As you are aware, solving air pollution is a challenging 
task. Most seaport container trade is heavily concentrated in a 
handful of gateways in the U.S. As such, air pollution is 
indeed a localized issue. We do not support a one size fits all 
approach. Ports, and the risks and challenges that they face, 
are not the same. Federal law should recognize and provide 
flexibility to address these challenges.
    Thank you again for the opportunity to appear today. I am 
happy to answer any questions you may have.
    Mr. DeFazio. OK. Thank you.
    Mr. Lytle.
    Mr. Lytle. Chairman DeFazio and Members of the Committee, I 
am Chris Lytle, Deputy Executive Director for the Port of Long 
Beach. Thank you for the opportunity to speak before the 
Subcommittee to discuss the Port of Long Beach Clean Truck 
Program. I am proud to say that the Clean Truck Program is one 
of our most successful initiatives to improve air quality. We 
have exceeded all expectations by reducing truck emissions by 
80 percent nearly two years ahead of schedule.
    Assisted by our industry partners, labor, environmental and 
community groups, local, State, and Federal regulatory 
agencies, Long Beach teamed with the Port of Los Angeles to 
develop the Clean Air Action Plan in 2006. This comprehensive 
strategy was created to reduce emissions from port-related 
sources by more than 45 percent within a five-year period. The 
CAAP has significantly cut pollution from trucks, trains, 
ships, and other equipment.
    One of the most ambitious initiatives within the CAAP is 
the Clean Truck Program. On October 1st, 2008, the ports began 
to progressively ban older polluting trucks to meet the U.S. 
EPA 2007 emission standards by 2012. As of May 1st this year, 
more than 90 percent of the cargo is being moved by clean 
trucks.
    To help finance the speedy replacement or retrofit of 
trucks, both ports imposed a $70 per 40-foot container fee on 
cargo owners who pay the fee on every loaded container shipped 
by old polluting trucks. With port and State bond funds, Long 
Beach has helped subsidize nearly 900 trucks by providing $52 
million of financial assistance to trucking companies and 
owner-operators to retrofit or purchase new trucks.
    Although both ports jointly adopted Clean Truck Programs 
with the same environmental goals, the programs are not 
identical. The most notable difference is that Los Angeles 
seeks to eventually bar independent owner-operators who serve 
the port. The Long Beach program allows both employee drivers 
and independent owner-operators to continue to serve the port. 
Of note, both ports have successfully met our environmental 
safety and security goals while utilizing independent owner-
operators and employee drivers.
    Even though we coordinated extensive outreach to a diverse 
group of stakeholders on the truck program, the American 
Trucking Associations filed suit against both ports. The ATA 
argued that the concession agreements were preempted by Federal 
statutes deregulating the trucking industry and that the Port 
of L.A.'s employee mandate requirement was preempted. A Federal 
judge later issued a preliminary injunction blocking 
environmental provisions of the concession agreements, driver 
hiring preferences, truck route and parking restrictions, 
concession fees, and L.A.'s employee mandate.
    Although these measures were enjoined, both ports were able 
to move forward with their efforts to clean the air thanks to 
industry leaders purchasing new clean trucks on their own. To 
end ATA's legal dispute and continue to meet our environmental 
goals, the Long Beach Board of Harbor Commissioners agreed to a 
settlement with the ATA replacing the concession agreement with 
a registration agreement. The registration agreement provides 
oversight and accountability that is needed. It restores 
environmental and security requirements that the court struck 
down in the concession agreement.
    Our program, which won the U.S. EPA's Environmental Justice 
Achievement Award, the Nation's highest honor for reducing the 
impact of pollution on low-income and disadvantaged 
communities, is improving air quality, safety, and security. In 
just over a year, the port truck fleet has been transformed and 
we have made major strides in doing what the program was 
intended to do, improve air quality.
    The Port of Long Beach program works. Through a 
comprehensive and sustainable approach that allows for 
flexibility within the drayage truck industry, our program 
serves as a model for ports throughout the world.
    The Port of Long Beach looks forward to continue working 
with the Committee. Thank you again for the opportunity to 
provide testimony. Thank you.
    Mr. DeFazio. I thank the gentleman.
    We will now move to questions. It seems like it is sort of 
a simple thing, but we have, in the OOIDA testimony, complaints 
that one problem is low staffing levels at the gates. Could 
both ports respond to that? Because that obviously causes 
trucks to be in line, idle--even if they are clean trucks--
creep forward, idle, etcetera.
    Mr. Lytle. Chairman DeFazio, this is a very important 
issue. We are working with our marine terminal operators, as I 
know Los Angeles is doing the same thing. It is critical for 
these truck drivers to be able to turn through these terminals 
and get multiple turns every day. We are working on several 
initiatives at the present time with these terminal operators 
to improve that turn time.
    Mr. DeFazio. So you can't just say to the marine terminal 
operators, ``Look, we don't want trucks sitting and idling, we 
want you to move trucks more quickly, we want a plan, we want 
it now''? Is this a lengthy negotiation? Does it have to do 
with their lease agreements? What would be the problem here?
    Mr. Lytle. No, Chairman, in our lease agreement it doesn't 
specify that a truck can be sitting outside the gate five 
minutes or ten minutes or twenty minutes, but we know, as a 
port operator, as a landlord port, how critical it is to have 
these drivers turn over.
    Mr. DeFazio. Right. It is no skin off the back of the 
terminal operators--the dirty air, the loss of time for the 
drivers, etcetera. It seems to me you may need to amend the 
lease agreements or somehow incent them because it is an 
expense for them, obviously, to either have new technology or 
more staffing.
    Mr. Lytle. That is true. One of the key things that is 
going to make a huge difference in our port, as well as Los 
Angeles, is the implementation soon of an appointment system. 
Right now trucking companies are free to bring drivers in any 
time of the day that we are open. Our hours of operation at 
both ports are longer than any other port complex in the 
Country by far. Unfortunately, there are certain peak times 
that companies choose to come into the port and bring their 
business, and, thus, end up with some wait time outside. It is 
critical for us to spread that business over the entire 
workday.
    Our terminals open normally at 8:00 in the morning until 
3:00 the following morning, so there is no other port complex 
that has those types of hours of operation. So what we are 
going to do by implementing an appointment system and working 
with the terminal operators is to spread that------
    Mr. DeFazio. A what, appointment? Appointment, is that what 
you said?
    Mr. Lytle. Appointment system, correct.
    Mr. DeFazio. OK. All right.
    Captain Holmes?
    Mr. Holmes. No, I would agree with Mr. Lytle. This is one 
of the many issues we work together on, and it is a significant 
problem. Wait times at the gates have increased, particularly 
with the downturn in the economy, and the ports have grown and 
gotten busier.
    It is a complex problem. We have to work with the terminal 
operators and the beneficial cargo owners, because if you take 
a container out of the port at 2:00 in the morning, you have to 
have a distribution facility to take it to. So although it 
seems like a simple problem, it is actually very complex.
    So we have actually been working with all of the parties, 
and Long Beach as well, to do something to improve the wait 
times at the terminals, and we think an appointment system is 
the way to go. And a properly run appointment system will not 
only spread out the traffic so that you won't have trucks 
waiting in line for hours, but you will also be much more 
efficient.
    And when we started the Clean Truck Program, one of the 
things that was an understanding was we have to work toward 
having a more efficient system as well, and that is one of the 
significant ways to reduce emissions, is just by increasing the 
efficiency of the system.
    Mr. DeFazio. All right, well, appointment system perhaps. 
Didn't I read about a time-of-day pricing system? Didn't one of 
you experiment with that or contemplate experimenting with 
that, that if you want to come at the peak time, you are going 
to have to pay a fee; if you want to come on the back of the 
clock, you don't?
    Mr. Lytle. Mr. Chairman, yes, the PierPASS system has been 
in effect in the port complex since the summer of 2005.
    Mr. DeFazio. Right.
    Mr. Lytle. And what that provides, that if you choose to 
pick your cargo up at a peak time, meaning from 8 to 5, 
potentially you would pay $100 for that honor of------
    Mr. DeFazio. Potentially? What do you mean potentially?
    Mr. Lytle. Well, sir, you would have to pay that cargo. 
Some cargo has to pay the fee; rail cargo is exempt. But if you 
pick the cargo up after 6 p.m., anytime from 6 p.m. until 3:00 
in the morning, you are exempt from that fee. So it is a peak 
pricing methodology.
    Mr. DeFazio. And that hasn't helped?
    Mr. Lytle. It has helped, sir. What happens right now that 
we are dealing with is at 6 p.m., when that fee is eliminated, 
you have a number of truckers that will come in and cue up 
prior to 6 p.m.
    Mr. DeFazio. Right. Who gets hit with this fee?
    Mr. Lytle. That fee is paid normally by the cargo owners.
    Mr. DeFazio. By the cargo owner.
    Mr. Lytle. Yes, sir.
    Mr. DeFazio. Not the driver picking up.
    Mr. Lytle. Right.
    Mr. DeFazio. OK.
    I have a question about any conditions that either of you 
put on clean truck grants. I understand some of this is 
history, but I understand that there is some additional money 
that is going to flow through the State of California to the 
ports for some additional clean truck acquisition--particularly 
clean fuel trucks.
    My question is, do you condition these subsidies? Do you 
require that the motor carrier pass the subsidy through to 
whoever is paying for the truck through a lease to purchase 
agreement? Is the owner-operator getting a discounted price for 
the clean truck when you give them a public subsidy, or is that 
discretionary on the part of the motor carrier? If you have a 
truck that costs $110,000 and they get a $20,000 subsidy, and 
then they turn around and charge the truck driver $110,000 for 
the lease--and there are other problems with leases we will get 
into later--have you required that they discount the price for 
the amount of the subsidy if they are leasing the truck to an 
owner-operator?
    Mr. Holmes. The short answer is no, sir. We would like to 
think that--in our case, we provide funding only to the 
trucking companies--that they are passing any kind of subsidy 
on in terms of------
    Mr. DeFazio. Like to think? I hope you are going to hang 
around for subsequent testimony, because I think that is kind 
of a pollyannaish view of the world here. I mean, why wouldn't 
you require that they pass it through, that they don't benefit 
from the subsidy?
    Mr. Holmes. To be very frank with you, sir, it is just 
something that we didn't consider when we were setting up the 
process------
    Mr. DeFazio. Right. But how about in the future? If there 
are additional monies coming from the State--and you will hear 
some testimony here that these clean truck acquisitions by the 
independent owner-operators have become very difficult to 
maintain. Why don't you require that the subsidies be at least 
shared, if not totally passed through to help the independent 
owner-operators?
    Mr. Holmes. And it is something that we certainly could 
require in the future or look into requiring or work with the 
State to require. Some of the money is our money; some of the 
money we provide is a combination State, county, and port 
money. But, yes, I have read the testimony and it is 
disconcerting if it is in fact correct, and I think this is 
something that we would look at putting some requirements on.
    Mr. DeFazio. OK.
    Mr. Lytle?
    Mr. Lytle. Mr. Chairman, typically, what we have done is we 
have split our awards of trucks between motor carriers, as well 
as owner-operators, and we pay, typically, up to 80 percent of 
the cost of the trucks. As part of our program, if a motor 
carrier takes a truck, we don't allow, under our program, for 
that motor carrier to sublease it to an owner-operator.
    Now, there has been a tremendous number of trucks that have 
been purchased by motor carriers and subleased outside of our 
port program, subleased to owner-operators, and that 
arrangement falls really outside of the port structure------
    Mr. DeFazio. No, I understand. But I am just asking about 
when you provide a subsidy. So you are saying when you provide 
a subsidy, that sometimes you give that subsidy directly to an 
owner-operator?
    Mr. Lytle. Yes, sir.
    Mr. DeFazio. And, therefore, they obviously would benefit 
from a discounted price and a lower financing payment. But 
sometimes it goes to motor carriers, but if the motor carrier 
gets the subsidy, they have to use an employee to drive that 
truck?
    Mr. Lytle. Yes, sir. They cannot sublease that truck to an 
owner-operator from our program.
    Mr. DeFazio. OK. Because you were kind of dinging on L.A. 
for their requirement for employee operators, but you actually 
require employee operators if they get a public subsidy.
    Mr. Lytle. If the motor carrier takes the truck, that is 
correct, sir. We have always believed in Long Beach that we are 
equal opportunity, whether it is a company that features 
employee drivers or owner-operators. We don't discriminate 
either way; we support both.
    Mr. DeFazio. OK. Thank you.
    Mr. Duncan?
    Mr. Duncan. Well, thank you very much, Mr. Chairman.
    Captain Holmes, the 9th Circuit U.S. Court of Appeals, 
which has the reputation of being one of the most liberal 
courts in the Country, has issued an injunction and has 
remanded the case to the U.S. District Court to issue an 
injunction, and what I am wondering about is, is there some 
reason--you do know that this case is being litigated right now 
between the port and the American Trucking Associations. Is 
there some reason why you don't want to wait until that case is 
fully decided in the courts?
    Mr. Holmes. No, sir. I was one of the witnesses at the 
litigation, which the trial just finished up last Thursday 
afternoon, and we are confident that there is going to be a 
decision out in the near future. But these processes are going 
on parallel, and we expect a decision from the courts fairly 
quickly, and we have abided by the decisions up to this point 
and will continue to do so.
    Mr. Duncan. If an independent contractor comes to your port 
with a clean, new model year truck and is compliant with all 
the California rules and regulations of the Highway Patrol and 
also with the U.S. Department of Transportation and all the 
safety requirements, and carries a TWIC card, (Transportation 
Workers Identification Card), for security clearance, is there 
some reason that you feel they should not be granted access to 
do business at the port?
    Mr. Holmes. I think the bigger issue for us is the issue of 
whether we can establish standards. I know the issue of whether 
people are employees or independent owner-operators is one of 
the hot button issues here, but fundamentally our concerns are 
that, based on the unique characteristics of the Port of Los 
Angeles and our environmental risks, should we have the ability 
to establish our own standards for companies that work in the 
ports, and that is fundamentally what our feeling is.
    Now, with respect to the specific question about somebody 
coming in, we do have a program where infrequent visitors can 
come in, and the long-haul trucks can come in, but we also 
believe that, from the perspective of control and 
accountability, we would like to see all the drivers as 
employees, because that is a more direct relationship between 
the employer and the company.
    Mr. Duncan. Well, both of your ports have obviously been 
able to make tremendous progress toward a Clean Truck Program 
without changing the Federal laws up to this point, and you 
know of nothing that would prohibit any port in the Country 
from implementing a Clean Truck Program right now under Federal 
law, is that correct?
    Mr. Holmes. I think there are many ports in the Country 
that are either in the process of implementing or looking at 
Clean Truck Programs.
    Mr. Duncan. Right.
    Mr. Holmes. They are all a little bit different in their 
goals and their implementation, and the ports are all a little 
bit different. Even though we are adjacent to the Port of Long 
Beach, we are different than the Port of Long Beach.
    Mr. Duncan. That is the problem with a lot of Federal laws 
and rules and regulations, because one size doesn't fit all in 
almost any business or industry throughout the country.
    Mr. Lytle, let me ask you this. Have you found any 
difference in compliance based on whether the drivers are 
employees or independent owner-operators?
    Mr. Lytle. No, sir, we haven't. We haven't seen any 
difference. In fact, through our program, through our 
contractual agreement with the motor carriers, our registration 
agreement, we have set standards in all the areas of safety, 
security, and environmental, so we have very high standards. We 
have a contractual agreement with the motor carrier, where the 
motor carrier agrees to abide by those regulations, and we feel 
very satisfied that that is adequate for our needs.
    Mr. Duncan. Have you received any complaints from drivers 
if they cannot afford to purchase or retrofit or maintain clean 
trucks?
    Mr. Lytle. I am sorry, sir, say that again.
    Mr. Duncan. Have you received any complaints from any 
drivers saying they cannot afford to purchase or retrofit or 
maintain clean trucks.
    Mr. Lytle. No, I haven't.
    Mr. Duncan. OK. All right.
    Mr. Chairman, thank you very much.
    Mr. DeFazio. I thank the gentleman.
    The staff gave me a list of the theoretical order in which 
people arrived, and I questioned the list, but it has been 
confirmed, so Mr. Sires will be first. Is he still here? No, he 
is gone. OK, Ms. Richardson.
    Ms. Richardson. Thank you, Mr. Chairman. You know, I find 
today an interesting day because both ports, all of the 
activity of the ports come through my district. In fact, Mr. 
Chairman, we have also brought forward legislation that I want 
to make sure people are aware of, H.R. 3446, which would 
establish being able to have clean ports throughout the 
Country, not just within our particular area, which I think 
would help us from a competitive sake.
