SPECIAL REPORT: Focus moves to Senate after House OKs mandatory fuel surcharge with highway bill

| 3/17/2005

Truckers are being encouraged to contact their U.S. senators to urge them to include a mandatory fuel surcharge in the Senate's version of the highway bill after a similar provision passed the House with the massive funding bill last week.

The provision in HR3 - the House version of the highway bill - would not only require motor carriers, brokers and freight forwarders to implement fuel surcharges, but it would also require 100 percent of the surcharges to be passed on to the individuals who actually buy the fuel.

The Owner-Operator Independent Drivers Association has been fighting for a mandatory fuel surcharge for several years, and Todd Spencer, the association's executive vice president, said this legislation has been needed for a very long time.

"House passage is great news, but that only gets us halfway there. We have to do the same in the Senate," Spencer said.

The Senate's Commerce Committee is expected to take up its portions of the highway bill when Congress returns from Easter break the week of April 4, said Rod Nofziger, OOIDA's director of government affairs in Washington, DC. Once the Senate's committees conclude their work on the bill, it will go to the full Senate for consideration. Then a conference committee of legislators from both the Senate and House will meet to merge the two chambers' versions of the bill into one to be sent to President Bush.

Congress is working with a relatively tight deadline for the highway bill because the current extension for the funding expires May 31. Legislators have extended the funding several times since the most recent legislation ran out in September of 2003.

The fuel surcharge language approved by the House when it voted 417-9 in favor of the highway bill March 10 specifically defines who would have to pay the surcharge and how it would be calculated. The surcharge would kick in when fuel exceeds the "benchmark" price by a nickel and would kick back off when the price of fuel falls back to less than 5 cents above the "benchmark."

The amendment specifically defines "benchmark" per-gallon price, "current" fuel price and "increased cost" of fuel - and spells out the formula the government will use for determining all of them. The benchmark for diesel is set at $1.10 in the current amendment language, but it would be recalculated every year if the proposal becomes law.

To calculate the benchmark price, the House amendment calls for the U.S. secretary of transportation to adjust it "by the percentage of change in the previous calendar year's Annual Truckload Producer Price Index as determined by the Department of Labor."

To figure the "increased cost," which is what will determine how much the surcharge will be, you simply subtract the "benchmark" price from the "current" price and then multiply the difference by the number of gallons of diesel used.

The House amendment also spells out how to determine gallons of diesel used, and assumes that a gallon of diesel is used for each five miles of transportation. Thus, the number of gallons used is figured based on the mileage of any given trip, which the amendment states shall be determined using the "Defense Table of Official Distances issued by the Surface Deployment and distribution Command, Department of Defense or under any applicable mileage guide established under section 13703(a)(1)(d)."

The "current price" of fuel will be the latest weekly average price for retail on-highway diesel as published by the Energy Information Administration for the region where a shipment is physically tendered. That means owner-operators hauling loads from the California region will use that region's average weekly price and owner-operators hauling loads from the Midwest will use that region's average weekly price.

For example, for the week of March 7, when the average price in the California region was $2.40 per gallon, the formula for a 500-mile trip, which used 100 gallons of diesel, would be:

$2.40 - $1.10 = $1.30 X 100 gallons = $130 of surcharge payment

The amendment also calls for motor carriers, brokers and freight forwarders to keep documentation of how much of a surcharge they charge. It also requires them to make those documents available to the individuals who actually buy the fuel - including owner-operators - so that there is no question about how much surcharge money should be passing through to them.

- By Coral Beach, Land Line staff