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Updated: New information on events leading to Celadon’s bankruptcy likely to anger former employees

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Bankrupt celadon receives partial approval to pay employee wages
Celadon officials knew of intent to file bankruptcy earlier than claimed. (The Trucker file photo)

*Updated 1/28/2020, 8:00 AM CT

In another twist to the Celadon bankruptcy case, reports indicate the company in the process of liquidation is requesting $900,000 to pay bonuses to three executives for their efforts “to make extraordinary efforts to manage and implement a successful wind-down and to maximize distributions to creditors.” The new information was revealed in a review of Celadon’s filing with a court in Canada to have its U.S. bankruptcy proceedings recognized and the final results accepted in the country where Celadon operated Hyndman Transport, a carrier with approximately 200 employees. The bonuses had previously been referred to in U.S. court filings; however, the details have not been included in unsealed documents.

Although bonuses, often much larger than those Celadon is reportedly requesting, are often approved in bankruptcy cases, the U.S. Trustee overseeing Celadon’s bankruptcy is opposed to the payments. Andrew Vara said the company has not provided proof that the bonuses are truly an incentive for the executives or that Celadon’s plan for compensation follows the precedence of similar bankruptcy situations.

Celadon’s filing indicated it “would be unable to achieve significant value” in the disposition of assets without the three executives. The filing added that the executives “possess irreplaceable skills and experience.”

A hearing is scheduled in U.S. courts for January 30 in which Andrew Vara will present his case opposing the bonus payments as well as requesting transparency in proceedings by unsealing other documents in the case.

ORIGINAL ARTICLE (1/24/2020)

While news of the Celadon bankruptcy that shocked the trucking industry broke nearly two months ago, newly unsealed documents provide insight into factors leading the carrier’s Chapter 11 bankruptcy filing. In this instance, the documents show that TA Dispatch (TAD) of Ensley, Alabama, filed a $6.2 million lawsuit against the carrier six days before Celadon officials announced the company sought a U.S. bankruptcy court’s protection. The documents also suggest Celadon had a minimum of 11 days to inform employees of the company’s pending closure.

TAD’s lawsuit is based on a breach of contract on the part of Celadon. The contract stated that the two companies would partner, allowing Celadon to access TAD’s logistics platform in a revenue-sharing agreement that would assist both companies in better serving customers.

While Celadon and TAD shared billing duties and transferred funds under procedures stated in the revenue sharing section of the contract, in mid-November, Celadon was unable to make its payment of $4.4 million due to its partner. TAD claimed that in a late November meeting, a Celadon executive told them the carrier was insolvent. In fact, Celadon requested a loan from TAD in order to keep operations afloat.

When demand for payment sent to Celadon on November 27 went unmet, TAD officials stated Celadon responded that further inquiries would be referred to its bankruptcy attorneys. In addition, Celadon cut off TAD’s access to its IT services, a move that severely interrupted TAD’s operations. Later, Celadon restored access.

The timeline of events in late November provides some insight into a potential reason for Celadon’s bankruptcy. But former employees will be much more interested in the dates TAD notes in its lawsuit.

Celadon caught many employees off-guard on December 8, when it sent a midnight message to drivers announcing it had ceased operations. Shortly thereafter, the Celadon’s fuel card company deactivated cards and left drivers stranded across the U.S.

The timeline of events offers evidence to support a former employee’s lawsuit claiming Celadon had violated the WARN Act, requiring large employers to provide notice of at least 60 days before implementing layoffs. The timeline as reportedly recorded in the documents suggests Celadon had a minimum of 11 days during which company officials knew of its intent to cease operations — 11 days employees could have spent searching for new jobs and to prevent them from being unemployed during the holiday season.

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Stretch of Highway 22 in Oregon closed after tanker crash, diesel spill

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tanker crash on highway 22
Highway 22 between Idanha and Santiam Junction is unlikely to reopen until Friday or Saturday as crews remove contaminated soil in a roadside ditch and rebuild a 600-foot section of roadway, the Oregon Department of Transportation said. (Courtesy: Oregon State Police)

IDANHA, Ore. — A stretch of Highway 22 will be closed for much of this week as crews clean up gasoline and diesel fuel that leaked out of a crashed tanker truck near Idanha along the North Santiam River, state transportation authorities said Monday.

