Unified Motor Carrier Fee System
Progress Made but Challenges to Implementing New System Remain Gao ID: GAO-07-771R May 25, 2007The congressionally established unified carrier fee system was not implemented before its predecessor, the Single State Registration System, expired thereby preventing states from collecting fees from for-hire motor carriers and other related entities. The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU) mandated that a new unified carrier fee system replace the Single State Registration System, which expired on January 1, 2007. The Single State Registration System annually provided 38 states with about $100 million in total fees collected from for-hire interstate motor carriers. States used revenue collected from this system to supplement general funds and conduct safety-related services. Unlike the Single State Registration System, the new system broadened the base of those expected to pay fees to include exempt for-hire motor carriers, private motor carriers, brokers, freight forwarders, and leasing companies. To develop and administer this new fee system, Congress established a Board of Directors. This board is also tasked with administering a federal-interstate Unified Carrier Registration Agreement (UCRA), and issuing rules and regulations to govern this agreement. GAO was asked to examine the progress that the board and the Department of Transportation have made in implementing the unified carrier fee system and any implications resulting from the status of its implementation. Specifically, we undertook this study to (1) describe steps taken to implement the unified carrier fee system and the current status of implementation, (2) identify factors contributing to the delay in implementing the unified carrier fee system, and (3) identify any potential implications resulting from the delay in implementing the unified carrier fee system.
The Board of Directors and FMCSA have taken a number of steps to implement the unified carrier fee system; however, certain key steps remain incomplete and a specific date for implementation is not yet clear. The board drafted procedures to govern the collection and distribution of fees paid by all entities covered under the new system. In addition, the board identified a state, Texas, to administer a Web site for registering all motor carriers during the initial year of the unified carrier fee system, until individual states can develop their own systems in subsequent years. A number of key steps, however, have not been completed, and no timeline for finalizing these steps has been set. The board has not designated a depository to hold revenues generated by the unified carrier fee system and distributes those revenues to participating states. In addition, the board has not yet completed development of a registration Web site. Finally, the Secretary of Transportation has not set fees. he board reported its recommended fee structure to the Secretary of Transportation on December 6, 2006. The amount of time taken for start-up actions left insufficient time to implement the unified carrier fee system before the Single State Registration System expired. In addition, the amount of time required to publish the proposed fees and issue final rules could cause further delays. FMCSA officials told us it took time to identify potential board members and make sure there would be a balanced composition that complied with SAFETEA-LU requirements. The board and FMCSA took additional time to resolve two fee-related issues related to implementing the new fee system. SAFETEA-LU requires the Secretary of Transportation to obtain public comment before setting new registration fees. Under the Administrative Procedure Act, FMCSA would accomplish this by publishing a Notice of Proposed Rule Making, providing a period for allowing comments to the proposal, analyzing those comments, and adopting and publishing a final rule. Also, FMCSA officials told us that since the unified carrier fee system has an economic impact more than $100 million, the Office of Management and Budget (OMB) will have to review both the proposed and final rules. FMCSA officials acknowledge that it could be difficult to complete this procedure within the required 90 days. Some state officials told us that the delay in implementation has hindered their ability to acquire revenues, and thus regulate motor carriers and improve safety. Twenty-five of 28 states that responded to our survey indicated that a delay in implementing the unified carrier fee system hindered their ability to acquire revenues, and 22 states indicated that this was a great or very great hindrance. Since the Single State Registration System expired and no new system took its place, states that collected fees under Single State Registration System have not yet been able to collect these fees during 2007. If implementation of the unified carrier fee system is not completed by the end of 2007, FMCSA officials said it is unlikely that states could recoup fees not collected to date.
