Regulators: Get In Their Heads

Jan. 1, 2011
The power shift in Washington means a new opportunity to convince legislators of industry’s role in strengthening the economy.

What a difference an election makes. Although the voters remain sharply divided on many issues, last November they ended Democrat control of the House, weakened their control of the Senate and at the state level substantially boosted Republican representation in legislatures and governors’ mansions.

For the business community the question is: What happens next? At the national level, Democrats lost their ability to pass almost any legislation without needing to negotiate with their Republican colleagues across the aisle. But there is serious question about how far the strengthened Republicans will be able to go in making the changes they ran on. (See “What’s at Stake in the November Elections” in the October 2010 issue of Material Handling & Logistics.)

Saving Jobs and the Economy

While public opinion polls and voter actions showed a widespread rejection of the Obama health reform legislation, the Republicans lack the votes to be able to deliver on their stated desire to repeal it as long as the President wields a veto pen. However, proposals could be enacted to ameliorate some of the worst aspects of a law that even Democrats agreed was an ungainly mess.
Businesses want many of these fixes because they have already seen their health insurance costs skyrocket and are facing a spate of new regulations and IRS reporting requirements in advance of the law’s scheduled full implementation between 2011 and 2014.

Polls show that if there was one message the voters made sure was heard loud and clear, it was this: they want Congress and the Administration to focus more on restoring the economy and creating jobs. This should turn out to be an advantage when it comes to advocating for the supply chain.

Removing Trade Barriers

Commercial warehouse and asset-based third-party logistics providers want to remove impediments to trade and commerce. These goals are not Republican or Democrat, and by pursuing them, politicians and bureaucrats at the state and federal levels can make a real contribution to creating jobs and economic growth.

A perfect example of the bi-partisan approach to trade and commerce is ratification of the free trade agreements negotiated between the U.S. and South Korea, Panama and Colombia. Bolstering our ability to trade with the rest of the world will pay off in creating sustainable jobs and increasing prosperity.

Promoting trade and commerce also is why the International Warehouse Logistics Association (IWLA) supports the development of a new National Freight Policy by the Department of Transportation, which was the subject of legislation introduced in the Senate in 2010. If designed properly, such a policy could focus infrastructure funding on those projects that increase supply chain efficiency and growth, creating a jobs multiplier effect beyond those needed to build them.

What we need from such a policy, and recognized in infrastructure funding legislation, is not more taxpayer money being directed to bike paths and high-speed passenger rail, but a user-fee based infrastructure system that promotes the free flow of freight and long-term employment.

Maintaining Infrastructure

Paying attention to our infrastructure needs isn’t just a case of building and maintaining its physical components like roads and bridges. It also requires all of the people who represent links in the chain to pay closer attention to supply chain processes. The Ports of Los Angeles and Long Beach are a case in point.

In June 2010 IWLA held a meeting attended by politicians, labor representatives and logistics providers in Long Beach. It showed there was a keen awareness that we need to pull together to eliminate inefficiencies that are placing the southern California ports at a competitive disadvantage and adding unnecessary costs.

Unfortunately, some in federal, state and even local governments haven’t gotten the message. In their quest for revenues in the face of mounting deficits, they are seeking new areas they can tax and one target is the supply chain. Last year IWLA members played a major role in stopping outgoing Pennsylvania Governor Ed Rendell’s effort to impose a sales tax on commercial warehousing. IWLA is laying the groundwork for fighting this tax when, as expert observers agree, the proposal resurfaces in Pennsylvania and possibly other states as well.


Another area of concern involves concerted attempts to load the dice for unions at the expense of business owners – and add costs that will impact everyone. A prime example is the effort to eliminate independent contractors from trucking at ports like Los Angeles. On another front, state and federal officials are mounting fresh attempts to reclassify independent contractors as employees to capture more payroll and other taxes.

A union-beholden Obama administration has stacked the deck at the national level. Strong opposition to the Employee Free Choice Act (EFCA), which would have mandated card check, effectively killed that legislation in Congress. However, the new National Labor Relations Board led by its chairman and former SEIU general counsel Craig Becker is pursuing a number of proceedings in what some legal observers believe amount to a stealth campaign to achieve “EFCA-Lite” – fulfilling the goals of the legislation administratively through piecemeal rulemakings.

A raft of other decisions handed down by the Obama NLRB have put employers facing organizing campaigns at a disadvantage and, along with the Department of Labor, the board has taken steps that make even the normal day-to-day interactions of employers and employees more regulated, complicated and costly.

With certain NLRB actions the oversight by committees in the new Republican-led House may have some effect in the future, but that remains to be seen. Employers are keeping an eye on the board, knowing that in certain cases if the board oversteps its authority their only relief may have to come from the courts.

In fact, the courts are seeing a lot of action in the wake of the haste with which President Obama and the Democratic leaders in Congress got as much of their agenda passed as quickly as possible over the past two years. The courts also are grappling with opposition to decisions by federal agencies like EPA, which unilaterally expanded its regulatory authority to greenhouse gases following the defeat of measures in Congress that would have accomplished that legislatively.

Educating Legislators

To make sure legislators keep trade and commerce top of mind, IWLA will hold a February meeting on Capitol Hill with members of Congress and their staffs, regardless of their party. The idea is to educate them about industry’s role in the economy.

We are taking this on because we have a track record of accomplishment. In 2010 we were successful in getting written into the Food Safety Act recognition for the unique identity and special responsibilities of warehouse-based third parties involved in food recalls. This Act was approved by the House late last year and was awaiting approval by the Senate when I wrote this article. IWLA also is participating in an FDA rulemaking proceeding to achieve the same goal.

We have enjoyed similar success both at the federal level and in the states by getting legislators to recognize the proper role of warehouse operators in the legal chain of custody for pharmaceuticals. In 2010 we did this in Florida and are continuing to pursue it in several others states, including Texas and California. We also will continue educating Congress and Customs about the unique position of asset-based third-party logistics providers in the C-TPAT program.

In addition, IWLA will continue its campaign to have states change the laws regarding the Uniform Commercial Code to allow the use of electronic versions of warehouse receipts, bills of lading and other documents of title. By the end of 2010 these changes were made in 39 states, including Wisconsin, Georgia and Florida.

Industry associations like the IWLA cannot accomplish their policy goals without the active leadership and participation of supply chain professionals. While association staff can help educate members of Congress about industry, nothing has had more of a positive impact than industry executives who invite their legislators to visit their facilities, who can then talk to employees and get to see the supply chain’s impact on the economy first hand.

There are a myriad of issues facing industry that could have a negative or positive effect on the supply chain and thus the economy as a whole. My hope is that this article will help you realize that in this time of political turmoil and uncertainty it is more important than ever for you to get educated and get involved in the political process at the local, state and federal levels. The future of your business depends on it.

Joel Anderson is president & CEO of the International Warehouse Logistics Association and a member of MH&L’s Editorial Advisory Board.

The views expressed in this feature are the author's, and are not meant to reflect a position taken by MH&L's staff.