The highway between Idanha and Santiam Junction is unlikely to reopen until Friday or Saturday as crews remove contaminated soil in a roadside ditch and rebuild a 600-foot section of roadway, the Oregon Department of Transportation said.

An oil sheen was visible on the North Santiam River downstream of the crash site, but officials said most of the tanker’s oil seeped into the ditch, where it was absorbed by the soil. It’s unclear how much entered the river, the Statesman Journal reported.

The city of Salem said Monday that its drinking water is safe and the oil from the spill has not reached its water treatment plant near Stayton, which is about 30 miles (48 kilometers) away from the crash. The oil will take several days to reach the plant, the city said, and teams will test the river water at multiple locations this week. Crews have set up absorbent berms to capture the oil on the water.

If any fuel is detected in the river, the city will close the water intake gates as it did in a similar situation three years ago.

The crash on Sunday closed Highway 22 near Detroit and Santiam Junction. The truck was carrying 10,600 gallons of fuel total — 6,500 gallons of gasoline in a tanker trailer and 4,100 gallons of diesel in the truck’s tanker.

About 7,800 gallons of fuel emptied into a roadside ditch and the rest was recovered, according to Oregon Department of Environmental Quality officials.

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FMCSA final rule lowers annual registration costs for motor carriers

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truck driving down road
The reduction of the current 2019 registration year fees range from approximately $3 to $2,712 per entity, depending on the number of vehicles owned or operated by the affected entities. (iStock Photo)

WASHINGTON — Motor carriers will now see a reduction in the price they must pay to register their vehicles. On February 13, the Federal Motor Carrier Safety Administration released a final rule that realigns the fees for the Unified Carrier Registration Plan.

According to the document posted on the federal register last week, this rule establishes reductions in the annual registration fees the states collect from motor carriers, motor private carriers of property, brokers, freight forwarders and leasing companies for the UCR Plan and Agreement for the registration years beginning in 2020.

“For the 2020 registration year, the fees will be reduced by 14.45% below the 2018 registration fee level to ensure that fee revenues collected do not exceed the statutory maximum, and to account for the excess funds held in the depository,” the document reads. “The fees will remain at the same level for 2021 and subsequent years unless revised in the future.”

The reduction of the current 2019 registration year fees range from approximately $3 to $2,712 per entity, depending on the number of vehicles owned or operated by the affected entities.

The UCR Plan and the 41 States participating in the UCR Agreement establish and collect fees from motor carriers, motor private carriers of property, brokers, freight forwarders and leasing companies. The UCR Plan and Agreement are administered by a 15-member board of directors; 14 appointed from the participating states and the industry, plus the Deputy Administrator of FMCSA or another Presidential appointee from the Department, according to the final rule.

Revenues collected are allocated to the participating states and the UCR Plan. If annual revenue collections will exceed the statutory maximum allowed, then the UCR Plan must request adjustments to the fees. In addition, any excess funds held by the UCR Plan after payments are made to the states and for administrative costs are retained in the UCR depository, and fees subsequently charged must be adjusted further to return the excess revenues held in the depository.

Adjustments in the fees are requested by the UCR Plan and approved by FMCSA. These two provisions are the reasons for the two- stage adjustment adopted in this final rule.

“While each motor carrier will realize a reduced burden, fees are considered by the Office of Management and Budget (OMB) Circular A–4, Regulatory Analysis as transfer payments, not costs. Transfer payments are payments from one group to another that do not affect total resources available to society. Therefore, transfers are not considered in the monetization of societal costs and benefits of rulemakings,” according to the document.

The rule states that the total state revenue target is more than $107 million.

For more information or the read the rule in its entirety, visit https://www.fmcsa.dot.gov/regulations/rulemaking/2020-01761.

