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What Owner-Operators Need to Know About the Inflation Reduction Act

On Tuesday, August 16, President Biden signed the Inflation Reduction Act of 2022 (Act) into law. The Act covers climate issues, taxes, healthcare, and other legislation in one bill, serving as a concise version of the Build Back Better bill.

What is the Inflation Reduction Act?

The main points of the Inflation Reduction Act of 2022 include:

  • 15% minimum corporate tax rate: Corporations that generate at least $1 billion in income will now have a 15% tax rate, and stock buybacks will have a 1% excise tax.
  • IRS investments: The IRS will receive $80 billion to hire new agents over the next ten years.
  • Prescription drug price reform: Medicare will now be able to negotiate the prices of particular prescription drugs, and in 2025 Medicare recipients will receive a $2,000 limit on annual out-of-pocket prescription costs.
  • ACA subsidy extension: The current medical insurance premiums under the ACA, which were set to expire January 1st, 2023, will now be extended through 2025.
  • Investments in energy security and climate change efforts: Households will receive tax credits to offset energy costs, the government will invest in clean energy production, and there will be tax credits for reducing carbon emissions.

On August 7, the Inflation Reduction Act went to the Senate and passed with 50 Democratic votes and zero Republican votes. Once it reached the House on August 12, bill 220-207 was passed.

Ultimately, small businesses and hardworking Americans will profit from this legislation through the investments in deficit reduction, increased manufacturing, lowered drug prices, and the push for corporations to give back to their community. But what does this bill mean for owner-operators within the transportation industry?

What Owner-Operators Need to Know

The Inflation Reduction Act will make significant changes to the United States environmental policies, health care policies, and tax codes. However, for owner-operators and other small trucking businesses, the Act’s extended changes to the ACA subsidies and IRS investments will likely be the most impactful.

The increased and extended ACA subsidies will allow owner-operators without employer-provided health insurance access to affordable health care coverage. Marc Ballard, who handles the NAIT’s various health care avenues, said, “We’re seeing about 90% of people who enroll can get a plan for $100 a month. Take, for example, a guy who may be 45 with a spouse and two kids, lives in Florida, and expenses a bunch of his income. … Let’s say his net adjusted income is $60,000. He grossed $200,000, but the reportable income is $60,000. He could literally be paying zero dollars for a health care plan.” Those making more money may face an increase in coverage costs by just a few hundred dollars a month.

And while the ACA subsidy changes won’t affect independent business people as much, it’s wise to use this extension period to shop for different health care plans. Freight rates are slowing due to the rise in fuel costs, and owner-operators’ incomes fluctuate as the pandemic period breaks down. So, now is the time to consider income projections and any potential family or personal status changes, which could unlock new health-expense savings.

The $80 billion investment in creating a larger Internal Revenue Service could also pose a threat to owner-operators with more frequent audits. The Associated Press did disclose that armed agents will not come knocking on owner-operators’ doors unless they are under criminal investigation for dealings in things such as contraband. Truck drivers must also be conscious of their increased chance of being audited. And while the IRS does have a backlog, the 87,000 incoming agents will quickly clear it, making time for them to look at newer returns. So, be sure to be extremely thorough when filing your taxes.

The Future is Green

The $369 billion investment in green energy will also notably change the trucking industry. In the next few years, trucking companies could receive tax incentives to purchase trucks that operate on alternative fuel sources, including electricity and biogas. Similar tax incentives will be made available for installing supportive infrastructure at trucking headquarters. The bill will also offer grant and loan programs to trucking businesses to encourage and fund their switch.

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A Trucker’s Guide to Assembly Bill 5

Regardless if you’re a California truck driver or not, you’ve probably heard about the recent employment legislation that could change the entire trucking industry. As of June 30, 2022, Assembly Bill 5 (AB5) is in effect and making sweeping changes throughout the transportation industry. Over the last few months, there has been an excessive amount of news and information surrounding the legislation and the impact it could potentially have. So, what’s the truth about AB5?

We’ve created a comprehensive guide to California’s Assembly Bill 5 that explains the bill and how it will affect truck drivers and the industry.

What is California’s AB5?