GAO-07-771R, Unified Motor Carrier Fee System: Progress Made but Challenges to Implementing New System Remain
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United States Government Accountability Office:
Washington, DC 20548:
May 25, 2007:
The Honorable Patty Murray:
Chairman:
The Honorable Christopher S. Bond:
Ranking Member:
Subcommittee on Transportation, Housing, Urban Development, and Related
Agencies:
Committee on Appropriations:
United States Senate:
Subject: Unified Motor Carrier Fee System: Progress Made but Challenges
to Implementing New System Remain:
The congressionally established unified carrier fee system was not
implemented before its predecessor, the Single State Registration
System, expired thereby preventing states from collecting fees from for-
hire motor carriers and other related entities. The Safe, Accountable,
Flexible, Efficient Transportation Equity Act: A Legacy for Users
(SAFETEA-LU) mandated that a new unified carrier fee system replace the
Single State Registration System, which expired on January 1,
2007.[Footnote 1] The Single State Registration System annually
provided 38 states with about $100 million in total fees collected from
for-hire interstate motor carriers. States used revenue collected from
this system to supplement general funds and conduct safety-related
services. Unlike the Single State Registration System, the new system
broadened the base of those expected to pay fees to include exempt for-
hire motor carriers, private motor carriers, brokers, freight
forwarders, and leasing companies.
To develop and administer this new fee system, Congress established a
Board of Directors. This board is also tasked with administering a
federal-interstate Unified Carrier Registration Agreement (UCRA), and
issuing rules and regulations to govern this agreement. The Secretary
of Transportation appoints the board, which consists of the Deputy
Administrator of the Federal Motor Carrier Safety Administration
(FMCSA) and representatives from participating states and the motor
carrier industry. The Secretary also ultimately sets the fees and has
delegated this responsibility to FMCSA.
You asked us to examine the progress that the board and the Department
of Transportation have made in implementing the unified carrier fee
system and any implications resulting from the status of its
implementation. Specifically, we undertook this study to (1) describe
steps taken to implement the unified carrier fee system and the current
status of implementation, (2) identify factors contributing to the
delay in implementing the unified carrier fee system, and (3) identify
any potential implications resulting from the delay in implementing the
unified carrier fee system.
To describe the steps taken to implement the unified carrier fee system
and to determine the status of its implementation, we attended five
board meetings and reviewed drafts of the UCRA and other board
documents, such as meeting minutes. To identify the factors
contributing to a delay in implementing the unified carrier fee system,
we interviewed key FMCSA officials and 7 of the 15 board
members.[Footnote 2] To identify potential implications resulting from
a delay in implementing the unified carrier fee system, we surveyed the
37 states that are planning to participate in the new system. We asked
the extent to which the delay in implementing the new system has
hindered certain state operations on a 5-point scale, ranging from very
greatly hindered to little or not at all. Twenty-eight states
responded. We conducted our work from September 2006 through April 2007
in accordance with generally accepted government auditing standards.
On March 27, 2007, we briefed your staff and the staff from the Senate
Commerce, Science, and Transportation Subcommittee on Surface
Transportation and Merchant Marine Infrastructure, Safety and Security
on the results of our analysis. This report formally conveys and
updates the information provided in that briefing (see app. I). In
summary:
* The Board of Directors and FMCSA have taken a number of steps to
implement the unified carrier fee system; however, certain key steps
remain incomplete and a specific date for implementation is not yet
clear. On May 12, 2006, the Department of Transportation completed its
process to select board members and announced the board's composition.
Since then the board has taken several steps to implement the new
system. The board drafted procedures to govern the collection and
distribution of fees paid by all entities covered under the new system.
In addition, the board identified a state, Texas, to administer a Web
site for registering all motor carriers during the initial year of the
unified carrier fee system, until individual states can develop their
own systems in subsequent years. On April 17, 2007, however, the Texas
Department of Transportation informed the board that it would not host
this Web site since handling the data for the states would result in an
unacceptable level of liability to the state. Texas officials offered
to transfer the development of its Web site to any other state that
would be interested in hosting the registration system. Finally, the
board developed a recommended fee structure. During this time, FMCSA
provided the board with financial and technical assistance, such as
preparing and posting official notices of board meetings in the Federal
Register. A number of key steps, however, have not been completed, and
no timeline for finalizing these steps has been set. The board has not
designated a depository to hold revenues generated by the unified
carrier fee system and distributes those revenues to participating
states. In addition, the board has not yet completed development of a
registration Web site. Finally, the Secretary of Transportation has not
set fees. The board reported its recommended fee structure to the
Secretary of Transportation on December 6, 2006. According to FMCSA
officials, FMCSA sent the chair and vice-chair of the board a letter on
December 21, 2006, that stated that the board's initial fee memorandum
lacked information it viewed as essential for it to complete its rule-
making process. In response, the board submitted a revised fee
structure dated March 23, 2007. FMCSA accepted this revised fee
structure on April 2, 2007, and is drafting a Notice of Proposed
Rulemaking to formally set the fees.
