BILL ANALYSIS Ó
Senate Appropriations Committee Fiscal Summary
Senator Kevin de León, Chair
AB 529 (Lowenthal) - Motor carriers: inspections and fees.
Amended: June 25, 2013 Policy Vote: T&H 11-0
Urgency: No Mandate: Yes
Hearing Date: August 30, 2013
Consultant: Mark McKenzie
SUSPENSE FILE. AS PROPOSED TO BE AMENDED.
Bill Summary: AB 529 would restructure the program through which
the California Highway Patrol (CHP) inspects motor carrier
terminals and vehicles, beginning on January 1, 2016. The
revised program would be performance-based and focus inspections
on new motor carriers and those with unsatisfactory compliance
records.
Fiscal Impact:
One-time Department of Motor Vehicle (DMV) programming
costs of approximately $100,000, primarily in 2014-15,
related to the collection of the new Carrier Inspection Fee
(Motor Vehicle Account). Ongoing DMV costs would be minor
and absorbable as inspection fees will be collected with
other fees paid to DMV.
Estimated CHP costs in the range of $50,000 to $100,000
over several fiscal years for staff time to adopt new
regulations associated with the restructured inspection
program (Motor Vehicle Account). CHP indicates these costs
are absorbable.
Unknown one-time CHP costs, likely in the hundreds of
thousands in 2014-15, to create a database that includes
safety and performance-based data on motor carriers (Motor
Vehicle Account).
New DMV-collected Carrier Inspection Fee revenues of
approximately $12 million to $13.5 million annually (Motor
Vehicle Account). This fee is intended to offset fee
revenue losses associated with the elimination of the
biennial motor carrier terminal inspection fees collected by
CHP, which generated $13.45 million for the program in
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2012-13.
Indeterminable impact on Safety Fee revenue (Motor Vehicle
Account) and Uniform Business License Tax revenue (General
Fund). These items are collected annually by DMV as part of
the motor carrier permit program. While the amounts of
these fees are not changed by the bill, the current fee is
collected based on fleet size. AB 529 specifies that a
motor carrier's trailers are no longer counted as part of
the fleet size when assessing these fees. However, any loss
of fees related to changes in fleet size could be offset by
the expansion in the number of motor carriers subject to the
fees.
Background: Motor carriers transport property, except for
household goods, for hire in trucks, tractor-trailers, or other
similar vehicles. Under existing law, DMV issues the permit
that a motor carrier must have to operate legally in this state,
and CHP regulates 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.
In conjunction with the issuance of motor carrier permits, DMV
collects a Safety Fee and Uniform Business License Tax, which
vary depending on the number of vehicles (both power units and
trailers) in a motor carrier's fleet. The Safety Fee ranges
from $60 for a fleet size of one, to $1,030 for a fleet size of
more than 2,000. These fees are deposited into the Motor
Vehicle Account. The Uniform Business License Tax ranges from
$60 for a fleet size of one, to $2,000 for a fleet size of more
than 2,000 vehicles. This tax is deposited into the state
General Fund. A motor carrier must renew its permit annually.
Existing law, the Biennial Inspection of Terminals (BIT)
Program, requires CHP to conduct inspections of motor carrier
terminals, including the vehicles, maintenance records, and
driver records of all motor carriers at least once every 25
months. A "terminal" is defined as 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 a biennial terminal inspection fee
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to CHP. The inspection fee ranges from $270 for a terminal
fleet size of one, to $1870 for a terminal fleet size of 91 or
more. 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.
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.
Failure of a motor carrier to schedule 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.
The Federal Motor Carrier Safety Administration (FMCSA)
established a new program in December of 2010 that is designed
to improve the safety of large commercial vehicles in terms of
reduced crashes, injuries, and fatalities. The program uses a
performance-based model and parameters to evaluate and target
on-site inspections of interstate motor carriers. This approach
allows FMCSA and those states choosing to use the model to
channel enforcement and compliance efforts to carriers that are
profiled with potential safety problems. California has not
been involved in implementing and evaluating this new program.
Proposed Law: AB 529 would restructure the program through which
CHP inspects motor carrier terminals and vehicles, beginning on
January 1, 2016. Among other things, this bill would:
Eliminate the current Biennial Inspection of Terminals
(BIT) Program, including the fee charged for periodic
inspections of each terminal, effective January 1, 2016,
including requirements that CHP inspect motor carrier
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terminals every 25 months and collect a biennial terminal
inspection fee.