In September 2019, the California Governor, Gavin Newsom, signed Assembly Bill 5 into law to provide gig workers with more rights and benefits. Specifically, the law promises gig workers who classify as employees minimum wage with overtime pay, standard employee benefits, expense reimbursements, health insurance, adequate breaks, and other benefits that were not previously promised under California labor laws. So, how do employers determine who classifies as what?

The ruling of AB5 is based on a 2018 California Supreme Court ruling, known as Dynamex Operation West v. Superior Court. The legislation replaced the 11-prong Borello test with a 3-prong test and established that workers were classified as employees unless otherwise proven by the hiring company. The new 3-prong test, known as the ABC test, determines whether a person can be qualified as an independent contractor. 

For a worker to achieve this classification, the following three statements must be true:

  1. The worker is free from direct control or direction of the hiring entity when performing their duties.
  2. The tasks and services performed are outside the hiring entity’s usual business activities.
  3. The worker regularly performs independent services similarly performed for the hiring entity.

If a worker does not meet the three requirements, they must be classified or, in some cases, reclassified as an employee and receive the rights and benefits that come with that title. The problem with the new ABC test is that it has created rigorous standards for employers, and it’s challenging for workers to pass.

Pros and Cons of Assembly Bill 5

The main issue with AB5’s 3-prong test is that it has turned some independent contractors into employees. Specifically, item B poses the most risk to a worker’s livelihood because it states that a person performing any work similar to the company that hired them is presumed to be an employee. If a worker is classified as an employee, they must adhere to new standards that ultimately impact how they perform their job. For instance, while gig workers can choose when and when not to work, employees must abide by a set schedule.

However, the new legislation isn’t all bad. Pros and cons of AB5 include:

Pros:

  • The legislation creates equal opportunities for gig workers and regular employees.
  • Qualifying as an employee entitles workers to benefits and other perks.

Cons:

  • Being classified as an employee could cost workers their flexible schedule.
  • Reclassifying independent contractors as employees could increase prices for consumers.

And while AB5 does not guarantee that hiring entities will eliminate flexible scheduling, employers may exert more control once they begin incurring higher costs of paying employees versus contractors.

How will California’s AB5 impact the trucking industry?

The application of AB5 will undoubtedly impact motor carriers’ prices, routes, and services. On January 16, the District Court for the Southern District of California found AB5 preempted by the Federal Aviation Administration Authorization Act (FAAAA) and urged its application. This ultimately left the independent contractor model unaffected—at the time. The state of California was also pushed to appeal the lower court’s injunction to the 9th Circuit Court of Appeals (CTA). 

However, on April 28, 2021, the appeal was reversed after finding that implementing AB5 did not fully impact motor carriers’ prices, routes, or services. Therefore it did not fall under the FAAAA’s preemptive scope. So, the reversal cleared AB5 to take effect. But, on June 23, 2021, the 9th Circuit stayed the reversal’s effect, pending the resolution of the appeal to the United States Supreme Court.

Without comment or discussion, the Supreme Court decided not to review the case and left the 9th Circuit’s decision intact. AB5 was once again clear to take effect on motor carriers operating in the state of California. In the Supreme Court briefing, representatives from the State of California downplayed the impact AB5 would have on motor carriers and the trucking industry. 

Now, drivers operating in California are bracing themselves for the “highly impactful and disruptive” consequences of the bill. Many motor carriers and industry experts believe that additional legal challenges associated with AB5 and the ABC test are likely to occur. Still, for the time being, those operating in California will, unfortunately, have to carry the weight of AB5.

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Top 5 Toughest States for Speeding

Which states are toughest on commercial truck speeding-enforcement?

Every year the Commercial Vehicle Safety Alliance (CVSA) of truck-enforcement jurisdictions and other related agencies stage a traffic enforcement event called Operation Safe Driver. In 2020, the enforcement effort responded to an uptick in speed-related fatality crashes. And while the automobile accidents were across all vehicle types, most involved Class 8 vehicles.

After the 2020 Operation Safe Driver event, the CVSA found that truck drivers received nearly triple the number of speeding citations as passenger vehicle drivers. In 2021, the number increased again, with approximately 3,000 truck drivers receiving citations. Experts anticipate similar results following this year’s enforcement event. But, drivers are wondering: Are there some states that are more strict when it comes to speeding enforcement?

Which states have the strictest speeding laws?

Experts agree that there are states that are stricter when it comes to enforcing traffic laws than others. 

