Congress votes for DoD fuel surcharge pass-through

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Congress enacted a fuel surcharge pass-through provision in the Department of Defense Authorization Bill, and the legislation is expected to be signed into law by President Bush. The language, sponsored by U.S. Rep. Peter DeFazio (D-Ore.) in a manager’s amendment during a DoD markup, was watered down significantly from its original offering, says Robert Voltmann, president and chief executive officer of the Transportation Intermediaries Association.

“While we believe the legislation was not necessary, the outcome of the DoD legislation represents a significant accomplishment for TIA,” Voltmann says. “Three months ago, we were faced with the prospect of having the industry re-regulated by the Trust in Reliable Understanding of Consumer Costs Act. Thanks to the concerted efforts of our members, coalition partners and staff, we overcame significant obstacles and limited the language to the watered-down version that we see today. I am particularly proud of our membership and how they engaged Congress.”

Congress made several significant changes to the bill — enacted Thursday, Sept. 25 — including the elimination of the proposed reporting requirement on every shipment, since DoD already posts the amount of its fuel surcharge on its website. By eliminating this shipment-by-shipment reporting requirement, Congress rejected the attempt to reintroduce a tariff regime in the motor carrier industry, according to TIA.

Also, the legislation is not self-implementing, meaning that it relies on DoD to create provisions “to the maximum extent practicable” to pass-through the fuel surcharge payment from DoD to the ultimate purchaser of the fuel, TIA says; furthermore, the legislation rejected attempts by the sponsors to create a private right-of-action, thereby reducing the threat of class-action lawsuits against carriers, brokers, forwarders and shippers.

Voltmann says it remains to be seen how this legislation will be carried out by DoD:

  • Will DoD continue to make a single payment for the full rate, or make a separate payment for fuel so that it can oversee compliance with the new pass-through requirement?
  • Will DoD’s new regulations, by setting the level of fuel surcharge to be paid the driver, have the practical effect of removing fuel as a negotiable item for DoD subcontracted shipments?
  • Voltmann says TIA will monitor DoD’s implementation of the legislation closely and report to the membership on the answers to these questions. “Their efforts made all the difference in our success,” he says. “Our members are prepared and well-armed for our opposition’s efforts to promote fuel surcharge legislation to all commercial shipping transactions in the 111th Congress. Ours is the most dynamic and efficient logistics system in the world. TIA and its members are at the heart of the logistics system, and we will fight efforts by our opponents to turn the clock back on 30 successful years of deregulation and innovation.”