The Trucking Industry Regulatory Reform Act of 1994: Understanding the Fine Print


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The Trucking Industry Regulatory Reform Act of 1994 ("TIRRA") has accelerated the process of promoting competition among interstate motor carriers. The new law affects interstate motor carrier regulation in three key areas: rates, entry, and exemptions.

Rate Regulation

TIRRA makes certain specific changes with respect to tariffs for individually determined rates. Trucking companies (except household goods and "non-contiguous domestic trade zone" traffic) are no longer required to file their individual interstate common carrier tariffs with the ICC. An "individually determined rate, classification, rule or practice" is a rate established by a single motor carrier for transportation service over its line, or a rate, classification, rule or practice of two or more interline carriers for transportation jointly provided over their lines. First, the tariffs are no longer subject to the ICC filing and approval requirements. Carriers are required to maintain their own individual tariffs and to provide them to a shipper or potential shipper upon request. The tariff includes a written or electronic copy of the rate, classification, rules, and practices upon which the agreed rate may be based. The ICC will retain jurisdiction over resolving rate disputes involving the applicability or "reasonableness" of a rate.

Second, the new law reduces to six months the time within which a carrier or shipper may challenge a rate after payment is made. The "agreed to and billed rate" for individual tariffs will be the absolute rate, unless a carrier rebills or a shipper protests the original bill within 180 days. The current 36-month statute of limitations under the Negotiated Rates Act of 1993 for collecting overcharges and undercharges still applies if timely notification is made. To effectively meet these timetables, both shippers and carriers alike may need to revamp their internal operations to increase the time within which freight bill audits are performed.

Third, a carrier cannot collect a rate determined by a referenced tariff (i.e., National Motor Freight Classification or HHG Mileage Guide) unless the carrier is a participant in the tariff. TIRRA simply codifies a prior Supreme Court ruling that prohibits a carrier from enforcing a tariff rate when the carrier did not sign a power of attorney for participation in the tariff.

Finally, the individual tariffs presently on file at the ICC have become null and void as of August 26, 1994.

Motor carrier licensing

Effective January 1, 1995, the ICC's role in issuing permits and certificates to motor carriers will diminish. Applications for new or expanded motor common or contract carrier operating authority to transport property (other than household goods) will require three identified showings. First, the applicant must demonstrate an ability to comply with all statutory, regulatory, and ICC imposed safety requirements. Second, the applicant must demonstrate its fitness to comply with safety standards developed by the Department of Transportation (DOT). Third, the applicant must demonstrate its ability to provide adequate liability insurance or otherwise meet the self-insurance standards under existing law. Most significantly, TIRRA eliminates the statutory "public convenience and necessity" standard. The new application process will focus only on the carrier's legal and financial fitness.

Exemptions

Two general exemptions are provided for in TIRRA. First, motor carriers providing household goods transportation services will remain subject to existing law. Second, motor carriers providing transportation in "non-contiguous domestic trade" are not subject to the provisions of the Act. "Non-contiguous domestic trade" means motor-water transportation involving traffic originating in or destined to Alaska, Hawaii, or a territory or possession of the United States. These two areas will continue to be subject to ICC regulation in a manner consistent with existing law.

The ICC is further given authority to exempt trucking matters from statutory and regulatory requirements. The ICC previously had this authority over railroads to administratively deregulate categories of traffic which it determined to be of limited scope and not subject to competitive abuses. However, TIRRA prohibits the ICC from exempting carriers from the new tariff rules, collectively made rates, insurance matters, carrier liability on cargo loss and damage, safety fitness or the uniform bill of lading.

Now What?

In response to the new law, motor carriers and shippers need to be aware of a variety of important business items:

  • Carriers should notify shippers that the individual rates and rules governing service will be based on tariffs which carriers will make available to shippers on request. Shippers should immediately submit written requests to their carriers for a copy of the individual rates and rules for service.
  • Carriers must insure their participation in bureau tariffs, including classifications and mileage guides. Otherwise, carriers may not be able to enforce such tariffs. Shippers should request written evidence of carriers' participation in any collectively determined bureau tariffs, including classifications and mileage guides. At a minimum, shippers should be provided with a copy of the power of attorney which the carrier provides to the tariff publishing agent.
  • Carriers are still required to possess the appropriate motor common or motor contract carrier authority from the ICC. If a carrier is contemplating an application for expanded authority, it may be an easier task to accomplish by waiting until January 1, 1995.
  • Shippers and carriers should both update their respective traffic and accounting functions to insure compliance with the 180 day statute of limitations. Carriers will need to rebill and shippers will need to protest original bills within 180 days.
  • Carriers should engage in a review of their rate and rule tariffs with an eye toward simplification.
  • Shippers must continue to request both the rules tariffs and rate tariffs to obtain a complete rate picture. Trailer detention charges, inside delivery charges, and other services currently contained in rules tariffs may play a dramatic role in modifying a quoted mileage rate.
  • Shippers able to generate a steady volume of traffic should consider negotiating new terms and rates with a selected group of carriers through a competitive bidding process. This may be coupled with a written contract setting forth each parties' rights and obligations, which will further allow quick adjustment or modification of basic rates only by way of a written amendment to the contract.
  • Contract carriers are still required under the Negotiated Rates Act of 1993 to keep evidence of the written agreements and rates for at least one year.