SENATE BILL REPORT

SB 6233

BYSenators Patterson, Owen, Nelson, West and Stratton

Decreasing regulations of trucking industry.

Senate Committee on Transportation

Senate Hearing Date(s):February 4, 1988

Majority Report:  That Substitute Senate Bill No. 6233 be substituted therefor, and the substitute bill do pass.

      Signed by Patterson, Chairman; Nelson, Vice Chairman; Barr, Hansen, Kiskaddon, Metcalf, Owen, Sellar.

Senate Staff:Mary McLaughlin (786-7309)

                  February 8, 1988

AS REPORTED BY COMMITTEE ON TRANSPORTATION, FEBRUARY 4, 1988

BACKGROUND:

EXEMPT COMMODITIES:  Since the inception of the Interstate Commerce Act in 1935, a variety of commodities transported in interstate commerce have been exempted from economic regulation.  Over the years, these federal exemptions have been interpreted by the courts and the ICC and modified by Congress, but without disturbing the original intent -- that agricultural commodities are not subject to regulation up to the point at which they are subjected to a manufacturing process that significantly alters the character.

Forest products are included within the federal agricultural exemption.  Administrative interpretation of Congressional intent concluded that the terms "agricultural and horticultural commodities" intended to include all forms of husbandry, including forest products.  In the Federal Motor Carrier Act of 1980 Congress added to these well-established exemptions.

The state does not follow the federal commodities exemption model.  Rather, the Legislature has opted to retain economic regulation over the intrastate movement of agricultural and horticultural commodities, fish and shellfish, and forest products, with only limited exceptions. The Legislature has chosen to exempt certain vehicles, rather than commodities:  (1) vehicles transporting U.S. mail, newspapers or periodicals; (2) government vehicles; (3) towing vehicles; (4) vehicles less than 8,000 gvw transporting legal documents; (5) vehicles transporting water for construction projects; (6) (a) farm vehicles used to transport a farmer's own farm products from the point of production to market or the first processing plant, or (b) the infrequent or seasonal transportation of products or supplies by one farmer for another when the farms are located within 20 miles of each other.  A for- hire intrastate carrier transporting a commodity not listed above is subject to the UTC's entry and tariff regulations.

FARMERS AND FARM VEHICLE:  In addition to the general farm vehicle exemption (see subsection (6) above), the UTC also issues permits for the for-hire movement of unprocessed or unmanufactured agricultural commodities and livestock for a distance not to exceed 80 miles from the farm to market if the applicant is found to be fit, willing and able. The operator is required to file tariffs and proof of insurance.

RATE CHANGE PROCEDURES:  Intrastate rates are adjusted through a general tariff petition or the rate docket hearing process.  A general tariff increase or decrease is based on inflation, labor costs, taxes, insurance rates, fuel costs and generally rising operating costs and is applied across-the- board.

The rate docket hearing process is used to adjust individual rates.  The petitioner generally seeks to establish or change a rate for a certain commodity within a specific territory.  The proposed rate is published in the bimonthly rate docket hearing notice.  A hearing is then held on the proposed rate.  A Utilities and Transportation Committee (UTC) rate examiner presides at the hearing.  Sworn testimony is taken from carriers and shippers supporting or opposing the proposed rate. Following the hearing, the staff findings and recommendation are presented to the commission.  The commission may approve, deny or modify the recommendation. The rate becomes effective upon publication of the new tariff sheets.  An intrastate carrier is obligated to charge the shipper or receiver the published rate.

The state of Texas has just instituted a new rate policy that allows a 5 percent-15 percent rate variance to the published rate.

SAFETY:  The UTC's authority is limited to for-hire 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.

OTHER ISSUES:  A person who performs a combination of services must obtain operating authority from the commission to do so.  Example:  A person who delivers and installs an appliance.  Intrastate exempt vehicles are excluded from this requirement.

It is unlawful to operate a for-hire vehicle in more than one class without commission approval.

A private carrier cannot haul products for compensation without first having received an operating authority permit from the UTC.

A person that does not have an operating authority permit may not advertise the transportation of good for compensation.

SUMMARY:

Carriers transporting certain commodities are exempt from Utilities & Transportation Commission (UTC) rate regulation, but remain subject to state licensing, insurance and safety requirements.  Transportation rates established by the UTC for intrastate movements are modified to provide for a rate variance. Truck safety inspections are expanded, and other regulatory procedures are changed.

INTENT:  Section 1-2:  The current intent section in which the state assumes the responsibility for limiting intrastate rate, route, and entry regulations for purposes of promoting safety and economic stability in the public interest is repealed.  The new policy (1) directs intrastate rate, charges and rules to reflect the needs of the market place, i.e., modified rate procedures and expanded commodity exemptions; and (2) declares it the policy of the state to promote competitive and efficient transportation services.