* The amount of time taken for start-up actions left insufficient time
to implement the unified carrier fee system before the Single State
Registration System expired. In addition, the amount of time required
to publish the proposed fees and issue final rules could cause further
delays. SAFETEA-LU allowed 17 months--from August 2005 to January 2007-
-to implement the new system before the Single State Registration
System expired. These 17 months included 90 days for the Secretary of
Transportation to set fees. During the first 9 months (August 2005 to
May 2006), the Secretary of Transportation appointed a Board of
Directors. FMCSA officials told us it took time to identify potential
board members and make sure there would be a balanced composition that
complied with SAFETEA-LU requirements. During the following 7 months
(May 2006 to December 2006), the board completed the analysis required
to estimate the number of affected motor carriers and related
entities[Footnote 3] and developed a fee structure to generate about
$106 million in needed revenues.[Footnote 4] The board and FMCSA took
additional time to resolve two fee-related issues related to
implementing the new fee system. First, the board interpreted SAFTEA-LU
as allowing them to charge unified carrier fees to all motor carriers,
including those operating in nonparticipating states, but FMCSA did not
determine until April 2 that SAFTEA-LU allows the board to charge fees
to those motor carriers operating in nonparticipating states. Second,
the board based its initial fee structure on the estimated number of
power units operated by affected motor carriers, but FMCSA officials
explained that SAFETEA-LU specifies that commercial motor vehicles be
used as the basis for the fee structure.[Footnote 5] The board's
revised fee structure that FMCSA accepted in April uses commercial
motor vehicles as its basis.[Footnote 6] Lastly, now that the board and
FMCSA agree on the fee proposal, the amount of time required to set the
fees could cause further delays. SAFETEA-LU requires the Secretary of
Transportation to obtain public comment before setting new registration
fees. Under the Administrative Procedure Act, FMCSA would accomplish
this by publishing a Notice of Proposed Rule Making, providing a period
for allowing comments to the proposal, analyzing those comments, and
adopting and publishing a final rule. Also, FMCSA officials told us
that since the unified carrier fee system has an economic impact more
than $100 million, the Office of Management and Budget (OMB) will have
to review both the proposed and final rules. FMCSA officials
acknowledge that it could be difficult to complete this procedure
within the required 90 days.
* Some state officials told us that the delay in implementation has
hindered their ability to acquire revenues, and thus regulate motor
carriers and improve safety. Twenty-five of 28 states that responded to
our survey indicated that a delay in implementing the unified carrier
fee system hindered their ability to acquire revenues, and 22 states
indicated that this was a great or very great hindrance. Since the
Single State Registration System expired and no new system took its
place, states that collected fees under Single State Registration
System have not yet been able to collect these fees during 2007. If
implementation of the unified carrier fee system is not completed by
the end of 2007, FMCSA officials said it is unlikely that states could
recoup fees not collected to date. In addition, 23 of 28 states
reported that the delay hindered their ability to regulate motor
carriers, and 13 states indicated that this was a great or very great
hindrance. For example, Washington state officials reported that it had
to scale back its transportation regulation, such as safety audits of
commercial motor vehicles, drivers, and companies, by approximately 20
percent. Finally, 19 of 28 states reported that the delay hindered
their ability to improve safety programs, and 9 states indicated that
this was a great or very great hindrance. Moreover, further delay could
jeopardize safety and enforcement programs in certain states. For
example, Michigan reported that if replacement funding is not secured
by July 1, 2007, its entire enforcement program, including the federal
Motor Carrier Safety Assistance Program, will likely shutdown.[Footnote
7]
Prior to our March 27, 2007, briefing, we provided the Department of
Transportation with the briefing document and incorporated technical
comments at that time. Since then the Department of Transportation has
reviewed the draft report and did not have any comments on it.
We are sending copies of this report to the Secretary of
Transportation, appropriate congressional committees, and other
interested parties. We will also make copies available to others upon
request. In addition, the report will be available at no charge on
GAO's Web site at http://www.gao.gov.
