Congress Passes Fuel Surcharge Pass-Through

The US Congress enacted a fuel surcharge pass-through provision in the US Department of Defense (DoD) Authorization Bill on and the legislation was expected to be signed into law by President Bush.

The language, sponsored by Congressman Peter DeFazio (D-OR) in a manager's amendment during a DoD mark-up, was significantly watered down from its original offering.

"While we believe the legislation was not necessary, the outcome of the DoD legislation represents a significant accomplishment for the Transportation Intermediaries Association (TIA). Three months ago, we were faced with the prospect of having the industry re-regulated by the Trust in Reliable Understanding of Consumer Costs (TRUCC) Act," said TIA president and CEO Robert Voltmann. "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," Voltmann added.

Congress made several significant changes to the Bill, 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.

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. 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.

It remains to be seen how DoD will carry out this legislation. For example, TIA noted, 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 to the driver, have the practical effect of removing fuel as a negotiable item for DoD subcontracted shipments? TIA said it would monitor DoD's implementation of the legislation closely and report on the answers to these questions.

"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," said Voltmann.

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