A recent study found that 75% of states have absolute speed limits, which means one mile per hour over the limit is enough for the state to convict you of speeding. The other 25% of the country has laws that allow you to plead your case in court. However, there are currently no states that have mandatory jail time for those convicted of reckless driving, which means you are liable to spend at least one night in jail if found guilty. 

And if you’re lucky enough to avoid jail time, you can still face a hefty fine. While the country’s average maximum speeding penalty is $742, there are some states where a single ticket could cost up to $5,000. 

The bottom line is that while keeping up with surrounding traffic may seem okay; there are some states where it’s ultimately safer to drive the exact speed limit.

5 toughest states for truck traffic enforcement

Delaware

In Delaware, the driving population speeds 21% more than the national average. And in January of this year, the state implemented cameras along I-95 in hopes of deterring speeding. So, even if there’s no cop in sight, you still need to be cautious of cameras.

West Virginia

If you’re in Virginia, go slow. The state has one of the harshest legal systems around traffic violations. For example, driving 80 miles per hour anywhere in the state or going 20 miles per hour the posted speed limit will result in a reckless driving charge. And you can receive a $2,500 fine and a year in jail for reckless driving.

Iowa

Iowa drivers are ticketed for speeding 66% more than average drivers, despite the state’s heavy police presence. In “The Hawkeye State,” there are 25 police officers per 10,000 drivers. Be sure to remember this ratio the next time you drive through Iowa.

Idaho

While Idaho has a low ratio of speed traps per mile, it ranks considerably high for issuing speeding citations. However, the fines aren’t as intimidating as in other states. If you’re driving anywhere between one and 15 miles per hour above the speed limit, you will be fined $75. Anything over 16 miles per hour will earn you a $140 ticket. 

South Carolina

South Carolina is considered more dangerous than any other state for driving. According to the NHTSA’s Traffic Safety report, the state has the highest rate of traffic fatalities per million miles traveled. And similar to Iowa, the state has 24 police officers per 10,000 drivers, So if you speed in the Palmetto State, you not only risk getting a ticket, but you also risk getting into an accident.

  

How speeding could impact your career

As a truck driver, receiving a speeding ticket is no minor inconvenience. In fact, a speeding ticket could lead to your CDL being revoked. In most states, exceeding the speed limit by at least 15 miles per hour is considered a severe violation for commercial motor vehicles (CMV). The violation could lead to a minimum 60-day license suspension. If you receive three violations within three years, you could face a 120-day CDL revocation. These violations could also appear on your record, ultimately affecting your next job opportunity. Plus, you could be fined up to $500. 

So, while driving can be frustrating and sometimes mundane, it’s safer to drive wisely and within the speed limit. After all, nothing is worth risking your CDL license and, above all, your life.

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What is the COVID HOS Emergency Declaration?

The COVID-19 pandemic changed the way many industries executed their operations and has had a lasting impact that the world still hasn’t been able to shake. In recent years, federal government agencies have declared various guidelines and regulations pertaining to the transportation industry, including the HOS Emergency Declaration.

What was supposed to be temporary measures has now been extended and could possibly carry on even further. So, what is the emergency declaration and how does it affect our country’s drivers?

What is the COVID HOS Emergency Declaration?

After COVID-19 was declared a national emergency, the Federal Motor Carrier Safety Administration (FMCSA) issued an Hours of Service (HOS) Emergency Declaration which suspended federal regulations and offered relief for fleets engaged in COVID-19 emergency relief operations. 

The declaration ensured that transportation services were distributed properly and vital supplies were delivered to areas in need of aid. However, it came with a number of restrictions that excluded some drivers and carriers over others. 

As previously mentioned, the declaration was originally supposed to end on April 12, 2020, but has since been extended and expanded upon multiple times. These amendments to the HOS Emergency Declaration include things like, limitations to the transportation of goods like “(1) livestock and livestock feed; (2) medical supplies and equipment related to the testing, diagnosis, and treatment of COVID-19; and (3) supplies and equipment necessary for community safety, sanitation, and prevention of community transmission of COVID-19, such as masks, gloves, hand sanitizer, soap, and disinfectants.” And recently, the declaration has been extended yet again. 

What’s the latest on the COVID HOS Emergency Declaration?