If your staff have any questions about this report, please contact me
at (202) 512-2834 or brownke@gao.gov. Contact points for our Offices of
Congressional Relations and Public Affairs may be found on the last
page of this report. GAO staff who made key contributions to this
report are listed in appendix I.
Signed by:
Kay E. Brown,
Acting Director, Physical Infrastructure Issues:
[End of section]
Appendix I: GAO Briefing to Senate Subcommittees:
Unified Carrier Fee System: Progress Has Been Made, but Implementation
Delays May Hinder States' Ability I to Regulate Commercial Motor
Vehicles:
Briefing for Senate Appropriations Subcommittee on Transportation,
Housing and Urban Development, and Related Agencies and Senate
Commerce, Science, and Transportation Subcommittee on Surface
Transportation and Merchant Marine Infrastructure, Safety, and
Security:
March 27, 2007:
Introduction:
The Single State Registration System annually provided 38 states with
about $100 million in total fees collected from for-hire interstate
motor carriers. Motor carriers paid these fees and provided information
on insurance to states upon registering. States used revenue collected
from this system to supplement general funds and conduct safety-related
services.
The Safe, Accountable, Flexible Efficient Transportation Equity Act: A
Legacy for Users (SAFETEA-LU) mandated that a new unified carrier fee
system replace the Single State Registration System, which expired on
January 1, 2007.
Unlike the Single State Registration System, the new system broadened
the base of those expected to pay fees to include exempt t for-hire
motor carriers, private motor carriers brokers, freight forwarders, and
leasing companies. (See enclosure I for a definition of each entity).
To develop and administer this fee system, Congress established a Board
of Directors. This board will also administer a federal- interstate
Unified Carrier Registration Agreement (UCRA), and issue rules and
regulations to govern the UCRA.
The Secretary of Transportation appoints the Board of Directors, which
consists of a Federal Motor Carrier Safety Administration (FMCSA)
representative and representatives from participating states and the
motor carrier industry, and ultimately sets the fees.
The Single State Registration System expired, but the unified carrier
fee system was not implemented by January 1, 2007, preventing the
collection and distribution of fees to states until the new system is s
in n place.[Footnote 8]
Objectives:
Based on interest from the Senate Appropriations Committee, we began
work on this issue. This briefing will:
* describe steps taken to implement the unified carrier fee system and
the current status of implementation,
* identify factors contributing to the delay in implementing the
unified carrier fee system, and:
* identify any potential implications resulting from the delay in
implementing the unified carrier fee system.
Scope and Methodology:
To describe the steps taken to implement the unified carrier fee system
and to determine the status of its implementation we attended four
board meetings, and reviewed drafts of the UCRA and other board
documents, such as meeting minutes.
To identify the factors contributing to a delay in implementing the
unified carrier fee system, we interviewed 7 of the 15 board members
and key FMCSA officials.
To identify potential implications resulting from a delay in
implementing the unified carrier fee system, we surveyed the 37 states
that are planning to participate in the new system. We asked the extent
to which the delay in implementing the new system has hindered certain
state operations on a 5-point scale, ranging from very greatly hindered
to little or not at all. Twenty-eight states responded.
We conducted our work from September 2006 through March 2007 in
accordance with generally accepted government auditing standards.
Results in Brief:
The Board of Directors and FMCSA have taken a number of steps to
implement the unified carrier fee system' however, certain key steps
remain incomplete and a specific date for implementation is not yet
clear.
The time taken for start-up actions, such as a pointing board members
and recommending a new fee structure, left insufficient time to
implement the unified carrier fee system on time. In addition,
unresolved issues over key elements of the board's recommended fee
structure and the time required to publish the proposed fees and issue
final rules could cause further delays.
The delayed implementation of the unified carrier fee system has
hindered some participating states ability to acquire revenues and
thus, regulate motor carriers, and improve the quality of safety
programs. According to state officials, further delay could jeopardize
safety programs in some states.
Background: SAFETEA-LU Created a New System for Collecting Fees from
Motor Carriers:
In August 2005, SAFETEA-LU replaced the Single State Registration
System with a unified carrier fee system, requiring the motor carrier
industry to pay fees to states that chose to participate.