    Mr. Lytle, you just said--I had some other questions here, 
but I found what you just said pretty interesting. You said 
that you haven't heard any concerns from drivers about being 
able to afford new trucks. Now, realistically, my community--
and you are from my area. People are finding it hard to pay for 
a car, so can you honestly say that people aren't really having 
difficulty affording trucks? I mean, I don't------
    Mr. Lytle. Our program, where we have awarded, made grants 
to drivers, we are paying 80 percent of the cost of the truck. 
We are keeping the monthly payment for that truck in the $300 
to $500 a month range for $100,000 to $150,000, $160,000 piece 
of equipment. We have a program where we have paid for the 
maintenance of that truck for seven years. We also have a 
program where, at the end of the seven-year lease-to-own 
period, we pay for half of the residual value. So we have put a 
lot into this thing to make it very affordable for the drivers. 
That $300 to $500 a month payment of the trucks that we have 
awarded, I think by anyone's standard is quite affordable.
    Ms. Richardson. And what is the connection between 
yourselves and the motor carrier companies to ensure that these 
independent drivers have an opportunity to get these trucks at 
this amount?
    Mr. Lytle. Well, Congresswoman, we have had a number of 
programs that we have started. The grant process is very 
specific to make sure that the drivers understand what they are 
involved in, how the financing works, where the trucks have to 
be operated, how many moves those trucks have to make in the 
port area. So we take that to the nth degree to make sure that 
there is a good, clear understanding with the drivers as to 
what is expected.
    Ms. Richardson. OK, but my specific question is how do you 
ensure that the drivers know this from the various trucking 
companies that they interface with? And I know the answer to 
the question, but I think it is important for the record and 
there are a lot of people, my colleagues who don't know. So 
that is why I am trying to get at this point.
    Mr. Lytle. Well, we have a tremendous outreach program. We 
have contacts and contracts with all of the motor carriers, so 
we assure that the motor carriers apply all of the rules in the 
correct way on all those areas: environmental, security, and 
safety. So we do that on an ongoing basis.
    Ms. Richardson. And what have you done to verify that, in 
fact, the motor carrier companies have this information 
available and posted, and so on?
    Mr. Lytle. We have administrative contractors that work 
with us that are in contact with these trucking companies all 
the time, really, to make sure that they are complying with 
what they are supposed to do.
    Ms. Richardson. OK.
    Now, Captain Holmes, in your testimony you talked about--
and you said it a couple times and Chairman DeFazio came back 
to the same point again. You said that the reason why Los 
Angeles has this agreement is because you have a greater 
connection and accountability with the drivers. Can you explain 
to this Committee--and I wrote here it allows you to establish 
standards and accountability for people who work within the 
ports. What standards and accountability do you need to set up 
that the Port of Long Beach doesn't?
    Mr. Holmes. Well, I think the issue is we are not perhaps 
as convinced as the Port of Long Beach that everything that is 
being done with respect to not only the companies, but the way 
that the drivers are treated and the way that the regulatory 
regime works in the port area is working as well as people 
would allow you to--would tell you that it works.
    Ms. Richardson. So can you give us some specifics? And I 
have 41 seconds.
    Mr. Holmes. Well, I think that the preeminent regulations 
here are those that are the FMCSA regulations. That is an 
organization that has no field people in our area; they depend 
on the California State Highway Patrol to enforce regulations. 
The California Highway Patrol is overworked and understaffed; 
we are very lucky to get one Highway Patrolman working in the 
port.
    We actually, at the Port of Los Angeles, we have 10 State-
trained police officers that do truck inspections, and from our 
experience I think that this regulatory scheme is somewhat 
overwhelmed, and that is one of the principle reasons that we 
would like to have our own oversight over not only the existing 
regulations, or have the ability to do something perhaps beyond 
the minimum Federal regulations if we think it addresses a 
problem specific to the Port of Los Angeles.
    And my example would be--and this is one of the things that 
is enjoined--is off-street parking or trucks not being able to 
park in neighborhoods. As you know, as well as I do, when you 
leave the Port of Los Angeles, you go 50 meters, you are into 
neighborhoods; and trucks wait in neighborhoods to get into the 
port sometimes, and we would like to not allow those trucks to 
wait in the neighborhoods.
    Ms. Richardson. OK. My time has expired, and I want to stay 
on the good side of our Chairman, so hold that thought, and 
maybe when another person will ask those questions, but I will 
come back to you. But you brought up very key points that I do 
see on a daily basis.
    Thank you, Mr. Chairman.
    Mr. DeFazio. I thank the gentlelady.
    Mr. Miller.
    Mr. Miller. Thank you, Mr. Chairman.
    I believe the hearing is about the environment and how do 
we clean the air. I am from southern California, so I know the 
unique characteristics of Long Beach and L.A., both. It seems 
like we have a problem with the wait time at the gates; some 
trucks parking in residential neighborhoods; subsidies has been 
a question here; how leases are issued to independent drivers.
    But, Mr. Holmes, you said you need different standards, you 
have unique characteristics, and you believe that somehow these 
impact the environment. Is a truck different when it arrives at 
the L.A. Harbor than it is when it arrives at the Long Beach 
Harbor, the same truck?
    Mr. Holmes. I think the short answer is the truck is not 
different, but the conditions------
    Mr. Miller. Thank you. No, the truck--if the truck meets 
the standards--we are talking about the environment. I heard 
your testimony, but 90 percent of the trucks that come through 
the harbors are independents or owner-operators; 10 percent are 
employee operators.
    Mr. Lytle, you have been able to meet all the standards 
applied to you earlier than required; you have met the 80 
percent reduction with no change in the existing situation as 
far as employee driver versus an owner-operator, is that not 
true?
    Mr. Lytle. Yes, sir, that is correct.
    Mr. Miller. Mr. Holmes, you have come 70 percent, which is 
very close to meeting the required implements placed upon you 
to meet environmental standards, with 90 percent being 
independent and 10 percent being employee drivers. Is that not 
true?
    Mr. Holmes. Yes, that is correct.
    Mr. Miller. Thank you. So the issue here seems to be not 
the environment and not air quality, which I thought we were 
going to talk about, because in southern California that is a 
huge concern.
    Grace, you and I spend a lot of time down in that area; you 
know it very well. I don't think the issue is who drives a 
truck. I think the issue we have here is does that truck meet 
the standards. Now, if the truck does not meet the standards, 
then the truck should not be able to operate.
    Now, the problem we have in California is only 4 percent of 
the trucks in California service the harbor. So you have 96 
percent of all the trucks in California have nothing to do with 
the Port of Long Beach or the Port of Los Angeles.
    Mr. Lytle, have you found any difference in compliance 
based on whether the drivers are employee or independent owner-
operators, period?
    Mr. Lytle. None whatsoever, sir.
    Mr. Miller. None whatsoever.
    Mr. Holmes, during this time period, do you require harbor 
drivers to be employed?
    Mr. Holmes. No, sir, not at this time.
    Mr. Miller. No, you don't. Has the program been successful 
so far to reduce it by 70 percent under current circumstances? 
You have met that standard, is that not correct?
    Mr. Holmes. Well, we haven't achieved the 80 percent, sir.
    Mr. Miller. You have met 70 percent without any change at 
all, and you are way ahead of the requirement placed upon you. 
And based on the time frame you are implemented with, you will 
meet the 80 percent very shortly, because all the trucks coming 
into the harbor must meet the new standards, is that not 
correct? Do you allow trucks that are 1966, that don't meet the 
standards, come into the harbor?
    Mr. Holmes. No, sir.
    Mr. Miller. You don't. So in order to come into the harbor, 
you have to meet the standards based on the requirements the 
law has imposed upon this, is that not true?
    Mr. Holmes. Yes, sir.
    Mr. Miller. Thank you.
    And I am really confused at this point, because if we are 
strictly dealing with air quality standards, which is the 
emphasis of this Committee hearing--and I applaud the Chairman 
for holding a hearing based on those standards, because we have 
had standard qualities in California in the past, and we need 
to adequately address those standards.
    But I have the Port of Long Beach here and the Port of Los 
Angeles here that have standards, and they are meeting the 
standards, they are making sure that they are being forced at 
the gates. The problems I see is that the waiting time is too 
long. So we need to effectively deal with something internally 
at the harbors to deal with the waiting time. That should have 
been what this hearing is about.
    How do we deal with that? If there is offsite parking in 
Los Angeles that is being done and it is not practical and it 
should not be allowed, that is something they should deal with 
local parking standards in local neighborhoods. But lease 
agreements, that is not an air quality issue for me.
    I was an independent contractor in the building industry. I 
started off as a framer in the union; I was a union carpenter. 
I went into business for myself. How I decided to borrow money 
from a bank was a decision I made on my own, as an independent 
contractor here makes on his own whether they want to enter 
into a lease to lease a truck or not.
    If they are entering into a lease--and I know Walmart, 
Target, many of these companies work with their drivers; they 
will finance the rig to be able to provide transportation for 
the goods coming from the harbor. And when you have 90 percent 
of the truckers hauling from the harbors, to say we are going 
to eliminate that percentage and give it to 10 percent, 
something has to happen in the marketplace that is not good for 
the marketplace. Competition is eliminated and it directly is 
going to impact cost. Plus, you have 15 million unemployed 
Americans, and at the harbor we want to tell some of these 
people who are employed, no, you can't work? Now, why would we 
do that to the American people?
    If the issue here is truly environmental standards, and we 
have placed requirements on these trucks that they have to meet 
the environmental standards, it does not make sense to me to 
discriminate against any individual in this Country because 
they do not happen to work for a given company, they want to be 
self-employed. Some people want to be self-employed. Some 
people want to determine when they want to work, when they want 
to go on vacation, if they want to work 60 hours a week. I 
remember working seven days a week, 6:00 in the morning until 
6:00 at night. I did it because I wanted to. I could have 
stayed working for the framing company that I worked for and 
been a carpenter, no problem. I chose to be an independent 
contractor.
    These companies are meeting the standards. If they are 
meeting the standards, it makes no sense to me to say to them, 
no, you cannot work because we just don't want you to work. And 
that is what this debate has been about.
    I enjoyed both of your testimonies. Mr. Lytle, you are 
meeting the standards in the system as it is today.
    Mr. Holmes, I meant no disrespect to you, sir. I think you 
will meet the standards shortly without the system changing at 
all. But to eliminate 90 percent of the workforce using the 
harbor based on issues of waiting time, subsidies, how leases 
are dealt with is not an issue Congress should deal with.
    And I thank the Chairman and yield back the balance of my 
time.
    Mr. DeFazio. I thank the gentleman. I would, though, remind 
the gentleman that the jurisdiction of the Committee--this is 
not a hearing just on clean air, which is a major issue, but we 
have jurisdiction over hours of service. There are questions 
about hours of service, working conditions.
    We have jurisdiction--actually, lease agreements are under 
the jurisdiction of this Committee and the Federal Motor 
Carrier Safety Administration, and there are substantial 
questions about the lease agreements. Whether they are sham 
owner-operators or not, that is within the jurisdiction of the 
Committee. Truck parking regulations were prohibited by the 
court settlement, so you have a truck parking problem without 
standards being imposed by these ports. Both attempted to 
impose truck parking standards. There are none now. And then 
the issue of whether people are truly self-employed or not 
self-employed.
    Mr. Miller. Would the gentleman yield?
    Mr. DeFazio. Certainly.
    Mr. Miller. I agree with you on everything you said, but 
none of that should apply differently to employed individuals 
versus owner-operator individuals; we should apply them 
reasonably and the application should apply to everybody. And I 
totally, wholeheartedly agree with that.
    Mr. DeFazio. I thank the gentleman.
    With that, I would turn to the Chairman of the full 
Committee, Mr. Oberstar.
    Mr. Oberstar. Thank you, Mr. Chairman.
    Mr. Miller, you said you chose to start out working for a 
company, you chose to be an independent contractor. Now you 
have chosen to be a Member of Congress, and Congress is the 
better for it. Thank you for serving. We are glad to have you 
and on this Committee. And the issues that the gentleman raises 
are appropriate and they are the subject of this hearing.
    These two ports are important to all of America, not just 
to the west coast, not just to the Los Angeles-Long Beach 
metropolitan area, the second largest now in the United States, 
probably soon to be the largest in population. The millions of 
containers that come in to these two ports, 70 percent make 
their way across the United States, eventually to the east 
coast. What happens at these two ports is critical to the 
national economy.
    I have been greatly engaged in this issue that is the 
subject of this hearing and want to understand a number of 
items. First, the legal authority of the Ports of Los Angeles 
and Long Beach to implement a truck ban under your Clean Truck 
Program, do the two ports have clear legal authority to ban 
trucks manufactured before a certain date or any trucks not in 
compliance with the 2007 EPA emission standards? Have your 
legal staff analyzed whether that ban can be challenged in 
court?
    Mr. Lytle. Chairman Oberstar, California law now parallels 
our program in terms of the truck ban, so the California law is 
in place, so our program simply dovetails exactly with that 
law.
    Mr. Oberstar. But does the Federal standard supersede that 
of California? Have your legal staff analyzed whether that is 
the case?
    Mr. Lytle. No, sir, I don't know that.
    Mr. Oberstar. Do you believe a challenge could be made 
under environmental laws, the Clean Air Act, under motor 
carrier laws, the Federal Motor Carrier Safety Act, or both?
    Mr. Lytle. The same question, sir? Do I know that we have 
the legal authority to do that?
    Mr. Oberstar. Yes.
    Mr. Lytle. No, sir, I don't.
    Mr. Oberstar. And it has not yet been challenged?
    Mr. Lytle. No. We have------
    Mr. Oberstar. But you have some inkling of whether that is 
the case?
    Mr. Lytle. No, that has not been challenged under the two--
----
    Mr. Oberstar. Under what authority do the ports carry out 
the incentive grant programs that fund clean trucks? Can that 
authority also be challenged in court?
    Mr. Lytle. That would be authority that is granted through 
our Harbor Commission and our port tariffs.
    Mr. Oberstar. But have you looked at whether that could be 
challenged because it is discriminatory compared to other 
ports, other port ranges?
    Mr. Lytle. Sir, our legal staff may have done that at some 
point. I am not familiar with that.
    Mr. Oberstar. I think it is a very commendable program. I 
think it is very forward-looking on your part. I think you have 
taken on the social responsibility to not only order clean 
trucks, but help truck owners and trucking companies clean up 
their trucks. What legal authority do the Ports of Los Angeles 
and Long Beach rely on to collect that $35 per container TEU 
fee moved by a diesel truck--this is the distinction I read in 
your documentation--a diesel truck not in compliance with the 
current stage of the truck ban, that is, those manufactured 
prior to 2003?
    Mr. Lytle. That authority, sir, is under our port tariffs.
    Mr. Oberstar. And is not in violation of, not in conflict 
with Federal authority?
    Mr. Lytle. Not that I am aware of, sir.
    Mr. Oberstar. When Mr. Nadler and I, several years ago, 
2005, to be exact, tried to initiate a fee on containers to pay 
for the cost of security, it was called out of order, it was 
challenged. The then Bush Administration vigorously opposed our 
proposal. You have authority under California law to do this? I 
think it is a great idea. We had a much more modest fee, only 
five lousy bucks on a container to finance security; you have a 
$35 fee. That has not been challenged in court?
    Mr. Lytle. No. No, it hasn't, sir. Both ports really are on 
the same track with that with our respective city attorney 
groups. There have been no challenges that I am aware of, and 
under the authority of the port tariffs we have the authority 
to do everything that we have done so far in the environmental 
area.
    Mr. Oberstar. In your view, can the Clean Truck Program be 
carried out successfully, can its goals be achieved without 
concession agreements?
    Mr. Lytle. I believe that there has to be a contractual 
arrangement with the motor carrier. We have such an arrangement 
in Long Beach. Currently, the Port of Los Angeles does not have 
an agreement because the concession was enjoined through the 
court system. Our registration agreement does everything that 
we want to have done in the areas of security, safety, and 
environmental.
    Mr. Oberstar. Well, the settlement agreement with American 
Trucking Associations and the Port of Long Beach does not 
require concessions, it requires licensed motor carriers to 
register with the port. Can the goals of the Clean Truck 
Program be achieved at the Los Angeles Port to the same degree 
under the registration requirement under concession agreements?
    Mr. Lytle. Sir, the major difference between the concession 
agreement and our registration agreement is that--and this was 
very concerning to the ATA at the time that we began our 
negotiations with the ATA. The ATA was very concerned that we, 
as a port, could designate trucking company A to get a 
concession, and trucking company B could be denied for what 
they would see as an arbitrary reason.
