BILL ANALYSIS                                                                                                                                                                                                    Ó






           SENATE TRANSPORTATION & HOUSING COMMITTEE       BILL NO: ab 529
          SENATOR MARK DESAULNIER, CHAIRMAN              AUTHOR:  lowenthal
                                                         VERSION: 6/25/13
          Analysis by:  Carrie Cornwell                  FISCAL:  yes
          Hearing date:  July 2, 2013



          SUBJECT:

          Motor carriers:  inspection and fees

          DESCRIPTION:

          This bill, beginning in 2016, changes the program through which  
          the state inspects large commercial trucks and trailers from a  
          periodic inspection of these vehicles and the operations  
          associated with them to one in which the California Highway  
          Patrol, through regulation, creates a performance-based truck  
          terminal inspection regime.

          ANALYSIS:

          Motor carriers transport property, except for household goods,  
          for hire in trucks, tractor-trailers, or other similar vehicles.  
           The Department of Motor Vehicles (DMV) and the California  
          Highway Patrol (CHP) regulate those motor carriers that operate  
          within California.  Specifically, DMV issues the permit that a  
          motor carrier must have to operate legally in this state.  State  
          law gives CHP the exclusive authority to regulate the safety of  
          operation of motor carriers of property, principally through  
          inspections of the terminals from which they operate and  
          roadside inspections of their vehicles.

          DMV issues motor carrier permits subject to the motor carrier  
          paying the "Safety Fee" (based on the number of vehicles the  
          motor carrier has in its fleet), providing proof of financial  
          responsibility (e.g., liability insurance), certifying that it  
          has workers' compensation coverage for its employees, securing a  
          CHP inspection (when required), and obtaining a carrier  
          identification number from CHP.  A motor carrier must renew this  
          permit every year.  

          Pursuant to existing law, known as the Biennial Inspection of  
          Terminals (BIT) Program, CHP must inspect at a motor carrier's  
          terminal the vehicles, the vehicle maintenance records, and the  




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          driver records of motor carriers at least every 25 months.  (A  
          "terminal" is any place where a commercial vehicle is regularly  
          garaged, maintained, operated, or from which it is dispatched.)   
           Not all motor carrier operations are subject to the BIT  
          program, as it is based not on the motor carrier permit but on  
          the types of vehicles the motor carrier operates.

          To initiate a BIT inspection, the motor carrier must file an  
          application and pay specified fees to CHP.  Existing law places  
          a priority on inspecting those vehicles that transport hazardous  
          materials.  Tow truck companies and others operating specified  
          types of lighter weight trucks are excluded from the BIT program  
          and its inspections.

          Failure of a motor carrier to schedule these BIT inspections  
          results in suspension of the motor carrier's permit.  Failure to  
          pay the required fee on time results in additional delinquency  
          fees.  A motor carrier operating without a valid motor carrier  
          permit or without having scheduled a BIT inspection is subject  
          to a misdemeanor penalty.

          To encourage motor carriers to attain continuous satisfactory  
          ratings, motor carriers with two successive satisfactory BIT  
          inspections are exempt from the onsite inspection and instead  
          subjected to only an administrative review.  In the  
          administrative review, CHP examines the motor carrier's  
          collision and citation history.  After two consecutive  
          administrative reviews, a motor carrier must again receive an  
          onsite inspection.  Existing law prohibits motor carriers  
          hauling hazardous materials from participating in this incentive  
          program, requiring instead that their terminals be inspected at  
          least once every 25 months.

           This bill  :

          1.Deletes, effective January 1, 2016, the existing BIT program,  
            including the BIT program's requirement that CHP inspect a  
            motor carrier's vehicles, maintenance records, and driver  
            records every 25 months and that motor carriers pay a fee and  
            schedule these inspections. 

          2.Requires, instead, that by January 1, 2016, CHP adopt rules  
            and regulations establishing a performance-based truck  
            terminal inspection selection priority system.  These  
            regulations shall incorporate methodologies consistent with  
            those used by the federal government, including quantitative  




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            analysis of specified safety-related motor carrier performance  
            data (such as accident and citation data) and information  
            collected during CHP's inspections and from other state,  
            federal, and local officials.  CHP shall use this information  
            to create a database that it must update to provide real-time  
            information on each motor carrier's performance.  CHP must  
            prioritize for inspection motor carrier terminals identified  
            by this system CHP develops, those never previously inspected  
            by CHP, and those operating vehicles hauling hazardous  
            materials. 

          3.Authorizes CHP, beginning January 1, 2016, to inspect any  
            terminal at any time it chooses.  If a terminal has received a  
            "satisfactory" rating in a previous inspection, then CHP may  
            wait six years to next inspect that terminal.  If a terminal  
            that receives "unsatisfactory" rating or falls below the  
            threshold established by the priority system in CHP's  
            regulations, then CHP must re-inspect within 120 days.  

          4.Requires, beginning January 1, 2016, all motor carriers to pay  
            and DMV to collect both the existing Safety Fee plus a new  
            "Carrier Inspection Fee" proceeds of which will pay for CHP's  
            truck terminal inspections and roadside safety inspections.   
            DMV would collect this fee when a motor carrier applies for an  
            original or renewal motor carrier permit.

