REGULATION AND INFRASTRUCTURE AFTER THE 2016 ELECTIONS Nancy O’Liddy, TIA Mike Regan, NASSTRAC/TRANZACT John Cutler, NASSTRAC

ELECTIONS HAVE CONSEQUENCES The details of what to expect from the Trump Administration, working with the new 115th Congress, are still being developed Two important goals are clear: reducing regulation and increasing infrastructure investment. Both goals enjoy broad support among transportation, logistics and supply chain professionals. We may see the biggest changes in almost 40 years in the way Washington works. In the 1980s, much economic regulation – of trucking, railroads, air carriers, energy – gave way to deregulation. Regulation continued but it was environmental, safety, security and health regulation, and it got out of hand. EXPECT SIGNIFICANT ROLLBACKS.

MAJOR REGULATORY REFORM CHANGES Presidential Executive Orders have begun the process of regulatory reform in the Executive Branch. New regulations on hold; 60-day extension of effective dates. When a significant regulation is proposed, Department or agency must identify two old regulations for removal, and fully offset the cost of the new regulation by September 30, 2017 Agencies must identify and work to repeal, replace or modify regulations that are ineffective, unneeded or inconsistent with regulatory reform. If costs exceed benefits or regulation derives from an old Executive Order that has been eliminated, regulation should go too. Congressional Review Act and new bills may increase role of Congress Hiring freeze, budget cuts and attrition are shrinking the federal workforce

PERSONNEL CHANGES AND POLICY CHANGES DOT Secretary Elaine Chao should be good for freight, focusing more on business and jobs and less on regulation and hiker-biker trails Leaders in Congress largely carry over. Rep. Shuster chairs House T&I Committee, Sen. Thune chairs Senate Commerce, but Senate Environment and Public Works Committee has new chair, Sen Barrasso, R-WY. New leadership at FMCSA, STB, FMC, and other key agencies, but many still need to be nominated and confirmed Below the political level are many permanent civil servants at Departments and agencies who will need to implement new deregulatory directives Court appointments may eventually help shift the balance of power away from the Executive Branch, reining in agencies. Justice Neil Gorsuch supports this. Congress could pass fewer vague laws, but ambiguity is unavoidable and judicial review can prevent agency overreach.

REGULATORY IMPACTS BY CONGRESS Congress can use new laws, defunding and oversight to block or influence agency action Congressional Review Act lets Congress “veto” regulations within 60 days, and Senate is considering new bills passed by House. CRA disapproval prevents using new rules to revive vetoed rules. Not reporting to Congress when regulations were adopted could expose older rules to CRA. Regulatory Accountability Act (HR 5) would require more justification for future regulations and end court deference to agencies when new regs appealed Under HR 26, Regulations from the Executive in Need of Scrutiny (REINS) Act, adopting major new rules would require joint resolution of Congress. This could mean gridlock or filibusters on Capitol Hill would block any significant regulatory changes.

POSSIBLE IMPACTS ON PAST RULES Regulations adopted as final rules, like the Electronic Logging Device (ELD) mandate and the rules prohibiting driver coercion, are unlikely to be overturned quickly Final rules adopted after notice and comment rulemaking can only be eliminated or modified after a new notice and comment rulemaking, absent Congressional intervention “Elimination” rulemakings could happen, but they take time. Agencies and the public may argue for keeping older regulations, and agency decisions are subject to lengthy court challenges. Some older rules may be eliminated eventually as part of the new regulatory reform process

POSSIBLE IMPACTS ON FUTURE RULES Future regulations and those now under consideration are most likely to be impacted soon FMCSA has several rulemaking proceedings pending: Speed Limiters; Sleep Apnea and Substance Abuse Testing; Carrier and Broker Insurance Requirements; Entry-Level Driver Training; Uniform Registration System Some rulemakings were mandated by Congress in 2015 FAST Act. Some will be dropped. STB faces major rail issues, including Competitive Switching and Revenue Adequacy, both targeted in rail industry lobbying FMC, FAA, PHMSA, FRA, FHWA and other DOT agencies also have new regulations under consideration. EPA plans to address NOx emissions. Fuel consumption rules may go. FMCSA is lying low. Last year it dropped plan for rules against excessive detention by shippers and consignees. HOS restart issue appears resolved.

