Fuel Surcharge Regulation For DOD Contracts—First Step Towards Re-Regulation

Fuel Surcharge Regulation For DOD Contracts—First Step Towards Re-Regulation
Logistics UPDATE

On September 27, 2008, legislation was passed by Congress requiring that motor carriers and third parties, such as brokers, pass through to the party bearing the cost of fuel any fuel surcharges collected on shipments transported under Department of Defense ("DOD") contracts. The legislation, a part of the Department of Defense Authorization Act for Fiscal Year 2009, is currently on President Bush's desk awaiting signature.

Although the current legislation is limited to DOD shipments, bills were previously introduced into the House and Senate last Spring which largely cover the remainder of motor carrier shipments. These bills, and the new DOD regulation, were championed by the Owner-Operator Independent Drivers' Association ("OOIDA") to prevent some motor carriers and brokers from collecting fuel surcharges from shippers and not remitting the entire surcharge to the actual service provider.

It is expected that passage of these bills will be contested by the Coalition to Stop Re-regulation of the Trucking Industry, a group which includes among its members the United States Chamber of Commerce, the Transportation Intermediaries Association, and the National Industrial Transportation League. Only time will tell whether this battle is simply limited to the fuel surcharge issue currently before the legislature, or is the first step towards Federal re-regulation of the interstate motor transport industry.