SENATE BILL REPORT

SB 5920

BYSenators Hansen, Patterson, Sutherland, Johnson, Kreidler, Sellar, Stratton and Benitz

Revising motor freight carrier regulations.

Senate Committee on Transportation

Senate Hearing Date(s):February 23, 1989

Senate Staff:Mary McLaughlin (786-7309)

AS OF FEBRUARY 21, 1989

BACKGROUND:

ENTRY:  Any common or contract carrier seeking intrastate operating authority must secure the approval of the Utilities and Transportation Commission (UTC).  The burden of proof is placed on the applicant.  Three types of entry are generally recognized: "Public Convenience & Necessity" (PC&N), "Public Interest" (PI), and "Fit, Willing & Able" (FW&A).

PC&N, the most restrictive entry test, is applied to Washington-based intrastate common carriers seeking permanent authority.  Contract carriers may qualify under the public interest test.  Until 1963, both common and contract carriers were subject to public interest.

Although there is no universal definition of PC&N, American Bus Lines Operation, an early ICC case, is often quoted and perhaps best states the basic issues:

      (1)  Whether the new operation or service serves a useful public purpose responsive to public demands or needs;

      (2)  Whether this purpose can and will be served as well by existing lines and carriers; and

      (3)  Whether it can be served by the applicant with a new operation or proposed service, without endangering or impairing the operation of existing carrier authority contrary to the public interest.

It must be determined that the proposed service represents an advantage to the public, outweighing the disadvantages to the existing carriers.  If the supporting evidence does not demonstrate any deficiencies in existing motor carrier service, it must, at least, indicate a need for better service, a need for more competition, or a need for a different kind of service.

In the case of "Public Interest", there must be definite prospects and guarantees that the service will, in fact, be used, as distinguished from mere hopes that the enterprise will be accepted by the shipping public.  In short, substantial evidence must be submitted in support of a public interest application, but its focus is more on the capability of the applicant to provide a desired service, rather than on the ability of existing carriers to provide the service.

"Fit, Willing & Able" is the most relaxed entry standard and allows unlimited entry into the field if the applicant can prove that he or she can provide the service.  This entry standard has been used by the ICC since federal deregulation of the motor carrier industry in 1980.

A national truck regulation survey was conducted by the Legislative Transportation Committee (LTC) staff.  Responses were received from 35 states.  With regard to entry standards, the results were:

      (1)  Twelve states (Connecticut, Illinois, Iowa, Kentucky, Montana, Nevada, North Dakota, Oklahoma, Oregon, Rhode Island, Texas and West Virginia) require both common and contract carriers to qualify under PC&N.  In nine other states (Alabama, California, Maryland, Mississippi, Nebraska, New Hampshire, South Dakota, Washington and Wyoming), PC&N is the entry standard for common carriers only.

      (2)  The states of Michigan, Pennsylvania, Tennessee and Utah allow both common and contract carriers to qualify under the public interest test.  (The statutory standard in Pennsylvania is PC&N, but in reality it has moved to PI.)  Contract carriers qualify under the PI test in Alabama, California, Nebraska, New Hampshire and Washington.

      (3)  Three states, Idaho, Kansas and Wisconsin, allow both common and contract carriers to qualify under FW&A.  By statute Idaho's entry standard is PC&N, but in reality a carrier qualifies under FW&A due to a relaxed interpretation of the statutes.  Wisconsin common and contract carriers are subject to entry requirements, but are exempt from rate regulation.  In three states (Maryland, Mississippi and Wyoming) FW&A is the entry standard for contract carriers.

DORMANT PERMITS:  A carrier who ceases operation and abandons UTC permit rights is required to notify the commission within 30 days and return the identification card.  A carrier who files a zero revenue annual report with the commission is sent a letter requesting voluntary cancellation of the permit or an explanation as to why the permit is dormant.  If the zero revenue report is filed three years in a row, the motor carrier is audited, and depending upon the results of the audit, the commission may take the carrier into a show cause action to determine if the permit should be cancelled for dormancy.  Dormant carriers have the right to propose or protest docket hearing items and entry applications.

INSURANCE:  Common and contract carriers registered with the commission are required to file liability insurance in the amounts of $750,000 for nonhazardous materials carriers, $1 million for certain hazardous materials classes and $5 for other hazardous materials carriers.  Although the law requires a carrier to file an insurance policy, the commission, in practice, requires the carrier to file a Form E report which indicates proof of insurance.

SAFETY:  The UTC's safety authority is limited to common and contract carriers.  Private carriers are not subject to UTC safety inspections and terminal audits.  The State Patrol conducts roadside inspections of private carriers, but does not conduct private carrier terminal surveys.

INTENT:  In the public interest, the state assumes the responsibility for limiting intrastate rate, route and entry regulations for the purposes of promoting safety and economic stability.

MISCELLANEOUS:  Private carriers are prohibited from performing for-hire movements.

SUMMARY:

ENTRY:  The entry standard for intrastate common and contract carriers is relaxed by changing the entry test from Public Convenience & Necessity to Fit, Willing & Able.  The burden of proof is shifted from the applicant to the protester.

DORMANT PERMITS:  A carrier whose operating authority has been dormant for one year cannot protest an entry application unless it explains, to the commission's satisfaction, on a form provided by the commission, the reasons for the dormancy.

INSURANCE:  Carriers registered with the commission are required to file proof of insurance rather than the actual insurance policy.

SAFETY:  The UTC is authorized to conduct private carrier safety inspections and terminal surveys.

INTENT:  The current intent section is replaced with new intent sections which:  (1) direct that intrastate regulation reflect the needs of the market place, i.e., relaxed entry and expanded safety; and (2) declare it the policy of the state to promote competitive and efficient transportation services.

MISCELLANEOUS:  A private carrier may obtain a regulated carrier operating authority permit upon a finding by the commission that the carrier meets the entry standard.  Reference to federal law is updated in the UTC registration requirements for interstate exempt carriers.

Appropriation:    none

Revenue:    none

Fiscal Note:      requested February 20, 1989