HM Safety | Final Report: Uniform Program Pilot Project

Transmitted to:
The Honorable Federico Peña
Secretary
U.S. Department of Transportation

By the
Interim Governing Board
Alliance for Uniform HazMat Transportation Procedures

March 15, 1996

ACKNOWLEDGMENTS

This report represents two and a half years of sustained effort by the Alliance for Uniform HazMat Transportation Procedures. The success of the pilot program depended on the collaborative efforts of many individuals. The Alliance would like to thank the Office of Motor Carriers within the Federal Highway Administration in the U.S. Department of Transportation for supporting the concept of a pilot project and for its financial support. The Alliance wishes to express particular thanks to Mike Trentacoste, Susan Petty, Phil Hanley, and Jim McCauley of the Office of Motor Carriers for their support and involvement in this process. The Alliance also extends its appreciation to George Whitney of the Research and Special Programs and Administration of the Department of Transportation for his assistance and advice.

The Alliance wishes to thank the many state officials and industry representatives who, at their own expense, participated in this effort. Their ideas and input made the pilot project a much more valuable experience. A listing of individuals who attended meetings and provided comments on draft documents is provided in Appendix B of this report.

Jay Kayne, director of the Economic Development and Commerce Policy Studies Division at the National Governors' Association (NGA), and James Reed, program principal at the National Conference of State Legislatures (NCSL), served as project director and principal investigator, respectively. They were assisted by Kyle Winston and Thom Rubel from NGA and Jacqueline Cummins from NCSL. Raquel Stanton, NGA, provided administrative support throughout the project. Jan Dunlavey and Luisa Farrell, NGA, handled meeting arrangements for the Interim Governing Board and the pilot states. Alicia Aebersold, NGA, provided editorial services for this report.

Finally, the Alliance staff wishes to acknowledge the dedication and commitment of the Interim Governing Board and the staff of the four pilot states to this process. The four at- large members—Nancy Brown (chair), Elmer Bietz (vice-chair), Grace Goodman, and Stephen Hermann—and the representatives of the four pilot states—Elizabeth Parker (Minnesota), James Rhode (Nevada), Steven Lesser (Ohio), and Jami McClellan (West Virginia)—ensured that the pilot project was a quality effort and remained on track. Each of the pilot states assembled a qualified and dedicated staff who pushed forward throughout the two-year demonstration regardless of the potential barriers and workload.

TABLE OF CONTENTS

Section I: Origin of the Pilot Program

In November 1990, Congress passed amendments to the Hazardous Materials Transportation Act (HMTA) that included provisions to address the burden on the motor carrier industry that resulted from the array of hazardous materials registration and permitting to be administered by individual states. Section 22 of the Hazardous Materials Transportation Uniform Safety Act of 1990 (HMTUSA) mandates that any state wishing to register and issue permits to motor carriers that transport hazardous materials must do so by using uniform procedures and forms. Section 22 also stipulated that the U.S. Secretary of Transportation should appoint a working group of state and local officials to develop recommendations, in consultation with affected industry, for a uniform program that eventually would be codified through the federal regulatory process.

The Alliance for Uniform HazMat Transportation Procedures

In 1991 the National Governors' Association (NGA) and the National Conference of State Legislatures (NCSL) successfully bid for a contract to staff the working group. Working with industry representatives and state and local government associations, NGA and NCSL presented recommendations to the Secretary of Transportation for a twenty-eight member panel. The working group held its first meeting in January 1992, at which time it selected the working title of the Alliance for Uniform HazMat Transportation Procedures (the Alliance).

Over two years, the Alliance established several subgroups and task forces to address specific aspects of state registration and the permitting of hazardous materials motor carriers. Final recommendations were adopted at the Alliance's fifth meeting in St. Louis, Missouri, May 23–25, 1993, and transmitted to the U.S. Secretary of Transportation on November 17, 1993. (Copies of the final report are available from NGA.)

Following is a brief description of the major provisions of the Alliance's recommended Uniform State Hazardous Materials Transportation Program (Uniform Program).

• Registration of motor carriers that transport hazardous materials shall be conducted through a base state system. Each participating jurisdiction may assess a registration fee on motor carriers that transport hazardous materials within its borders. However, the motor carrier will apply to a single base state, which will be responsible for collecting the registration fees for all states and distributing such fees accordingly. Information required for processing a registration will be collected through Part I of the uniform application.
• Participating jurisdictions may issue a reciprocal national permit that allows a permitted motor carrier to transport hazardous materials in all participating jurisdictions. The motor carrier applies to its base state for the permit. The base state conducts a review of the motor carrier's qualifications to transport hazardous materials and, if appropriate, issues a permit that is valid in any participating jurisdictions that also require the national permit. Information requirements for issuing a uniform permit are contained in Part II of the uniform application. [Note: Section 22 required only that the working group study the feasibility of a base state system; however, the Alliance, after considerable deliberations, determined that base state registration and reciprocal permits had effectiveness and efficiency benefits for both the participating jurisdictions and the motor carrier industry.]
• Because of the negative economic value of hazardous and radioactive wastes, a participating jurisdiction that issues permits to hazardous waste transporters may require additional disclosure information related to the applicant's operations and the integrity of the applicant's owners and managers. The disclosure requirements are contained in Part III of the uniform application.
• Although the registration and permit are issued under a base state system, a participating jurisdiction retains its individual enforcement authority when a registered or permitted carrier is transporting hazardous materials within its borders. Penalties and the procedures for assessing penalties continue to be those of the jurisdiction in which a violation occurs. Major violations are reported to the base state. If appropriate, the base state may review the motor carrier's operations to determine whether the violation should result in suspension or revocation of the reciprocal national permit.
• Although Section 22 did not explicitly address the issue of local registration and permitting programs, the Alliance recommended provisions that would allow a locality to become a participating jurisdiction. The provisions ensure that a locality, working with the state, can obtain the revenues required to operate its hazardous materials safety programs (e.g., training and response programs) and can issue permits to carriers that have not received credentials from another participating jurisdiction.