    Under our registration agreement, any trucking company that 
has all the proper authorities and agrees to abide by all the 
rules in terms of our standards of safety, security, and 
environmental, can have a registration agreement, and then with 
the enforcement clauses that are part of that registration 
agreement to ensure compliance.
    Mr. Oberstar. Can you achieve the goals of the Clean Air 
Act without those agreements?
    Mr. Lytle. I believe you have to have an agreement. We have 
an agreement, and that meets our needs, sir.
    Mr. Oberstar. Captain Holmes, what do you think?
    Mr. Holmes. Well, I would------
    Mr. Oberstar. You have been very silent. You have been 
letting your partner do all the heavy lifting.
    Mr. Holmes. He often speaks for me in meetings, but------
    [Laughter.]
    Mr. Oberstar. You are the port at issue here.
    Mr. Holmes. I would point out a couple things. One is, 
under the current scheme, we are allowed to have the ban and we 
are allowed to charge the fee because it has not been 
contested. That doesn't mean it cannot be contested. In fact, 
it could be contested.
    So if our terminal operators got together tomorrow and 
said, we don't think this collecting the fee is a good idea, we 
would have practical means to collect the fee. So any parts of 
this program can be contested; it is just that some have and 
some haven't.
    And that is one of the reasons we are here today, because 
it is an issue of self-determination. We would like to be able 
to charge the fee and not have it be contested. We would like 
to have the ban and not have it be contested. And nothing is--
there is no sure thing to say that tomorrow the fee or the ban 
isn't going to be contested and the work that we put into this, 
the 70 or 80 percent emissions reduction, is going to go by the 
wayside.
    The past is a wonderful thing, and we have done well in the 
past in reducing emissions. It is the future that the Port of 
Los Angeles is worried about. We do not want to see all the 
work we have put in and all the investment we have put in go to 
naught in five or six or seven years because we can't maintain 
the system either by virtue of somebody contesting it, somebody 
taking us to court, or that issue.
    The short answer to your last question is I don't think, 
without having the ability, for us, to legally and confidently 
set some standards of our own, can this program perpetuate 
itself and, most importantly, be sustainable. Mr. Lytle, the 
program in Long Beach, they give the drivers 80 percent of the 
cost of the truck and they do all the maintenance.
    Well, I think in some ways that is just setting us up for 
another big money handout five or six or seven or ten years 
down the road. What we are trying to do, and what we tried to 
do with our program, is build something that is sustainable in 
the long-term, that builds up the companies so they can buy the 
trucks in the long-term, so we are not forking over 80 percent 
of the cost of the trucks. That------
    Mr. Oberstar. You have a very successful program and it is 
a great port, and Geraldine Knatz is a wonderful Port Director. 
You are the only port I know that has its own eight-part 
series, public television. I watched it this winter while I was 
pedaling indoors, when I couldn't get out on the road. I put 
your DVD in my small television down in the basement and 
pedaled for a couple hours every day, worked up a good sweat, 
and I saw the hearings that have been held, public involvement 
and the intensity of interest in clean air.
    But can the Clean Truck Program be carried out successfully 
without the requirement that only trucking companies whose 
drivers are direct employees can obtain concession agreements 
with the Port of Los Angeles? Is the labor structure essential 
to the success of the Clean Truck Program?
    Mr. Holmes. I think the short answer is, in the long-term, 
we have to establish a structure that is going to perpetuate 
the continuing goals of the Clean Truck Program, and we believe 
that structure is best served with employees, and not 
independent owner-operators.
    Mr. Oberstar. Why is that so? I have heard the serious 
problems and concerns and the mistreatment and alleged abuse of 
the owner-operators, who really are not true employees, they 
are independent contractors, and they really have very little 
standing as such. But I don't understand how the labor 
structure is essential to the Clean Air Program.
    Mr. Holmes. I think one of the things--and this is a 
comment I guess you would say, maybe complaint, that we 
routinely hear from the truck drivers, and I am sure some of 
our representatives have heard--is they cannot find the funding 
to buy new trucks. It is as simple as that. We get calls every 
day.
    At the present time, we have a program that we are doing 
jointly through the State of California and the South Coast Air 
Quality Management District, where we provide 50 percent of the 
cost of a new diesel truck, or $50,000. It is daily that we get 
calls from people who cannot find or get financing for the 
money to pay the other 50 percent of the cost, which, again, is 
$50,000, and we are very concerned that these people will be 
unable to do so and continue to be unable to do so. We are 
just, frankly, concerned that we are setting up a system that 
is going to eventually fail because the independent owner-
operators, without the company buying the trucks, are not going 
to be able to buy the trucks on their own.
    There is a reason why our trucks were 12 years old when we 
started this program. It is not because the drivers didn't want 
to have new trucks; it is because the drivers couldn't afford 
new trucks. That is a lot of money in capital. A brand new 
truck is $100,000; a brand new LNG truck is between $160,000 to 
$180,000.
    And many of these people, who are hardworking people, just 
simply don't have the capital to buy $160,000 or $180,000 or a 
$100,000 truck; and we can't continue to give, in my mind--and 
I applaud what Long Beach has done--80 percent of the cost of a 
truck plus pay all the maintenance. The ports just don't have 
the money to continue to do that, not in this economy.
    Mr. Oberstar. Thank you very much. At this point, I will 
withhold further questions until later and now recognize Mr. 
Nadler, who will be our Acting Chair.
    Mr. Nadler. [Presiding.] Well, thank you. I will move over 
to the Chair's position after I ask the questions, then.
    Mr. Oberstar. The authority holds with the person, not the 
chair.
    Mr. Nadler. Thank you, Mr. Chairman.
    Let me thank the Committee for holding this hearing today 
regarding the Clean Truck Program in the Ports of Los Angeles 
and Long Beach. This is an issue of great importance around the 
Country. I represent New York City, which has a major port, and 
we also are facing a 70 percent expansion of trucking in the 
next 10 years. We must have an effective environmental program 
in place, like at the Port of Los Angeles, if we are to 
accommodate an increasing goods movement without adversely 
affecting our environment.
    The Port of New York and New Jersey recently adopted a 
program to phase out older trucks and provide grants to help 
purchase newer, cleaner trucks, but it is not enough. The port 
just sent me a letter requesting an amendment to the Federal 
Motor Carrier Statute so that it can take measures to more 
effectively improve air quality, and I ask unanimous consent to 
insert the letter in the record. And since I am Chairing it, 
without objection.
    [The information follows:]
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    [Laughter.]
    Mr. Nadler. I am currently drafting legislation to amend 
the Federal Motor Carrier Statute so that ports can enact and 
enforce Clean Truck Programs similar to that of the Port of Los 
Angeles, if they choose to do so. I recently sent a letter to 
the Committee signed by 78 other Members of the House 
requesting support for such an amendment, and, without 
objection, I will insert that letter in the record as well.
    [The information follows:]
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    Mr. Nadler. Now, let me ask Captain Holmes, what is the 
effective difference between a registration system as in Long 
Beach and the concession system that you wanted in Los Angeles? 
Now, we heard Mr. Lytle say that the ATA objected to the 
concession system because it would allow the port arbitrarily 
to say company A gets a concession, company B doesn't get a 
concession.
    But assuming you get rid of that, assuming you wrote into 
the concession or the legislation something that says you can't 
arbitrarily deny a company that meets certain whatever 
standards, concession, what is the effective difference between 
the registration and the concession system, and would you 
regard a concession system as necessary, as opposed to 
registration system?
    Mr. Holmes. Well, I think, first of all, I would mention 
that in our efforts to have concessionaires, we have not turned 
down any concessionaire that met the requirements, which is 
basically similar to Long Beach and the paperwork. So that 
would be the first thing I would say. Although I am sure the 
argument could be made that it is arbitrary, we have not been 
arbitrary.
    Mr. Nadler. But you have not been--but you could write into 
a concession standard or into legislation a non-arbitrary 
requirement. So assuming you got that out of the way, that you 
could not arbitrarily deny a company.
    Mr. Holmes. And yes, sir, just as a business practice, you 
are not going to------
    Mr. Nadler. Well, you wouldn't want to, but assuming we 
gave a legal mandate you couldn't do that.
    Mr. Holmes. OK.
    Mr. Nadler. At that point what is the--you couldn't do it; 
you don't want to do it anyway. At that point, what is the 
effective difference between a registration and a concession, 
and do you regard a concession, as opposed to a registration 
arrangement, as essential to your goals?
    Mr. Holmes. I think there are two fundamental differences, 
and I would defer to my colleague from Long Beach to correct me 
if I am wrong. One is simply the fact that ours is very 
company-focused versus truck-focused. So we have a company-
centered program that puts the burden on the companies to be 
responsible for the trucks and the drivers.
    And the second is, with respect to, you know, we believe 
that if a company has a number of trucks, for example, that are 
unsafe, we believe that we should be able to take action 
against the company to cancel their concession.
    Mr. Nadler. And under the registration system you couldn't 
do that?
    Mr. Holmes. I believe they can--and I don't want to speak 
for my colleague, but I believe they can individually--trucks 
can individually be identified as being unsafe, but we think it 
is inefficient, plus you have to catch every------
    Mr. Nadler. Excuse me.
    Mr. Lytle, if you found a company that was registered with 
you that was systematically a large proportion of its trucks 
were unsafe, could you, under your system, move against the 
company or would you have to move against each truck 
individually?
    Mr. Lytle. Sir, the first thing that we would do is all of 
those trucks that were in non-compliance would not be allowed 
in the marine terminals. So that is agreed to contractually 
with the motor carriers. The motor carriers, under this 
agreement, also agree that there is a process by which, if they 
are in violation, we could sit down. There is a cure process 
where we can petition for the authority to be removed or 
suspended, and we can suspend the trucking company itself with 
violations.
    Mr. Nadler. So you could suspend the trucking company if 
you found that X percent of its trucks were in violation, too 
high a percentage?
    Mr. Lytle. Yes, sir.
    Mr. Nadler. OK. Mr. Holmes?
    Mr. Holmes. Fundamentally, that is the fundamental 
difference between the registration and the concession. In 
addition, we had some other items in the concession, which have 
since been enjoined, that we believe are specific concerns to 
the Port of Los Angeles.
    Mr. Nadler. Can you give us an example of that?
    Mr. Holmes. The one would be off-street parking, as I 
discussed earlier, or parking in neighborhoods, for example. We 
don't allow our trucks to--well, it has been enjoined, but we 
did not want our trucks to be allowed to park in the 
neighborhoods, waiting for appointments at port terminals or 
whatever, because we felt that was clearly a safety risk when 
you have neighborhoods immediately adjacent to the port; they 
have housing and cars, and obviously parking big trucks on the 
street is not conducive to safety.
    Mr. Nadler. Thank you. I want to explore one other thing 
before I call my time expired, and that is you said in your 
written testimony that asset-based trucking companies are a 
sustainable model that will provide companies the ability to 
replace the current trucks without public money in the coming 
years. I assume by that you meant what you were talking about 
with Mr. Oberstar, namely, that if you have an owner-operator 
system, the owner-operators don't have the funds to replace the 
trucks or to maintain them; whereas, if you have a company-
based system, they do. That is what you mean by this?
    Mr. Holmes. Yes, sir. Yes, sir, that is correct.
    Mr. Nadler. Now, let me ask one other. And that has been 
your experience?
    Mr. Holmes. Well, that has not only been our experience, 
but we started developing and building the program, we traveled 
around to other ports that had done similar things, and we also 
traveled around and visited the top 25 trucking companies in 
the Country, and based on some experience we had with the Port 
of Vancouver, who has a truck program, they convinced us that, 
for sustainability, which is, again, one of our keys because, 
obviously, we don't know if we are going to have or don't want 
to continue to hand out money, the asset-based system is the 
best way to ensure sustainability because the people use the 
trucks as collateral to buy new trucks. Whereas, if you have an 
independent owner-operator, in many cases the time comes to 
replace the truck and they don't have the money or the 
wherewithal to replace the equipment.
    Mr. Nadler. And the old truck is so broken down they can't 
use it as collateral.
    Mr. Holmes. Yes, sir.
    Mr. Nadler. Let me ask you one further thing. You obviously 
favor that, but you are enjoined from using that now?
    Mr. Holmes. We are enjoined from a number of things.
    Mr. Nadler. You are enjoined from requiring that the 
companies own their own trucks and treat the drivers as 
workers?
    Mr. Holmes. Yes, sir.
    Mr. Nadler. OK. Now, even given that injunction, I have 
seen testimony--I am sure we will hear more about this in the 
second panel--that some of these companies have contracts with 
the so-called owner-operators that say you will not work for 
anybody else, and various other provisions, which would seem to 
not call into question, but to rule outright the idea that they 
are in fact independent owner-operators.
    Given that, are you enjoined from or would you be inhibited 
in any way from simply saying this is a fiction and we are 
going to recognize you as the owner and him as the worker, 
given the nature of the contract that you have, which is 
clearly not that of an independent owner-operator?
    Mr. Holmes. Again, I am not sure legally. That would be 
something that we--you know, throughout the program we have 
come up against bumps in the road, and this would be--if in 
fact what you are talking about was happening, it would be 
something that we would have to talk collectively to our legal 
department to see how we would handle it.
    Mr. Nadler. So clarification legislatively would be helpful 
here.
    Mr. Holmes. Yes, sir. Yes, sir. Well, and also I think that 
one of the things is there are some lease requirements in the 
FMCSA, but it is my understanding that the State of California 
has not adopted those requirements.
    Mr. Nadler. OK.
    Mr. Holmes. So there are some Federal requirements that 
pertain to how leases to people can be written, and that is 
something that would have to be looked into as well.
    Mr. Nadler. Thank you very much.
    I will now recognize the gentleman from New Jersey, Mr. 
Sires.
    Mr. Sires. Thank you, Mr. Acting Chairman.
    I have the district opposite Congressman Nadler's. I 
represent the ports in New Jersey. I represent the whole coast, 
the whole situation with the Bayonne Bridge. I am sure you have 
probably heard something about it. But I am just curious about 
some of the comments that you made and I want your opinion on 
some of the things.
    For example, Captain Holmes, you said that you don't 
support a one size fits all solution in your comments. And let 
me just get to my question. Given the fact that the drayage 
industry operates in a similar manner at the Port of Newark and 
Elizabeth as it does in Los Angeles and Long Beach, and drivers 
are also paid very little wages, how could the experience of 
the Clean Truck Program in Los Angeles and Long Beach be 
applied to New York, New Jersey? What would be the benefits to 
Pennsylvania and New Jersey and New York, knowing what you know 
about the ports in our area?
    Mr. Holmes. Well, actually, the top-tier ports in the 
Country--including Seattle, New York, Long Beach, Los Angeles--
work collectively on a lot of these programs. We have talked to 
the Port of New York-New Jersey--I think both of the ports 
have--on programs, and I think the good news is although we 
have some philosophical differences, the port programs do have 
a lot of similarities, and I think the Ports of New York-New 
Jersey could learn from truck bans and how we have handled--you 
know, one of the biggest hurdles we had to deal with is how you 
identify the trucks.
    So Los Angeles and Long Beach had to get together and build 
an IT system that reached into every terminal, and it cost 
millions of dollars; and it was a very successful endeavor. And 
that is one of the things that New York and Seattle and San 
Diego have all come to us and said how did you put this IT 
system together? Because when a truck comes in a gate, you have 
to have a very, very rapid way of knowing whether it is a 1988 
or a 2008 truck; and we had to put a system together using 
radio frequency identification tags and a computer system that 
did that.
    So I think from the perspective of--we would love to talk 
to the other ports because this has not been without its bumps 
in the road, and we would like to feel that, through our 
experience--and I will defer to Mr. Lytle--we can have some of 
the other people who are putting together these systems 
basically eliminate some of the hardships that we had in 
putting the program together.
    Mr. Sires. Because one of the problems that we have is that 
they are paid very low, so they have a problem also with 
purchasing of the truck, although the Port Authority has a new 
program now. I think they are putting $27 million in order to 
purchase.
    Mr. Lytle, do you want to comment on that?
    Mr. Lytle. Yes, Congressman. I am very familiar with the 
Port of New York and New Jersey. I personally managed one of 
the large terminals in your district, PNCT, a few years ago, so 
I am very aware of the challenges with the owner-operators and 
the trucking companies in the area. And I fully agree with 
Captain Holmes; I think this is--the things that we have 
learned together--and, yes, we have our disagreements on some 
aspects, but the things that we have learned together to put 
together this program, and when you look at the environmental 
benefits that we have, I don't think anybody can deny how 
successful the program has been.
