Alex Laska | TRANSPORTATION INTERMEDIARIES ASSOCIATION
As the door closed on the 2019 session of Congress, several questions remain as to what Congress will do regarding surface reauthorization, corporate transparency, and other matters important to the 3PL industry in the coming year.
As 2020 is an election year (and a presidential election at that), conventional wisdom tells us that it will be difficult for Congress to get much done, as Members don’t want to risk upsetting core constituencies and must turn their attention towards their own campaigns. There’s no question that the clock is ticking and that the window of opportunity to get big things done in the 116th Congress is closing—but as baseball legend and truism speaker Yogi Berra once said, “It ain’t over ‘til it’s over.”
You, the reader, have the benefit of a few additional months where some of these questions may have been answered already. However, as I write this in early December just before the editorial deadline for this issue, here are the questions we’re asking about what Congress will (or won’t) do in 2020:
1. What Will the Surface Reauthorization Look Like?
In July, the Senate Environment & Public Works (EPW) Committee passed a bipartisan surface reauthorization that included new investments targeting congestion relief, bridge repair and reconstruction, and emissions reductions. However, that’s only one piece of the puzzle: at the time of this writing, other Senate committees have yet to report their pieces on rail, transit, trucking, and—perhaps most importantly—how to raise enough revenue to fund these investments.
On the House side, Transportation & Infrastructure Committee staff are currently drafting the House version of the surface reauthorization; it’s very possible they will have unveiled their bill by the time you read this. We will be looking to see how the House bill differs from what the Senate has passed so far, particularly as Chairman Peter DeFazio (D-OR) has said he wants to do more to address climate change than the EPW bill (and will do so without Republican support if necessary).
One of TIA’s top priorities regarding surface reauthorization is establishing a Motor Carrier Selection Safety Standard (MCSSS) to help combat the confusion and liability traps that currently exist when A) a 3PL is selecting a motor carrier, and that B) improves the overall safety of the transportation marketplace. Right now, there is no federal standard for 3PLs to follow to ensure they are properly selecting a motor carrier, and TIA members are being named as defendants in negligent selection lawsuits when accidents involving those motor carriers occur.
The MCSSS would require U.S. 3PLs to select motor carriers that are properly registered with the U.S. Department of Transportation, have at least the minimum amount of insurance required by law, and do not have an unsatisfactory safety rating from the Federal Motor Carrier Safety Administration (FMCSA), or been placed out-of-service at the carrier level. The standard would not absolve 3PLs from liability or limit an individual’s right to bring forward a suit, but it would provide clarity for our industry and a minimum defense for 3PLs to say they’re following a standard.
We are excited to say our standard has bipartisan support in Congress, as well as broad support in the shipping and logistics industries, but we also stand ready to continue working with other stakeholders going forward.
2. Will Congress Pave the Way for Non-Asset Based Property Brokers to Participate in C-TPAT?
First established shortly after 9/11, the Customs-Trade Partnership Against Terrorism (C-TPAT) is a program that brings Customs and Border Protection (CBP) together with the trade and freight transportation community to close national security gaps in the supply chain. In return for being vetted thoroughly by CBP, C-TPAT certified companies get priority processing and reduced inspections at ports of entry. This certification has become a must-have for 3PLs that want to stay competitive.
Unfortunately, CBP does not currently allow DOT non-asset based property brokers—3PLs that arrange for the movement of freight by truck, but don’t own the trucks—to participate in the program, even though other non-asset based brokers like non-vessel owning common carriers (NVOCCs), customs brokers, and air consolidators are allowed. This exclusion puts these companies at a competitive disadvantage and has prevented them from fully participating in keeping our freight transportation network secure.
Congress will likely reauthorize C-TPAT this year; House Border Security, Facilitation, & Operations Subcommittee Ranking Member Clay Higgins (R-LA) has released a reauthorization bill that would direct CBP to consider allowing non-asset based property brokers to join the program. TIA supports this language as a step in the right direction to ensuring parity between all types of 3PLs.
Historically, Congress doesn’t get much done when the House and Senate are controlled by different parties, regardless of who is in the White House.
