Highway Reform Tops Washington Agenda

In Washington over the coming year, the transportation community will be fixed on the most important event since the Interstate Highway System was launched in 1956. The federal law that sets long-term surface transportation policy will expire next October. Congress will spend the next 12 months debating, drafting and maybe even passing a replacement, although the complexity and enormous political stakes could delay completion of the measure until 2010 or later.

Meanwhile, there will be a new president - which means new leadership in key departments and agencies - and Congress will resume consideration of important energy, environmental and safety legislation.

On the operational side, there are numerous critical issues at the Federal Motor Carrier Safety Administration due for resolution, chief among them hours of service reform and a new rule on electronic onboard recorders.

Transportation leaders such as former Transportation Secretary Norman Mineta and current House Transportation and Infrastructure Committee Chairman James Oberstar, D-Minn., have described the upcoming reauthorization as the most momentous transportation issue of the past half-century.

The system of highway governance and funding has fallen behind and needs fundamental restructuring or the U.S. risks losing its leadership position in the global economy, according to a bipartisan study of the issue.

Several themes emerged from the report of the National Surface Transportation Policy and Revenue Study Commission.

First, the social contract under which the government assesses user fees to pay for construction and maintenance of the Interstate System is no longer working and needs to be rejuvenated. Now that the system is complete, support for the user fee has diminished - in part because of the perception that the money is not being well spent.

Second, the country has fallen behind on maintenance and improvement, with potentially disastrous consequences if the situation is not remedied. The infrastructure is aging and needs much more investment just to keep pace, much less improve. For example, slowdowns and fuel wastage caused by congestion are costing almost $80 billion a year.

Third, the system of governance needs comprehensive reform in order to restore public trust in the program. The commission called for restructuring the Department of Transportation to emphasize goals and performance standards rather than modes of transportation, and to create a new national freight program. It said the government must be more disciplined about where and how it spends the money, and that the excessive time lag between concept and conclusion of highway projects is wasting billions of dollars.

There is general agreement on these issues in the transportation community, but that agreement falls apart when the conversation turns to funding.

A majority of the commission reluctantly concluded that there is no way to meet the challenge without raising fuel taxes: other fundraising methods, such as tolling and private investment, should be part of the mix but cannot provide all the money that's needed. The majority added, however, that a fuel tax hike is a stopgap measure. In the long run the country needs to wean itself off the fuel tax and shift to a mileage-based system using roadside telemetry to keep track of vehicles and distance.

On the other side, a minority of the commission, representing the views of the Bush administration, is adamantly opposed to raising the fuel tax. This group, led by Transportation Secretary Mary Peters, believes the money has to come from greatly increased private investment and tolling techniques such as congestion pricing.

To a great extent, the outcome of the funding debate will depend on who is in the White House.

Sen. John McCain of Arizona, the ranking Republican and former chairman of the Senate Commerce, Science and Transportation committee, has long experience in transportation issues. He has acknowledged the need for reinvestment in infrastructure and safety but wants to see a smaller federal role in the process. According to a veteran Hill watcher, he is not likely to support a fuel tax increase. McCain's signature passion in this arena is his fierce opposition to congressional earmarking practices - the reason he gave for voting against the current transportation law.

Sen. Barack Obama of Illinois supports a major federal role in the highway program and has called for infrastructure investment to keep the U.S. competitive in the world, to improve safety and to create new jobs. He has advocated creation of a national infrastructure bank that would use $60 billion in federal money over 10 years to supplement current federal programs.

Trucking will have a voice in the debate, as well. Industry interests have generally supported the idea of raising the fuel tax, provided the money is properly spent. The American Trucking Associations also supports use of tolls and private investment, but only under certain limited conditions and not to the extent advocated by the Bush administration.

Another important player will be the investment community. According to DOT, there is more than $400 billion in private capital available for infrastructure investments globally. A study published by the Harvard Business School estimates that public-private deals in the U.S. will grow by $1.6 trillion over the next decade. This much money is likely to generate momentum as the debate unfolds in Congress.

Chairman Oberstar supports a mix of funding techniques, including a fuel tax increase that is linked to the cost of highway construction rather than inflation. He anticipates that his draft of the bill will call for a program in the range of $450 billion to $500 billion. He plans to have a framework proposal ready by the end of February, and is building a coalition of political leaders and private interests who will explain the proposal to the public and ask for support.