Alliance Pilot Program

In May 1992, the Alliance recommended that the Federal Highway Administration (FHWA) fund a pilot project to field test the working group's recommendations. The Alliance designed and implemented a two-year pilot project, involving four states. The purpose of the pilot program was twofold. First, the Alliance recognized that the feasibility, benefits, and costs of a base state program were speculative. Therefore, a real-world demonstration was required to confirm the validity of the assumptions and procedures associated with the Uniform Program. Second, the pilot program would help FHWA address comments during the rulemaking process.

The major objectives of the demonstration program included:

• determining the barriers within individual states adopting the uniform procedures and operating under a base state system;
• determining the costs of state participation in a uniform base state program, including personnel and hardware and software requirements;
• testing the reciprocity provisions of the base state agreement, including the collection, distribution, and auditing of registration fees, the issuance of national hazardous materials transportation permits, and the enforcement of national standards;
• assessing the extent to which the base state system reduced the administrative burden on the regulated industry and on states;
• determining the extent to which the uniform system enhanced protection of public health and safety;
• testing the provisions related to local hazardous material regulation under the Uniform Program;* and
• examining the role and operations of a governing board and national repository.

During the first year, states would focus on making the legislative, regulatory, and administrative changes required to operate the program. The Uniform Program would be implemented in the second year.

Selection of the Pilot States

In November 1992, the Alliance issued a solicitation to states to express their interest in participating in the pilot program. The solicitation required that respondents from an interested state describe the state's current hazardous materials registration and/or permitting activities, outline their reasons for wanting to participate in the pilot program, and include a letter of commitment from the Governor supporting the state's participation. The Alliance asked the staff to work with interested states and

*Note: This aspect of the Uniform Program was not tested during the pilot since none of the participating states included localities that were willing to test the local program provisions with the Alliance's original recommendations. The Public Utilities Commission of Ohio held several meetings with officials from Cleveland concerning the impact of the Uniform Program on the city's current programs. City officials indicated that they might discontinue their current program if they had access to carrier information through the Alliance's information management system. In response to the city's request, the Interim Governing Board adopted a resolution supporting access by localities to the Alliance database when such access was requested by

to recommend pilot program participants based on the following criteria:

• the Governor and state legislature of pilot states were committed to taking the necessary legislative and administrative actions to conduct the state's hazardous materials transportation programs under the principles and operating procedures of the Alliance's recommendations;
• the regulated community within the state was committed to supporting participation in the pilot program;
• the state had experience in the registration and permitting of hazardous materials, and/or in the transportation of radioactive materials;
• the group of states chosen reflected geographic diversity; and
• at least one of the pilot states had a major locality with a hazardous materials transportation registration or permitting program.

Based on the responses to the request for letters of intent, the Alliance initially selected California, Nevada, Ohio, and West Virginia as the four pilot states. Nevada and West Virginia agreed to test the registration and general permitting requirements, while California and Ohio committed to testing the Part III disclosure requirements for hazardous waste transporters. However, in December 1993, California opted out of the pilot because of concerns that participation in the demonstration would bias a continuing legal battle over preemption of California's tank truck inspection program.

Following California's withdrawal from the pilot, the Alliance staff contacted several states that had expressed initial interest in the pilot and made site visits to Minnesota and New York. The Minnesota site visit in January 1994 included a briefing for state legislative staff and representatives of the Minnesota Trucking Association. Ultimately, Minnesota became the fourth pilot state, with the passage of enabling legislation in May 1994.

Each participating state was given the opportunity to select one of the following three options for implementing the Uniform Program.

• The pilot state could apply the requirements of the Uniform Program to all motor carriers (interstate and intrastate).
• The state could apply the requirements only to domiciled, interstate motor carriers that operate in two or more of the pilot states. This option would target motor carriers covered under any reciprocity provisions associated with the Uniform Program. It would significantly reduce the number of motor carriers subject to the new program regulations during the pilot phase. In addition, the pilot state might obtain executive or legislative authority to conduct the demonstration without completely revising state laws and/or regulations.
• The state could select an even smaller sample of interstate motor carriers. The pilot state could seek, from among domiciled motor carriers, volunteers that would support state efforts to test the model program. The state would then work more closely with each participating motor carrier to evaluate the procedures contained in the Uniform Program. The disadvantage of this approach was that the pilot state could not get a true estimate of the administrative burden and cost of operating a full-scale program.