This new system was created to lower the burden on for-hire interstate
motor carriers while ensuring that states receive their revenues by
spreading registration fees to private motor carriers, brokers, freight
forwarders, and leasing companies.
Participating states that were part of the Single State Registration
System are entitled to continue receiving the amount of fees they
collected under the old system in registration year 2004, plus an
allocation to cover expected intrastate registration fees.
States that were not part of the previous system can receive up to
$500,000 per year if they choose to participate under the new system.
Background: FMCSA, States, and Motor Carriers Play a Role in the New
System:
SAFETEA-LU specified that:
* A 15-member Board of Directors governs the system.
* The board is made up of a representative from FMCSA, and
representatives from participating states, and the motor carrier
industry.
The board is charged with:
* developing and administering an agreement among the parties,
* developing and recommending a new fee structure, and:
* developing a method for distributing collected revenues to
participating states.
SAFTEA-LU charged the Secretary of Transportation with setting the fees
and any subsequent changes to those fees within 90 days after receiving
the board's recommendation -a responsibility the Secretary delegated to
FMCSA.
Background: New System Revenues to Be Used for Safety, Enforcement, or
Administration:
SAFETEA-LU restricts participating states' use of revenues generated
under the unified carrier fee system. These revenues may be used only
for:
* motor carrier safety programs,
* motor carrier enforcement programs, or:
* administration of the unified carrier fee system.
States may use these revenues as matching funds for federal commercial
motor carrier safety purposes.
Objective 1: FMCSA and the Board Have Taken Steps to Implement the New
System:
On May 12, 2006, the Department of Transportation completed its process
to select board members and announced the board's composition.
Between June 2006 and March 2007, the board met almost monthly and:
* Determined the amount of fees states participating in the Single
State Registration System collected in registration year 2004 and
established total state entitlement (referred to as the "cap"), as
specified in SAFETEA-LU.
* Estimated the number of motor carriers and other entities that are
covered under the new system.
* Identified states that would participate in calendar year 2007 (37
states).
Objective 1: Most States Will Participate in the New System in 2007:
[See PDF for image]
Source: FMCSA.
Note: Alaska and Hawaii are not participating. According to FMCSA, 41
states plan to participate in 2008.
[End of figure]
The board also:
Drafted procedures to govern the collection and distribution of fees
paid by for-hire and private motor carriers, brokers, freight
forwarders, and leasing companies.
Identified a state to administer a Web site for registering all motor
carriers during the initial year of the unified carrier fee system,
until individual states can develop their own systems in subsequent
years. Texas volunteered to develop this initial system.
Developed an initial recommended fee structure, which it reported to
the Secretary of Transportation on December 6, 2006, and a revised fee
structure in March 2007. The board considered a number of factors in
developing this structure such as equity among motor carrier entities
with different fleet sizes.
The board formulated a fee structure to generate over $106 million in
revenues. The approximately $106 million in revenue is a sum of the
$101 million entitled to participating states that were part of the
Single State Registration System, $5 million for administrative costs,
and $500,000 to Oregon for joining the new system.
During this time, FMCSA provided assistance to the board.
* FMCSA provided approximately $60,000 in financial assistance to pay
for meeting space and travel because the board does not have funding
for its activities until fees are collected.
- In January 2007, however, FMCSA informed the board it would o longer
fund these costs given budget constraints. The March 00 board meeting
as e d via teleconference. Until the board begins to collect fees, it
has no specific funding for its administrative costs, such as travel
and setting up an electronic fund transfer system.
* FMCSA provided technical assistance and consultation in areas such as
the board's responsibility to notify the public of its meetings and
factors to consider when developing a fee structure.
* FMCSA prepared and posted official notices of board meetings in the
Federal Register.
Objective 1: Key Steps Remain Incomplete and a Date for Implementation
is Not Clear:
As of March 23, 2007, a number of key steps had not been completed:
* The board had not designated a depository to hold revenues generated
by the unified carrier fee system and distribute them to participating
ates.
* The Texas Department of Transportation had not completed development
of the registration Web site.
