Presidential election years influence policymaking in Washington just as they do headlines. It is thus not too soon to take stock of what federal policy changes may be on the horizon for parcel shippers in 2024.
Although intervening events can change priorities, for the 2024 election cycle, parcel shippers should be aware of possible policy changes affecting international trade; employment classifications; competition law; and transport safety and licensing regulations. Each of these potential changes could affect both the cost of shipping parcels and the methods of doing so.
Congress
A cursory glance at current bills in Congress show proposals seeking to provide authority to the United States Postal Service to mail alcoholic beverages; address supply chain congestion and competition issues; review Chinese investments in US ports; increase the criminal penalties for mail fraud misrepresenting countries of origin; establish a national motor carrier safety selection standard for entities that contract with motor carriers transporting goods; establish and strengthen cybersecurity standards; and change infrastructure funding. Most bills do not become law and, with the exception of mandatory funding bills, the window for enacting substantive law in a divided Congress is likely to close by late spring of 2024.
Two proposed bills, the Import Security and Fairness Act (S. 2004) and the De Minimis Reciprocity Act of 2023 (S.1969), merit a closer look. If enacted, they have the potential of affecting all parcel shippers by changing the current de minimis standards under which small packages can be imported into the United States without the payment of customs duties.
The current $800 de minimis standard has enabled e-commerce retailers to facilitate the purchase and import of products online with a direct shipment to the US consumer as opposed to the processing of containerloads of imported goods through Customs.
Although taking slightly different approaches, each of these two bills would address perceived abuses of the current de minimis threshold by imposing limits on both how and who can use the standard, as well as the requirement of additional information for shipments entitled to de minimis treatment.
Being “tough on unfair trade” may have bipartisan support in an election year. All parcel shippers should thus keep on their radar screen the Congressional treatment of de minimis imports and how possible changes could affect distribution strategies and costs.
Executive Branch
In Presidential election years, federal agencies rush to enact regulatory changes in the event that there is a new occupant in the White House. The ancient Greeks consulted the Oracle at Delphi for future prophecies. A review of the Unified Agenda of Regulatory and Deregulatory Actions is the Washington equivalent.
Published each fall and spring in the Federal Register, the Unified Agenda provides public notice about upcoming possible regulatory and deregulatory actions by federal administrative agencies. The Spring 2023 Unified Agenda can be found at Reginfo.gov (https://www.reginfo.gov/public/do/eAgendaMain).
There are several regulatory proposals on the horizon that may affect the costs, operations, and competitive number of carriers providing services to parcel shippers.
For example, one long overdue Federal Motor Carrier Safety Administration (FMCSA) proposal would implement the increased regulatory and financial responsibility requirements for motor carrier brokers and freight forwarders as required by MAP 21, enacted in 2012. The FMCSA is now stating that it anticipates a final rule by February 2024.
The FMCSA has also stated that it may initiate a new rulemaking that would consider methods for ensuring that new motor carrier applicants are knowledgeable about safety requirements before they are granted authority as new entrants. The FMCSA also states that it will be seeking information on how it might use data and resources to identify unfit motor carriers and remove them from operation more effectively.
Each of these proposals has the potential to tighten regulatory standards and reduce the number of competitors in the motor carrier industry.
Employment and non-compete issues are also key policy issues for 2024. Worker classification as either independent contractors or employees is a long-running policy dispute that has a direct impact on worker status and benefits, especially for drivers for motor carriers and delivery companies and the related costs of transporting goods. The Department of Labor has stated that it intends to issue a final rule as to the classification of independent contractors under the Fair Labor Standards Act by August 2023.
The Federal Trade Commission’s proposed Non-Compete Clause regulation essentially prohibiting the use of non-compete clauses in employment relationships may also be issued as a final regulation. If adopted as proposed, it will have widespread consequences on employer-employee relations; competition between companies; and the protection of trade secrets in an employment context.
Supreme Court
Finally, the Supreme Court also has a role in determining federal policy. In this context, parcel shippers should keep an eye on whether the Supreme Court will decide in 2024 to resolve a federal appellate court conflict about the scope of motor carrier federal preemption statutes.
In June 2022, the Supreme Court refused to consider a Ninth Circuit decision that held that state law personal injury claims against a broker for the allegedly negligent hiring of a motor carrier involved in an accident were not pre-empted by federal law. Since then, the federal courts in the Seventh and Eleventh Circuits have issued directly contrary decisions concluding that such negligent hiring claims are pre-empted. Whether the Supreme Court will choose to resolve this conflict in the next year is of significant importance to any company shipping packages by motor carrier or using the services of a broker in doing so.
Stay tuned!
Andrew M. Danas is a partner in the Washington, D.C. law firm of Grove, Jaskiewicz and Cobert, LLP. Visit www.gjcobert.com or contact him at adanas@danaslaw.com. The information contained in this article is intended to be general background information. It does not constitute and should not be relied upon as legal advice. Readers should contact a qualified attorney should they have a specific legal question.
This article originally appeared in the September/October, 2023 issue of PARCEL.