EXEMPT COMMODITIES:  Section 3:  Vehicles currently exempt from UTC rate regulation when performing intrastate movements are retained.  Commodities that are exempt from rate regulation in interstate commerce are also exempt when moving intrastate.  These commodities are: livestock; unmanufactured agricultural and horticultural products - includes unprocessed forest products; fish and shellfish, other than those preserved by canning, smoking, etc; feed and seeds when transported to an agricultural production site or a business selling goods used in agricultural production; property moved by combined air-ground movements; property being transported in lieu of air transportation because of adverse weather or mechanical failure; used pallets and empty shipping containers; natural crushed decorative rock; wood chips; property being moved within a state or national park or monument; property that is part of a trailer or flat car intermodal movement when the railroad arranges for the transportation from origin to destination; property being transported by a federal, state or local agency, except property being transported by a garbage or refuse company remains subject to rate regulation; property being transported without charge for a charitable organization or for use in a public exhibition. Cooked or uncooked beef, lamb, pork or poultry are also exempt when moving intrastate.  Intrastate carriers transporting the above commodities remain subject to state licensing, insurance and safety regulations.

RATE VARIANCE:  Section 5:  A rate variance procedure for general freight shipments over 10,000 pounds is established. The rate charged a shipper or receiver can vary 15 percent above or below the UTC published base rate.  A carrier wishing to use the variance must file notice with the commission; the rate becomes effective five days after filing.  The rates in effect on January 1, 1989 serve as the initial base rates for purposes of applying the deviation procedures.  The deviation rates also take effect on January 1, 1989.

Deviation rates are not published, but will be kept on file for review by any interested party in accordance with current UTC procedures.  Although no formal protest period is provided, a complaint may be filed with the UTC on any rate or rule.  The Commission may, after investigation and hearing, suspend or revoke a rate or rule.

Predatory pricing is defined as the charging of rates which are below the carrier's actual operating costs or unreasonably above such costs, or are unduly discriminatory.  If the commission determines that a carrier has engaged in predatory pricing, the Commission may (1) suspend the deviation rate, (2) direct the carrier to charge and collect the base rate; and (3) direct the carrier to repay any overcharges and collect any undercharges.

The commission may, after hearing, (1) adjust the deviation rates, but in no event may they be less than 15 percent for shipments over 10,000 pounds; and (2) apply the deviation, suspension and predatory pricing rates to shipments being transported by the various classes of specialized carriers.

SAFETY:  Section 13:  The commission's authority is expanded to include private carrier safety. The UTC is authorized to conduct safety inspections and terminal surveys.

OTHER ISSUES:  Section 4:  Carriers of state exempt commodities are not required to obtain an operating permit from the commission when performing a combination of services. Example:  The operator of a log truck who falls, cuts, and loads the vehicle.

Section 8:  Transportation of exempt and regulated commodities in the same vehicle is permitted as long as the carrier has a permit to transport the regulated products; issuance of a special waiver by the commission is no longer required.

Section 8:  A private carrier may obtain a regulated carrier operating authority permit upon a finding by the commission that the carrier meets the entry standard.

Section 9:  Carriers operating exempt vehicles or hauling exempt commodities for-hire are permitted to advertise.

Section 10:  Reference to federal law is updated in the provision relating to UTC registration requirement for interstate exempt carriers.

Section 11:  The definition of "public service company" is clarified to exclude vehicles and commodities exempted from UTC regulation.

REPEALERS:  Section 14:  Current intent section for the regulation of for-hire carriers.  Farm to market permits within an 80-mile radius.

EFFECT OF PROPOSED SUBSTITUTE:

Draft  2, issued removed:  Farm and cooperative association provisions; various driver qualification requirements (based upon the requirements of the Federal Motor Carrier Act of 1986); division of the driver record for employment purposes; time limitation on approval of an operating authority application; Draft  3, issues removed: the requirement that the commission must review all rates for shipment over 500 pounds prior to implementation of the deviation rates, and conduct an annual review thereafter; publication and 15-day protest following publication of the deviation rate; 5 percent deviation rate for carriers between 500 and 10,000 pounds; broken glass and recyclable materials as exempt intrastate commodities.  Draft  3, issued added:  The transportation of cooked or uncooked beef, lamb, pork or poultry is added to the intrastate exempt commodities listing; governmental property transported by a garbage company is not considered an exempt commodity.

Appropriation:    none

Revenue:    none

Fiscal Note:      none requested

Effective Date:January 1, 1989:  Deviation rate procedures take effect.