By Kenneth E. Siegel
President-elect Obama has indicated that a stimulus bill will be the first matter to be considered by the new Congress and that the bill will be aimed at creating new jobs through rebuilding our country’s sagging infrastructure, including highways. But besides determining what and whose infrastructure projects will be included in the bill, the new Congress must determine how the projects will be paid for. The Highway Trust Fund is virtually bankrupt. The 110th Congress had to provide the Fund with an emergency transfusion of over 7 billion dollars just to enable it to meet fiscal 2008 commitments under the 2005 Highway Reauthorization Bill known as SAFETEA-LU. Where will the moneys for the new projects come from? The 111th Congress will have to tackle some very difficult finance issues when it takes up both the stimulus bill and the new highway reauthorization bill in 2009. The president-elect has indicated that he is willing to run a deficit to help the economy and improve the nation’s infrastructure. Mr. Obama has also voiced his support for an Infrastructure Bank, although the details of how the bank will be funded and projects selected for financing have not been made clear.
The make-up of President-elect Obama’s transportation transition team can also provide a hint at the interests which will have the strongest influence with respect to the new U.S. DOT and the new administration’s legislative approach. Representatives of Labor and the so called safety advocates constitute a significant number of the team’s members.
I. THE MOTOR CARRIER INDUSTRY
A. Highway Reauthorization
It is time again for Congress to address reauthorization of highway funding as well as money for aviation and for hazardous materials safety programs. The largest question looming ahead may well be how to fund future highway and other transportation projects. As mentioned above, the 110th Congress had to bail out the Highway Trust Fund to the tune of $7 billion this last year. The future for the Fund is not bright. In September of this year Americans drove 2 billion miles less than they did in September 2007. Less driving means less gas tax revenues for the Highway Trust Fund. This trend is not likely to change in coming years. Cars and trucks will continue to become more fuel efficient; people and industry are searching for more fuel efficient means of transporting both passengers and freight. Miles driven will continue to decline significantly – both for private and commercial vehicles. Alternative, untaxed, fuels will become more and more available. Although still the option of choice for the Bush administration and some cash strapped States, programs for privatization of highways -- that is, the transferring of the ownership, operation and development of highways to the private sector as the principal means of financing new highways as well as maintaining existing routes -- have not been as successful as many supporters predicted or wished. Political opposition, reduction in traffic and thus, potential toll collections, have all worked to take the petals off of the bloom of privatization. Other Bush administration proposals such as “hot lanes”, congestion pricing, and tolls in general have not received the backing of the public or industry.
Some see large increases in the federal fuel tax as at least a partial solution, but this approach would seem to fly in the face of the new administration’s pledge not to increase taxes on the middle class. Another approach that has been advocated is a distance tax or fee. Similar in nature to the ton mile taxes imposed in some states, the tax would be based on the number of miles a vehicle travels on certain highways. The infrastructure that would be required to calculate, enforce and collect such a tax would not only require a massive investment, but would take years, if not decades, to develop and put in place. Further, if the number of miles being driven is falling, a distance tax faces the same dismal future as fuel taxes. In the meantime our existing highways and bridges are in desperate need of repair and restructuring and the economy needs improved infrastructure to recover, both through the investment and jobs that would be derived from highway and intermodal projects and through the improved distribution services that would result from the availability of an adequate and efficient infrastructure.
Several bills were introduced in the last Congress proposing various fees and taxes on imports and exports to help finance improvements in infrastructure at and leading to port facilities. Many of the sponsors of such legislation, e.g. Illinois Congressman Jesse Jackson, are likely to find themselves in better positions to promote these concepts in the new Congress.
There will be heavy competition between highway, high speed rail, mass transportation and other transit projects, bridge replacement, improvement to intermodal facilities and new freight rail lines for the limited funds that will be available for the infrastructure.
The reauthorization bills will address many issues other than funding and highway maintenance and construction. The legislation also is likely to address questions involving:
· Expansion of mass transportation networks;
· Passenger bus safety and operations;
· Handling of hazardous materials;
· Creating a federal clearinghouse for positive drug and alcohol test results of Commercial Driver License (“CDL”) holders;
· Whether to require speed governors on commercial vehicles;
· Whether to re-impose a national maximum speed limit;
· Idling restrictions;
· Providing more and safer parking areas on the interstate system for commercial vehicles; and
· Whether to allow Mexican motor carriers to continue to operate in the U.S.
B. Labor and Employment
The presidential election and the strengthening of the Democratic Party’s control of Congress, whether filibuster-proof or not, will also bring about more attention to labor and employment issues that will directly affect the trucking industry. Among those labor and employment proposals that we can expect to be addressed by the 111th Congress are measures that would make it much easier for labor unions to gain a foothold in a company and that could change independent contractor classification.
The Employee Free Choice Act, which passed the House of Representatives in 2007 on a party-line vote and had the support of all Democrats in the Senate, would require the certification of a union at a non-union company if the union obtains the signature on sign-up cards (“card check”) of a majority of employees in the bargaining. While opponents have raised numerous objections, arguing especially that denying employees the right to a secret ballot would lead to intimidation, and while the bill had no chance of success in the 110th Congress, those opposing the bill have lost one major “firewall” – the presidency – and have a much smaller margin for enforcing a filibuster.
The Employee Free Choice Act had the strong support of President-elect Obama as did the Independent Contractor Proper Classification Act. The Classification Act would authorize the Treasury Department to issue new criteria for determining independent contractor classification. Whistleblower protections would be imposed to encourage disgruntled owner-operators to contest classification, and the IRS would adjudicate the disputes. The current safe harbor provisions allowing motor carriers to rely upon industry standards to determine a driver’s independent contractor status would be repealed.
