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2. OVERVIEW. November elections changed political dynamicGridlock is worse, as predicted, and may lead to Government ShutdownKey personnel changes are John Boehner replacing Nancy Pelosi as House Speaker, and John Mica replacing Jim Oberstar as Chairman of House T
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1. 1 HEALTH AND PERSONAL CARE LOGISTICS CONFERENCEWASHINGTON UPDATEApril 2011 John M. Cutler, Jr.
McCarthy, Sweeney & Harkaway, P.C.
1825 K Street, N.W., Suite 700
Washington, DC 20006
(202) 775-5560
jcutler@mshpc.com
2. 2 OVERVIEW November elections changed political dynamic
Gridlock is worse, as predicted, and may lead to Government Shutdown
Key personnel changes are John Boehner replacing Nancy Pelosi as House Speaker, and John Mica replacing Jim Oberstar as Chairman of House T&I
Tea Party and other Republican Freshmen are becoming a force on Capitol Hill
3. 3 INFRASTRUCTURE Everyone knows we need to spend more
Fuel taxes not increased since 1993 and not indexed for inflation
Many bipartisan, expert studies urge higher fuel taxes, possible VMT, and a greater focus on freight
House T&I produced draft Highway Bill that looked like the most comprehensive approach to the problem in history
Funding was the insurmountable problem
4. 4 INFRASTRUCTURE(continued) No action during lame duck session
Loss of former House T&I Chairman Oberstar is blow to effort to increase investment
New House T&I Chairman Mica is knowledgeable and concerned, but faces same funding problem that blocked action under Oberstar
White House proposal is ambitious and unrealistic
5. 5 WHITE HOUSE TRANSPORTATION BUDGET $556 billion total spending over 6 years
$336 billion for roads and bridges, 48% more than SAFETEA-LU
$119 billion for transit, 127% more than SAFETEA-LU
$53 billion for high speed rail
$30 billion for an Infrastructure Bank, which could provide leverage for far more spending
6. 6 CHAIRMAN MICAS CURRENT THINKING Do more with less
Three-pronged approach
- Use existing fuel tax revenue (NO TAX INCREASE)
- Add unspent stimulus bill money
- Stretch funding by making highway projects cheaper and faster
Get next Highway Bill enacted into law by the end of current fiscal year (9/30/11), two years after SAFETEA-LU expired
7. 7 PROSPECTS FOR SUCCESS The White House budget sounds good but has little chance of success
The Mica approach is unlikely to meet needs
- almost $12 billion would need to be cut to match spending and projected fuel tax revenue, due to front-loaded obligations
- stimulus funding included less than $30 billion for highways and bridges, and most of that is spent or obligated
8. 8 PROSPECTS FOR SUCCESS(continued) Gridlock in Washington makes it difficult to pass anything that is at all controversial
No earmarks pledges make it harder to attract votes
Private equity is unlikely to fill the gap and tolling remains unpopular
9. 9 PROSPECTS FOR SUCCESS(continued) ATA President Bill Graves and Senate Finance Committee Chairman Max Baucus predict no new Highway Bill in 2011 or 2012, when Presidential elections will make everything harder
Will success even be achievable in 2013?
Assuming funding is found, who will provide it?
Assuming funding is found, where will it go?
10. 10 RAILROADS ARE DOING GREAT Raising rates and fuel surcharges and making record revenues and profits
Warren Buffett couldnt be happier with Berkshire Hathaways purchase of BNSF
Wall Street loves the railroads
Rockefeller bill stalled
STB rail competition proceeding unlikely to change anything anytime soon
11. 11 RAILROADS ARE DOING GREAT(continued) DOT loves railroads, extending record funding and calling for more freight to move by trains, not trucks
Trucking productivity growth stalled
Rail intermodal service quality is improving
Watch rail fuel surcharge antitrust case
Watch S. 49, Railroad Antitrust Enforcement Act of 2011
12. 12 AIRLINES FAA Reauthorization Bill passed by House
2007 FAA Act, which has been extended 17 times, may finally be updated
Veto threat due to provision overturning NMB ruling facilitating unionization
13. 13 AIRLINES(continued)
No FedEx labor provision
Funding for NextGen Air Traffic Control system
More slots for Reagan National Airport in Washington
14. 14 WATER CARRIERS FMC relieves NVOCCs from requirement of filing tariffs with the Commission if they
- make free copies of rules tariffs available to public
- enter written agreements before accepting covered shipments
- retain documents for 5 years
New Negotiated Rate Arrangements cannot be amended, so they are most likely to be used for short term or one-off deals
NVOs can still use NVOCC Service Arrangements (NSAs).