The FMCSA has recently announced another extension of the emergency declaration amid the dwindling number of COVID-19 cases and the return to national normalcy. The FMCSA also confirmed that carriers would still be relieved from maximum drive-time limits within the hours of service for another 90 days starting June 1st and lasting until the end of August.

The carriers that can take advantage of the extended relief are those who carry commodities in “direct assistance in support of emergency relief efforts related to COVID-19.”

These commodities include:

  • Community safety supplies and equipment (disinfectants, gloves, hand sanitizer, and soap)
  • Diesel, diesel exhaust fluid (DEF), Gasoline, ethyl alcohol, jet fuel, and heating fuel (propane, natural gas, and heating oil)
  • Food, paper products, and grocery items for emergency restocking
  • Livestock (and livestock feed)
  • Medical supplies related to COVID-19, constituent products, and vaccine supplies/kits

Some commodities that were once on the declaration are no longer covered, including building materials, vehicles, and more.

Will the HOS Emergency Declaration be extended again?

The overall goal is to eventually end the HOS Emergency Declaration. However, this won’t happen until a number of things take place. For starters, the U.S. government must deem that we are no longer in a national emergency. When this will happen is unpredictable since emergency declarations bring in discretionary funds and opportunities for various federal agencies. The troubles within the supply chain have also had an influence on the extensions of this declaration by forcing the FMCSA to waive certain parts of the HOS for haulers moving goods in direct-assistance efforts. So, as we continue to experience supply chain challenges alongside inflationary pressures, another extension could definitely be on the table.

In the meantime, industry experts are hopeful that the span of the current extension will narrow as COVID-19 cases continue to lessen. The FMCSA has also said that they intend “to continue to closely monitor the safety impacts of the relief granted under this extension. … As necessary, FMCSA may take action to modify the Emergency Declaration, including scaling back the commodities covered by the Emergency Declaration or changing the restrictions associated with transporting the commodities.” Or they will move to terminate the hours relief sooner than the end of August if conditions permit.

Frequently Asked Questions from the FMCSA

Question:  Does the current COVID-19 Emergency Declaration include the transportation of fuel?
Answer:  Yes, the Emergency Declaration includes the transportation of fuel including gasoline, diesel, jet fuel, ethyl alcohol, and heating fuel including propane, natural gas, and heating oil.

Question:  What does the May 13, 2022 amendment of the COVID-19 Emergency Declaration change?
Answer:  FMCSA amended the commodities covered by the Emergency Declaration to include heating fuel including propane, natural gas, and heating oil.

Question:  Why did FMCSA amend the COVID-19 Emergency Declaration?
Answer:  FMCSA amended the Emergency Declaration to address particular fuel needs arising out of the ongoing emergency and to broaden the categories of fuel shipments covered. 

For more information, visit the FMCSA website.

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Pros and Cons of Battery-Electric Trucks

Image Credit: Tesla

In today’s world, electric vehicles account for approximately two percent of auto sales, and that number only continues to grow. Now, electric semi-trucks and freight vehicles, or commercial battery-electric vehicles (CBEVs), are merging onto America’s roads and highways. Manufacturers have poured billions of dollars into developing CBEVs, and companies are slowly integrating the new technology into their fleets. And while the focus has mainly been on Class 8 trucks, automakers are introducing commercially available models in numerous classes.

So, what exactly does this electric revolution look like and who is responsible?

Who are the key creators of electric semi-trucks?

Very few automakers dared to venture into the world of EV manufacturing. However, those who did are now reaping the benefits of their investment. Currently, Volvo Trucks offers two tractor configurations for their electric Class 8 trucks, including a 4×2 and a 6×2. These trucks provide different ranges that are dependent on the amount of cargo you’re hauling and the overall size of your trailer. The manufacturer also sells an electric box truck model, which offers a range of 150 miles on a single charge. 

And in 2021, Volvo received its largest order from Quality Custom Distribution (QCD) for its VNR Electric model. The foodservice logistics supplier ordered a total of 14 electric trucks for their Southern California drivers. While the new EVs won’t significantly impact QCD’s original fleet of 700 fuel-powered trucks, it’s a step in the right direction. Daimler has also been a key player in the EV market with models like the Freightliner eM2 and Freightliner eCascadia. And while Volvo and Daimler have been innovators in the trucking industry’s EV movement, Tesla has recently unveiled what may be the new standard in trucking…

Check out the reveal of the new Tesla Semi

How will electric semi-trucks shape the future of trucking?