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Rhode Island DOT looks to hike trucks-only tolls amid court battle; public input sought

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Rhode island dot wanting to hike rates on trucks-only toll system while court battle continues; public comment sought
A truck passes through one of Rhode Island's six operating toll gantries. (courtesy: Providence Journal)

PROVIDENCE, R.I. — As the Connecticut legislature prepares to vote this week on Gov. Ned Lamont’s controversial and long-debated “trucks only” toll proposal, a similar system in Rhode Island continues to operate while legal action to overturn the tolls is underway.

The original Rhode Island Department of Transportation (RIDOT) proposal to charge tolls on trucks only included 14 locations, all bridges RIDOT deemed as structurally deficient. Tolls collected at each bridge would be used to repair and upgrade the specific location.

RIDOT is accepting public comment through March 1 on a plan to increase the toll on a newly installed gantry at the Oxford Street Bridge in Providence, a bridge crossing Interstate 95. The original toll for the bridge was set at $2.25 per trip; however, RIDOT is studying the cost-benefit ratio of doubling the rate to $4.50. RIDOT representatives requesting comment on the proposed increase claim the increase is really no increase at all; it is simply an effort to maintain the revenue forecast from the 14 gantries included in the original tolling proposal.

Currently, Rhode Island has constructed toll gantries at six of the originally planned locations; however, as the program has moved forward, two locations have been temporarily or permanently delayed. Rather than adjusting anticipated total revenue based on 12 locations, Gov. Gina Raimondo has instead directed RIDOT officials to study and request rate hikes at specific bridges. The toll hikes will allow Rhode Island to collect the same $45 million forecast from the 14 original gantries. This new twist on a toll program already challenged as unconstitutional by the American Trucking Associations, and one which an appellate court has ruled Rhode Island must face in a lawsuit, is leading the trucking industry and toll opposition to question RIDOT’s language in press releases and discussions on the issue.

Chris Maxwell, president of the Rhode Island Trucking Association, said, “This should serve to reinforce concerns over the unbridled power and discretion given to RIDOT and further feeds the suspicion and skepticism of Rhode Island’s business owners about the end game of this scheme.”

Maxwell’s comments come on the heels of an already approved increased toll rate at another location in Providence. The Route 6 bridge over the Woonasquatucket River was increased from $2.00 to $5.00 last fall.

Maxwell also expressed concern about changing the still new tolls program when original approval was based on environmental impact studies. “From a legal standpoint,” he said, “these ‘on the fly’ changes would seem to undermine and violate the purpose and extent of the environmental impact assessments.”
Other opponents to the Oxford Street bridge toll increase note that the bridge does not fall into the criteria RIDOT deemed as structurally deficient, meaning revenue from the toll would be used at other locations, a provision not included in the tolling plan.

From RIDOT’s perspective, not only is the proposed toll rate increase not really an increase, it is also going to save the state money. RIDOT Director Peter Alviti said that the infrastructure costs of eliminating two planned toll locations will result in lower implementation costs.

“Our thinking is we’ll forgo building [a gantry] at the viaduct in Providence, or at least while the viaduct is being built,” Alviti said on WPRO radio. “We’ll assign the toll amount we were going to collect there to the next nearest location, which is Oxford Street.”

Chris Maxwell believes he has a full understanding of RIDOT’s intent. “[They] deliberately chose the most densely traveled tool location in the who scheme to further their insatiable appetite to soak businesses, consumers, and taxpayers,” he said in an interview with Transport Topics.

RIDOT is justifying its proposed action based on the original toll proposal’s expectation of generating $45 million in revenue. In any event, Peter Alviti says, truckers traveling I-95 through Rhode Island will still be paying $20.00 per trip.

When is an increase not an increase? It depends on what your definition of increase is. For those wanting to comment, emails can be sent to Dot.BridgeRepairTolls@dot.ri.gov or comments can be submitted in writing to Jay McGinn, P.E., Project Manager II RIDOT, 2 Capitol Hill, Providence RI 02903. Following cutoff date for comments on March 1, the new rate will be implemented on March 5.

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