          5.Adds into the BIT program motor carriers of property not  
            currently included, thus greatly increasing the number of  
            trucking operations subject to BIT inspections.  These will  
            include tow truck operators, construction truck operators,  
            utilities with trucks and trailers now not included, and all  
            companies that transport their products in two-axle trucks. 

          6.Clarifies that the definition of motor carriers of property  
            excludes vehicles never operated in commercial use if they  
            weigh less than 26,001 pounds, provided that they are operated  
            singly or are towing camp trailers, trailers for watercraft,  
            or a utility trailer.

          7.Imposes a delinquency fee on motor carriers that renew their  
            permits after they have lapsed.  (Now a motor carrier faces no  
            delinquency fee for paying after its permit expires, but it  
            cannot operate legally until it renews its permit.)  All of  
            these funds accrue to the Motor Vehicle Account to pay DMV and  
            CHP costs associated with regulating motor carriers of  
            property.




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          8.Makes conforming changes elsewhere in law, including deleting  
            references to obsolete requirements on motor carriers to  
            schedule BIT inspections or face suspension of their motor  
            carrier permits, that also take effect on January 1, 2016.
          
          COMMENTS:

           1.Purpose  .  The Legislature created the BIT Program to ensure  
            that every motor carrier operating commercial vehicles from  
            terminal locations throughout the state underwent a safety  
            truck inspection at least once every 25 months to reduce the  
            fatality and injury collision rate in California.  CHP has  
            conducted these inspections since 1989.  During an inspection,  
            CHP will inspect a sample of regulated vehicles, maintenance  
            records of the vehicles, and driver records to determine if  
            the motor carrier is in compliance with all safety related  
            statutes and regulations.  If the motor carrier passes  
            inspection, then the next inspection will take place in  
            approximately two years, but no later than 25 months.   
            Additionally, motor carriers are also required to carry out  
            their own vehicle inspections every 90 days and maintain  
            sufficient records of these inspections for CHP review.  

            Since the program's inception nearly 25 years ago, technology  
            and data collection systems now provide an opportunity to  
            revise the BIT program into a performance-based system.    
            Drawing from data gathered by DMV and law enforcement from  
            around the state and the nation, CHP can compile a full  
            complement of information and apply algorithms that will allow  
            them to focus its BIT inspections on new motor carriers and on  
            those that are most likely to be out of compliance with motor  
            carrier permit requirements or to have safety issues.  

            The author introduced this bill to use innovation and  
            technological advances that have occurred in recent years to  
            create a performance-based system to select for inspection  
            those trucking operations that are non-compliant or problem  
            motor carriers.  This system will allow CHP to inspect  
            compliant motor carriers once every six years without the  
            motor carriers having to undergo two inspections in which it  
            gains a satisfactory rating.  The author believes that this  
            bill will provide significant incentive for motor carriers to  
            employ business practices that ensure their drivers are  
            competent and their vehicles are safe.





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            In addition, this bill realigns several functions between DMV  
            and CHP to increase program efficiencies and free up CHP time  
            for inspections and enforcement rather than revenue collection  
            and administrative tasks better handled during DMV's  
            permitting process.  DMV will be responsible for collecting  
            all motor carrier fees, which will allow the DMV to hold or  
            suspend operating permits for non-compliant motor carriers.   
            This realignment will also permit CHP to focus solely on  
            terminal and motor carrier inspections, thereby ensuring that  
            public safety efforts are maximized. 


           2.Huge increase in BIT program  .  Under this bill, the number of  
            terminals (and their associated heavy duty vehicles) included  
            in the BIT program is likely to nearly double.  Many of those  
            who operate these vehicles today, who are not now subject to  
            the BIT program and its inspection fee, will be subject to the  
            Carrier Inspection Fee that the bill imposes and to CHP  
            inspections of their operations.  This bill is designed to  
            generate the same amount of revenue in the future for the  
            revamped BIT program as is generated by today's program, but  
            it is likely that CHP's workload could increase.  CHP reports  
            that since the inception of the BIT program its general  
            budget, which comes primarily from the motor vehicle  
            registration fees, has subsidized the BIT program by nearly 50  
            percent.  This is very likely to increase if this bill becomes  
            law and is fully implemented in 2016.  The committee may wish  
            to consider whether this bill provides sufficient resources to  
            CHP to implement the revamped BIT program it creates and  
            whether it is appropriate that California's motorists  
            subsidize this program.

           3.Chaptering conflicts  .  Both this bill and AB 501 (Nazarian)  
            amend Vehicle Code Section 34601 relating to motor carrier  
            weight thresholds in similar but different manners.  The  
            author will need to resolve these substantive and chaptering  
            conflicts.
           
           Assembly Votes:
               Floor:    73-1
               Appr: 17-0
               Trans:    15-0

          POSITIONS:  (Communicated to the committee before noon on  
          Wednesday,                                             June 26,  
          2013.)




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               SUPPORT:  California Construction Trucking Association
                         California Tow Truck Association
                         California Trucking Association
                         Pacific Merchant Shipping Association
               
               OPPOSED:  None received.