June 2010 | Commentary | In Perspective

Deregulation Amended and Upended

Tags: Ocean, Trucking, Legislation, Public Policy, and Regulations, Rail

Dust off your legal textbooks. It's time to revisit transportation deregulation's rocky history and defend what we have.

Almost as soon as economic deregulation of air, motor, and rail transportation became the law of the land, some were voicing expectations that we would see re-regulation. The fear was that carriers would become large and predatory, and shippers—especially smaller ones—would become prey. The expected abuses didn't materialize, and what followed was a period of much- needed evolution in transportation and logistics functions.

Yesterday's transportation networks couldn't support what we are able to accomplish with today's supply chains, and much of the advance is due to the competitive markets that resulted from deregulation and sparked tremendous creativity and innovation.

Those predicting doomsday in the 1980s weren't entirely wrong about re-regulation. They were way off on the cause and scope, but there have been steady and frequent efforts to chip away at the market freedoms that have benefitted logistics and supply chain management over the years.

One case that reached the U.S. Supreme Court was Rowe v. New Hampshire Motor Transport. This case centered on a Maine law that would require carriers to obtain a signature and verify the age of anyone receiving shipments of tobacco products—an issue because of electronic commerce's growth as a new channel for distribution. Does a state have the right to preempt the Federal Aviation Administration Authorization Act (FAAAA)? The court struck down the Maine law because, it said, a state could not regulate a motor carrier's price, route, or service in interstate commerce.

A safety preemption is allowed, but public health, as was argued, was not a sufficient safety issue to let the state preempt the federal statute. That same argument came to the forefront when several West Coast ports attempted to enact laws that would have regulated motor carriers serving the ports. There, air quality (public health) and security (safety) did not prevail as arguments, and Rowe v. New Hampshire Motor Transport was cited as a precedent in the arguments supporting the FAAAA over the state law.

Now the ports are back. This time they are attempting to amend the FAAAA and forego the issue of states' rights. Joel Anderson, president and CEO of the International Warehouse Logistics Association (IWLA), is back in the trenches fighting the proposed amendments. The federal government controls trade and commerce for a reason, he says, dating back to the Articles of Confederation. The proposed amendments amount to local regulation of freight moving in interstate and foreign commerce, he argues.

Besides, he notes, efforts to improve air quality, security, and safety are on track or ahead of schedule without amending the federal law.

I have to agree that it is bad public policy to take those controls out of the hands of the federal government. We can't afford to wait for appeals to reach the new Supreme Court. A good place to start is with the same people who received Anderson's letter on behalf of IWLA members and the logistics community: Representatives Peter DeFazio and John Duncan, House Committee on Transportation and Infrastructure, Subcommittee on Highways and Transit.

As we learn repeatedly, you don't get to keep your rights if you don't defend them.