* The Secretary of Transportation had not set fees. According to FMCSA,
it sent the chair and vice-chair of the board a letter on December 21,
2006, that stated that the board's initial fee memorandum lacked
information it views as essential for it to complete its rule-making
process.[Footnote 9] FMCSA asked the board for this information. The
board had not yet submitted a new fee structure.
* No timeline for finalizing these steps had been set.
Objective 2: The Time Taken for Start-up Activities Left Insufficient
Time to Finalize the New System:
The length of time taken to complete certain key start-up activities
contributed to not having an implemented unified carrier fee system by
January 1, 2007. (See enclosure II for a timeline of key events).
SAFETEA-LU allowed 17 months to implement the new system before the
Single State Registration System expired-from August 2005 to January
2007. This time frame included 90 days for FMCSA to set fees.
During the first 9 months (August 2005 to May 2006) the Secretary of
Transportation appointed a Board of Directors. FMCSA officials told us
it took time to identify potential board members make sure there would
be a balanced composition that complied with SAFETEA-LU requirements,
and invite members to participate.
During the following 7 months (May 2006 to December 2006), the board
estimated the number of affected motor carriers and related entities
and recommended a new fee structure.
Estimating the number of motor carriers and related entities required
several steps:
* The board used FMCSA's Motor Carrier Management Information System
(MCMIS) database to estimate the number of active motor carriers from
which it could expect to collect a fee. This included determining both
the overall population of motor carriers and their fleet size.
* The board found that FMCSA's MCMIS database that contained 712,837
motor carriers was unreliable in part because it included inactive
motor carriers. As a result, the board used MCMIS to identify as active
those interstate motor carriers that had some roadside or audit
activity (roadside inspections, reportable crashes, or a safety review)
within a 30 month period. In response to FMCSA concerns about this
number, the board worked with FMCSA to identify additional fields in
MCMIS to ultimately identify about 350,700 motor carriers.
* From that subset, the board added 14,575 active brokers and freight
forwarders in FMCSA's License and Insurance System database.
* Ultimately, the board estimated that states might be able to collect
fees from about 36,000 companies.
Objective 2: Unresolved Issues Regarding the Fee Structure May
Contribute to Further Delay:
Given its legal responsibility to set the fee, FMCSA officials
explained that SAFTEA-LU states that the Secretary of Transportation
also has the responsibility to review the basis for the fees and
consider the same =hat the board considered to ensure compliance with
the law.
The board and FMCSA have not completely resolved two fee-related
issues:
* Carriers in nonparticipating states paying fees:
- The board interpreted SAFTEA-LU as allowing them to charge unified
carrier fees to all motor carriers. Under the Single State Registration
System, states collected fees from all for-hire interstate motor
carriers.
- As of March 19, 2007, FMCSA had not yet determined whether SAFTEA-LU
allows the board to charge fees to motor carriers operating in
nonparticipating states.
Fees based on power units:
* The board based its initial fee structure on the estimated number of
power units operated by affected motor carriers since power units were
used as the basis for the Single State Registration System. Power units
are self-propelled motor vehicles.
* FMCSA officials explained that SAFETEA-LU specifies that commercial
motor vehicles be used as the basis for the fee structure. The law
defines commercial motor vehicles as those vehicles that are self-
propelled or towed. These vehicles include self-propelled vehicles and
accompanied towed vehicles, such as trailers.
* Thus, the board developed a revised fee structure based on the number
of self-propelled and towed vehicles in the fleet. On March 15, 2007,
the board met and voted on this new recommended fee structure and plans
to submit this revised fee structure soon.
The board's revised fee structure recommendation:
Bracket 1;
Fleet size: 0-2;
Percent of industry: 50.0%;
Fee: $39;
Revenue: $7,128,498.
Bracket 2;
Fleet size: 3-5;
Percent of industry: 20.0%;
Fee: $116;
Revenue: $8,457,560.
Bracket 3;
Fleet size: 6-20;
Percent of industry: 20.0%;
Fee: $231;
Revenue: $16,893,030.
Bracket 4;
Fleet size: 21-100;
Percent of industry: 7.7%;
Fee: $806;
Revenue: $22,524,476.
Bracket 5;
Fleet size: 101-1,000;
Percent of industry: 2.1%;
Fee: $3,840;
Revenue: $29,548,800.
