Letter Opposing Mandatory Fuel Surcharge Provisions

April 7, 2005

Honorable Ted Stevens
Chairman
Senate Committee on Commerce, Science and Transportation
508 Dirksen Senate Office Building
Washington, D.C. 20510

Honorable Daniel K. Inouye
Ranking Member
Senate Committee on Commerce, Science and Transportation
508 Dirksen Senate Office Building
Washington, D.C. 20510

Honorable Trent Lott
Chairman
Senate Committee on Commerce, Science and Transportation, Subcommittee on Surface
Transportation and Merchant Marine
427 Hart Senate Office Building
Washington, D.C. 20510

Re: Opposition to Mandatory Fuel Surcharge Provisions in the Surface Transportation Reauthorization Bill

We are writing on behalf of our respective members to urge you in the strongest possible terms to oppose any provision that would add a fuel surcharge provision to the surface transportation reauthorization bill.

Section 4139 of the House-approved bill (H.R. 3) would reverse 25 years of free-market transportation policy and would lead to the economic re-regulation of the trucking industry. It would require that shippers, carriers, and intermediaries pay a government-dictated "fuel surcharge," rather than allowing shippers and carriers to negotiate fuel surcharges when they contract for shipping. That system of freely-negotiated prices exists today and works well. Section 4139 would unnecessarily eviscerate that contractual freedom and replace it with government-mandated price regulation.

Section 4139 will also lead to higher costs. Shippers will incur additional costs of compliance as they review and update pricing schedules and renegotiate pricing levels with their carriers. And, despite claims by proponents of § 4139 to the contrary, this provision will increase costs to the Federal Government, the largest purchaser of transportation services in the United States. Moreover, § 4139 includes an enforcement mechanism that virtually guarantees a proliferation of lawsuits, including class actions, which will certainly increase litigation costs.

In her April 5, 2005, testimony before the Surface Transportation and Merchant Marine Committee of the Senate Commerce, Science, and Transportation Committee, FMCSA Administrator Annette Sandberg stated:

The Nation has benefited enormously from our economic deregulation of the transportation industry. In the last 25 years, the free market for motor carrier services in particular has made important contributions to the growth and efficiency of our economy and helped to sustain its remarkable ability to create new jobs. Although the price of diesel fuel has risen sharply in the past few years, the allocation of those costs among the buyers and sellers of transportation is best accomplished through the working of the marketplace, not by government prescription. The mandatory fuel surcharge for truckload transportation prescribed by section 4139 of H.R. 3 would insinuate government into commercial relationships in a way that is ill-advised and that would reverse a quarter-century of U.S. economic policy. For these reasons, the Administration strongly urges the members of this Committee, and other Senators, not to include language supporting a fuel surcharge in its reauthorization bill.

The provision in the House bill would reverse a deliberate decision Congress made in 1980 to get the Federal Government out of the business of regulating interstate truck prices and return the industry to centralized price controls. In short, this provision is a wholesale retreat to the failed regulatory policies of the past and must be stopped.

Sincerely,

Airforwarders Association
Alliance of Automobile Manufacturers
American Bakers Association
American Electronics Association
American Moving and Storage Association
American Trucking Associations
Associated General Contractors
Association of Equipment Manufacturers
Automobile Manufacturers Alliance
Consumer Electronics Association
Food Marketing Institute
High Tech Airfreight Shippers Coalition
Motor Freight Carriers Association
National Association of Manufacturers
National Beer Wholesalers Association
National Association of Wholesaler-Distributors
National Grocers Association
National Industrial Transportation League
Retail Industrial Leaders Association
Snack Food Association
Transportation Intermediaries Association
United States Chamber of Commerce