    So this is where we really want to go. And we think in 
terms of some of the technology we have looked at, some of the 
pitfalls. We know that that the programs aren't perfect, but we 
also know that we are continually changing and upgrading and 
making it better, and the folks in the Port of New York and New 
Jersey would certainly benefit from that.
    Mr. Sires. You know, since the New Jersey Port community 
also has the same air quality problems, is there a danger that 
future infrastructure, expansion, could face similar 
environmental litigation as southern California faced, some of 
the ports?
    Mr. Holmes. I guess this is where I say no place is quite 
like southern California, sir, but------
    Mr. Sires. You haven't been to New Jersey lately.
    [Laughter.]
    Mr. Holmes. But I think that is a distinct possibility. And 
one of the things that was--one of the prime movers of the 
program was the fact that we had a seven-year hiatus from doing 
any major terminal expansion because of litigation and 
lawsuits, and this Clean Truck Program allowed us to get past 
that, and I know now the Port of Los Angeles is spending $1 
million a day on terminal expansion projects and the Port of 
Long Beach is probably spending a similar amount of money.
    So the Clean Truck Program allowed us to move past some of 
the troubles of the past and disagreements with the past and, 
frankly, make some people who were--established a collegial 
relationship with some of the people that we didn't have quite 
in the past and move forward.
    So I would say in most places that are like New York and 
Seattle that are putting a truck program into place, one of the 
drivers is the fact that there is going to come a point when 
the constituency is going to say we are not going to take this 
anymore. And we got to that point, and maybe what we can help 
do at our port complex is help people in other places 
understand that the day is coming, and it is better to start a 
program now than it is to wait until somebody sues you and you 
spend millions and millions of dollars before you do it.
    Mr. Sires. Mr. Lytle, would you like to comment, knowing 
New Jersey like you do?
    Mr. Lytle. I am sorry, sir?
    Mr. Sires. Knowing New Jersey like you do, would you like 
to comment on that?
    Mr. Lytle. No, sir. I agree with Captain Holmes. We are 
moving things forward. There is a tremendous amount to be done. 
I think what is going to happen in the Ports of New York and 
the New Jersey is all of the issues that we have been going 
through in the last few years are absolutely going to be on the 
forefront with New York and New Jersey. I know the port there 
is growing. Unfortunately, maybe some of that business has come 
from the Ports of Long Beach and Los Angeles. But I know there 
is a lot of infrastructure that is going on, infrastructure 
work that is being contemplated in New York and New Jersey.
    In the Port of Long Beach, we are talking about $4.5 
billion over the next 10 years or so in terms of bridges, 
roads, railroads, marine terminals. So we know that we have to 
invest, but the first thing for us was to get the air cleaned 
up, and that was job one; and we have made huge headway in that 
regard and I think everybody is going to be, ultimately, faced 
with that same challenge.
    Mr. Sires. Thank you very much.
    Thank you very much, Mr. Chairman.
    Mr. Nadler. Thank you. I now recognize the gentleman from 
Washington, Mr. Larsen.
    Mr. Larsen. Thank you, Mr. Chairman.
    I have had conversations with the Port of Seattle and I am 
looking forward to talking to the Port of Tacoma a little bit 
as well, get some perspective on this, but I think one of the 
issues here is the different models that you are using. The 
Port of Seattle has a ban that comes now into effect I think 
the beginning of next year on pre-94 trucks, and then it is 
2015 and 17 for 1997 trucks; and then there is a buy-back 
program probably a little closer to what Long Beach is doing 
than what L.A. tried.
    But I think one of the problems in looking at this further 
is if you look at a study that was done by a group called Port 
Jobs out of Seattle, where the average short-haul trucker at 
the Port of Seattle drove an 11-year-old truck, worked 11 hours 
a day, earned $31,000 a year, and that was before the downturn 
in the economy, and with diesel prices also doubling.
    And the idea that you can ask someone with that kind of 
income, even when you subsidize their purchase of a newer 
truck, to then finance the remainder, given the working 
conditions and given how they are paid by the load and so on, 
seems to me a major hurdle to achieving the goal of switching 
old trucks out and getting new trucks in, which is probably a 
little bit of the thinking that went into the L.A. program.
    So one of the curious things about your testimony, Mr. 
Lytle and Captain Holmes, is that Mr. Lytle's testimony talked 
about 250 trucks being subsidized, but then Captain Holmes' 
testimony discusses a much larger number of trucks being 
switched out. So, Mr. Lytle, can you talk about the Long Beach 
program and why there aren't as many trucks being switched out 
in your program, say, as opposed to the L.A. program? Is it 
structural; is it strictly money?
    Mr. Lytle. Sir, when you look at the total number of 
incentive dollars that both ports have put into the program--I 
believe Captain Holmes cited $60 million from the Port of Los 
Angeles; our number is currently projected at $52 million, so 
they are relatively close--we have subsidized a total of 900 
trucks at the Port of Long Beach, and that is various programs, 
some where the programs where we have incentivized to the tune 
of 80 percent, that number was 250 trucks.
    Some of the other different trenches of this program were 
subsidized at different levels, including some trucks that were 
provided a retrofit device, and the cost of the retrofit device 
is $20,000 typically. So our program is made up of about five 
or six parts and it totals 900 trucks for a total of $52 
million.
    Mr. Larsen. Out of how many trucks service this particular 
market, the drayage market, or anyone who would have to comply?
    Mr. Lytle. Right now we have, in our drayage truck 
register, we have about 7,500 clean trucks registered, slightly 
less than that fully paid, but right now 7,500 clean trucks 
meeting the EPA 2007 standard, with another 1,200 trucks that 
are in that model year '04-'06. So those trucks are able to 
enter the gates, but they are subject to our clean truck fee, 
which is $35 per TEU, or $70 for a typical load.
    Mr. Larsen. And like the Seattle program, do you have the 
marine terminal operator enforcing that, or is the port 
actually there doing that?
    Mr. Lytle. We have the marine terminal operators, we have 
the technology in place that is excellent, and that technology 
describes every single unique truck that comes into the marine 
terminals. They have to have an RFID device; all of the motor 
carriers have agreed with that. These RFID devices are on every 
single truck, so every move, the time, and so on is tracked. 
And the trucks that we have financed, where we have financed 
the 80 percent, we have also included GPS tracking devices on 
those vehicles, too, to make sure that they are operating where 
they are supposed to operate.
    Mr. Larsen. Mr. Chairman, could I just ask one question of 
Captain Holmes? Thanks.
    Captain Holmes, can you explain to me, then, why you moved 
to more of this concession agreement? Because it really, 
honestly, given the numbers at the Port of Seattle, if you look 
at what these folks are making, just as a practical matter it 
seems that the L.A. program is a better alternative, separate 
from the legal issues. We will get into those, I am sure, but 
these folks are not making a lot of money to finance on their 
own on a $100,000 truck, much less half of that, if the rest of 
it is subsidized or 80 percent of the rest of it is subsidized.
    Mr. Holmes. And I think that is absolutely something we 
took into consideration, and my background is an operations 
person, so we had to step back and take a real clear, pragmatic 
look at how to get the most trucks changed out in the fastest 
period of time, and we knew that the pay for the drivers was 
very low; we knew that they have a hard time buying new trucks, 
so that was pragmatically one of the reasons why we focused on 
companies and put the burden on the companies, as opposed to 
put the burden on the individual drivers.
    So we spent our money a little bit differently. As Mr. 
Lytle said, we spent about the same amount of money, but our 
incentive program was to the companies and it was for $20,000 
for a truck. It basically made the down payment for them, 
enabling them to get the truck.
    So the program was put together as sort of a systematic way 
to move from point A to point B, and just pragmatically 
speaking we didn't see sustainability in providing a lot of 
money to an individual owner-operator who, in meetings with us 
told us, frankly, that they weren't going to have the money to 
buy a new truck in five or six years anyway.
    Mr. Larsen. Thanks. I will just end on a quote from one of 
these gentlemen that was interviewed for this story a couple 
years ago. He said the good thing about this job is--this is 
one of the drivers--he said the good thing about this job is I 
am my own boss and I have a lot of freedom. But now the only 
thing I am getting is the freedom, not the money.
    Mr. Nadler. Thank you.
    I will now recognize the gentlelady from Hawaii, Ms. 
Hirono.
    Ms. Hirono. Thank you, Mr. Chairman. Before I proceed, I 
would like your permission to insert into the record a letter 
from a constituent who wanted to share her views regarding the 
subject of this hearing.
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    Ms. Hirono. I share Chairman Oberstar's observation that 
what happens in these two ports has national import, because so 
many of the goods that are distributed throughout our Country, 
and clearly to Hawaii, come through these ports. So I do 
commend you for moving ahead with your Clean Truck Program, 
even though it has led to substantial litigation.
    My question surrounds the Federal law. My understanding of 
the Federal law that governs is it is pretty broad because it 
disallows or it preempts the States and political subdivisions 
from--I am paraphrasing--from regulating the price, route, or 
service of any motor carrier. I consider that a very broad 
preemption language.
    Mr. Holmes, you noted that you would like us to consider 
limiting or in some way exempting these kinds of programs from 
this very broad preemptive language, and I am just wondering 
whether we can craft that kind of language specifically enough 
so that the Federal interest in making sure that the kinds of 
programs and decisions that you are seeking to implement in 
your ports do not have unintended consequences to other States.
    Let me give you an example. There was a time when I believe 
the State of California or it might have been your ports wanted 
to impose a container fee on shippers, and, of course, that fee 
would have impacted all of the purchasers of those goods; and 
for a State like Hawaii, which is over 90 percent dependent on 
goods that are shipped to our State, that would have had a 
major cost implication to us.
    So it is in that kind of context. I am all for the Clean 
Air Act; I am all for addressing environmental issues that are 
very important. But, at the same time, I am concerned that the 
kind of language that you would like us to consider so that you 
do not have to continually face, and any other ports who want 
to have this kind of program do not continually face litigation 
that will cost millions of dollars. Do you think that we can 
draft language specific enough to address the concern you have, 
at the same time addressing some issues that would arise in a 
State like Hawaii?
    Mr. Holmes. Well, I think that is an excellent point, and I 
would like to think that getting the parties together, industry 
and the ports, that could be done; and I think it is important. 
We are not advocating that you write language which mandates 
for ports to do things different. I think what we are asking 
for is language that allows ports to have the tools to do 
things a little bit differently. And I think we have all found, 
in the post-9/11 world, that risks are not the same in all of 
the different ports or all of the different cities, and that 
applies to the environmental world as well. We are unfortunate 
in the L.A. area that we are in a basin and any emissions that 
we have stays right there.
    So we have to deal with those problems, and, again, we 
can't deal with them the same as other places. Seattle, for 
example, is in a much better geographical position and the 
emissions don't stay in the Seattle area as much as they stay 
in the L.A. area. So I think what we are asking you to do is to 
make an effort to allow us to set some standards of our own so 
that we don't have to end up going to------
    Ms. Hirono. Well, since I am running out of time, excuse 
me. I certainly understand the unique features of every port, 
and you have suggested that perhaps the parties of interest, 
entities such as the ATA and the ports, could get together and 
perhaps fashion some kind of compromise language. Apparently, 
you did that in your port by going with a registration program 
as opposed to a concession program. So have those kinds of 
discussions taken place, to come up with--because, Mr. Holmes, 
you are suggesting Federal language. I am wondering whether you 
have something to offer.
    Mr. Holmes. I think some language has been drafted, and I 
don't know how extensive the outreach has been, but I think if 
people were serious about doing so, the outreach could be 
expanded to the point where you could try to work something 
out.
    Ms. Hirono. But you yourself have not started discussions 
with parties of interest such as ATA?
    Mr. Holmes. Well, at the present time we are in an awkward 
position with the ATA.
    Ms. Hirono. Litigation.
    Mr. Holmes. I think we are going to have to wait until some 
things sort themselves out before we start those discussions.
    Ms. Hirono. Thank you very much.
    Mr. Nadler. Thank you.
    I will now recognize the gentleman from Iowa, Mr. Boswell.
    Mr. Boswell. Thank you, Mr. Chairman. I will be pretty 
brief. I just overheard Captain Holmes make the comment that he 
did about the ports are not all the same. Certainly not. It 
caused me to do a little reflection. One time I was flying in 
to Torrejon in Spain and flying over Madrid early in the 
morning, and there was an inversion there kind of like there is 
where you folks are from, and it was a very quiet morning and 
you could literally see the street designs from what was coming 
up from the emissions. It was stunning to me. This was a number 
of years ago. I don't know if you have experienced that in your 
area or not, but probably the winds are never calm there to 
where you could, but I would suspect it could happen. So I 
understand your concern.
    But I think there is something, Mr. Chairman, that we ought 
to be very aware of. Although this is a situation that needs to 
be dealt with, I am very concerned that out in the Midwest and 
Iowa we don't have any ports, but we depend on the ports for 
our economy. And I might add to that it is the long-haul trucks 
that I am concerned with, the over-the-road trucks. And I don't 
think you are having a problem with them.
    You might want to say something about that, but it seems to 
me like, as I observe, being one of the few possessors of a CDL 
around here, I just naturally look and think about it. I don't 
see many older trucks out there. I see a lot of later model 
trucks have a lot of miles on them, but we understand that. I 
don't see the older trucks. So I guess my concern is, one, that 
the ports are not all the same, so we can talk about that, but 
I don't think you ought to be having an impact on the over-the-
road long-haul. I hope you don't.
    Mr. Holmes. Well, I think that, no, we don't, and that is 
why we worked with the OOIDA to fashion an agreement for the 
long-haul trucks that come into the port.
    Mr. Boswell. Well, just on that point, please continue, 
have you had a satisfactory working relationship with OOIDA? I 
like hearing that. How is that going?
    Mr. Holmes. I think we have a very satisfactory working 
relationship with OOIDA, and we met with them in DC while we 
were here this time. But I think one of the things that needs 
to be said is because of the reliability needed on the long-
haul trucks, just that in and of itself makes it a bit of a 
different industry than the port industry. So the trucks, the 
drivers who drive or are OOIDA drivers, their equipment is 
clearly not as old as the port trucks were and also well 
maintained because it has to go thousands of miles at a time. 
In the port industry, you know, it is a very different 
industry.
    Mr. Boswell. I understand.
    Mr. Holmes. And you can afford to have a truck--you know, 
if a truck breaks down in the port industry, you are not 3,000 
miles away from home. But if a truck breaks down for the long-
haul truckers, it is a different situation.
    Mr. Boswell. I understand that and I appreciate that you 
understand it very much. So you are assuring us that this is 
not going to be a penalty on the over-the-road long-haul.
    Mr. Holmes. No, sir.
    Mr. Boswell. No problems at all?
    Mr. Holmes. No, sir.
    Mr. Boswell. Thank you, Mr. Chairman. I yield back.
    Mr. Nadler. I thank the gentleman. That concludes our first 
panel. I thank Captain Holmes and Mr. Lytle.
    Ms. Richardson. Mr. Chairman? I did have one follow-up 
question.
    Mr. Nadler. All right. I take that back. I will recognize 
Ms. Richardson for one follow-up question.
    Ms. Richardson. I promise to be brief.
    Mr. Lytle, I just want to clarify something. The way that 
the program would work is--if in fact the truckers can afford 
it--you mentioned the fact that you provide 80 percent subsidy 
and 20 percent you provide the financing. Don't you have more 
truckers, though, who want to get these trucks? Didn't we have 
a limited amount of funding to do the program?
    Mr. Lytle. Congresswoman, yes, we did. We had targeted in 
that group 250 was the maximum that we could accommodate. We 
have other parts of our plan that included lesser amounts, and 
some of the plans included collaboration with the Port of Los 
Angeles and combining Prop 1B funding from the State.
    Ms. Richardson. So wouldn't you say that probably some of 
the trucks that Captain Holmes in Los Angeles helped to bring 
forward, in terms of being newer trucks, are probably also 
being utilized in the Port of Long Beach?
    Mr. Lytle. Absolutely, yes. These trucks cross the borders.
    Ms. Richardson. That was very important to get through to 
the record.
    Mr. Lytle. Yes, definitely.
    Ms. Richardson. Thank you so much.
    Mr. DeFazio. [Presiding.] OK, I thank the two gentlemen for 
their testimony, and we will now move on to the second panel. 
If they would be seated, please.
    I thank you all for being here. Thank you for your 
patience. Clearly, the Members have significant interest and a 
lot of questions about this program and this subject.
    On this panel, since there are so many of you, we are going 
to attempt to move along a little more quickly. You all 
submitted written testimony. I have read, as I assume other 
panel members have read, your testimony, as has the staff, and 
we are going to ask you to summarize your testimony in two 
minutes. Or if you want to react to questions or concerns 
raised during the first panel, that would be great.