Bracket 6;
Fleet size: 1,001+;
Percent of industry: 0.2%;
Fee: $37,500;
Revenue: $22,762,500.
Total;
Fleet size: [Empty];
Percent of industry: 100.0%;
Fee: [Empty];
Revenue: $107,314,864.
Source: Unified carrier fee system Board of Directors.
[End of table]
FMCSA interprets SAFETEA-LU as permitting it to delay starting the 90-
day period allowed for fee setting until it believes the board provides
a recommendation that sufficiently explains the basis for its fee
proposal.
FMCSA officials told us they have authority to set fees without regard
to the board's recommendations; however, the officials said they would
prefer to resolve any issues collaboratively with the board.
It is not clear that FMCSA's interpretation of the SAFETEA-LU 90-day
fee-setting period is correct. SAFETEA-LU does not specifically
authorize the Secretary of Transportation to delay this procedure.
A 90-day period measured from when the board submitted its original fee
recommendation on December 6, 2006, would have elapsed on March 6,
2007.
Objective 2: Rule-making Requirements Are Likely to Contribute to
Further Delay:
According to FMCSA, the need to follow the Administrative Procedure Act
in finalizing the new system fees may contribute to further delay.
* SAFETEA-LU required the Secretary of Transportation to obtain public
comment before setting new registration fees.
* Under the Administrative Procedure Act, FMCSA would accomplish this
by publishing a Notice of Proposed Rule Making, providing a period for
allowing comments to the proposal, analyzing those comments, and
adopting and publishing a final rule.
* Also, because the unified carrier fee system has an economic impact
more than $100 million, FMCSA officials believe the Office of
Management and Budget (OMB) will have to review both the proposed and
final rules.
* FMCSA officials said it would be difficult to complete this procedure
within the required 90 days. They said OMB review alone usual takes 90
days.
Objective 3: State Officials Told Us the Delay Has Hindered Their
Ability to Acquire Revenues, and Thus Regulate Motor Carriers and
Improve Safety Programs:
The delay has hindered states' ability to acquire revenues and thus
regulate motor carriers and improve safety programs, according to state
officials we surveyed.
Acquire revenues - Twenty-five of 28 states that responded to our
survey indicated that a delay in implementing the unified carrier fee
system hindered their ability to acquire revenues, and 22 states
indicated that this was a great or very great hindrance. Because the
old system expired and no new system took its place, states that
collected fees under the old system have not yet been able to collect
these fees during 2007.
* For example, as of January 2007, Illinois had collected $129,211 in
fiscal year 2007 motor carrier receipts, although normally it would
have collected over $2 million by this time.
* If implementation of the unified carrier fee system is not completed
by the end of 2007, FMCSA officials said it is unlikely that states
could recoup fees not collected to date.
State officials reported that this delay in receiving motor carrier fee
revenue has also affected the ability to regulate motor-carrier
activities and improve safety programs.
Regulate motor carriers - Twenty-three of 28 states reported that the
delay hindered their ability to regulate motor carriers, and 13 states
indicated that this was a great or very great hindrance.
* Washington state officials reported that Washington state has had to
scale back its transportation regulation such as safety audits of
commercial motor vehicles, drivers, and companies by approximately 20
percent.
Improve safety programs - Nineteen of 28 states reported that the delay
hindered their ability to improve safety programs, and 9 states
indicated that this was a great or very great hindrance. States also
reported that the delay has moderately hindered their ability to
improve the quality of safety programs.
* Michigan officials stated that as a result of a projected shortfall
of $4.2 million, state police had to curtail commercial motor vehicle
safety and enforcement programs.
Moreover, further delay could jeopardize safety and enforcement
programs in certain states.
For example:
* Illinois has projected that it will not be able to pay for 64 highway
safety employees if it does not receive its fiscal year 2007 revenues.
* Louisiana officials stated that if replacement funding is not
obtained within the next few months, the state will have to begin
layoffs of highway enforcement agents.
Some states are more affected than others.
* Michigan reported that if replacement funding is not secured by July
1, 2007, its entire enforcement including the federal Motor Carrier
Safety Assistance Program, will likely shutdown.