Experts from the U.S. Energy Information Administration estimate that battery-electric trucks will account for 31% of the industry or reach around 672 million vehicles by 2050. Undeniably, this would reshape the trucking industry and the world as we know it.

In a single day, a fuel-powered truck will be on the road for up to 11 hours, all while producing harmful emissions. And if a team of drivers runs the truck, it could be on the road even longer. But, if a company were to deploy just one EV, it would be equivalent to placing over a dozen electric sedans on the road, thus significantly reducing harmful emissions. 

The North American Council for Freight Efficiency (NACFE) created Run on Less – Electric, a trucking demonstration that set out to determine the pros and cons of EVs. The run further confirmed that CO2 and particulate emissions would be significantly reduced by replacing traditional trucks with electric ones.

Electric trucks also reduce noise pollution and provide optimal safety through intuitive technology and design measures. For instance, the Tesla Semi is built with active safety features that help to prevent jackknifing. Volvo Trucks also attempts to provide enhanced safety through a new, patented safety feature called Active Grip Control. The feature “improves stability, acceleration, and braking in slippery conditions.”

What concerns come with battery-electric trucks?

While there are clear advantages to using BEVs, there are some concerns. 

The main concerns include:

  • The effects of extreme weather and temperatures on electric trucks.
  • Maintenance costs and schedules.
  • Availability of parts and services.
  • The overall safety of electric trucks.

Thankfully, some testing and trial runs have shed light on the above mentioned issues. The NACFE’s Run on Less – Electric found that extreme weather and temperatures don’t pose any serious threats to BEVs’ overall performance or vitality. 

RoL-E also proved that overall maintenance costs and failure rates are less than internal combustion vehicles. However, when the microchip and automotive technology shortage struck the nation in 2020, many EV manufacturers found themselves between a rock and a hard place. Automakers were not only unable to produce new electric models, but they weren’t able to make most of the necessary parts or components. This led many owner-operators to question whether or not moving to BEVs would be wise, considering the unpredictability of the future.

What should fleets keep in mind moving forward?

Before fleets commit to transitioning to BEVs, there are a few things that fleet managers and owner-operators should keep in mind, including:

  • How many miles are being driven?
  • How often would charging need to take place for each truck?
  • Will charging stations or at-home charging need to be installed?
  • How many BEVs would be needed?
  • Would a partial conversion make more sense than replacing the entire fleet? Or vise-versa.

Fleet managers must also consider a maintenance plan for their electrified fleet. Industry experts who’ve made the move recommend “[getting] your mechanics in there and [getting] them trained” in the new-age technology. Finally, if owner-operators choose to transition to CBEVs, they must implement proper safety protocol and invest in new safety equipment, including arc lash shields, dielectric boots/shoes, electrical safety gloves, insulated tools, etc.

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How Drivers Can Avoid Drug and Alcohol Violations

In 2020, the Federal Motor Carrier Safety Administration (FMCSA) proposed regulations that would require state agencies to block drivers with any drug and/or alcohol violations from renewing or upgrading their commercial driver’s licenses or permits. The proposed regulations would also prevent new drivers from being issued licenses or permits. In some cases, the new rules would grant agencies the authority to downgrade a driver’s license or permit within 60 days of receiving a drug and/or alcohol violation. 

Today, a new regulation requires states to ban drivers with violations from operating commercial vehicles until the driver completes a return-to-duty process. These regulations were deemed ‘The Drug and Alcohol Clearinghouse.’ 

From their start in January 2020 to the end of March 2021, states saw an astonishing 69,100 total drug violations and 1,552 alcohol violations. In the first three months of 2021 alone, there were 14,324 drug violations and 367 alcohol violations reported, and experts anticipate these numbers to grow with each passing year.

While the FMCSA’s Clearinghouse aims to safeguard our nation’s roadways from potentially dangerous truck drivers, some drivers fall victim to violations simply because they don’t know the new laws and regulations.

Drug and alcohol violations are on the rise

As expected, reported violations saw a 10.2% increase from 2020 to 2021. In 2021, the nation’s total number of drug violations was particularly shocking, with a total of 58,215 reported.