Three of the pilot states—Minnesota, Ohio, and West Virginia—used option one during phase two, while Nevada selected option two for the first round of registration and permitting with the intent of expanding the program to all carriers during the second program year. In addition to testing the Uniform Program, the Public Utilities Commission of Ohio also committed to a one-year test of state administration of the federal hazardous materials registration program established under HMTUSA.

To facilitate state participation in the demonstration, each pilot state received $50,000 in funding as part of FHWA's financial support to the pilot. [Note: Ohio received an additional $50,000 in funding to support its testing state administration of the federal registration program.] The funds were provided in the form of a subcontract under NGA's prime contract with FHWA to administer the pilot. In return for the financial support, each of the pilot states agreed to the following scope of work:

• adopt enabling legislation, if necessary, that will allow the state to participate in the pilot program;
• establish the administrative capacity to conduct a one-year demonstration of the Uniform Program;
• conduct a one-year demonstration of the Alliance Uniform Program to register and permit motor carriers based in West Virginia;
• designate a representative of the state to be a member of the Interim Governing Board that will oversee the pilot program;
• participate in all meetings of the Interim Governing Board and pilot states;
• participate in peer reviews of the other pilot state efforts;
• provide NGA with information related to the state's effort for inclusion in reports required under NGA's contract with FHWA; and
• host one meeting of the Interim Governing Board and one meeting of pilot state representatives.

Basis for Report Findings

The remainder of this report will address the extent to which each of the pilot program objectives was satisfied. The findings are based on the experience of the four pilot states, the deliberations of the Interim Governing Board (the Board) established to oversee the pilot program, and surveys conducted by the Alliance staff of both the participating states and motor carriers that were subject to the requirements of the Uniform Program. (Copies of both the industry and state administrator survey instruments are available from NGA.)

Section II: Preparing to Implement the Uniform Program

The demonstration project was established as a two-year process. During the first year, each pilot state made the necessary legislative and administrative changes to participate in the Uniform Program. The second year focused on actually registering and permitting motor carriers. The following is a discussion of the issues and barriers that the pilot states encountered as they prepared to operate the Uniform Program.

Passage of Enabling Legislation

Two issues arose relating to the passage of enabling legislation. First, the states found that the participation by industry representatives in the Alliance's deliberations and the design of the pilot program did not translate into political support of in-state motor carrier groups. Second, the differing legislative requirements among the states raised questions about the states' ability to respond to modifications in the Uniform Program.

Political Support for the Pilot Program. Although several national motor carrier associations actively participated during the Alliance process, the pilot states quickly realized that support by national associations did not automatically translate into support by in-state motor carrier groups. Each state found that to gain support from the state trucking industry for the enabling legislation, it had to revisit many of the issues and the rationale for the provisions within the Uniform Program.

Minnesota, which became a pilot state late in the process, was able to learn from the experience of the other three pilot states and provides the best example of how a state worked with its state trucking association to garner support for enabling legislation. Before formally announcing its interest in participating in the pilot program, the Motor Carriers Services Division of the Minnesota Department of Transportation scheduled a briefing for industry representatives and state legislative staff by Alliance staff. Based on that briefing, the state trucking association determined that it was in its interest for Minnesota to participate in the pilot. Thus, the bill before the Minnesota legislature was viewed as an industry initiative, rather than as another government program.

Based on states' experiences in the demonstration program, the Alliance adopted the following recommendation concerning the content of, and strategy for adopting, enabling legislation.

Prior to joining the Alliance, a potential participating jurisdiction should conduct a full briefing on the Uniform Program for its motor carrier industry. At that time, the state should request that the state trucking association either sponsor or cosponsor the enabling legislation.

Level of Specificity Within Each State's Enabling Legislation. All four pilot states required enabling legislation to participate in the program. In Nevada and West Virginia, the enabling legislation included most of the provisions of the Uniform Program by reference. By contrast, the legislation in Minnesota and Ohio included the specific language for many of the Uniform Program requirements.

Throughout the demonstration project, whenever the Board considered amendments to the program procedures, participating states had to determine whether the Board's decisions would require amendments to their enabling legislation. In one instance—when a repository surcharge was considered—the issue had to be deferred because the states did not feel they could amend their legislation in time to implement the change for the next application cycle.

To alleviate the situation, the Board directed staff to develop a range of model legislation to address the legislative philosophies within the various states. Once developed, the models will segregate the provisions of the Uniform Program in which states must comply exactly with the rules and procedures from those elements of the Uniform Program where the state is given flexibility, such as program level, target motor carrier population, and fee rates. To the extent possible, the Board encourages states to adopt blanket enabling legislation (i.e., incorporating the Uniform Program by reference) covering those items in which the Board establishes specific program requirements and procedures. Both Minnesota and Ohio indicated that their legislatures might require less specific legislation following the effective date of the federal mandate for states to operate under the Uniform Program.

