Unified Motor Carrier Fee System: Progress Made but Challenges to
Implementing New System Remain (25-MAY-07, GAO-07-771R).	 
                                                                 
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. 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. 				 
-------------------------Indexing Terms------------------------- 
REPORTNUM:   GAO-07-771R					        
    ACCNO:   A69953						        
  TITLE:     Unified Motor Carrier Fee System: Progress Made but      
Challenges to Implementing New System Remain			 
     DATE:   05/25/2007 
  SUBJECT:   Federal aid for highways				 
	     Federal aid programs				 
	     Federal aid to states				 
	     Federal funds					 
	     Motor carriers					 
	     Procurement					 
	     Proposed legislation				 
	     Safety regulation					 
	     Safety standards					 
	     Schedule slippages 				 
	     Transportation safety				 
	     Fees						 
	     Policies and procedures				 
	     Program implementation				 

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GAO-07-771R

   

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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, 2007.1 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.

1Current legislative proposals exist to temporarily reinstate the Single
State Registration 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.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:

                        o 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.

                                     o 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
                                     entities3 and developed a fee structure
                                     to generate about $106 million in needed
                                     revenues.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.5 The board's revised fee
                                     structure that FMCSA accepted in April
                                     uses commercial motor vehicles as its
                                     basis.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.

                                     o 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.7

2We sought to interview all 15 board members and 7 agreed to meet with us.

3The 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.

4The 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.

5Power units are self-propelled motor vehicles and commercial motor
vehicles are vehicles that are self-propelled or towed, such as trailers.

6FMCSA 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.

7The 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.

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 [email protected] . 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.

Kay E. Brown,
Acting Director, Physical Infrastructure Issues

Appendix I: GAO Briefing to Senate Subcommittees

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.

(542103)

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