But Ranking Member Higgins isn’t in the majority, so it is unlikely his reauthorization bill will be the one the House eventually votes on. House Homeland Security Committee Chairman Bennie G. Thompson (D-MS) has yet to release the Majority reauthorization bill. TIA has been working with committee staff and Member offices to ensure they understand the value of having non-asset based property brokers participate in C-TPAT so that these companies can remain competitive and contribute to our national security.
3. Will Congress Place New Reporting Requirements
on Small 3PLs?
Last May, the House of Repre-sentatives passed the Corporate Transparency Act (H.R. 2513), which is an attempt to prevent the establishment of anonymous shell companies to hide illicit activities like money laundering. The bill would require certain corporations and LLCs to file a list of their beneficial owners as well as identifying information like their date of birth, address, and government ID number to the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).
The bill specifically targets small businesses. In order to be exempt from the reporting requirements, a company must have more than 20 full-time employees, more than $5 million in gross receipts or sales, and a physical office in the U.S.
What this means is that, if the Corporate Transparency Act becomes law, small 3PLs will need to register with FinCEN, file paperwork identifying their beneficial owners each year, and face fines and/or prison time should they fail to comply.
TIA has been working with Senate offices to ensure that if the Senate passes beneficial ownership legislation, it will be much more workable for small businesses than this House bill. A bipartisan group of senators is working on similar legislation that has fewer reporting requirements and reduced penalties for failure to comply. We have heard from both parties in the Senate that they are open to making changes to ease the administrative burden on small businesses.
4. Who Will Win in November?
And finally, the question that is on many people’s minds: who will win the House and Senate next November? Right now, most of the election handicappers, like Sabato’s Crystal Ball and the Cook Political Report, are predicting that Democrats will lose some seats but maintain control of the House, while Republicans will maintain the Senate with roughly the same majority they have now. But again, things can change quickly in politics, and so the state of play might look very different this fall.
The largest question mark is, of course, the outcome of the presidential election. The Democratic Party hasn’t chosen their candidate yet, and so we don’t know who will go up against President Trump in November. Whoever takes the White House will have a tremendous impact on transportation- and logistics-related federal rulemakings, as well as implications for which congressional legislation can become law. Particularly if Congress ends up having to pass a short-term surface reauthorization, then the next president could end up playing an outsized role in establishing federal transportation policy.
Historically, Congress doesn’t get much done when the House and Senate are controlled by different parties, regardless of who is in the White House. If either party can win all three—the House, Senate, and presidency—then it will be much easier for that party to pass their legislative agenda, though obstacles remain including the need to get 60 votes to overcome a filibuster in the Senate. It took 60 votes, for example, for the Senate to pass most of President Obama’s major initiatives including the Recovery Act, the Affordable Care Act, and the Dodd-Frank Wall Street Reform Act. Once Senate Democrats lost their 60-vote supermajority, much of their agenda ground to a halt.
(In case you’re wondering, the 2017 Tax Cuts and Jobs Act, one of President Trump’s major legislative accomplishments, only required 51 votes in the Senate because the Senate was able to pass it under the budget reconciliation process, which allows the Majority party to pass a few bills each year affecting the federal budget with a simple majority of 51 votes rather than needing 60 to overcome the threat of a filibuster. Republicans failed to pass a repeal of the Affordable Care Act under reconciliation when Sen. John McCain (R-AZ) denied them a 51st vote.)
In any other scenario—for example, Republicans winning both chambers but losing the White House, or Democrats winning both chambers but Trump winning re-election—compromise becomes necessary if anything is to get done. Look no further than the lengthy (but ultimately successful) negotiations between House Democrats and the Trump Administration on USMCA as an example of how a divided Washington can make it harder, but not impossible, to pass key legislative items. In these scenarios, watch how the president uses the Executive Branch, including the use of Executive Orders and federal rulemakings, to enact his or her agenda. For example, President Obama leaned on federal agencies to enact the new hours of service (HOS) requirements and federal overtime rules in the absence of a cooperative Congress—rulemakings the Trump Administration would later alter.
Who wins in November, and whether the federal government remains divided as it is now, or one party takes control of Washington, could have major consequences on federal policymaking for the next few years. For this reason, TIA encourages you to participate in our nation’s political process and exercise your right to vote—regardless of who you plan on voting for.
Alex Laska is Manager of Government Affairs with TIA. He can be reached at email@example.com.
Photo credits: iStock.com/Sagittarius Pro, iStock.com/AlexLMX