INFRASTRUCTURE INVESTMENT President Trump calling for $1 trillion infrastructure program, to repair and expand crumbling infrastructure and create good new jobs New Congress, like predecessors, is moving slowly because of funding issues and resistance to higher fuel taxes Public Private Partnerships with tax breaks are likely to be part of any package, but PPPs generally lead to privatizing and tolling highways ATA, OOIDA, carriers, industry and the public have signaled opposition to tolling on existing highways. PPPs are also a poor fit for rural areas needing infrastructure investment. (New Chair of Senate EPW Committee from Wyoming.) Other funding sources – tax reform, repatriation of overseas funds, refinery tax, carbon tax – might help. However, quick action is unlikely. Trump Administration, Congress and new appointees may be able to streamline permitting and construction process for roads, bridges, etc.

NEW HOPE FOR PRODUCTIVITY GAINS Trucking accounts for 70% of US freight. By 2045, DOT projects a 44% increase in the weight of goods transported by truck and an 84% increase in the value of goods transported by truck. Use of other modes will also increase, but trucking will remain the dominant mode as the nation grows. Unfortunately, trucking industry productivity growth has not been a focus of FMCSA, and Obama Administration seemed more supportive of rail. Allowing twin 33-foot trailers would help meet growth in demand for freight capacity, and may be approved in 2017. A new coalition, Americans for Modern Transportation, is working on such productivity issues. NASSTRAC supports this effort, and would also like to see six-axle trucks of up to 97,000 lbs. gross vehicle weight allowed where appropriate Infrastructure funding to fix choke points and congestion also needed Longer term, autonomous vehicles should help

UNCERTAINTY ON INTERNATIONAL TRADE Renegotiation of NAFTA is likely to affect cross-border freight and US operations by Mexican motor carriers Non-participation in or renegotiation of TPP is likely to affect US-Asian trade, many US supply chains, and corresponding transportation flows Reducing imports and promoting exports through tariffs and border adjustment taxes are new, complex and controversial ideas, with uncertain implications for businesses, markets and freight. Shipper, 3PL and carrier flexibility will be needed. Additional manufacturing in the US and Buy American may mean more business for trucking companies, railroads and other domestic service providers, but forecasts and contracts based on pre-election expectations about the future may need to be revisited. Logistics professionals may be even busier than they normally are.

RECENT AGENCY NEWS FMCSA has dropped SFD rulemaking, in which it proposed to replace Satisfactory, Conditional and Unsatisfactory ratings with single Unfit rating Proposal was controversial and relied on Safety Measurement System data. SMS is subject to review mandated by Congress because of distrust of SMS. STB will not investigate new wording on back of Uniform Straight Bill of Lading as changed by NMFTA, in the 2016 National Motor Freight Classification STB action was due to jurisdictional limits, not approval of changes, but changes are effective and reduce participating carriers’ liability for cargo claims. The best way to avoid the changes is through negotiations, and well-designed contract provisions on cargo loss and damage, bols, and the NMFC

RECENT AGENCY NEWS FMC is considering a request by NRF, NITL and others for a rulemaking to consider relief from ocean/port demurrage and detention charges resulting from delays due to port labor disputes, carrier bankruptcies, severe weather and other causes beyond shipper control FMC has changed its service contract rules to allow amendments to take effect without waiting 30 days after filing with FMC. Further relaxation of FMC contract regulations might be proposed. Trans Pacific ocean shipping lines reportedly under investigation by DOJ for collusion Railroad fuel surcharge antitrust class action litigation still moving forward, 7 years after cases first brought

CONTINUING ISSUES We also still have to worry about older issues, many on NASSTRAC’s 2017 Policy Agenda: CSA and SMS Driver shortage Port labor issues Port dredging (and funding) Ocean carrier finances and alliances State-level efforts to reclassify independent contractors as employees Federal preemption of state laws, including driver meal and rest break rules Tort reform and a National Hiring Standard for Carriers

LOOKING AHEAD Under the Trump Administration and the 115th Congress, we are likely to see the most significant changes in decades in transportation (and other) regulation. Many changes should be beneficial, but significant disruption is also likely. Paying attention and speaking out are critical. As logistics professionals know, there are better ways and worse ways to transport goods and grow the economy. We need to work together. Thanks for listening. Any questions?