    If you want to, in anticipation of something that someone 
is going to come after you on this panel, say something, feel 
free. And if you come after someone and you wish to respond to 
that, use your two minutes for that. We are all capable of 
reading, and just reading testimony is not necessarily the most 
helpful way to move forward.
    So, with that, Jose Covarrubias would be first.
    Mr. Covarrubias.

  TESTIMONY OF JOSE M. COVARRUBIAS, INDEPENDENT TRUCK DRIVER; 
 ROBERT DIGGES, JR., VICE PRESIDENT & CHIEF COUNSEL, AMERICAN 
 TRUCKING ASSOCIATIONS, INC.; JAMES JACK, EXECUTIVE DIRECTOR, 
COALITION FOR RESPONSIBLE TRANSPORTATION; FREDERICK H. JOHRING, 
    PRESIDENT, GOLDEN STATE EXPRESS, INC. AND GOLDEN STATE 
   LOGISTICS, INC.; MELISSA C. LIN PERRELLA, STAFF ATTORNEY, 
 NATURAL RESOURCES DEFENSE COUNCIL; FRED POTTER, INTERNATIONAL 
   VICE PRESIDENT AND PORT DIVISION DIRECTOR, INTERNATIONAL 
   BROTHERHOOD OF TEAMSTERS; AND JOE RAJKOVACZ, DIRECTOR OF 
    REGULATORY AFFAIRS, OWNER-OPERATOR INDEPENDENT DRIVERS 
                          ASSOCIATION

    Mr. Covarrubias. Good morning, Mr. Chairman and Members of 
the Subcommittee. My name is Jose Covarrubias and I have been a 
port truck driver at the ports of L.A. and Long Beach for 20 
years. We are called independent contractors, but all we are is 
employees with expenses. Our bosses tell this lie so they can 
make us pay for the company trucks.
    When the L.A. Clean Truck Program started, we were hoping 
that finally we would be recognized as an employee. But after 
the American Trucking Associations attacked the program, we 
were forced to pay for the new clean trucks and their 
maintenance.
    I was working at a company called Southern Counties 
Express. When I first applied to work for this company, they 
told me they could give me work only if I sign a lease. I 
brought two pay stubs for you to see. After working over 50 
hours that week, I took only $96, because the company takes 
away my money to pay for the truck. In the second check, I 
actually owe them $200.
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    It is obvious that drivers like me cannot afford to pay for 
these trucks, and we shouldn't have to. Mr. Chairman, we are 
the workers. We are not small businesses, we are employees of 
the company. They own the truck. They control all of our work. 
They tell us where to go, when to go, and for how much. We 
cannot take these trucks to work for nobody else. Mr. Chairman, 
why are the laws set up so families like mine are forced by our 
bosses to pay for cleaning up the air?
    Port drivers are proud of the work we do, but we are 
suffering. I lost my house and my daughters have cut hours at 
college to work more and pitch in at home. On behalf of my 
fellow truck drivers and their families, I ask you to please 
fix the laws so that port truck companies can be finally held 
responsible for the trucks and the workers.
    Thank you, Mr. Chairman, and thank you, Members of the 
Subcommittee.
    Mr. DeFazio. Thank you for being exactly on time.
    Mr. Digges.
    Mr. Digges. Thank you, Mr. Chairman. My name is Bob Digges 
and I am representing American Trucking Associations. I want to 
make it clear that American Trucking Associations and the motor 
carrier industry has consistently supported the ports' Clean 
Truck Program and the Clean Air Action Plan. We were very 
careful in our litigation to tailor the challenge not to 
include any aspects of the program that were necessary for 
environmental purposes, and I want to comment that even in 
these tough economic times the trucking industry has stepped up 
and has invested $600 million of its own money of private 
investment in the Clean Truck Program. That is more than 10 
times that the port did.
    Second area I want to mention is, as you have heard today, 
the program has been a huge success in terms of air quality, 
two years, three years ahead of schedule. But it has also been 
a success, as the Director of the port testified in our case, 
that they have now been able to move forward with several 
programs that had been stalled because of environmental 
problems. So, again, it has accomplished what they set out to 
do.
    Finally, I want to just mention this whole concern about 
motor carrier owner-operator safety is really unfounded. When 
you look at the Federal safety regulations, they apply equally. 
They make a motor carrier equally accountable for the safe 
operation of owner-operators and owner-operator trucks as they 
do for employees and company-owned trucks; and the only way to 
ensure that any motor carrier is going to meet those 
requirements is through strict enforcement. And the ports 
happen to be in a situation or in a position where they can 
very closely monitor trucks; they have controlled gate access.
    So that is the reason American Trucking Associations has 
agreed with the Port of Long Beach. They have the exact Clean 
Air Program as the Port of Los Angeles, and they have coupled 
that with a very strong enforcement program which I think will 
make sure that all the trucks meet all environmental, safety, 
and security provisions.
    Thank you.
    Mr. DeFazio. Thank you.
    Next, Mr. Jack.
    Mr. Jack. Thank you Chairman DeFazio, Ranking Member 
Duncan, and Members of the Subcommittee. My name is James Jack, 
and I serve as the Executive Director of the Coalition for 
Responsible Transportation, which is the national coalition of 
importers, exporters, trucking companies, ocean carriers, and 
clean truck manufacturers dedicated to reducing port truck 
pollution.
    CRT member companies were among the earliest industry 
stakeholders to publicly support the clean air goals that were 
proposed by the ports through the phase-out of older, high-
polluting trucks. The challenges to meet those goals were 
immense, but CRT's members met those challenges by facilitating 
a partnership between industry and the ports, recognizing that 
industry can provide the ports with insight, experience, and 
expertise on how to reach their goals in the most efficient and 
cost-effective manner.
    Now that the ports' Clean Truck Programs have been 
implemented, two clear facts have emerged: number one, the 
success of the Clean Truck Programs in reducing air pollution 
has exceeded even the highest expectations and, number two, the 
private sector has responded in resounding fashion to deploy 
the clean trucks needed to meet the programs' air quality 
goals.
    CRT member companies have deployed 1,500 model year 2007 
clean trucks into service at the ports, and CRT member 
companies are responsible for the deployment of the majority of 
the trucks using alternative fuels that are currently in 
service. These trucks have been financed in an economically-
sustainable manner using the CRT financial model, which reduces 
the economic burden on the individual driver. These trucks have 
fueled a dramatic 80 percent reduction in pollution from harbor 
trucks two full years ahead of port deadlines.
    Since our formation in 2007, our members have worked to 
develop Clean Truck Programs that have been adopted in Seattle, 
Tacoma, Oakland, New York, and New Jersey, with additional 
ports on the horizon.
    I am grateful for the opportunity to speak with you today 
and welcome any questions. Thank you.
    Mr. DeFazio. Thank you.
    Mr. Johring.
    Mr. Johring. Thank you, Chairman DeFazio, Mr. Duncan, and 
Members of the Subcommittee. I am Fred Johring. It is an honor 
to speak to you today on behalf of the Clean Truck Coalition.
    An historic transformation is underway in the San Pedro Bay 
ports: the air is cleaner, the ports are more secure than ever 
before, and motor carriers, especially small family businesses 
like mine, are doing a lot of the heavy lifting. In fact, L.A. 
drayage companies have invested more than half a billion 
dollars in clean trucks, much of it backed by personal 
guarantees.
    We support the ports' Clean Truck Programs. We support the 
emission reduction goals and the phase-out of old trucks, and 
the clean truck fee. We also support the independent business 
owners who move the cargo of our customers. We create 
opportunities for full-time work that produces middle-class 
earnings, and we help them build their small businesses. We 
succeed when they succeed. Congress must avoid actions that 
hurt them.
    But the proposed amendment to re-regulate the harbor 
trucking industry will do just that, because L.A. wants the new 
power to ban independent operators from the port. Licensed 
motor carriers should have the choice to utilize independent 
business owners or employee drivers, just as we have for 30 
years. Likewise, our business partners should have the choice 
to remain independent. In fact, when asked, independent 
operators said they prefer to work for themselves.
    Mr. Chairman, I ask that a letter signed by 345 independent 
business owners be included in the record.
    Small business owners in the harbor understand the risks 
associated with operating our businesses. We also understand 
our responsibilities in modernizing our industry and doing our 
part to provide clean air for Southern Californians while 
continuing to make our economic contributions to the region. We 
can do this by focusing on the trucks, not the truckers.
    Again, thanks for allowing me to appear.
    Mr. DeFazio. Thank you. Since the gentleman asked to submit 
something for the record, we will be happy to enter that in the 
record. I have also been given another petition signed by 541 
people who claim the letter was coerced. So, therefore, we will 
put both in the record and someday we will figure it all out.
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    Mr. DeFazio. With that, we will turn to Ms. Perrella.
    Ms. Perrella. Thank you, Chairman DeFazio, Ranking Member 
Duncan, and Members of the Committee. I want to thank you for 
the opportunity to provide the environmentalists' perspective 
on the Clean Truck Programs. My name is Melissa Lin Perrella. I 
am an attorney with the Natural Resources Defense Council.
    I had prepared some remarks for my opening statement, but I 
would actually like to use my time to respond to some of the 
questions that have been posed this morning, which I think are 
very important questions, one of which was whether or not we 
need Federal legislation, given the early progress of the Clean 
Truck Programs, given the early environmental gains.
    From the environmentalists' perspective, the question for 
us is not whether some fraction of the Ports' Clean Truck 
Programs can result in some short-term gains. What we are 
really interested in is having the Port of L.A. being able to 
implement their full program so that long-term gains can be 
achieved.
    I think Captain Holmes stated it quite well, that if there 
is a major transformation within the port drayage industry, we 
may very well be in the same position we were in in 2008, where 
16,000 dirty trucks were serving the port. And that is the 
position we would like to try to avoid.
    The second question that I would like to address is whether 
or not the ports have clear authority to ban dirty trucks. 
Member Hirono paraphrased the breadth of preemption under the 
Federal Aviation Administration Authorization Act. I don't 
think it takes a rocket scientist to understand how one could 
make the argument that ports do not have the authority to ban 
dirty trucks.
    So I think that Federal legislation is needed not just to 
protect Los Angeles' program, but to protect Long Beach's 
program and the recent program adopted by the Port of New York 
and New Jersey. Federal legislation would really pave the way 
for local authorities to address the ill effects of port 
drayage.
    Thank you.
    Mr. DeFazio. Thank you, and thank you for responding to 
questions raised earlier.
    Mr. Potter.
    Mr. Potter. Good morning, Mr. Chairman.
    This hearing should answer two questions: Why have 
America's ports become the place where old trucks go to die? 
And who will pay to replace them?
    Deregulation and free trade were not intended to impoverish 
workers or pollute communities, but that is exactly what 
happened in port trucking. For thirty years companies have 
misclassified their drivers as independent contractors to force 
these workers, who make $10 to $11 an hour, to absorb the 
industry's capital costs. These backward economics led drivers 
to purchase the oldest, cheapest rigs that are more polluting 
and spew toxic emissions into the ports and to the surrounding 
communities.
    The environmental crisis further blocked critical jobs 
creating infrastructure projects, as was discussed earlier. So, 
in 2008, the L.A. Port gave trucking companies a quarter of a 
billion dollars in subsidies with the requirement that they own 
trucks and legally employ their drivers, ending the fiction 
that these workers are small business owners. It worked, and 
over 6,500 new EPA-compliant trucks went into service.
    However, the ATA injunction has allowed the industry to 
place the burden of buying these trucks on the workers. Drivers 
are now responsible for the leases of up to $2,000 a month, and 
the $8,500 in annual costs for maintaining the new engines. In 
fact, the ATA claim of $600 million is false. They are not 
making that payment; the drivers are making that payment 
through scam leases, like Jose described earlier in his 
testimony.
    The industry has created a sharecropping-on-wheels system 
where drivers choose to either feed their families or to 
properly maintain the trucks, endangering L.A.'s remarkable 
emissions reductions. The ATA has robbed other ports of the 
right to solve pollution problems as well. Oakland has delayed 
lifesaving environmental rules and drivers are going bankrupt 
paying for retrofits.
    In closing, the Federal Motor Carrier Act needs to be 
updated. Supports can implement 21st century environmental 
safety and congestion programs that create good clean jobs.
    Thank you for this opportunity to testify.
    Mr. DeFazio. Thank you.
    Finally, Mr. Joe Rajkovacz.
    Mr. Rajkovacz. Good afternoon. Thank you for inviting me to 
testify. By the way, some of the things I am going to say I 
would like to mention we have not collaborated, but I am going 
to use some of the same statements, words that he has used.
    Port drayage is a unique subset of trucking with its own 
unique challenges, and the CTPs obviously were initially 
instituted to clean the air at L.A. and Long Beach from the 
older trucks, obviously, driven by primarily owner-operators. 
Anybody who has ever driven the 710 Freeway in L.A. during the 
recent past would have easily noticed something didn't look 
right about the trucks streaming out of the ports; they really 
were junk.
    The key question is how did the drayage industry, how did 
the fleet become so dominated by older polluting trucks, and 
have the CTPs done anything to address those issues so that the 
industry won't need further subsidies in the future to keep, 
maintain, and replace the trucks that are currently being 
purchased.
    Our response is, not really. The use of owner-operators, 
who are legitimate small business people, are a key issue 
surrounding this whole debate. And I want to be clear: owner-
operators are a vibrant part of the marketplace and they do 
offer some of the safest and best transportation service in the 
industry.
    But for them to be a vibrant part of the marketplace, 
regulations, Federal regulations that are meant to protect them 
from unscrupulous and illegal practices by motor carriers need 
to be enforced; and I am referring to Part 376 of the Federal 
Motor Carrier Safety regulations. It is about the leases 
between motor carriers and owner-operators. These are widely 
ignored. We have an extensive library that just absolutely 
proves that many motor carriers, especially in port drayage, 
give it simple lip service; even minor compliance with Part 
376.
    The second key failure in the drayage market is the 
explosion in the sham lease purchase agreements. We do agree 
this is a rent-to-own scheme, and it is sharecropping or 
involuntary servitude, and it really makes the payday loan 
industry look ethical in comparison.
    Mr. DeFazio. Thank you. With that, we will proceed to 
questions.
    Mr. Covarrubias, do you know, among your associates and 
colleagues, anybody who ever successfully completed a lease-to-
own agreement?
    Mr. Covarrubias. No. I don't know nobody that has 
successfully paid off a truck.
    Mr. DeFazio. OK.
    Mr. Rajkovacz, do you, in your many years in the industry 
with independent truckers, owner-operators, know anybody who 
has successfully completed one of these agreements?
    Mr. Rajkovacz. Personally, I know absolutely nobody after 
29 years of driving, over two decades of which I owned my own 
equipment. And one other response I would make to that, you 
have to look no further than Arrow Truck Lines, Tulsa, Oklahoma 
at Christmastime. They had lease purchasing scams. They shut 
their doors. Every driver who was involved lost his truck to 
the lienholder, the bank.
    Mr. DeFazio. Mr. Potter?
    Mr. Potter. I know of none. And I would like to address one 
other thing. There was testimony earlier about parts of the 
L.A. program that were not challenged. I just want to note that 
the ban on trucks in New York-New Jersey ports is largely 
supported by grants, which are supported by recovery money; it 
doesn't create one job, and the fact that New Jersey Motor 
Truck Association is already threatening to file lawsuit 
against that ban.
    Mr. DeFazio. OK.
    So we have some difference of opinion here. So I would 
guess now I would turn to one of the other representatives, 
either ATA or--well, let's perhaps go to I think it was Mr. 
Jack, with the Coalition for Responsible Transportation, 
because you talk about the three-legged stool best practice 
financial model. What percent of these leases, in your 
experience, are successfully completed?
    Mr. Jack. In our experience, financial assistance that is 
offered to drivers comes in many forms depending upon the 
relationship------
    Mr. DeFazio. Right. But I just asked at the end point. 
Let's just get to the end point. How many people successfully 
comply with, get through these leases and take ownership of the 
truck, in your experience? What percent?
    Mr. Jack. In our experience, in Southern California, we 
have 1,500 trucks on the road that are all economically 
sustainable by the drivers that operate them.
    Mr. DeFazio. But you are saying--OK, you are saying present 
tense there are 1,500 trucks on the road and you believe they 
are sustainable, that these people are making a living wage.
    Mr. Jack. Correct.
    Mr. DeFazio. OK. But to this point in time you don't know 
of anyone who has successfully completed one of these 
agreements; they are too new? Haven't they been around for a 
while, even before clean trucks, maybe, or is this all a new 
thing?