Designation of the Lead Agency and Interagency Coordination

The designation of the lead agency was not an issue for Minnesota, Ohio, or West Virginia. The Motor Carrier Services Division within the Department of Transportation in Minnesota historically had permitted hazardous waste transporters. In Ohio, the Public Utilities Commission had been responsible for the state registration program prior to the demonstration. There was no permitting program for either hazardous materials or for hazardous waste transporters. Prior to the demonstration, there was neither a registration nor a permitting program in West Virginia. Therefore, entry into the pilot program for these three states did not require the Governor to make a decision about the lead agency between two or more entities that had previously shared or split responsibility for hazardous materials and/or waste transportation registration or permitting.

In Nevada, the original scope of the state's participation in the pilot program focused solely on hazardous materials and was administered by the Nevada Highway Patrol. The only other state program related to transportation of hazardous materials is the Public Service Commission's (PSC) trip permits for radioactive waste. During the course of the pilot, PSC explored the potential of using the Part III permit as a substitute for its current radioactive waste permit. Eventually, Nevada decided to expand its program to include a Part III permit. The division of responsibility between the Nevada Highway Patrol and PSC has not yet been finalized.

An indication of potential issues associated with split program responsibility surfaced in California before that state elected to withdraw from the pilot program. Responsibilities for hazardous materials and waste transportation are currently divided between the California Highway Patrol (hazardous materials transport licenses and inspections of tank trucks and hazardous waste vehicles and containers) and the California Environmental Protection Agency (hazardous waste transport permits). The California Public Utilities Commission also regulates intrastate hazardous waste carriers. Even though the Governor designated the California Environmental Protection Agency as the lead for the pilot program, there were numerous questions about the roles and responsibilities of each agency and its relationship to the Alliance. For example, California queried whether a representative from each of the agencies could sit on the Interim Governing Board, with each having one-half of a vote.

Most of the interagency coordination for the four pilot states has involved interaction with other divisions within the lead agency. For example, the Motor Carrier Services Division relied on the Management Information Division in the Minnesota Department of Transportation to design and implement its automated entry and credential system. In addition, some of the states have drawn on the Motor Carrier Safety Assistance Program (MCSAP) staff to generate the carrier profiles needed to conduct the application review. Only in Ohio did the lead agency contract with an outside entity—the Bureau of Investigation—to conduct the disclosure reviews of its Part III applications.

From the outset, the Alliance recognized that states should retain the authority to structure the administration of the Uniform Program in a manner appropriate within each state. Based on the experience in the pilot, the only issue related to administrative structure is the burden placed on other participating states in that they were required to deal with more than one point of contact in the other states. Therefore, the Board made the following recommendations concerning designation of a lead agency at the June 1995 board meeting in Boston.

When a state petitions the Board to become a member of the Alliance, the request must include a formal designation of a lead agency by the Governor.

During the accreditation review process, the peer review team should determine that if more than one agency is involved in the implementation of the Uniform Program, the potential participating jurisdiction has developed procedures and protocols to ensure coordination of the state's effort.

Role of State Trucking Associations

From the beginning of state implementation of the Uniform Program, the Interim Governing Board of the Alliance has sought the involvement of industry, particularly the state trucking associations. State associations were integral to the success of the Uniform Program and continue to play a role in its further definition. The pilot states engaged their state trucking associations early in the process, familiarizing them with the principles, requirements, and benefits of the Uniform Program.

Based on their understanding and support of the Uniform Program, the state trucking associations were useful in program implementation and outreach. Evidence from the state evaluation survey suggests that without the support of industry, and the associations in particular, states would have been hard-pressed to pass enabling legislation. Furthermore, because some components of the Uniform Program pilot (e.g., testing the utility of fingerprints under the Part III disclosure) were perceived as "lightning rod" issues to many carriers, association support was pivotal.

Pilot states also asked the state associations to participate in outreach and education efforts. For instance, Ohio briefed members of the Ohio Trucking Association so that they could answer carriers' questions about the application and the program. In addition, national trucking associations conducted and cosponsored outreach and training seminars, including a seminar in California to familiarize carriers in that state with the requirements they would face if they needed credentials under the Uniform Program in Nevada. Trade meetings, newsletters, and other communication vehicles employed by the state motor carrier associations proved to be valuable tools for educating carriers about the Uniform Program.

Outreach to Regulated Industry

For the pilot states and the Interim Governing Board, industry outreach was a crucial strategy of the pilot project. Early in the process, the Alliance made a commitment to seek industry input. Outreach efforts focused on involving industry in the policymaking process and on gaining input into state programmatic issues.

The Board took great care to ensure that industry representatives had ample opportunity to provide input into policy decisions. Industry representatives were invited to all Board meetings, and the Board tapped several representatives to serve on a nonvoting industry advisory panel. Members of the panel were representatives of various industry constituencies, such as hazardous waste transporters, shippers, and tank truckers. They were chosen to ensure prolonged and regular interaction between industry and the Board. Participation on the panel allowed industry representatives extra opportunities to review and comment on certain information and policies.

