Transportation legislation: Post-health care debate, various legislative issues affecting transportation in 2010 and beyond
John D. Schulz, Contributing Editor -- Logistics Management, 10/27/2009
WASHINGTON-As the ongoing debate over health care reform has proven, Congress has extreme difficulty doing more than one thing at a time. Multitasking has never been Washington's strong suit.
With health care sucking all the oxygen out of the room, transportation interests are bracing for 2010 when many key transport legislative initiatives likely will be fought.
Among them:
- renewal of the highway bill;
- Cap-and-trade provisions of climate change legislation;
- Employee Free Choice Act (i.e. "Card Check"); and
- the opening the Mexican-U.S. border to all trucking.
SAFETEA-LU: Except for health care, reauthorization of SAFETEA-LU (Safe, Accountable, Flexible, Efficient Transportation Equity Act) is the most expensive piece of legislation facing Congress. There is probably going to be an 18-month extension of the current $286 billion, five-year law that expired last Sept. 30. There likely will be a $450 billion-to-$500 billion, five-year bill sometime in 2011
How Congress decides to pay for that is a major sticking point. The Obama administration has signaled it will not raise fuel taxes in a recession. But what happens if the recession ebbs in 2011? Truckers are bracing for an increase in the federal fuel tax, which has been unchanged since 1993.
Cap and Trade: Another major fight is brewing over the proposed cap-and-trade legislation that the trucking industry fears will impose significant costs while doing little to curb carbon emissions.
While truckers are not covered by the legislation because, trucking has been deemed to be not a discretionary user of fuel, truckers do fear that such a cap-and-trade arrangement will result in higher costs for diesel fuel.
Sens. Kay Bailey Hutchison, R-Texas, and Kit Bond, R-Mo., have estimated that the cap-and-trade bill in the House would assess $3.6 trillion in new taxes, including $1.3 trillion in new diesel fuel taxes.
The U.S. trucking industry consumed $53.9 billion gallons of fuel last year, when it spent a record $148.6 billion on diesel fuel costs. A one-cent increase in diesel fuel costs the trucking industry an additional $391 million.
Barbara Hahn, president of tank trucker Hahn Transportation, New Market, Md., recently said cap-and-trade "simply will increase the cost of diesel fuel, while failing to reduce carbon emissions from the trucking industry."
There are major changes pending in federal labor law affecting transportation companies. The combination of a heavily Democratic, pro-union Congress in conjunction with more aggressive enforcement from agencies covering transport issues, means "major changes" ahead for the industry.
Card Check: One potential major change would be the Employee Free Choice Act (EFCA), which in its original form would have allowed a "card check" methodology of employee unionization elections. Its original format, which would have done away with secret union elections, is dead. But industry insiders warn it could be revived as labor flexes its muscles.
On EFCA, the manufacturing community has been successful in beating back organized labor's first attempt.
"It's amazing how much air has come out of this balloon," said Mark Friedman, U.S. Chamber of Commerce executive director of labor policy. "The goals of this bill are not bills the business community could ever support. The time now is to be vigilant."
It's likely a possible alternative bill could come up early next year that likely would eliminate the cark check provision. But there could be "snap" elections, with as little as five- or 10-day advance notice, via mail ballots, that trucking executives fear because it doesn't give companies enough time to fight back.
"It skews the system in a way that favors the unions and it does it in a way that is invasion and obstructive," Friedman said.
Pension problems persist: Pension reform continues to be a hot topic in 2010. The financial condition of the Central States Pension Fund, the largest in the Teamsters union, continues to worsen.
Herve H. Aitken, an attorney with Ford & Harrison who specializes in transport labor law, estimated that Central States' financial condition is precarious. It has assets of $17.35 billion and liabilities of $42 billion, a funding ratio of 42 percent. It suffered a $9.4 billion net change in assets in the most recent quarter, Aitken said.
"We have hit a black hole," Aitken said at the recent annual membership meeting of the North American Transportation Employee Relations Association (NATERA).
With annual employer contributions of $900 million, Central States has an annual operating deficit of $1.8 billion. It has a ratio of 1 active workers to 4 retirees, with only 81,111 active workers in the fund.
Of those, an estimated 22,000 work at companies controlled by financially ailing LTL giant YRC Worldwide, which has lost in excess of $2 billion in the last two and a-half years.
Trucking also is braced for stiffer enforcement from agencies ranging from the Labor Department to the Justice Department.
Contractor Classification: One hot area now is classification of workers as either independent contractors or employees. Federal Express's Ground Division (formerly RPS) is embroiled in a decade-long fight to keep its independent contractor model. Some courts have ruled those workers as employees, which has forced FedEx to change routing requirements in California and elsewhere.
Robert Digges, deputy general counsel for the American Trucking Associations, said the environment in the political atmosphere "is very treacherous" right now for truckers utilizing independent contractors.
There is activity in at least 23 states concerning misclassification of employees as independent contractors, Digges said. States are concerned over loss of payroll taxes. The unions are an interested third party, as they see independent contractors as a potentially rich area of union organizing.
There is a bill, H.R. 3408, which would allow the Internal Revenue Service to rescind independent contractor provision and would allow for reclassification of workers going forward.
"These rules would be very disruptive to motor carriers, and would be very expensive in order to preserve the independent contractor model," Digges said.
Cross-border concerns: The North American Free Trade Act (NAFTA) requires that the border be opened to trucks from all three North American nations. Currently that has become a political football, with the U.S. border currently closed to Mexican trucks beyond the 25-mile free trade zone. Mexico retaliated with tariffs on certain U.S. products.
Clearly, that will not last. The issue begs for a workable compromise. Transportation Secretary Ray LaHood has indicated this will come sometime in 2010. How that works out remains to be seen, but could affect shippers' trucking options for next year and beyond.
HOS: There will also be another, perhaps final, challenge to the 2004 ruling by the DOT of the ongoing hours of service saga. Public Citizen, the Teamsters and others have filed a petition against the new hours-or-service (HOS) rules. While the HOS rules are expected to be unchanged, it is possible that new requirements for electronic on-board recorders-black boxes-could be included in whatever ruling comes out next year from the Federal Motor Carrier Safety Administration.
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