    Mr. Jack. Well, with regard to the Coalition for 
Responsible Transportation's role in the debate, our 
organization formed in 2007, at the same time as the ports were 
developing their Clean Truck Programs. And I think it is worth 
noting that the economics of the Clean Truck Programs that we 
have supported dictate that shippers have a vested interest in 
the financial success of the individual driver.
    In a few months' time, moving cargo in Southern California 
via clean truck will no longer be optional, it will be 
mandatory; and if shippers don't ensure that individual drivers 
have the financial ability to sustain the cost of their clean 
truck, shippers won't be able to move their cargo------
    Mr. DeFazio. OK, I understand that, but you could also make 
the point if a motor carrier has purchased a vehicle and they 
are putting it into a lease purchase arrangement, that the 
shippers really don't care what happens to the driver; all they 
care is that that clean truck continues to operate.
    And the testimony we have is that, for any number of a 
myriad reasons, you lose title, you lose--apparently, you don't 
accrue equity as you go along. If at some point you go into 
default, you just lose everything, and they just put someone 
else in the driver's seat and they keep going. So I am not 
sure.
    So you are saying that you are seeing the container fee 
increase, which the shippers are having to pay. Is that being 
passed through, in the case of your 1,500 drivers--are they all 
getting that $35 per container?
    Mr. Jack. Our experience is that the additional fee, the 
incremental cost of moving cargo via clean truck through the 
CRT financial model is passed on to the driver; and that comes 
in a variety of formats. Again, it can be down payment 
assistance, monthly payment assistance, higher trucking rates. 
It all depends--it is worth noting for the Committee that CRT's 
membership utilizes both employee drivers, independent owner-
operators, and a combination of the two. So, Mr. Chairman, 
again, that is dependent upon the relationship that the LMC has 
with its individual driver.
    But I think to answer your question in the broader sense, 
there is a built-in incentive for each individual shipper to 
ensure the drivers have the financial support they need, 
because their failure to do so will result in the failure of 
their supply chain, and that is something that no shipper can 
afford.
    Mr. DeFazio. Well, I just don't quite understand that, 
because it seems like, with high unemployment, we have a lot of 
people lined up to take over the seat after someone else gets 
yanked out of the seat, but for the moment we will take that.
    So, Mr. Johring, how about in your experience, since 
obviously your organization has been around longer than his? 
Overall, what is the experience of these lease-to-own 
agreements among the members of the ATA, can you give us a 
number, percentage, how many people successfully complete?
    Mr. Johring. I can't speak for the ATA on that; I can speak 
for the Clean Truck Coalition and I can speak for my own 
company. The lease-to-own model is a relatively new invention 
that wasn't around more than a couple years ago; probably 
started right when the clean trucks------
    Mr. DeFazio. OK, maybe I am asking the wrong question. If 
it has only been around two years, this lease-to-own, and we 
have been provided one example, which doesn't seem to comply 
with Federal standards, and we have been told otherwise we are 
not allowed to see them because they are proprietary. We will 
perhaps be using our subpoena power in this case in order to 
understand these agreements better if we don't get cooperation.
    But let's look at it the other way. If they haven't been 
around long enough to know how many people have succeeded, how 
many people have failed? That is, how many people began during 
this two-year period with this relatively new program with the 
clean trucks, entered into a lease-to-own, and then, for one 
reason or another, were no longer eligible and the truck was 
passed on to someone else? Do you know what percentage failure 
in your experience?
    Mr. Johring. In my experience? Has to be very small. The 
failure rate is dependent more on the driver, maybe dependent 
on the economy. But a driver can't succeed if he doesn't work, 
and I think the example that we have at the table here is such 
a case, where he says one thing. My understanding, because he 
worked for a member of our Clean Truck Coalition, was that he 
never did work as an independent hard-working business man. So 
the question--the response I would like to say is if they walk 
away from it, I don't consider that a failure; that is a 
decision by the owner-operator.
    Mr. DeFazio. Well, if you had--Mr. Covarrubias, would you 
like to respond to that?
    Mr. Covarrubias. Yes. Your truck can be taken away any time 
they want. You get a family emergency, you have to leave for a 
week or two, they will take your truck. We have drivers here 
with that situation. So to complete a lease is going to be 
impossible.
    Mr. DeFazio. When you put up this Southern Counties 
Express, Inc. paperwork--it is not a pay stub and I don't know 
what to call it, but how many hours did you work that week?
    Mr. Covarrubias. You work about between 50 hours and 70 
hours a week.
    Mr. DeFazio. So do you think this pay stub, which you had 
put into the record, where it says ``I owe the company money'', 
that is a typical week and that week you worked at least how 
many hours?
    Mr. Covarrubias. Fifty to 70 hours a week.
    Mr. DeFazio. OK. And this wasn't an exceptional week where 
you just didn't come to work a few days or something else and 
didn't work?
    Mr. Covarrubias. No. We were working five days a week. See, 
after you complete 30 days in the company, they start giving 
you good work. The good loads are given to the new guys.
    Mr. DeFazio. But is this week unusual in terms of the low 
net? This document shows a net of $96; and then we have a 
different one which has a net of minus $200. So were these 
typical weeks?
    Mr. Covarrubias. Yes, it is a typical week. You can see it 
is $1,200 over there, so the typical one will be between $1,200 
and $1,500. But after they take out all the expenses, all the 
deductions, you have nothing left.
    Mr. DeFazio. But in the week where you owed them money, it 
only showed proceeds of $503; the other week shows proceeds of 
$1,226. Why would there be so much less? Does that mean you 
worked a lot fewer hours or------
    Mr. Covarrubias. No, the work is the same. You show up to 
work about 6:00 in the morning, 7:00 in the morning, and you 
wait and wait and wait until they finally give you something. 
They give you some work to do, then you go to the harbor and 
wait and wait and wait.
    Mr. DeFazio. OK.
    So, Mr. Jack or Mr. Johring, do you care to respond? 
Particularly Mr. Johring, I think you were saying some pretty 
harsh things about Mr. Covarrubias, that he wasn't working 
hard. It seems like 50 hours in a week, when he doesn't control 
his dispatch, where he is available for work, that is a pretty 
long work week, more than your standard work week. And taking 
home $96.12 doesn't seem exactly, Mr. Jack, to be part of a 
three-legged stool and a living wage. Could you help me with 
that?
    Mr. Johring. I don't know the details of that specific 
week, nor do I know the details of the documents that were 
provided, I believe, by Southern Counties through some of the 
members, but it was indicated to me that the average work week 
was 3.5 days and the number of hours was less than, on average, 
in the four months that he was at Southern Counties, was 
considerably less than 40 hours.
    Mr. DeFazio. OK. Well, clearly we have some pretty 
extraordinary disagreement here, and I think this is going to 
merit--I will consult with the full Committee Chairman, but we 
do have an Investigations and Oversight Subcommittee who are 
prepared to delve more into some of these questions. I think we 
need to find out whether this is an outlier, whether this is 
more typical, or whether or not these leases comply with 
Federal law, whether they are sham leases or not.
    With Mr. Rajkovacz, 29 years in the industry, granted, you 
are saying these are new things, but if I look at the numbers 
we were provided on the average incomes, those were people 
driving junkers that they owned. Now they are not driving 
junkers that they owned. I don't know if we have a new survey.
    Is there a new survey? Because when I add up the costs of 
the lease and the additional maintenance for a clean truck, it 
would seem to me that the take-home would drop to somewhere 
around $10,000 by my own back of the envelope calculations, 
unless there is a large increase in income; and I am not sure 
that we are experiencing that.
    Mr. Digges. Mr. Chairman, can I respond to that on behalf 
of ATA?
    Mr. DeFazio. Sure. Yes.
    Mr. Digges. We just had a trial of this matter, as you well 
know, and the only testimony in the trial was that, just like 
any other thing, the owner-operator's compensation is created 
by the market, market demand, and that these truckers and the 
owner-operators are business partners. The trucker isn't 
successful if the owner-operator isn't successful.
    So the testimony was that for the one company, their 
average gross compensation to the owner-operators they targeted 
$110,000, and they said that was representative because, if 
they didn't pay them that much, the owner-operators can lease 
with another company; and they wanted them to take home $45,000 
to $50,000.
    So, again, it is a productivity issue; it is how hard they 
work------
    Mr. DeFazio. So you would say that company is the rule, 
rather than the exception? There are always good actors and bad 
actors in every industry.
    Mr. Digges. But as you know, again, it is a free market 
and------
    Mr. DeFazio. I understand that, but there is also something 
in economics--which I studied rather extensively--called the 
prisoner's paradox, where you end up engaging in irrational 
behavior on both sides, even though it isn't benefitting 
anybody, because you are in a competitive market; and this 
market, the drayage market, has been described as I think 
someone said maybe neanderthalic. They went on and on about how 
much free entrance and competition exist, but driving to the 
point where it doesn't make sense.
    I understand there may be some good operators, they get 
good drivers and they want to keep doing it, but there could be 
other people--in fact, we have testimony about one gentleman 
who apparently his truck was also leased to someone else, and I 
wonder how that works out in the end. If they both complete the 
lease terms or if they complete them on different days, who 
gets the truck?
    Mr. Digges. Well, what I understand--and, again, an owner-
operator is running his own business, so if an owner-operator 
wants to hire a co-driver and to expand his hours and his 
income, they can certainly do that.
    And in response to a question you made earlier, in the 
deposition testimony in this case, one of the motor carriers 
did say we lost customers. And they asked why you lost 
customers, and it was because I demanded a higher rate because 
I wanted to pass that higher rate along to my owner-operators--
----
    Mr. DeFazio. That is the prisoner's paradox. That is a 
problem.
    Mr. Digges. So, again, it is a tough market out there. The 
motor carriers------
    Mr. DeFazio. Right. But that is what L.A. was trying to 
rationalize, the market, in what they did. And I understand 
that, but it just--you know, we are looking for sustainability, 
but we are also looking for things that comply with law both in 
terms of the lease agreements. We did provide some of the 
testimony to the Department of Labor, and their cursory 
analysis is that these people are not independent contractors; 
however, they are going to investigate further. Because when 
you don't own your equipment, you don't control your dispatch; 
they didn't meet any of the test criteria for independent 
contractors. So I think we might have a problem here and we 
have to delve into it a bit more.
    With that, I would turn--well, there is no one on the 
Republican side.
    Mr. Potter. Mr. Chairman?
    Mr. DeFazio. OK, go ahead, Mr. Potter. Then I have to turn 
to another Member of the Committee.
    Mr. Potter. Thank you. You know, you brought out some great 
points regarding Jose's company, Southern Counties. I should 
point out that they are also a member of the Coalition for 
Responsible Transportation, and the earnings that these drivers 
are receiving after paying expenses certainly doesn't amount 
for a sustainable program.
    I should also note that Southern Counties received a large 
amount of the subsidies that were spoken about earlier. In 
fact, I understand they got 71 LNG trucks basically for free. 
The fact is that wasn't passed on. We can't see where that was 
passed on to drivers like Jose, who work a full week and end up 
with $96.
    We have also had an opportunity, meeting with the drivers, 
to review many of these so-called leases. Many of these leases 
contain provisions in there that make it very clear that they 
are leasing the truck and that they are not guaranteed and it 
is up to the leaser to determine whether or not they will even 
ever buy the truck. It doesn't permit them from handing it to 
another driver to drive and taking money for them to drive in 
it.
    We look at these things. These aren't lease agreements, 
these are people that are saying, as a condition of employment, 
you must rent the truck from us; and then they fully control 
the movement of that truck, the movement of the driver. In 
fact, many of the leases contain work rules that would apply to 
an employee, not to an independent contractor. It is a total 
sham.
    Mr. DeFazio. Thank you.
    With that, Mr. Lipinski, you haven't had a chance to ask 
questions yet.
    Mr. Lipinski. Thank you, Mr. Chairman. Thank you for 
holding this hearing today.
    And I want to thank all the witnesses for your testimony.
    I am the only Member of the Transportation and 
Infrastructure Committee from the Chicagoland area, and I know 
firsthand the movement of freight and all the issues that are 
involved. I know it is also the lifeblood of our economy.
    I know in Chicago and Southern California we all face a lot 
of challenges with the movement of freight--traffic on the 
roads, on the rails, pollution issues--and for many people this 
has simply become a way of life. But because of these problems, 
both capacity and quality of life issues are only going to 
continue to grow worse unless we take action right now. So I 
think it is very important that we do have this work on the 
Clean Truck Programs to address some of the environmental 
issues that we are facing and certainly face a lot of my 
constituents in the Chicago area also.
    The first thing, I want to get back, if I have more time, 
to the environmental issue, but the first thing I wanted to do 
is ask Mr. Potter--I know, reading through the testimony, there 
is talk about the concept of driver productivity, and we have 
heard that supposedly independent drivers are much more 
productive than drivers who are employees. Now, in your view, 
Mr. Potter, what does productivity really mean and is this 
really true about independent drivers as opposed to drivers who 
are employees?
    Mr. Potter. First of all, we don't believe that to be true. 
We haven't seen one credible study that proves that. As was 
testified earlier, many of these companies operate with both 
company and independent. If company drivers were not 
productive, why would they in fact use them? Why do companies 
like UPS strictly use employee-based companies, who are 
considered one of the most efficient companies in the world 
that moves packages, that moves freight?
    So we think this is just a ruse to come up here and say 
that these drivers are not productive. And I think if you look 
at the fact the difference between an employee, you are going 
to pay them for their time. If they are at that port for 12 
hours, you are going to pay them 12 hours, because that is the 
law. But labeling them as independent contractors, they are 
only going to pay them for the trip. So if they pay you for a 
trip and you get paid the equivalent of four hours pay and it 
takes you 12 hours, on paper you look more productive because 
they have only paid you four hours.
    So show us the study, show us where it is not true, and 
show us where the onus is on the management in order to provide 
a productive and efficient workforce whether it is company or 
whether it is owner-operator. These aren't owner-operators, 
these are employees. So if they are saying they are more 
productive, they are saying employees are more productive.
    Mr. Digges. If I could respond. I just finished the trial, 
and all four carrier witnesses had the same concerns about 
productivity. They had done their independent studies. Anywhere 
from 17 percent to 30 percent less productivity, and it is 
exactly because of what Mr. Potter just described. If you are 
an employee and you are there for 12 hours, you get paid for 12 
hours no matter how much you accomplish. If you are an owner-
operator, what you need to do is make the turns and actually 
accomplish freight movement, so that is why the owner-operators 
are more productive.
    Mr. Lipinski. Would you like to respond, Mr. Rajkovacz?
    Mr. Rajkovacz. Yes. You know, this idea of productivity, 
you talk 12 hours, paid for four hours. Earlier it was talked 
about how the trucks cue up in lines at the ports in order to 
do their in-gating, out-gating. Why is it the driver--whether 
it is the driver or he is an owner-operator, take the status 
out of it. Why is it the driver's responsibility to donate any 
of his time for someone's lack of inefficiency?
    That is what we are talking about. That is what I just 
heard down here, is that, hey, we are real concerned about the 
productivity. Productivity is measured, so much of it the 
driver himself doesn't control, but as an owner-operator, yes, 
I would end up down there donating my time because I couldn't 
do anything about what the supply chain was doing to me and 
forcing me to give up my labor for free.
    Mr. Lipinski. And it always depends on what exactly you are 
counting as time and whose time that it is, so I appreciate 
that and I see my------
    Mr. Potter. If I may.
    Mr. Lipinski. Mr. Potter.
    Mr. Potter. One of the things, too, if they are looking at 
productivity and measuring cost, the independent driver they 
have no responsibility for. They save 30 percent, and that is 
the cost of Social Security, FICA, workmen's comp, and all the 
other payroll taxes that you pay to a legitimate employee. So 
what is this measurement? What is this testimony?
    I find it hard to believe that a company driver is going to 
go up there and hold the line. It just doesn't make sense and 
there is no credible study to go with that. But if you compare 
the money, if you pay people substantially less on paper, they 
are going to appear to be productive and more productive.
    Mr. Lipinski. Thank you.
    I yield back.
    Mr. DeFazio. I thank the gentleman for his questions.
    And I have misplaced the list, but Ms. Richardson was next. 
Yes, there it is.
    Ms. Richardson. Thank you, Mr. Chairman.
    Witnesses, I am going to ask if you can answer real 
quickly, because I now have four minutes and 56 seconds and I 
have a lot to get through.
    Mr. Digges------
    Mr. DeFazio. We can do a second round, so do it in a 
measured way so you get good responses.
    Ms. Richardson. Mr. Digges, what is the average lease for a 
truck driver?
    Mr. Digges. The length of the lease?
    Ms. Richardson. No, what is their average lease cost, to 
your knowledge?
