Paul Cullen Jr.
The Cullen Law Firm, PLLC
The Bush administration has revealed its proposal to reauthorize the nation’s highway and transportation programs. Totaling 378 pages, the “Safe, Accountable, Flexible and Efficient Transportation Equity Act of 2003,” or “SAFETEA,” would have a significant effect on highway programs and the motor carrier industry. The central purpose of the bill is to authorize spending levels for transportation programs through the year 2009. Between next year and 2009, the administration proposes spending $201 billion on highway and safety programs and $46 billion for public transportation programs.
While setting the targets of transportation spending is the main purpose of the bill, changing transportation policy is also an important component of the bill. In issues pertaining to trucking, the SAFETEA bill would make it easier for states to put tolls on interstates, make motor carrier executives more responsible for safety compliance, increase penalties for carrier violations of federal safety rules and eliminate broker registration and bonding requirements.
This bill is far from becoming law. The DOT helps set the transportation agenda by announcing its SAFETEA proposal. The bill will face scrutiny and go through many changes as it winds it way through multiple House and Senate committees during the remainder of the year.
DOT promises no federal tax increase— but would allow more toll roads
The Bush administration has taken the position against raising any federal taxes, including the fuel tax, to pay for new roads and highway improvements. This is opposite to the wishes of some members of Congress, who would like to increase the fuel tax by 2 cents per gallon per year for four years and then index increases to that tax to inflation. The DOT says it will use all the funds available in the highway trust fund and keep the president’s pledge not to increase taxes.
At the same time, however, the SAFETEA proposal would make it easier for states to erect new tolls in two different ways.
The establishment of new tolls for road repair is the revision of an existing federal pilot program that would allow states to establish a new toll if it were the only way of funding the repair of that highway. Because no state applied to participate in the existing program, DOT wants to change the conditions for participation. Under the new proposal, a state could apply to DOT to establish a new toll if that were “the most efficient, economical or expeditious way to advance the project.” While the administration describes this as a minor change to the requirements for participation, states would have a much easier time qualifying to create new highway tolls.
States could also establish new variable tolls on so-called “Lexis lanes.” In this program, states could raise and lower tolls on particular roads depending on the time of day or amount of traffic congestion. The SAFETEA proposal states that variable tolls would be allowed as a tool to regulate traffic congestion and reduce vehicle emissions. Its potential to raise money, however, is not lost on the states.
DOT would have to approve both new tolling proposals, and there would be some restrictions on the use of the toll money collected by the states.
There is no reason to believe that either the proposal to raise fuel taxes or the proposal to increase tolls is exclusive of the other. It is entirely possible both could be passed as part of the final bill. For example, some proponents of higher fuel taxes have also voiced support for construction of truck-only toll lanes.
Proponents of higher fuel taxes come from both Republican and Democratic leaders on the transportation committees in Congress. They see the growing need to build and repair infrastructure handicapped by a stagnant funding stream. The strongest opponents of higher fuel taxes are the House and Senate Republican leadership and the Bush administration. They stand by their general conviction against raising taxes and for giving states more autonomy to make decisions on such matters.
In the end, Congress is likely to combine the federal interest in promoting interstate commerce through federal investment in infrastructure with the desire to allow states more autonomy to control local infrastructure projects. This means some rise in fuel taxes and more state tolling.
Maximizing highway financing opportunities might be the focus of the toughest battles during Congress’ consideration of the bill. If no increase in fuel taxes is in the cards, Congress might consider authorizing highway programs for only two years instead of five. That would allow Congress and the president to get past the 2004 election without raising fuel taxes. Then Congress could revisit the issue in 2005 with less political resistance to raising taxes.
What option or mix of funding options will become law in the end is far from certain at this early stage.
Broker bond and registration requirements to be eliminated?
In SAFETEA, the DOT asks Congress to give it authority to decide whether or not brokers and freight forwarders should continue to be required to register with DOT and carry a bond. Under its proposal, DOT would retain only the requirement that brokers and freight forwarders of household goods register and possess a bond.
DOT states there continues to be a need to protect consumers from brokers and freight forwarders of household goods. It hints, however, that there may no longer be any reason to protect shippers and carriers from freight forwarders or shippers from brokers.
The bill’s explanation contains no acknowledgement that owner-operators and carriers are also parties that are protected by broker registration and bonds.
DOT and Congress will undoubtedly hear from OOIDA and various carriers on the continued need for broker registration and bonds. Given the proliferation of brokers since deregulation of the trucking industry, the unreliability of information in FMCSA’s broker database, and the fact that the $10,000 bond limit has not changed for over 20 years, DOT may be mistaking the ineffectiveness of its current broker program for a lack of need for it. This is another subject Congress should review carefully this year.
Higher penalties for carriers and drivers
DOT proposes to encourage better compliance with the motor carrier safety rules by increasing the penalties for their violation. Penalties for record-keeping violations would be raised from the current $500 to $5,000 per offense to $1,000 to $10,000 per violation.
Penalties for violating an out-of-service (OOS) order are currently a 90-day disqualification from operating a CMV and a civil penalty of at least $1,000 for the first offense. For a second offense, the penalty is disqualification for one to five years and a civil penalty of at least $1,000. An employer could face a $10,000 penalty if it knowingly allows or requires a driver to violate an OOS order.
SAFETEA would increase the civil penalty for a motor carrier that knowingly orders a driver to proceed despite an OOS order to a maximum $25,000. An employer could also get a year in prison and up to a $100,000 fine if the employer knowingly and willfully ignores an OOS order and $250,000 if the OOS violation results in death.
The penalties a driver would face increase also. A first-time offense would bring a 180-day disqualification and a civil penalty of at least $2,500. For a second offense, the driver would face a two- to five-year disqualification and a civil penalty of up to $5,000.
DOT also wants to get the states more involved. Under current law, if states follow specific procedures, they are allowed to deny, suspend or revoke CMV registrations when the U.S. DOT issues an operations out-of-service order. This cooperative effort is called the Performance and Registration Information System Management (PRISM) program. To encourage more states to participate in PRISM, DOT proposes offering grants through the SAFETEA program. (For more information on PRISM, see Page 78, June 2003 LL.)
Expulsion of bad carrier management personnel from the trucking industry
DOT would also like to prevent individuals in motor carrier management from ignoring the safety rules, being shut down and then moving on to create or join a new carrier just to repeat their unlawful practices. DOT proposes that it “be able to suspend, amend or revoke the registration of a for-hire motor carrier if any of its officers has engaged in a pattern or practice of avoiding compliance or concealing non-compliance with federal motor carrier safety standards.”
The department contemplates this rule would include owners, chief executive officers, chief operating officers, chief financial officers, safety directors, vehicle maintenance supervisors and driver supervisors. Instead of targeting all of the officers of an offending motor carrier, DOT would focus on the individuals who showed a pattern of disregard or contempt for the safety rules.
The provisions discussed above hardly scratch the surface of all of the proposals in the SAFETEA bill. Other provisions relating to the trucking industry include a proposal to commercialize highway rest areas, a program to provide electrical hookups for trucks at rest areas, the qualification and registration of medical examiners, the requirement that private carriers possess the same liability insurance as for-hire carriers and the removal of the long-standing registration exemption of carriers of agricultural commodities (ordinary livestock, agricultural or horticultural commodities, commodities on a 1958 list published by the Interstate Commerce Commission, fish and shellfish, livestock and poultry feed, and agricultural seeds and plants).
DOT also supports the effort to continue a crash analysis study of accidents involving trucks, and supports a greater effort to promote the “share the road” campaign.
Washington Insider will continue to provide updates on this bill as it winds its way through Congress.