In addition, a representative from the state trucking association in each of the pilot states was invited to sit on the advisory panel. Their participation proved to be invaluable, because the state association was often the first entity to receive a complaint about the program. The state association members were also invited to participate in the nonconfidential discussions during each state's peer review. This participation was designed to increase the state association's level of comfort that state officials were conducting objective reviews of carriers' permit applications. All states maintained regular contact with their state trucking associations throughout the two-year demonstration effort.

Other in-state outreach efforts were driven by the participating jurisdictions. These efforts focused on educating carriers and familiarizing them with the various aspects of the Uniform Program as the pilot states ran seminars for affected carriers. The seminars also helped alert pilot states to potential problems or criticisms. For instance, one company stated that the Part III section on criminal and civil penalties would require the submission of more information than the administering agency could handle. These seminars gave the state the opportunity to explain exactly what was required and how the state would evaluate the submitted materials.

Other outreach activities included sending letters to affected carriers about the Uniform Program and providing phone assistance to carriers as they filled out the application. Although the primary responsibility for assisting carriers lies with the state in which the carrier is based, the Board suggested that eventually the repository should consider establishing an 800 number for carriers to call with questions about the program. Staff suggested that the repository might also establish an Internet web site and e-mail address to assist carriers that have questions about the program.

Training of Staff

Accreditation for participating states under the Uniform Program requires that the states adhere to rigorous record-keeping and training standards. The primary training document used by the states to familiarize their staffs with the Uniform Program was the state program administrator's manual. A companion Uniform Program audit manual is currently under development and will also serve as a training reference.

State program staff received the majority of their training by attending Interim Governing Board and pilot state meetings. State program administrators used Alliance meetings to familiarize their staffs with the philosophy and procedures of the Uniform Program.

The Public Utilities Commission of Ohio held a retreat to train its state permit, audit, and enforcement staff in managing the program. The retreat was open to all jurisdictions participating in the pilot program and to the interim repository staff. Of the four pilot states, staff from Minnesota, Ohio, and West Virginia attended the retreat.

Because of the small number of participating states and the availability of the staff retreat in Ohio, the repository did not conduct formal training sessions or prepare specific training materials. However, as the number of participating jurisdictions increase, the Board has suggested that the repository develop training modules for program managers, administrators, and auditors, using staff from currently participating states as faculty.

Maintenance of Records

Two issues related to records maintenance were addressed during the pilot program. The first focused on the time period during which states would have to retain information on a specific carrier. The second involved the process by which states would share basic information about carriers for which they served as the base state.

Period of Records Maintenance. The Uniform Program application approved during the Alliance working group's deliberations originally required that applicants provide information covering five years of operations. However, during the pilot program, the Board modified this requirement to three years, because it would cover the time between permit renewals. Consequently, the Board, at its January 6–7, 1994, meeting in Reno, Nevada, recommended that participating jurisdictions retain records in each motor carrier's folder or in electronic files for the same three-year time period.

Data Exchange Among Participating States. In May 1993, the Alliance working group supported the concept of base state registration and permitting provided that all states had access to information about carriers that operated within their boundaries. At that time it was determined that one function of the national repository would be to establish a central database in which basic information about all registered and permitted carriers would be maintained.

In April 1994, the Alliance staff contracted with an outside software consulting firm to develop software through which the pilot states could:

• enter basic information on each applicant;
• upload the information to the repository's central database;
• print credentials; and
• conduct queries about any carrier operating under the Uniform Program.

The HazMat Alliance Registration and Permitting System (HARPS) was written for a Microsoft Windows platform using Access 2.0. Alliance staff established a Windows NT server at NGA and provided copies of the software to each of the pilot states. Three of the states (Nevada, Ohio, and West Virginia) elected to use this software as provided by the Alliance.

In contrast, Minnesota created a HARPS-like module on its central motor carrier database. Minnesota's decision not to use the PC-based software available through the Alliance was approved by the Board as being consistent with the desire to provide states with flexibility in administering the Uniform Program. Minnesota agreed that its programmers would create a software link that would also provide the information on Minnesota-based carriers in the format required to upload to the central server.

Another information issue that surfaced during the pilot was the extent to which the states could access existing information about a carrier's safety fitness. To facilitate such access, the Alliance staff asked its software consultants to develop a link between HARPS and the USDOT Motor Carrier Safety Information Network (SafetyNET). The consultants proposed developing a HARPS module that would allow the Uniform Program administrator to pull down a motor carrier safety profile. However, after several weeks of discussions with USDOT officials, the consultants reported that federal officials had raised significant questions about security and the cost of providing this service to the Alliance pilot program officials. Therefore, each pilot state made arrangements to access motor carrier safety profiles from its existing MCSAP program office.

Base states were also encouraged to use other sources (e.g., federal violations). For instance, the Public Utilities Commission of Ohio accessed databases such as NEXUS and West Law to obtain information on fines and penalties assessed against hazardous waste permit applicants.*

* A more complete discussion of HARPS and proposals for improving the system are provided in Section VI: Role and Operations of the Governing Board and the National Repository.