    Mr. Digges. The cost? The testimony was that they grossed 
about $105,000 to $110,000, and they netted about $45,000 to 
$50,000, so I guess their costs are $55,000.
    Ms. Richardson. No, my question was, of the trucks that you 
are aware of that are being financed, what is your 
understanding that is the current lease cost for the truck that 
a driver pays.
    Mr. Digges. I don't have any knowledge of that.
    Ms. Richardson. OK.
    Mr. Johring, what is the average cost of the lease for a 
truck driver with your company?
    Mr. Johring. The subsidized--for the subsidized trucks.
    Ms. Richardson. Subsidized and non-subsidized, how much is 
it?
    Mr. Johring. The subsidized trucks are running the drivers 
$270 and $303 per week for my company. The unsubsidized trucks, 
depending on the cost of that truck, is about $400 per week.
    Ms. Richardson. And you don't think it is more than $400?
    Mr. Johring. No, it is not.
    Ms. Richardson. OK. Does this include maintenance?
    Mr. Johring. No, it does not include maintenance.
    Ms. Richardson. What would you say is the average cost of 
maintenance for a truck?
    Mr. Johring. The new clean trucks have very little 
maintenance. Annual cost would involve tires, probably one set 
of tires, because they are going to run between 30,000 and 
50,000 miles per year, and that is going to cost somewhere 
under $3,000 for tires when that occurs. Your engine cost, 
Detroit Diesel, I believe, put out a study saying their cost 
for maintenance of their new 2007-compliant engine is around 
$500 per year.
    Ms. Richardson. OK, are you prepared to testify before this 
Committee that the truck drivers that you have are not paying--
they are paying anywhere between $300 and $400 for a lease, and 
are you prepared to say that all your drivers are making at 
least minimum wage, unlike the testimony of what we heard 
today?
    Mr. Johring. I have not analyzed the minimum wage issue, 
but let me speak to the lease for just a quick second. As I 
have offered, prior to today, I have offered information saying 
that anybody that brings us a clean truck--I don't care whether 
we subsidize it or don't subsidize it--we will offer them a 
minimum of 12 clean truckloads a week, which will pay $30 per 
clean truckload, if they are available and if they don't turn 
it down.
    Again, they are independent businessmen, so if they choose 
not to be available on a particular day when we have that load 
available--and I am not going to stack them up all on one day, 
making it impossible, but my guys are turning far more than the 
minimum of 12 right now, and that is a $360 per week--I don't 
want to call it a guarantee, but it is; I am offering them $360 
to pay for--that will go toward that lease, which, as you can 
tell, more than pays for the subsidized lease.
    Ms. Richardson. Well, $1,240, not counting taxes and all 
the other stuff that comes out, $1,240 per month, and then if 
you subtract out $400 for the truck, you are talking about 
$800, which is clearly tight and very difficult for someone to 
live on.
    Mr. Johring. Excuse me. I don't understand the $1,240.
    Ms. Richardson. I was doing the math. You said people make 
approximately $360.
    Mr. Johring. Oh, that is just for the clean truck premium 
that we pay the owner-operator. That rewards him for bringing 
us a clean truck. On top of that he gets what he is paid for 
the loads.
    Ms. Richardson. OK. So would you say, on average, how much 
do your truckers make?
    Mr. Johring. The drivers or the owner-operators that are 
running------
    Ms. Richardson. Net.
    Mr. Johring.--bringing clean trucks? Minimum of $50,000 a 
year. Minimum. I am writing checks that, when I evaluate the 
cost of the lease, take the cost of the lease out, the cost of 
fuel, the cost of insurance, we are writing $1,500 checks a 
week.
    Ms. Richardson. OK.
    Mr. Potter, what do you think? What are you seeing in terms 
of leases and what truckers are making?
    Mr. Potter. We see that the average costs of lease are 
between $1,300 to $1,600 per month. And as I testified earlier, 
maintenance cost is about $8,500. The new equipment has--it 
can't be fixed by a backyard mechanic; they have to be taken to 
a shop, filters have to be cleaned or replaced on a pretty 
regular basis, valves have to be adjusted. All these are costs 
that get done at high-end shops that have the equipment in 
order to do that.
    Our studies have shown that--and there have been recent 
articles in the Oakland Times regarding the retrofit program 
and the cost to the drivers unable to pay for the maintenance. 
The maintenance on these new vehicles is substantially more. We 
believe that the average cost for maintenance is $3,500 more 
per year than one of the old trucks they drove.
    Ms. Richardson. OK.
    Mr. Chairman, I have been here the whole time, and 
unfortunately I am late, as we all are, for multiple things. 
Let me just say for the record, being a Member who is actually 
in this area, I would concur with you that I think one of the 
biggest problems--the good thing is both programs have worked 
from an environmental perspective. We have been able to get 
cleaner trucks on the road.
    And I can tell you issues like parking and inspection and 
training and all that are big things, because, in my community, 
if a trucker is not properly trained, we have a jackknife on 
the highway and someone is getting killed.
    So some of these things I think we have improved 
dramatically, but I think, to me, the crux of the issue is, 
with these whole trucks, if we are going to talk about people, 
as Mr. Lytle had testified, if we are going to say that 
truckers are only paying $300 a month for their truck, we have 
to verify one way or the other what are people really paying, 
because I would tell you if we are subsidizing and we are 
subsidizing and people are not even making minimum wage, that 
puts us in a jeopardized position.
    But I want to thank you for having this hearing. Being a 
part of watching this unfold for the last couple years has been 
quite interesting. And I would say that, as I mentioned and I 
think you were out at that point, I have brought forward 
legislation, I would like to work with you and this Committee, 
that I think, above all, we need to establish something 
nationwide that will protect our environment, enable companies 
to make money, and ensure that truckers or the people who are 
actually driving the trucks are not at a disadvantage. So I 
look forward to working with you.
    Mr. DeFazio. I thank the gentlelady. I do believe you 
misspoke when you said $300 a month. I believe what Mr. Johring 
said was $270 to $303 per week, not per month. You said------
    Ms. Richardson. No, that is correct, and he clarified it 
was actually------
    Mr. DeFazio. No, just in your summary statement I thought--
maybe I misheard.
    With that, we turn now to Mr. Nadler.
    Mr. Miller. How about our side?
    Mr. DeFazio. Oh, sorry. You came back.
    Mr. Miller. Oh, we are Republicans, we are left out now.
    Mr. DeFazio. Well------
    Mr. Miller. Thank you, Mr. Chairman.
    Mr. DeFazio. Mr. Miller.
    Mr. Miller. Southern Counties Express has given the four 
and a half months of time cards of Mr. Covarrubias. I would 
like to submit that for the record.
    Mr. DeFazio. No objection.
    Mr. Miller. Thank you.
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    Mr. Miller. I really enjoyed Ms. Richardson's comments and 
I wholly support them. My son has a commercial license; he 
drives for an environmental company with toxic materials, so it 
is very dangerous type of work and I know they are held to a 
very strict standards. And I know our drivers in this Country 
are put through very strict processes before they are licensed 
and they are held accountable. If they violate the law, if they 
get citations and such, it has a major impact on the ability to 
do their jobs.
    Mr. James Jack, the Port of Long Beach is the busiest 
container port in the world, and I believe 90 percent of the 
cargo activity in the Port of Los Angeles is done by 
independent owners and 10 percent is done by business 
employees. How would you force the disruption of this model and 
affect shippers when the local and national economy is trying 
to get back on its feet? How do we force a disruption on a 
reasonable basis?
    Mr. Jack. Thank you, sir, for your question. You know, we 
believe that the most important thing policymakers can do is to 
provide the flexibility for shippers and their service 
providers to deploy clean equipment in the manner that works 
best for their individual business models. CRT's membership 
utilizes both employee drivers and independents, depending on 
their needs. We strongly believe that the most important 
objective is to reduce port diesel pollution by getting clean 
trucks on the road.
    Mr. Miller. I agree with that.
    Mr. Jack. And, based on our experience in Southern 
California, sir, both employees and independents have 
illustrated that they can make the switch to newer, cleaner 
trucks as long as the individual driver has the financial 
support from the cargo owner and trucking company, which we are 
committed to.
    Mr. Miller. And I think if we have bad drivers, regardless 
who they are, we need to get them off the road, if they are 
unsafe. Don't you believe that if we start impacting what ports 
can be serviced by certain companies, we are going to move 
those goods to other ports?
    Mr. Jack. Sir, that is a very important question. Our 
membership is absolutely committed to implementing sustainable 
Clean Truck Programs at ports across this Country, with full 
industry support, in a way that preserves the competitive 
position of our Nation's ports in the global marketplace. We 
believe that the programs that we have developed in many ports 
already, and the programs we hope to develop in additional 
ports, will ensure that cargo diversion does not take place.
    That said, cargo has often been compared to water in that 
it flows through the path of least resistance. If costs to move 
cargo see dramatic increases, the decision of how to move cargo 
becomes an economic one for any company that is importing goods 
into this Country. Fundamentally speaking, sir, in answer to 
your question, if cargo becomes prohibitively expensive to move 
through a given port, it increases the likelihood that that 
cargo will find another port to move through.
    Mr. Miller. Well, I really want to applaud the employee 
driver businesses out there for the work you have done with 
clean technologies and you have cleaned our ports out; and the 
owner-operators I think have done a great job too. I think it 
has been a tremendous burden on both sides. Both of you had to 
buy new equipment. You have made tremendous investments and you 
are trying to recoup the investments you have made.
    Mr. Johring, why do some business and owner-operators 
choose the same model, where you might have the same in one 
company?
    Mr. Johring. Why do some businesses------
    Mr. Miller. Choose to have owner-operators and basically 
employees that work for them.
    Mr. Johring. They may have a different model; they may have 
different types of loads that they feel they can be more 
effective with------
    Mr. Miller. Is that flexibility important, do you believe?
    Mr. Johring. I think so. For example, I am not a hazmat 
carrier, but if I was, I would consider changing my model, 
perhaps, to handle the hazmat. It would be a different business 
profile.
    Mr. Miller. That is what my son hauls. My son hauls that.
    Mr. Johring. Right.
    Mr. Miller. Does that flexibility allow you basically--it 
is a touch economy out there--to stay in business dealing with 
the port activity that has dropped due to the economy? Is that 
flexibility in the makeup of your company, has it helped you in 
any way during this tough economy to have employees plus 
contractors?
    Mr. Johring. It has been critical that I had the option. 
Without the option, I am not sure that I would survive.
    Mr. Miller. So it would have been that much more difficult 
on you.
    Ms. Perrella, I guess it is?
    Ms. Perrella. Right here.
    Mr. Miller. The Ports of L.A. and Long Beach both tout the 
success of their Clean Truck Programs. I think they have done a 
really good job with achievements far beyond their goal. Could 
these successes, were they achieved under existing Federal law?
    Ms. Perrella. As I stated earlier--I think you may have 
actually been out of the room--I think a lot of the early 
successes have been attributed to the truck ban. I think the--
----
    Mr. Miller. But that is under current law.
    Ms. Perrella. I think it is questionable whether the truck 
ban is legal under current law. It just hasn't been challenged 
in court. I think the breadth of preemption under FAAAA is so 
broad that one could very easily argue that ports do not have 
the authority to ban dirty trucks.
    Mr. Miller. Well, I think you are probably correct in that, 
but I am saying the current situation where the ports are 
accepting both employee drivers and independents, this success 
they achieved has been based on that current requirement, where 
both sides have been participating.
    Ms. Perrella. That is correct, there has been some early 
successes. I think our concern is whether or not those 
successes will be sustained for the long-run.
    Mr. Miller. And virtually this requirement under clean air 
really cleaned up the act of both sides. Both sides have 
decided they are going to get clean trucks, they are going to 
create a better environment for all of us in the future. Both 
are doing that at this point in time.
    Ms. Perrella. At this point in time, I think there has been 
early success, yes. But again I think there is concern that 
maybe a decade from now we may not be seeing that same level of 
success.
    Mr. Miller. Well, again I want to applaud the companies 
with employee drivers. I think you have done a good job. And 
the contractor companies, I think you have done an equally good 
job. You have all invested a lot of money, you have applied 
your talents to meeting the current standards we have in 
environmental law, and I think you have done a great job, 
especially in the L.A. basin.
    We have had a tremendous problem in the past especially 
with truck accidents. With the amount of cargo and the trucks 
we put on the road in the L.A. basin to ship goods, it is a 
very difficult job. You are trying to do your job, you are 
trying to do it in a good way, and you are competing with 
commuters out there who want to cut in front of trucks when you 
are trying to do your job, not realizing you can't see every 
area around you, and I just want to applaud everybody who is 
here today and thank you for the good work you have done in 
our------
    Mr. Covarrubias. Mr. Miller, can I have a remark about the 
clean trucks?
    Mr. Miller. Oh, sure.
    Mr. Covarrubias. Both plans are working right now, but only 
the L.A. program is the one that is going to ensure that it is 
going to be clean because a year from now we are not going to 
have the resources to get the maintenance for these trucks. I 
mean, there is a study that tells us the maintenance for these 
trucks is around $3,000 and $8,000 a year.
    Mr. Miller. Well, these trucks------
    Mr. Covarrubias. With these checks, we are not going to be 
able to do it.
    Mr. Miller. I reclaim my time, sir. The new trucks out 
there are designed in a way where, if they are not maintained, 
they shut down. They virtually shut off. So if they don't meet 
the standards that they are supposed to meet, they quit 
running. You are driving down the road and you are no longer 
operating.
    And I think that that technology is great and I think that 
they are going to have to be inspected and tested, and if they 
meet the standards they are going to be allowed to be operable 
and do their job. If they don't meet the standards, they are 
going to be pulled off the road, and I think that is 
appropriate. But I think that applies to both groups, employee 
drivers and contract drivers. If their equipment does not meet 
the standards, they shouldn't be operating on the roads, and I 
applaud that.
    I yield back. Thank you, sir.
    Mr. Digges. Congressman, if I could make a response. I 
don't want to leave unchecked the idea that the environmental 
aspects of this program would be challengeable under the 
Federal Aviation Act and under the preemption statute. 
Certainly, ATA did not choose to challenge them and, as you 
know, anything can be sued, but the State of California, 
especially has very broad latitude in its environmental 
programs under the Clean Air Act, and as someone in the earlier 
panel noted, these programs are now being folded into a 
statewide program. So, again, I think that something that is 
enacted under Federal law under the Clean Air Act is going to 
be very difficult to challenge under another Federal provision.
    Mr. Miller. May I respond for one second?
    Another problem we have in California, you are probably 
aware, the heavy equipment operators. When the economy got bad 
in California, they pretty much shut down around 2007, and when 
they come back on, if they come back into business next year or 
the year after, most of the iron they have in these yards can't 
be used in California; they are virtually giving it away to 
India and other countries for just the value of the iron 
itself.
    And I don't know how we get our contractors in California 
working again, because they are all going to have to come out 
with a new standard equipment, when they have been losing money 
for years. So all the businesses that I see in California have 
really suffered through this downturn. Some of our regulations 
have made it very difficult for them to survive in the future 
and very difficult for them to come back into business, and I 
wish them all the best, as well as our truckers and our cat 
scanners out there that drive heavy equipment; they have a very 
difficult time ahead of them.
    I yield back. Thank you.
    Unidentified Witness. Mr. Chairman, can I address a couple 
of these issues?
    Mr. DeFazio. I will give you a chance to respond later, but 
Mr. Nadler has been waiting patiently. He is going to have to 
Chair another hearing, so I am going to let him ask his 
questions, then we will give you an opportunity.
    Mr. Nadler. Thank you very much, Mr. Chairman.
    Let me ask, first, Ms. Perrella, to comment again on what 
Mr. Digges just said, do you believe that under current Federal 
law a challenge could withstand a good chance of being 
successful in Federal court against the truck ban?
    Ms. Perrella. Well, I would hope that it wouldn't be, but I 
think------
    Mr. Nadler. You would hope so, but do you think there is a 
real risk?
    Ms. Perrella. I think so. And to respond to Mr. Digges' 
comment, the California Trucking Association actually filed a 
petition with the California Air Resources Board asking it to 
repeal classic air pollution control regulations it had adopted 
for transportation refrigeration units. Those are basically 
units that are attached to cargo containers to help keep 
perishable goods cool.
    And the argument was that CARB's regulations, classic air 
pollution control regulations, adopted under the Clean Air Act 
were preempted under the FAAAA. So, fortunately, CARB denied 
the petition, but the trucking industry has made this argument 
against classic air pollution control regulations adopted by 
CARB.
    As Mr. Potter indicated, a trucking association in New 
Jersey has asserted that the Port of New York-New Jersey's 
Clean Truck Program may be illegal under the FAAAA. So these 
challenges are being proposed by a number of different trucking 
associations.