Another legislative proposal that the President-elect and other pro-labor advocates strongly supported in the 110th would grant OSHA jurisdiction over job safety standards for all occupations. In the case of industries, such as trucking, in which another federal agency has substantial responsibility for the safety of workers, OSHA rules would apply unless OSHA made a finding that the independent agency’s rules provided sufficient protection.
C. Fair Labor Standards Act
Various highway safety advocacy groups and unions are likely to try to further restrict the trucking industry’s exemption from the Fair Labor Standards Act’s federal overtime rules. The 110th Congress eliminated the exemption for motor carrier employees involved with the safe operations of non-commercial vehicles (trucks with a gross vehicle weight rating or GVWR of 10,000 lbs. or less). Labor and the so called safety advocates have longed argued that elimination of the overtime exemption for all truck drivers would result in shorter driving hours and safer operations, ignoring the question as to where to find all the additional truck drivers that such action would necessitate.
D. Other Safety Rules
An Obama administration may have the opportunity to reconsider some major safety regulations regarding motor carriers. The Federal Motor Carrier Safety Administration (“FMCSA”) has issued a final rule that would retain the current hours-of-service rules adopted in 2005 and successfully challenged by the safety advocates and Teamsters on technical and procedural grounds. Several Congressional leaders including Speaker Pelosi and House Transportation & Infrastructure Committee Chair Oberstar have expressed concern with the rules, especially the part permitting CDL operators 11 hours of driving time in every 14 hour shift. The FMCSA has just sent its proposed rule governing electronic onboard recorders (“EOBRs”) to the Office of Management & Budget (“OMB”) for review. The chances for approval before the Bush administration departs are dwindling. Should the new Congress or the new head of U.S. DOT finally decide to take more control of these issues, as did the 110th with respect to rail workers’ hours of service, the trucking industry and its customers can probably expect significant reductions in the permissible driving hours as well as extended mandatory rest periods and mandatory use of EOBRs.
E. International Trade and Security
Legislation banning the further entry of Mexican trucks into the U.S. twice passed the House of Representatives and had strong support in the Senate. In spite of factual findings that the Mexican truckers currently operating in the U.S. have stronger safety records than their American counterparts, it is likely that the anti-Mexican sentiment and the solicitude for union job security that was pervasive in the last Congress will continue to rage.
Measures to increase security of the trucking and other transportation modes will also be likely in a new Congress. The imposition of rules requiring tracking devices on hazardous materials shipments; expansion of the Transportation Workers Identification Card or TWIC beyond use in the ports; cargo inspections and tracking; and other security related actions have all been mentioned.
II. RAILROAD ISSUES
The push for reregulation of the rail industry will begin anew, although with the enactment of rail safety legislation in the 110th Congress, the coalition of shippers and labor will not be as strong.
A. Amtrak
Vice-President Biden has been one of Amtrak’s strongest supporters and that support is likely to continue through the administration. Biden’s support will probably mean increased funding and support for high speed rail projects.
B. Freight Railways
In a letter to the NITL President-elect Obama stated that rail modernization was essential to the economy and that funding for track and roadbed improvements had to be found, e.g. through an infrastructure bank. The rail freight industry would also benefit from EPA grants for carbon capturing plants resulting in growth in the clean coal industry. Other issues of concern for the freight railways include: common carrier obligation; limited versus full liability for carriers with respect to hazardous materials transportation; elimination of antitrust immunity; and economic reregulation or increased protection for “captive shippers”. The latter has some support from Senate leaders such as Jay Rockefeller, incoming Commerce Committee chair, but lacks support within the membership of the committee.
III. AIR
The Federal Aviation Administration and its related programs are also up for reauthorization in the new Congress. Issues involving air labor, safety, open skies, and national security (such as a review of the 100% cargo inspection mandate) will be before the new Congress.
IV. MARITIME
The continued existence of the Federal Maritime Commission (“FMC”) may also become an issue in the new Congress. The FMC has been taking a strong stand against the efforts of the Ports of Los Angeles and Long Beach to launch a “Clean Truck Plan”. The Plan has the strong support of California’s pro-environment politicians and many in the House and Senate, rightfully or wrongly, are now threatening to call the agency before them to explain its position. The original bill which eventually became the Interstate Commerce Commission Termination Act also proposed to do away with an independent FMC. Although not high on anyone’s to-do list, many on the Democratic side of Congress are wondering what it is the agency does and why they need to keep it around. At time when Congress will be looking for every possible penny to put in the stimulus package, an agency which has come into disfavor with a significant portion of the leadership may find that its ship has sailed – or sunk.
Another maritime related issue may be ratification of the Rotterdam Convention, a new cargo liability regime drafted by the United Nations Committee on International Trade Law or UNCITRAL. No matter how important this may be to ocean shippers and carriers, however, it likely will take a back seat in Congress to more glamorous issues such as 100% container inspections, the alternative proposed by Customs and Border Protection (“CBP”), and the10+2 Program which CBP recently published in the Federal Register. (See separate blog posting by Strasburger’s Doug Jacobson.)
V. TAX ISSUES – A BRIGHT SPOT?
It is obviously difficult to move most domestic transportation operations or employment offshore. Therefore, most railroads, trucking companies, and logistics companies will be eligible for proposed tax credits to companies creating jobs in America. Most of the industry would also benefit from a proposed reduction in the corporate tax rate for American based companies on their American generated income.
In summary, the 111th Congress will be an active one for the transportation industry. It will be important for those that might be affected by these new laws and regulations to keep informed and active.
Editor’s note: Ken Siegel, of counsel with Strasburger’s Washington, DC office, has represented the trucking industry on legislative issues for upwards of two decades. His experience includes serving as Deputy General Counsel and Vice President of Law with the American Trucking Associations before entering private practice in 2000.