Section III: Administrative Burden on the Participating States and the Regulated Industry

Although the congressional intent of the Section 22 uniformity mandate was to relieve the motor carrier industry of the need to file multiple state hazardous materials transportation registration and permit applications, the Alliance working group believed that a base state reciprocal program could also result in administrative savings for participating states. However, the major reason for that assumption was the division of labor among the states, with each state generally taking responsibility only for its domiciled carriers. During the pilot program, it was impossible to test this assumption because the four pilot states were responsible for registering and permitting national and regional carriers that will eventually be based in other states.

The following is a discussion of the administrative burden on the participating states and the regulated industry in terms of both hours expended and costs.

Burden on the Participating States

One objective of the demonstration project was to determine the administrative and fiscal requirements for participating states. The following numbers were provided by the pilot states in response to the state administrators survey.

The four states reported a total of twenty-two full-time equivalents to handle a total of 4,342 applications. Therefore, on average, a full-time staff person was required for every 197.36 applications processed.

To support program administration, the four states reported the following budget expenditures during the first cycle of Uniform Program registration and permitting.

The four states expended a total of $767,792 during the first registration and permitting cycle to process the 4,342 applications. Therefore, each application required an average expenditure of $176.83.

It is difficult to reach more specific conclusions from these data for two reasons. In some states, staff resources and expenditures were not charged directly to the project and may appear as indirect costs. In addition, there is considerable variance in the salary scales and operating costs from state to state. The information is also skewed because the Nevada staff were concurrently implementing the Uniform Program for a subset of that state's motor carrier population and its previous permit program for the remaining firms.

Although these numbers can be used for general guidance, the Alliance suggests that any new state that elects to administer the Uniform Program contact several of the pilot states to compare its expenditure scales with the individual states. In addition, the Board identified state administrative costs as a topic that the staff should continue to track. Therefore, the Board recommended that state administrators should maintain expenditure information during the second cycle to determine the extent to which:

• certain costs can be viewed as one-time, start-up expenditures;
• the impact of the three-year permit on expenditures differs in years when the state is primarily registering previously permitted carriers; and
• administrative efficiency improves over time.

Burden on the Regulated Industry

Information on the effort required by motor carriers to comply with the application requirements of the Uniform Program was gathered through a sample survey of companies that had applied for credentials during the first program year. To obtain the sample, Alliance staff asked each of the nine members of the industry advisory panel to submit the names of up to twenty carriers to which the survey was mailed. Using the lists provided by the industry advisors, staff mailed surveys to 143 motor carriers; 45 carriers responded for a return rate of 31 percent.

Each respondent was asked to provide information related to the administrative burden and costs expended to comply with the uniform application requirements. Reported costs did not include fees paid to the state for registration or application processing. These fees will be addressed in Section VII: Recommended Changes to the Uniform Program Based on the Pilot Project Experience. The responses from the forty-five motor carriers are provided in the following table.

Experience from the pilot program as reported through the industry survey sample suggests that the Uniform Program recommended by the Alliance will have significant administrative savings for motor carriers as highlighted below.

• The Uniform Program will reduce the number of state and local applications that motor carriers must file in order to transport hazardous materials. These benefits increase according to the number of states in which the motor carrier anticipates transporting such materials.
• Even with the increased amount of information required on the Uniform Program application compared with the most simple current state and local registration and permit applications, the average amount of time required to complete the Uniform Program application is less than 9 percent of the time required for compliance with all existing state and local applications.
• The administrative cost in dollars to comply with the Uniform Program hazardous materials permit application is approximately one-tenth of that for current state and local hazardous materials permit applications.
• The benefits to hazardous waste transporters are even greater. The average applicant for the Part III hazardous waste credential saved more than 500 hours and almost $20,000 in administrative costs completing the Part III application, compared with the current range of state and local hazardous waste permit applications.

Section IV: Reciprocity Provisions of the Uniform Program

Although the Alliance had the ability to draw on the experience of other base state motor carrier programs—the International Registration Plan (IRP), and the International Fuel Tax Agreement (IFTA)—those programs primarily involved the collection and distribution of motor carrier fees among the participating states. The Uniform Program is unique because it represents the first time that states have agreed to allow other states to act as their agents in making substantive decisions concerning the issuance of permits to motor carriers. For this reason, there were several issues related to reciprocity during the pilot program. The following is a description of these issues and of the actions of the Interim Governing Board to respond to these issues.

Conducting Peer Reviews

The proposed Uniform Program gives the Board the authority "to establish and oversee a state program compliance accreditation process to ensure the integrity of the uniform registration and permitting program." Under the Uniform Program procedures adopted by the Board, each peer review is conducted by a team consisting of representatives from at least two other participating jurisdictions and a member of the Alliance staff.

During the onsite visit, the peer review team is expected to examine the following elements of the program under review:

• personnel;
• capacity to collect and distribute registration fees;
• automated data processing;
• procedures for reviewing permit applications;
• training;
• program funding;
• public access to records;
• audit capacity;
• enforcement; and
• enabling legislation and implementing regulations.