15. 15 WATER CARRIERS FMC Chairman urges shipping lines and shippers to provide in their service contracts for use of FMCs Consumer Affairs and Dispute Resolution Services (CADRS) office in service contracts
DOT making a push to promote barge transportation of freight
DOT cites ability of marine highway system to save energy and reduce congestion
16. 16 CAUSE FOR CONCERN OVER TRUCKING Fuel Costs
Lack of progress on Highway Bill
Hours of Service and Driver Shortage
CSA and Drive Shortage
DOT Policy
Truck Size and Weight Limits
Where is the good news for trucking?
17. 17 HOURS OF SERVICE Hours of Service rules in effect from 2003-2011 have worked well
Highway crash rates and fatalities have fallen, including 3% drop in 2010
FMCSA nevertheless wants to reduce daily driving time by 1 hour (plus mandatory hour break or two)
FMCSA also wants to regulate weekend sleep time (the restart) that could mean the required 34 hours off is actually as much as 48 hours off
Result could also force drivers coming off restart to drive during morning rush hour
18. 18 HOURS OF SERVICE(continued) Trucker and shipper requests for more flexibility for team drivers with sleeper berths were brushed aside
FMCSA support for these changes is skimpy and flawed
H&PCLC and many other carrier groups, shipper groups, and drivers filed comments opposing HOS rule changes
Prposed rules will exacerbate driver shortage
Court challenge certain; H&PCLC will support trucking industry
19. 19 COMPLIANCE, SAFETY, ACCOUNTABILITY New FMCSA program to improve trucking company and safety accountability and performance is being implemented
Rulemaking proceeding not likely to begin till this summer
H&PCLC will participate
Safer highways likely to result, as bad apples (drivers and trucking companies) forced to improve or seek other employment
20. 20 COMPLIANCE, SAFETY, ACCOUNTABILITY (continued) Greater complexity; danger of lost business due to misleading appearance of problems
Will not help driver shortage
Danger of exposure to personal injury lawsuits
Contract updates recommended
21. 21 DOT POLICIES For decades, DOT has supported all modes of transportation
Today, DOT favors rail, giving rail projects more funding
DOT needs major freight railroads to cooperate with High Speed Rail program
DOT may also be responding to environmental and congestion concerns
22. 22 DOT POLICIES(continued) DOT may also be defining the need for highway spending down, in light of deficit concerns and gridlock
DOT is also very interested in bike trails and livability
Bottom line: DOT Secretary LaHood is calling for shifting freight from trucks to trains
23. 23 OTHER TRUCKING DEVELOPMENTS GAO Study says freight trucking costs not passed on to consumers are 6 times greater than rail costs and 9 times greater than water costs
Congress is considering efforts to increase GVW from 80,000 lbs. to 97,000 lbs. HR 763 and HR 801, and S 747.
Railroads oppose, saying this will mean more trucks on roads, but gridlock is the main obstacle
FMCSA eliminates minimum insurance requirements for motor carriers
24. 24 OTHER TRANSPORTATION DEVELOPMENTS (continued) FMCSA wants EOBRs on 500,000 carriers, subject to penalties of up to $11,000
Tentative new deal announced to resolve NAFTA debate over Mexican truckers serving U.S. destinations
Deal needed to end punitive Mexican tariffs on U.S. Goods
Safety and union concerns and gridlock make progress doubtful. FMCSA plan to provide EOBRs for Mexican trucks doesnt help.
25. 25 PORT DRAYAGE UNIONIZATION Efforts continue to require independent truckers in port drayage service to become employees
Port of Long Beach showed that this is not necessary to reduce pollution
Goal is to facilitate efforts by Teamsters to organize drayage companies
ATA is in court fighting Port of Los Angeles on issue
26. 26 SECURITY TSA wants to screen 100% of inbound air cargo by the end of 2011, two years sooner than expected
Attempt to ship explosives in printer cartridges from Yemen is cause
Puerto Rico Port Authority proposed an expensive ($70 per container) x-ray screening program on all inbound ocean containers
27. 27 SECURITY(continued)
Opposition from carriers and shippers, including H&PCLC, has led to revisions, including possible exemption for C-TPAT members
Crowley won court order halting program