Rep. John Mica of Florida, the ranking Republican on the Transportation and Infrastructure Committee, wants the total value of the bill to be in the range of $1.5 trillion. He has said that he and Oberstar agree that about a third of that, $500 million, could come from federal spending. The other two-thirds would come from a combination of public-private partnerships and bonds.

On the Senate side, Democrat Barbara Boxer of California, chairman of the Environment and Public Works Committee, is preparing a bill aimed at maintaining a major federal role in transportation and increasing investment - although she has not yet said how the money should be raised.

A key issue for Boxer will be reducing congestion and improving air quality. "The movement of goods has a serious impact on air quality and global warming," she said recently at a hearing. "We need to find a way to reduce congestion while our population is growing and placing new and greater demands on the existing transportation systems."

Transportation committees in both chambers have held numerous hearings already, and the pace will pick up after the next president is inaugurated in January. It remains to be seen, however, if Congress will get the job done on schedule. Last time around it took 11 extensions of the old law to bring the matter to closure: the bill that was due on Oct. 1, 2003, was finally signed on Aug. 10, 2005.

Cross-Border Trucking And Other Issues

In early September the House passed a bill that would immediately end the U.S.-Mexico cross-border trucking program. This followed the Bush administration's decision this summer to extend the year-long program for another two years, a move that angered opponents in this long-running skirmish over the North American Free Trade Agreement.

The program is designed to let up to 100 Mexican and U.S. carriers provide long-haul trucking north and south of the border to see if the FMCSA's safety control system will work. In early September, there were 27 Mexican carriers running 90 trucks and 10 U.S. carriers running 52 trucks in the program.

"This bill will force the Administration to stay true to its word that this program will remain a short-term, limited experiment," said Chairman Oberstar.

Mica, a co-sponsor of the bill, seconded Oberstar. "This bill puts the brakes on a program that was forced on the Bush administration after President Clinton supported NAFTA provisions that required admitting Mexican trucks across our border," he said. "... It's appropriate that Congress rejects the panel's decision and protects U.S. interests on this issue."

The bill, which passed by an overwhelming margin, 395-18, still must be taken up by the Senate, where there is considerable sentiment against the program.

The Senate already has a transportation appropriations measure sponsored by Sen. Byron Dorgan, D-N.D., and others that would cut off funding for the program. It is not likely, however, that Congress will pass any appropriations bills until next year, after the new president and Congress get to work.

Again, the outcome of the presidential election could influence this fight: The candidates have differing views on NAFTA..

The matter is under litigation as well. The Ninth Circuit Court of Appeals in San Francisco is considering a suit filed by the Teamsters, Public Citizen and the Sierra Club contending that the program is illegal and unsafe. A reversal there could stop the program before Congress reaches a decision.

Also this year, truck component manufacturers want to move legislation to create market incentives for carriers to buy and install certain safety technologies on their trucks. Congress has a bill that would give tax credits to fleets that use collision avoidance, lane departure warning, stability control and brake stroke monitoring. The hurdle for this measure will be to find the money to replace the loss in tax revenue - not an easy thing under current fiscal circumstances

Congressional interest in energy and environmental matters is driving a couple of proposals of direct importance to trucking. The House has a bill that would mandate a fuel surcharge pass-through to the person who bought the fuel - a measure designed to protect independents and small fleet operators.

In its original incarnation the bill applied to all truckload shipments, but it was scaled back to just Defense Department shipments when it was attached to a DOD appropriations measure. Even this version faces an uphill climb, though, since shippers and large carriers view it as a return to economic regulation.

Congress also has taken up the subject of greenhouse gas regulation. This summer the debate opened on a prototype cap-and-trade measure that would cover transportation as well as electric power, manufacturing and natural gas. The transportation provision would set up a cap-and-trade program for medium- and heavy-duty hybrid trucks as well as buses and vans.

The bill went nowhere, in part because of strong opposition from the business community. Both presidential candidates support the cap-and-trade approach to limiting greenhouse gases, so the issue is likely to resurface.

