With the trucking industry on pins and needles anticipating more proposed changes in the truck driver hours of service regulations, some leading industry advocates and analysts are anticipating a once-in-a-generation opportunity to shape transportation policy in the new era of split government in Washington.
With Republicans taking over control of the House when the 112th Congress convenes in January, there is a feeling among trucking lobbyists and CEOs that perhaps 2011 will be finally the year that some long-term regulatory issues get resolved in Washington.
But first, hours of service. Most industry officials are expecting the Federal Motor Carrier Safety Administration (FMCSA) to propose rules that reduce by one hour the current 11-hur driving limit as well as the 14-hour on-duty limit. There may also be an increase in the hours required to “restart” the clock, from the current 34 hours off-duty to perhaps as much as 48 hours. There may also be more mandated rest breaks and a proposal for mandatory electronic on-board recorders (EOBRs) to help check cheating by drivers still using paper log books.
This could cause the industry to operate with perhaps 5-8 percent less available driving time. Then there is uncertainty associated with the rollout of CSA 2010 (“Comprehensive Safety Analysis”), which is expected to be fully implemented in 2011.
No less authority than Chris Lofgren, CEO of Schneider National, the nation’s second-largest truckload carrier, recently predicted that CSA could take out as much as 10 percent of available drivers from the trucking pool, further straining capacity at a time when overall economic conditions are improving.
These increases of the requirements of driver standards will reduce the number of eligible drivers. This means down the road truck rates will be rising as carriers suffer some side effects, including a reduction in asset utilization, an increase in driver pay and a likely increase in sales of Class 8 trucks in the next couple of years, at least. All these factors raise carrier costs, so rates will have to rise, most analysts are predicting.
But the uncertainty over HOS and CSA will likely diminish once the proposed rules are published, and carriers have time to react and retool their operations. But beyond these two issues, there are larger areas of uncertainty associated with tax policy, the upcoming reauthorization of the surface transportation bill (and how to pay for it), the elimination of “earmarks” to help pay for pet projects, clean air legislation, and constant rising of energy costs as diesel fuel costs are projected to remain north of $3.25 a gallon for the foreseeable future.
“Those issues are not going away,” Randy Mullett, vice president of government affairs for Con-way Inc., told LM. “We have a new Congress that is pretty much saying, ‘We’re not raising fuel taxes and we’re eliminating earmarks.’ That dramatically changes how we’ve done transportation policy in this country.
“There is uncertainty regarding HOS and CSA, but that uncertainty will be cleared up relatively quickly. What is different is what is going to happen with our tax policy. That is an ongoing issue that isn’t going away any time soon.”
Truckers have general concerns about HOS and what that will do them us operationally. CSA concerns about overall availability of equipment. But most large carriers say they’re excited about CSA because it has ability to remove bad actors from the system, which is good for the entire industry that often has been painted with a broad brush because of the actions of a few bad actors.
“These things will go a long way toward the industry being seen as a responsible player, and that’s good for all of us,” Mullett said.
Like a lot of Washington lobbyists, Mullett sees the change in House leadership as an interesting opportunity for surface transportation policy. “We’ve pulled a lot of levers to get here, such as the fuel tax (unchanged since 1993) and earmarks for special projects. Take those tools away and how do we get to where we want to go?”
Basically, it opens the door for once-contentious issues such as more liberal size and weights for trucks, national speed limits on trucks and mandatory EOBRs. Some insiders see the opportunity to “trade” for such things as the opportunity to operate longer combination vehicles (LCVs) in exchange for tighter hours of service, mandatory EOBRs and other safety improvements.
“It’s going to provide opportunities once we get past these initial uncertainties,” Mullett predicts. “This business is made up of self-made entrepreneurs who grew up in a deregulated environment. They responded and took advantage. Rules changed, and they took advantage of it. There’s no reason the industry won’t do it again.”
One thing is nearly certain. There will be no increase in the federal fuel tax (18.4 cents on gasoline, 23.4 cents on diesel) anytime soon. Rep. John Mica, R-Fla., the incoming chairman of the House Transportation & Infrastructure Committee, more or less signaled that when he was named new T&I chairman in December.
“Our government, elected leaders and Americans everyone have no choice but to do more with less,” Rep. Mica said upon winning the T&I chairmanship. “This will also be the Transportation & Infrastructure’s mandate.”
Still, money will be spent. There is a proposed six-year, $500 billion highway reauthorization bill that likely will be passed by next summer. That law expired on Sept. 30, 2009, but has been funded at existing levels through a series of “continuing resolutions” since. Rep. Mica has called the highway bill “must pass” legislation in 2011.