The Alliance staff person participating in the peer review is required to prepare a report for the Board documenting the findings of the peer review team and recommending whether the program subject to review should retain its accreditation.

Experience with Peer Reviews During the Pilot Project. To test the concept of peer reviews, each pilot state agreed to submit to a peer review during the second year of the demonstration program. An expanded peer review team consisted of at least one representative from each of the other pilot states, one staff person each from NGA and

NCSL, and one at-large member of the Interim Governing Board. (The schedule of peer reviews is provided in Appendix A.)

To facilitate the peer review and begin to develop a uniform format, the staff prepared a peer review checklist. The checklist included thirteen categories of questions associated with the program elements to be reviewed during the site visit. Prior to the visit, officials in the state subject to the review were asked to review the checklist and compile basic information about their program.

Each peer review consisted of three basic activities. First, the state under review made a presentation based on the questions covered on the peer review checklist. Second, state officials showed the peer review team the procedures and filing system they used for processing applications. Finally, each state was asked to pull a sample of applications and explain why state officials decided to approve or deny the application.

Other Issues Raised in Peer Reviews During the Pilot Project. Because the initial peer reviews were conducted while the pilot states were in the process of reviewing permit applications, the onsite visits also served as working sessions at which the pilot states could identify and address issues associated with application processing and review. For example, one question that was raised concerned the base state's responsibility when the calculated fees do not equal the amount submitted by the applicant. As a result of this discussion, the Board eventually adopted the pilot state's recommendation that the base state may forgive a discrepancy that is within $5.00 of the correctly calculated fee anticipated from the carrier.

In the pilot states' peer review process, the pilot states also looked for ways to increase the uniform substantive review of permit applications. During the Minnesota peer review, the pilot states discovered that each state had its own perception of the out-of-service violations reported in the motor carrier's safety profile. The issue arose because most profiles contain violations for the three most recent years. Therefore, should the base state consider the average out-of-service record for the three years, the most recent year, or the pattern over the three years? After considerable discussion, the pilot states recommended that the reviewers look at the pattern, giving additional weight to the most recent year. In other words, a carrier that demonstrated improvement over the three-year period would be of less concern than one that showed a deterioration in its operations over time.

Finally, during these peer reviews, the pilot states constantly reexamined what constituted a "flag" for purposes of requesting additional information from the applicant. During the Nevada peer review, the pilot states recognized the need for assessing the safety rating of a motor carrier that had not been subject to an FHWA compliance review. At about the same time, in a September 14, 1994, regulation, FHWA issued a determination that concluded that a carrier with a less than 33 percent out-of-service record would be considered to have the equivalent of a satisfactory safety rating. A carrier with an out-of-service record of between 34 percent and 67 percent would be considered to be conditional. Any rating above 67 percent would be considered unsatisfactory. The pilot states recommended that they use a similar typology and that a state could request additional information from a carrier in the "conditional" category.

The pilot states also discussed procedural changes to the Uniform Program and brought the issues before the Board. One issue discussed was the difference between applications in which applicants had failed to complete each element and applications that contained substantive information that raised questions about the carrier's qualifications. The pilot states recommended to the Board that states should immediately review an application for completeness. If the application is incomplete, the state would be authorized to use a "ding fax" to communicate to the applicant that the substantive review of the application could not proceed until the deficiencies were resolved. This process is different from that in which the information on the completed application raises questions that result in the request for additional, clarifying information from the applicant.

Defining Review Criteria

The discussions among the pilot states during the peer reviews often focused on the question of review criteria and the appropriate state response (e.g., request for additional information or denial of a permit) to specific information in the application. At the outset of the pilot project, industry representatives also pressed for more specific instructions to the states concerning flags and denials of permits. At that time, however, the Board stated that any action would be speculative, feeling that additional guidance would emerge based on the states' review of actual applications during the first registration and permitting cycle.

The issue of review criteria is important to both participating jurisdictions and to the industry. From the state's perspective, the level of confidence in a reciprocal system increases to the extent that a participating jurisdiction feels that the base state is responding to information contained in an application the same way that the participating jurisdiction would. Uniform review criteria ensure that all motor carriers within the industry would be subject to the same level of scrutiny regardless of the base state in which they applied for a Uniform Program permit.

At its meeting in April 11-12, 1994 in Charleston, West Virginia, the Board first addressed this question by considering and adopting the following general criteria for the denial, suspension, or revocation of Uniform Program credentials.

1.A carrier has violated the Hazardous Materials Regulations, 49 CFR 100-180, the Federal Motor Carrier Safety Rules, 49 CFR 383, 387, 390-397, or any order by the base jurisdiction issued to secure compliance with any such division or rule, when transporting hazardous materials or offering hazardous materials for transportation, and such violation poses an imminent hazard to the public or the environment.