Require CHP to adopt rules and regulations to establish a
performance-based truck terminal inspection priority
selection system by January 1, 2016, including
FMCSA-consistent methodologies for quantitative analysis of
safety-related performance data.
Require CHP to create a database to include all
performance-based data, and require updates to provide
real-time data on motor carrier performance.
Require CHP to prioritize inspections for terminals that
have never been inspected, those identified by the
performance-based system, and those operating vehicles that
transport hazardous materials.
Authorize CHP, beginning January 1, 2016, to inspect any
terminal at any time it chooses, but no more than every six
years if a terminal has received a satisfactory rating in a
previous inspection. A terminal receiving an unsatisfactory
inspection rating or falls below the threshold established
by CHP's priority system must be re-inspected within 120
days.
Require DMV, beginning January 1, 2016, to collect a new
annual Carrier Inspection Fee on all motor carriers, based
upon fleet size that only includes power units (trailers are
not included in fleet size). The fee amount would range
from $130 for a fleet size of one, to $2,114 for a fleet
size of over 2,000 vehicles.
Specify that the existing Safety Fee and Uniform Business
License Tax collected by DMV on motor carriers would be
based upon fleet size that only includes power units. Under
existing law, trailers are included in a motor carrier's
fleet size.
Expand the BIT program to include additional motor
carriers, such as 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.
Clarify that the definition of motor carriers 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.
Impose a delinquency fee on motor carriers that renew their
permits after they have lapsed. The delinquency fee would
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apply to the Safety Fee, Business License Tax, and Carrier
Inspection Fee, and funds would accrue to the Motor Vehicle
Account to pay DMV and CHP costs associated with regulating
motor carriers.
Make additional conforming changes, effective January 1,
2016.
Staff Comments: AB 529 implements a performance-based inspection
program patterned after the FMCSA model. By using
performance-based prioritization, CHP will focus staff
inspection resources where most needed: targeting new motor
carriers and those that are out of compliance or have identified
safety-related problems. The bill would also realign some of
the administrative duties associated with the program to achieve
operational efficiencies. Specifically, responsibilities for
collecting inspection fees would shift from a biennial system of
collection at the time of CHP inspection to an annual inspection
fee collected in conjunction with other fees that DMV collects
through the motor carrier permit process.
CHP indicates that the changes to the motor carrier inspection
program are designed to be revenue neutral. Staff notes,
however, that due to the number of parameters that are changing
as a result of the transition to a performance-based inspection
program, the ultimate fiscal impacts are difficult to estimate
with reasonable certainty. For example, as a result of the
changes to the program, CHP estimates that an additional 14,500
terminals will be added to the program, and staff notes that the
inspection fees will be charged annually rather than biennially,
pursuant to a revised fee schedule, and they will be imposed on
an expanded population of carriers, but the fees will be
calculated based upon a fleet size, rather than on each
terminal, and the fleet size would no longer include the number
of trailers in a carrier's fleet. As a result of the numerous
variables between the existing BIT program and the new program,
this bill could result in an imbalance between workload and
available revenues.
AB 529 would create a performance-based inspection system that
would allow CHP to focus inspections on motor carriers with
compliance and safety-related issues. This would allow CHP to
allocate resources more efficiently and maintain a program
whereby high-priority terminals are inspected as necessary, and
those with satisfactory ratings ar not inspected more than once
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every six years. CHP expects the revised fee schedule to
generate revenues that are similar to those collected under the
current fee structure. Staff notes, however, that the bill
requires CHP to prioritize for selection those motor carrier
terminals that have never previously been inspected by CHP. As
noted above, this would put approximately 14,500 terminals as
first priority, in conjunction with those that have compliance
and safety problems. As such, the bill would place significant
staffing pressures on the department to conduct all necessary
inspections in the early stages of the revised program within
existing resources, based upon the priorities identified in the
bill.
CHP indicates that the current BIT program costs approximately
$12 million to $15 million annually to administer. Certain
duties associated with the program, however, are not covered by
the fees generated by the program. These include, fleet
replacement, IT upgrades, recurring specialized training, and
administrative costs associated with collecting terminal
inspection fees, all of which are absorbed within CHP's general
operating budget.
AS PROPOSED TO BE AMENDED this bill would include provisions to
avoid chaptering conflicts with AB 501(Hueso), and strike out
the word "not" on line 24 of page 28.