There are calls from members of the National Surface Transportation Infrastructure Financing Commission and the Bipartisan Policy Center’s (BPC) National Transportation Policy Project to start a new way of accountable, targeted, fiscally responsible and performance-driven national transportation policy. The group that includes former Republican and Democratic Senate and House members, mayors, business and civic leaders and transportation stakeholders and experts, is calling for new revenue to provide adequate investment in the nation’s transportation infrastructure to advance specific national transportation goals.
“Our recommendations show that stakeholders with widely divergent views, can come together to address the challenges facing our transportation system,” said former Detroit Mayor Dennis Archer, co-chair of the BPC’s National Transportation Policy Project. “We hope that our recommendations resonate among both parties in Congress and serve as the starting point for a much needed transformation of the system.”
The BPC’s National Transportation Policy Project and the National Surface Transportation Infrastructure Financing Commission said recently that in these times of severe fiscal constraint, it is vital that the U.S. invest scarce public resources “more wisely and efficiently, in order to maximize the reach and impact of what we spend.”
Otherwise, the group said, the country will continue to get the same results: “deteriorating infrastructure marked by unacceptable compromises to safety as well as worsening performance, especially growing congestion.”
The National Surface Transportation Infrastructure Financing Commission was designated by Congress to make recommendations for financing future infrastructure investments.
“For too long transportation policy in Washington has been in political and policy gridlock. The stakes for the nation and for travelers are too high for this to continue,” said Rob Atkinson, President of the Information Technology and Innovation Foundation and Chair of the infrastructure financing commission.
Atkinson says it’s possible to find common ground to help figure out how to pay for infrastructure projects. This means accepting the need for higher user fees while at the same time requiring stricter accountability and real performance standards in how federal money is invested, he said.
The combined groups are recommending targeted investments in the transportation system from all levels of government and the private sector in order to adequately serve the nation’s growing population and to support the nation’s economy and international competitiveness.
“In a time of fiscal crisis, this is where we must make the critical future investments in our economy,” the groups said in a joint statement. “Transportation investments should be strategically focused on achieving long-term benefits in terms of economic growth and competitiveness, improved national connectivity, rural and metropolitan accessibility, and the promotion of energy security, environmental sustainability, and personal safety.”
Second, users of the transportation system must “bear more of the full costs of infrastructure they demand – including congestion, pollution, and other indirect impacts.” To increase revenues from direct user fees, Congress should “remove certain barriers to tolling and pricing; reauthorize and expand the credit assistance program; authorize and fund federal incentive grants to support the development by states of major user-backed projects; and recapitalize state infrastructure banks.” The group also called for a needed and critical “national commitment” to a more direct user fee based on vehicle miles traveled (VMT), a vehicle trucking groups have long opposed.
The groups are also calling for an increase in the federal fuel tax, which seems like a long shot at this point. But they called the fuel tax “the responsible way” to make progress in the infrastructure battle. But Rep. Mica has essentially ruled out raising fuel taxes while he’s in charge of the House’s largest committee.
Raising taxes “is off the table” when the U.S. House votes on a six-year plan for funding highways, perhaps early next year, Mica recently told Bloomberg Business Week. Instead, Rep. Mica favors increased use of public-private partnerships, and accelerated release of aid to states to generate cash for projects.
“We don’t have to spend a huge amount of more money, but we can leverage the money that we have, or better move the funds that we have, and get things done,” Mica said in the Bloomberg interview. Time is of the essence. Look for a massive, $500 billion surface transportation reauthorization bill—perhaps with limited “earmarks,” or special goodies for specific congressmen—to be passed by late summer.
“We have to get a bill up early this year, because I have to get it through the Senate,” Mica recently told the Florida Times Union. “I only have until about August. That’s when the presidential politics begin.” The $286.5 billion law passed during the administration of President George W. Bush expired more than a year ago. Mica said he hasn’t determined a spending level for his proposed measure.
While the Highway Trust Fund has been spent down in recent years, some federal accounts have unspent funds, Mica said. A railroad- infrastructure finance fund has $34 billion available and a harbor maintenance trust has $5 billion to $6 billion, he said.
Raising the fuel tax would be a fast way to rebuild the Highway Trust Fund. But with Republicans controlling the purse strings in House of Representatives in the 112th Congress, that appears to be a longshot. But however it’s paid for, new infrastructure spending is essential.
“The urgency of the need to make significant changes to America’s transportation policy cannot be overstated,” said Martin L. Shultz, Vice Chair of the National Surface Transportation Infrastructure Financing Commission. “These combined recommendations should be implemented as soon as possible. America’s economic health depends on it.”
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