    Mr. Nadler. Thank you.
    I would like to ask Mr. Digges a series of questions, and I 
hope I will get brief answers, because it is a series. And they 
are all based on the written testimony of Mr. Potter, which I 
don't know that he went into orally.
    He says that many drivers are getting--many trucking 
companies now put drivers in company-owned trucks and pay them 
a flat percentage of the rate they receive from the shipper. 
With no ownership, lease, or any other legal interest in the 
truck, these drivers would normally be considered employed, 
showing up every day at the same company for the same jobs. But 
the companies brazenly force them to sign independent contract 
agreements and issue 1099s. Are you familiar with this 
practice?
    Mr. Digges. I am not, and------
    Mr. Nadler. You are not. If it exists, would you agree it 
is abhorrent?
    Mr. Digges. I agree. We------
    Mr. Nadler. Do you agree, yes or no?
    Mr. Digges. Yes. American Trucking Associations does not--
----
    Mr. Nadler. Excuse me, you have answered my question. I 
have a series of questions. You agree that it is abhorrent. It 
doesn't exist. If it did, it is abhorrent. Thank you.
    Secondly, the majority of leases, we are told, explicitly 
prohibit drivers from using the leased truck to haul for more 
than one company. Is that true?
    Mr. Digges. That is true.
    Mr. Nadler. If that is true, isn't this serfdom? You are an 
independent operator, but you can only work for one company? 
How are you in any sense an independent operator?
    Mr. Digges. This is an important point because, under the 
Federal leasing rules, a motor carrier has to have exclusive 
use and possession and control of a truck during the period of 
the lease. That is designed to protect the public, to protect 
everyone------
    Mr. Nadler. So under the law--I just want to get that 
straight. Under the law, the company has to have exclusive 
control of the truck during the period of the lease?
    Mr. Digges. That is correct.
    Mr. Nadler. So if I sign a lease for five years, I can only 
work for that company for five years?
    Mr. Digges. You can break the lease and then you can go 
work for another company.
    Mr. Nadler. Well, then how, under any stretch of the 
English language or of Federal law, could you consider that an 
independent operator?
    Mr. Digges. There has been dozens and dozens of court cases 
on this issue, and the--anything that a company does because of 
government obligation does not count as control.
    Mr. DeFazio. May I just interject for a second?
    Mr. Nadler. Please.
    Mr. DeFazio. The company has to have control, but that 
control could say you can provide services to other companies.
    Mr. Digges. The companies can do what is called trip 
leasing, and the motor carrier itself can trip lease to another 
motor carrier, and that is frequently done. But for the Federal 
regulations to protect the public, here, the Port of Los 
Angeles is concerned about accountability------
    Mr. Nadler. Excuse me. Fine, for Federal purposes, for 
various reasons of accountability and safety we have such an 
arrangement. But if you have such an arrangement that you, Joe 
Blow, can only contract with this company under a certain 
period of time, can only work for this company, you don't 
control; then obviously you can only work when they give you 
work to do; you have to wait for their loads. You can't decide 
I am going to go pick up somebody else's load.
    Mr. Digges. As I said, you can break the lease------
    Mr. Nadler. You can break the lease, but as long as you are 
under the lease--and I presume if most companies do this, if 
you break the lease, somebody else may not want to sign a lease 
with you if you get a reputation for breaking leases. So if you 
are going to be under a lease, then you don't have control over 
your work, you have to show up when you are asked to, you have 
to work when you are asked to. Why shouldn't you get W-2s? How 
are you not an employee?
    Mr. Digges. You have control over your work. You don't have 
to show up. It is just a simple question of whether or not you 
can work for another party. And, again, through the trip lease 
you can, but the bottom line is you have driven down the 
highways. You know that historically there is a driver 
shortage. You have seen the same signs that say owner-operators 
wanted. Again, it is a free market out there; that is how it 
works.
    Mr. Nadler. By that logic, we shouldn't have minimum wage 
laws.
    Mr. Potter.
    Mr. Potter. First of all, it is not a free market. Many of 
the leases contain requirements that you have to pull a 
specific number of trips. And under the arrangement they are 
talking about, they are renting the truck to the driver. If he 
wants to break the lease, he loses the truck; he has no truck 
in which to go to work for somebody else. He is captive. This 
is an inducement------
    Mr. Nadler. Excuse me a second.
    Mr. Digges, is that true? If he breaks the lease, he loses 
the truck?
    Mr. Digges. No, not to my knowledge it is not.
    Mr. Nadler. Mr. Potter?
    Mr. Covarrubias. Mr. Nadler, can I add something? I have 
been in this business for 20 years, and they control where to 
go, when, how much they are going to pay you, what kind of load 
you are going to take, what time you are going to start, and 
when you are going to finish. And if you break the lease, yes, 
they take the truck.
    Mr. Nadler. If you break the lease, they take the truck.
    Mr. Potter. Yes.
    Mr. Nadler. And Mr. Digges is unaware of that. Mr. 
Covarrubias is aware of that and Mr. Potter, you are aware of 
that.
    Mr. Potter. Yes.
    Mr. Covarrubias. I think Mr. Digges is aware of that too.
    Mr. Digges. Could I further answer that?
    Mr. Nadler. Please.
    Mr. Digges. It is my understanding under these agreements, 
and I have looked at them from the perspective of the 
independent contractor classification, especially from an IRS 
perspective, and these leases have to be the same as an arm's 
length lease that you would get from General Motors Leasing or 
Volvo Truck Leasing. So, again, I am not familiar with the 
specific provisions, but we would counsel our carriers that the 
lease should be------
    Mr. Nadler. But if it is true, sir, that if you break the 
lease you lose the truck, testimony we just heard, that all of 
this becomes totally coercive, does it not?
    Mr. Digges. Not necessarily.
    Mr. Nadler. Oh?
    Mr. Digges. Because, if you break the lease with one 
company and go to another, as long as you make the truck 
payments------
    Mr. Nadler. But you have lost the truck.
    Mr. Digges.--as long as you make the truck payments------
    Mr. Nadler. Excuse me. You have lost the truck. I just said 
if it is true, if it is true, as we have just heard from Mr. 
Potter and Mr. Covarrubias, if it is true that if you break the 
lease, you lose the truck, then, under that circumstance, this 
would be totally coercive, would it not be?
    Mr. Digges. Under the strict terms of your question.
    Mr. Nadler. Yes. Well, it is not a strict term, it is 
either true or it is not true. And we may have to find that 
out.
    But we have heard testimony from the driver, from Mr. 
Potter, that if you lose--that under many of these agreements, 
that if you break the lease, you lose the truck, which means 
you can't break the lease; which means that you have to show up 
when you are asked to show up and carry what loads and under 
whatever terms; which means, under the normal English language, 
maybe not under some provision of Federal law which ought to be 
changed, you are not an independent operator.
    Mr. Potter, would you like to comment?
    Mr. Potter. Well, you are exactly right, and there are 
examples of leases that provide for this. And this------
    Mr. Nadler. You say there are examples of leases that 
provide for that. Would you say that most such leases------
    Mr. Potter. Absolutely.
    Mr. Nadler. Most leases provide that, if you break the 
lease, you lose the truck?
    Mr. Potter. That is correct.
    Mr. Nadler. Mr. Rajkovacz?
    Mr. Rajkovacz. What I am hearing here is one of the things 
that I think really needs to be understood. The word lease is 
being used interchangeably here. There is the federally 
required operating lease under Part 376 of the FMCSRs. That is 
a totally different animal than the lease purchase agreement, 
and just from a real world standpoint to somebody who operated 
under a lease to motor carrier------
    Mr. Nadler. Wait a minute, wait a minute. It is a totally 
different thing, so you have two leases in effect?
    Mr. Rajkovacz. If we are talking about an owner-operator 
who is lease purchasing a truck, there are two leases. There 
better be two leases.
    Mr. Nadler. OK. And if you want to haul for somebody else, 
you have to break the lease. Which lease?
    Mr. Rajkovacz. The way that I have read this, you are 
breaking the lease on the lease purchase. On the operating 
lease, I was always able, if my carrier approved it, to go haul 
for someone else's freight.
    Mr. Nadler. If your carrier approved it.
    Mr. Rajkovacz. That is correct.
    Mr. Nadler. But your carrier had to approve it.
    Mr. Rajkovacz. But what they approve is that you are not 
going to get dinged. They don't want you hauling freight for 
somebody who is not going to pay the bill. It is simply--they 
simply just do some due diligence.
    Mr. Nadler. Wait a minute. Why is it their business whether 
you get paid?
    Mr. Rajkovacz. Because I am leased to them and I depend on 
them to pay me for what I am doing.
    Mr. Nadler. But coming back, they still control whether you 
can do that or not.
    Mr. Rajkovacz. They can say yes; they can say no. If they 
say no, I sit.
    Mr. Nadler. OK. That was my point.
    I will simply observe that under any definition, if they 
have to approve your going to some other company to work, then 
you are not an independent operator.
    I yield back.
    Mr. DeFazio. Mr. Boswell.
    Mr. Boswell. Thank you, Mr. Chairman. I have learned a lot 
here today, and I think I am going to address my remarks mostly 
to you in the sense that I appreciate your doing this. It seems 
to me like we realize that like in my State, the Midwest, and I 
talk to some owner-operators frequently in small towns around 
that make their living, barely making their living in many 
cases.
    It seems like when some incentive or whatever is given out 
to the carriers, whatever, it rarely gets down to the guy 
driving the truck, and I think we need to look into that a 
little deeper than what we have, or maybe you are already ahead 
of me--you frequently are--and make sure that this is not 
happening.
    I am starting to wonder if we are not in an environment 
almost like the Wall Street environment, that advantage is 
being taken here that is going to cause a lot of harm, or is 
being taken and do a lot of harm to the rest of the Country in 
the sense that maybe the major--well, it is the major port 
activity on the coast, but we are a United States, and we out 
in the Midwest have to depend on this industry to get our goods 
and services as well.
    So I think there is a big concern that has been cooking 
here for a while, and maybe this is kind of bringing it to a 
head. So I look forward to working with you to see if we can't 
get to the bottom of this and fulfill our oversight 
responsibility, because I feel like it is pretty heavy. I was 
listening to Mr. Rajkovacz and I think some ports need our 
attention.
    Mr. DeFazio. Thank you.
    Mr. Boswell. I yield back.
    Mr. DeFazio. I thank the gentleman.
    Let's sort of back up for a minute and see if we can get--
well, first off, Mr. Potter--well, we have the bells. Never 
mind. I will just address questions to you, but I just have 
one. This is a wonky question, but Mr. Miller said something I 
am not aware of. He said if the truck is past its maintenance 
due date on filters or something else, it is going to 
automatically shut down. I am not aware of this provision in 
the technology. Does that exist?
    Mr. Covarrubias. No, it keeps running.
    Mr. DeFazio. What is that?
    Mr. Covarrubias. I said the truck keeps running.
    Mr. DeFazio. OK, you say it keeps trucking. Mr. Johring 
says it doesn't.
    Mr. Potter. There is a warning light that comes on and 
alerts you------
    Mr. DeFazio. Right.
    Mr. Potter.--but the truck keeps running.
    Mr. DeFazio. Yes. There is not a--the truck doesn't shut 
down.
    Mr. Potter. No, you are not going to be left on the 
freeway.
    Mr. DeFazio. Right. OK. All right, so it is kind of--yes, 
Mr. Johring?
    Mr. Johring. Let me respond quickly. The new trucks, the 
2007 trucks are outfitted with an active and passive filter. 
The passive part of the filter is that when it gets a certain 
amount of particulates in the filter, it builds up so much 
pressure, and if you are able to drive 45 miles or 45 minutes 
at speed pulling a load, it will burn it off itself.
    If you don't, it has a little--most of them have a little 
gauge in it, and as the gauge approaches the red line, the red 
light goes on and you can see that if you don't stop by the 
time it hits the peg, it will slow down for you and it will go 
through the active part of the regeneration of that filter, 
which takes 30, 45 minutes.
    But you have no option. You have no option of maintaining 
that filter. So we are not going to run dirty trucks and they 
are not going to run in the harbor because they are not 
maintained. They are not going to------
    Mr. DeFazio. Right, but that is not exactly what Mr. Miller 
is implying; this whole thing is set up so you get to change 
the oil, bam, the truck--anyway, it is like--OK, I get what you 
are saying. Thanks for clarifying that.
    Here is my observation. We have the ports sit here; they 
admit they have a gate problem, but so what? They have a gate 
problem. That is the responsibility of the marine terminal 
operators. So they are going to work with the marine terminal 
operators and maybe we will get more people at the gates, and 
maybe we will have appointments, and maybe that will work.
    We have the dispatch issues. Some companies are probably 
much better at keeping their people busy than others, but we 
have testimony about people having to line up in the morning 
and wait for hours before they get dispatched. Even I was 
looking at Mr. Covarrubias' time records, and I do see that at 
one point he is driving and at the other point he is not 
driving, but on duty; and they pretty much kind of equal out. 
So there is a heck of a lot of wasted time here under the 
current system. And that may not have to do with dispatch; that 
has to do with getting to where your load is, picking up your 
load, or dropping your load off.
    We are well aware of the issue of dropping off at 
warehouses and elsewhere that--we have heard this in other 
testimony and other hearings, that since we have eliminated 
detention pay, the people who operate the warehouses could care 
less how long you wait in line to drop off your load unless you 
have an option to go to another warehouse, and then they might 
have a little bit of a competition thing going, but a lot of 
times it is a dedicated shipment; it can only go one place, so 
what do they care? They would have to put more staff on to 
process you more quickly.
    And then we have the chassis problem, which the Feds may or 
may not be dealing with, with the new rule, but it somehow 
becomes the responsibility of the poor guy driving the truck 
that he has picked up a bad chassis, rather than the port or 
the chassis owner or somebody else.
    And again, everything, seems to me, conspires against the 
people actually driving the rigs, which is why I can understand 
people don't want to have employees, because I have an 
employee, I am paying him by the hour, he is sitting at the 
gate for an hour to get in. Oh, I just lost an hour there. He 
gets to pick up the load, he waits to pick up the load. Oh, I 
lost time there. He gets a bad chassis and he is going over 
here to get the chassis fixed. He had to spend two hours 
getting the chassis fixed.
    Then he drove out to the warehouse, it is now five hours, 
six hours later. I paid him for six hours and he is dropping 
off one load at one warehouse, and they happen to have a two 
hour wait, so we are now up to eight hours and he has delivered 
one load. I mean, we have an incredibly inefficient system.
    Now, you can disagree with the way L.A. wanted to make it 
more rational, but the point is this system has to get better. 
I mean, it really does. We are wasting fuel; we are wasting 
time. I think we are depriving people of opportunities to make 
a better living. We may be forcing companies who would just as 
soon have employees who they can totally control versus owner-
operators, have owner-operators or enter into lease agreements 
because they can't afford all this downtime and bad time.
    But if they were employees, maybe those companies would 
then go to the Port of L.A. and say, hey, we are tired of this. 
We are really tired of this. You guys are going to fix up your 
chassis, you are going to man the gates, you are going to do 
this, and we will do a better job dispatching. So that is an 
observation.
    Just a question, Mr. Johring. Apparently, according to Mr. 
Potter--and, again, you can contest this if it is not true, but 
he says that in September 2008 your company converted 75 
independent contractor drivers to employees, Southern Counties.
    Mr. Potter. It is not the same company, sir.
    Mr. DeFazio. Oh. Oh, OK. Sorry. Southern Counties and 
Southern Counties Express, OK. Well, so then I don't know who 
can answer this question, but for some reason after April 2009 
that company converted back to independent contractor drivers. 
I guess that was--since you can't address that, that is not 
going to work here.
    But I have to say there are a lot of troubling 
contradictions here, a lot of questions. Mr. Digges says he has 
examined these lease agreements and believes--and the IRS 
rules, and believes all these people are independent 
contractors, unless certain conditions that Mr. Nadler talked 
about apply. I have already spoken to Chairman Miller of the 
Committee on Education and Labor, and it is my inclination--and 
I will talk to Chairman Oberstar--that we put our two 
investigation and oversight staffs together, we delve into 
these questions more as relates to these relationships, these 
leases; and also we will be looking at the environmental 
issues, the concerns of Ms. Perrella, watching what the 
California Trucking Coalition decides to do in terms of 
litigation and other things.
    I really believe this is not the last time this Committee 
is going to be dealing with this issue, and I thank you all for 
your time and, with that, the Committee is adjourned.
    [Whereupon, at 1:59 p.m., the Subcommittee was adjourned.]
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