Enclosure I: Motor Carrier Industry Entity Definitions:
Motor carrier - A person who operates a commercial motor vehicle in the
interstate transportation of goods or passengers for compensation.
Exempt for hire - A person who operates a commercial motor vehicle in
the transportation of property or passengers exempt from economic
regulation by the FMCSA, such as cotton and figs, for compensation.
Motor private carrier - A person who uses a commercial motor vehicle to
provide interstate transportation of property in which it has a
property interest, including an owner, lessee, for the purpose of sale,
lease, or rent or to further a commercial enterprise.
Broker - A person, other than a motor carrier or an employee or agent
of a motor carrier, who sells, offers for sale, negotiates for, or
holds itself out for selling, providing, or arranging transportation by
motor carrier for compensation.
Freight forwarder - A person other than a carrier who provides
transportation of property for compensation in the ordinary course of
business. Freight forwarders assemble and consolidate shipments, assume
responsibility for shipments from receipt to destination, but they use
the services of others to provide actual carriage.
Enclosure II: Timeline of Key Events:
[See PDF for image]
Source: GAO analysis of board and FMCSA data.
[End of figure]
Contact Information:
GAO Contact:
Kay Brown, (202) 512-2834, brownke@gao.gov:
Staff Acknowledgments:
Catherine Colwell, Samer Abbas, and Alex Lawrence made significant
contributions to all aspects of this report.
Note: After we provided this briefing, we continued our work through
April 2007.
Note: After we provided this briefing, the board and FMCSA resolved the
issues related to the board's recommended fee structure.
Note: After we provided this briefing, Texas officials informed the
board that it would not host a registration Web site.
Note: After we provided this briefing, FMCSA accepted a revised fee
structure on April 2, 2007, and is drafting a Notice of Proposed
Rulemaking to formally set the fees. In addition, the Texas Department
of Transportation informed the board on April 17, 2007, that the state
will not host the registration Web site.
Note: After we provided this briefing, the board and FMCSA resolved
these issues. When FMCSA accepted the revised fee structure on April 2,
2007, it recognized that the board could charge fees to motor carriers
operating in nonparticipating states.
Note: After we provided this briefing, FMCSA informed the board that
the 90-day period for setting fees based on the revised recommendation
began on April 2, 2007.
Note: After we provided this briefing, FMSA accepted the board's
revised fee recommendation and informed the board that the 90-day
period for setting fees based on the revised recommendation began on
April 2, 2007.
[End of section]
(542103):
FOOTNOTES
[1] Current legislative proposals exist to temporarily reinstate the
Single State Registration System.
[2] We sought to interview all 15 board members and 7 agreed to meet
with us.
[3] The estimation of the number of affected entities required the
board to filter data in FMCSA's Motor Carrier Management Information
System to identify active motor carriers from which it could expect to
collect a fee.The board found that this database contained over 700,000
motor carriers, but was unreliable in part because it included inactive
motor carriers.
[4] The approximately $106 million in revenue is a sum of the $101
million entitled to participating states that were part of the Single
State Registration System, $5 million for administrative costs, and
$500,000 to Oregon for joining the new system.
[5] Power units are self-propelled motor vehicles and commercial motor
vehicles are vehicles that are self-propelled or towed, such as
trailers.
[6] FMCSA interpreted SAFETEA-LU as permitting it to delay starting the
90-day period allowed for fee setting until it believed the board
provided a recommendation that sufficiently explains the basis for its
fee proposal. It is unclear, however, if FMCSA's interpretation of the
SAFETEA-LU 90-day fee-setting period is correct since SAFETEA-LU does
not specifically authorize the Secretary of Transportation to delay
this procedure. A 90-day period measured from when the board submitted
its original fee recommendation on December 6, 2006, would have elapsed
on March 6, 2007. FMCSA informed the board that the 90-day period for
setting fees based on the revised recommendation began on April 2,
2007.
[7] The Motor Carrier Safety Assistance Program is a federal grant
program that provides financial assistance to states to reduce the
number and severity of accidents and hazardous materials incidents
involving commercial motor vehicles.
[8] Current legislative proposals exist to temporarily reinstate the
Single State Registration System.
[9] Some members of the board, however, told us that they were not
aware of FMCSA's request for more information until the board's meeting
in mid- January.
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