The Drug and Alcohol Clearinghouse broke that number down even further and found:

  • 31,085 violations involving marijuana
  • 8,765 violations involving cocaine
  • 5,082 violations involving methamphetamine

In terms of alcohol violations, the Clearinghouse saw a 26.74% increase from 2020. 

Overall, the Clearinghouse found 104,840 truck drivers with at least one violation since its start in 2020. 81,052 of the drivers are still prohibited from resuming operations, and, as of January 2022, only 13,050 of them have completed the requirements for return-to-duty eligibility.

In recent years, the FMCSA has vowed to double the number of random drug tests administered. This decree requires carriers to perform random drug tests on all of their drivers, including any contracted owner-operators. While this demand was labeled as a temporary statute, it will most likely be re-instituted again and again. The FMCSA is required by federal law to increase random drug testing by 50% if the rate of positive drug tests passes the 1% threshold. This change could cost up to $70 million for approximately 2.1 million drug tests.

6 drug and alcohol traps and how drivers can avoid them

On more than one occasion, truck drivers have violated regulations concerning drugs and alcohol because they don’t know or fully understand the law. 

Trucking professionals have found six common traps to watch for, including:

1) Sleeping/Resting in the sleeper cab after consuming alcohol.

According to the safety regulation 49 C.F.R. § 392.5, a driver is not allowed to have any alcohol in his/her/their system while having “physical control” of a commercial vehicle. The general definition of physical control is: to have immediate access to the keys and your vehicle in close proximity to you. However, the exact points of what qualifies as “physical control” are not fully specified within the regulation.  

Since the fine points of “physical control” are not defined, it is better to play on the safe side and avoid alcohol consumption while on the road. The regulation also applies when taking a 34-hour restart. So, suppose you decide to consume alcohol while you’re at home or in a lodge. In that case, we recommend storing your keys in a safe location to avoid being considered “in physical control” of your commercial vehicle.

2) Failure to proceed to a testing site immediately after testing notification.

The regulation 49 C.F.R. § 382.305 orders drivers to go to a test site immediately after receiving notice of their selection for random testing.

It is imperative to do precisely that in order to avoid receiving a violation. For example, suppose you are in the process of completing a non-driving, safety-sensitive task or function (e.g., unloading a trailer). In that case, you and your fleet manager (or someone with authority) are obligated to stop your task and ensure that you reach the designated testing site promptly. A few contingencies would not be subject to violation, but you will need to review the FMCSA’s regulations to determine them.

3) Failure to report to testing while off duty.

In reference to regulation 49 C.F.R. § 382.305, the same rules apply to drivers off duty. According to the FMCSA, drivers are subject to random drug testing while at home or on vacation. If you are selected for random testing, you must immediately proceed to the designated testing site.

Regarding random alcohol testing, the regulation does not state or require drivers to submit to testing while off duty.

4) Failure to respond to a medical review official.

A medical review officer is responsible for confirming a positive drug test that has been received from a designated laboratory. To complete the confirmation, the M.R.O. must contact the driver-in-question’s employer and ask that they notify the driver to contact the M.R.O. to discuss test results promptly. This is an opportunity for the driver to offer an explanation for the positive test results or to retrieve fax or email information to forward a copy of a prescription to the M.R.O.

5) Using medication that is prescribed to someone else.

In the event a driver tests positive for specific drugs, they would automatically be banned from operating a commercial vehicle until they follow subsequent protocol. In regards to controlled substances that are only made available by prescription from a licensed medical professional, a positive test is deemed okay. However, if a driver tests positive for a controlled substance but does not have a prescription for that substance or the prescription is expired, then they are subject to violation.

6) Legal marijuana use.

If you test positive for marijuana in a random DOT-mandated test, you will immediately be banned from professionally operating a commercial vehicle until you complete subsequent protocol. This rule also applies to legal marijuana usage and/or consumption since state laws do not have the power to overrule or void drug testing results under the FMCSA’s regulations.

Treatment resources every driver should know

If you or someone you know is struggling to overcome addiction, consider treatment through an inpatient or outpatient program.

American Addiction Treatment Centers by State

For free, confidential treatment referrals and information services any time, anywhere, visit SAMHSA’s website or call their National Helpline at 1-800-662-HELP (4357).

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