Last June a bipartisan group from the Transportation and Infrastructure Committee said it will write a bill to create a national database that carriers would use to determine if a driver applicant has a record of drug or alcohol abuse. It's a measure long sought by some trucking interests.

The bill, which has not yet been introduced, also will require more oversight of the agencies that collect drug samples for testing, including fines for those not in compliance, and tougher enforcement of carrier testing requirements. The group also is considering a ban on products that some drivers use to pass the tests even though they have drugs in their systems.

Safety Regulations

The hours of service rules are in their usual state of suspended animation. The 2003 version is in effect while FMCSA, working under a court order, drafts a rewrite that is due in December.

Last year the U.S. Court of Appeals for the D.C. Circuit struck down two key provisions of the rule, the 11-hour limit on driving time and the 34-hour restart. The agency is reworking the rule to answer the court's findings that it violated procedural requirements, among other problems.

Whatever the agency produces could easily wind up back in court. Public Citizen, which brought the suit against the rule, will not be happy with a revision that preserves the status quo, and trucking interests might sue if the agency goes too far in the other direction.

The agency also plans to issue a major rule on electronic onboard recorders before the end of the year.

FMCSA is considering requiring mandatory recorders for carriers that repeatedly show they are not willing to abide by the hours rules. Specifically, if a carrier violated the hours rules 10 percent or more of the time, as determined in two compliance reviews within a two-year period, it would have to use recorders.

In regulatory terms, this is a pretty light touch. At any given time, around 930 carriers would have to use recorders - that's 0.14 percent of the 650,000 carriers FMCSA estimates it regulates.

But agency administrator John Hill has indicated that he's looking for ways to expand the proposed requirement, which could mean that the agency is considering tightening the standard to reach more carriers, or even all of them.

Also pending at FMCSA:

The agency wants to tighten standards for new entrants into the trucking business. Specifically, it has proposed rejecting new entrants for failing to meet core safety requirements, such as failure to implement an alcohol or controlled substances testing program, not having insurance, or failing to track HOS. The final rule is due in November.

In two related rules, the agency is planning to improve its system for ensuring that drivers are medically qualified. One rule, due in December, will integrate medical certificate information into the national commercial driver's license database. Another, due in November, will set training and certification standards for medical examiners, and create a national registry of certified medical examiners.

Among the agency's longer-range projects is a proposal to toughen driver training standards. FMCSA has proposed that trainees get 44 hours behind the wheel before they can get a commercial license. This is in response to a 2005 court order that said the lack of a requirement for road training is a fatal flaw in the current rules.

Also in the longer term, the agency wants to toughen its knowledge and skills tests for the commercial driver's license, and set new standards for states to issue commercial learner's permits. Under the proposal, an applicant for a learner's permit would have to pass the knowledge test. Also, a would-be driver would have to obtain the learner's permit and hold it for a month before applying for a CDL. The state would have to check the driver's record before issuing the permit.

FMCSA also is well into a long-term project to restructure its approach to enforcement. It plans to ratchet back its emphasis on compliance reviews - too labor-intensive and time-consuming - and determine a carrier's safety fitness based on performance information such as traffic, hours of service or license violations, improper maintenance or a pattern of frequent accidents. It envisions using roadside telemetry to collect this data.

FMCSA and the National Highway Traffic Safety Administration are studying the idea of requiring truck manufacturers to program a maximum speed of 68 mph into their trucks' electronic control modules.

NHTSA is expected to issue a final rule in December that will require shorter stopping distances for heavy-duty trucks.

Two more proceedings of note:

In December FMCSA is supposed to complete its final rule on intermodal chassis "roadability" to clarify who is responsible for maintaining container chassis in safe operating condition. Under the proposal, which was ordered by Congress, responsibility would lie with the company that provides the equipment. The provider would have to establish a system for inspecting and maintaining chassis, and for responding to drivers' reports about defects. The provider also would have to obtain a DOT number and display it on the chassis.

And, this year the National Academy of Sciences is supposed to finish a study on the feasibility of setting truck fuel efficiency standards. Once that work is done, the Departments of Energy and Transportation, and the Environmental Protection Agency, will have two years to start writing a rule to set and enforce standards. The rule would have to give truck and engine manufacturers four model years of lead time to meet the standards, and three model years of stability.