2.The base state determines that such carrier has exhibited reckless disregard for the public and the environment pursuant to the following factors.

a)Such carrier committed a knowing (federal definition) falsification in the registration and/or permit application;

b)Such carrier has engaged in a pattern of violations of the Hazardous Materials Regulations, 49 CFR 100-180, the Federal Motor Carrier Safety Rules, 49 CFR 383, 387, 390-397, or an order of the base jurisdiction issued to secure compliance with the Hazardous Materials Regulations or the Federal Motor Carrier Safety Rules, when transporting hazardous materials or offering hazardous materials for transportation, or of regulations for the management of hazardous waste issued pursuant to the Resource Conservation and Recovery Act (RCRA), including consideration of the number of truck-miles such carrier transports hazardous materials and the number of vehicles in such carrier's fleet;

c)The actual or potential level of environmental damage resulting from any incident or finding of violation of the provisions enumerated above;

d)The response by the carrier to any incident or findings of violation of the provisions enumerated above;

e)Such carrier's history of violation for the past three years;

f)Any mitigating factors such carrier chooses to present at a hearing before the responsible agency within the base jurisdiction; and

g)Such other matters as justice requires.

With input from the pilot states, staff also developed a set of review criteria for each element. However, it became clear during the peer reviews that these instructions were more procedural than substantive. Reviews of specific applications revealed that pilot states were responding to similar application responses differently. As noted previously, procedures and review criteria were continuously revised based on the findings established during the peer reviews.

However, the question persisted of what specific types of responses to application questions would constitute a denial of a permit. Based on recommendations from the pilot states, the Board had adopted only the following two circumstances in which a carrier MUST be denied credentials:

• the motor carrier has an unsatisfactory USDOT safety rating; or
• the motor carrier does not have the minimum level of insurance coverage.

At the December 1994 Board meeting in Denver, members of the industry advisory panel asked the Board to consider adopting an application scoring system similar to that used by FHWA for compliance reviews. At that time, the Board asked the staff to work with the pilot states to determine the feasibility of a scoring system. The analysis and staff recommendations were presented to the Board in Boston in June 1995.

The staff found that not one of the current state hazardous materials registration or permitting programs uses a scoring system to evaluate applications. Rather, applications are generally reviewed one of the following two ways:

• following a set of evaluative guidelines, or instructions for each question; or
• ensuring simply that the required information is included in the application.

The staff analysis suggested that any determination by the Board to develop and implement a point system for scoring the Uniform Program application should take into consideration the following issues.

• The strongest argument for a scoring system is that it would increase the objectivity and uniformity in evaluating an application. A scoring system would allow a state agency to point to specific items in the review process in which the carrier did not meet requirements as well as provide a carrier with specific items that need improvement.
• A scoring system may tie the hands of state agency investigators and take evaluative power away from those persons charged with evaluating the ability of a carrier to transport hazardous materials in multiple states.
• Two original goals of the Alliance were that the permit process be an educational effort for carriers and that the application be a vehicle to establish an interaction between the base state and a carrier. This interaction would allow an ongoing relationship between each base state and carrier. The base state can assist the carrier in any remediation efforts that may need to be undertaken before a permit is granted. A defined scoring system may impede this communication effort and the remediation process, as a permit would either be granted or denied based on a final score.
• The Alliance made a decision that the application was not to be a complete evaluation tool. In response to industry concerns regarding the amount of information they would have to provide the base state, the Alliance decided that many issues would be evaluated only on audit and would not bear any analysis in the original permitting process. Assigning a score, or point, to information that is taken on faith, such as certifications, would be arbitrary at best.
• The Alliance approved, and the pilot states are refining, a set of objective criteria that will be used to evaluate the application questions. The instructions are intended to ensure a uniform approach to analyzing the information provided on the application. Pilot state meetings concentrate primarily on application evaluation in each state. Pilot state representatives discuss evaluative techniques and adopt a common approach to application approval to ensure uniformity across the pilot states.
• The Alliance originally intended the base state to use the application to paint a complete picture of the carrier's operations in all areas of hazardous materials transportation. Instructions also direct a state agency to uncover additional information on answers that cause concern. A scoring system would necessitate breaking down the application evaluation into individual questions and assigning a numerical standard to each question. The scoring approach of such revised application would take away from the original intent and design of the Uniform Program application.
• The Uniform Program questions are not designed to have "right" or "wrong" answers. Compliance reviews evaluate carrier compliance with specific regulations. Carriers either meet or do not meet the requirements under those regulations, a situation that lends itself to a system of evaluation that uses points. The Uniform Program questions were designed to provide information on carrier operations, not to be right or wrong.

Based on these considerations, the Board elected not to adopt a point-scoring system at this time. However, it instructed the staff to continue working with the pilot states to develop more detailed guidance on application review criteria. Toward this end, the staff has scheduled two working sessions with the pilot states. In addition, each pilot state was asked to develop case studies of applications that it denied or considered denying, for discussion at these working sessions. Any recommendations for revisions in the review criteria will be presented to the Board as they are identified through the case studies.

Clarifying the Relationship Between Part II and Part III States

At the pilot state working session in Minnesota, questions emerged regarding the role and responsibility of states performing Part III reviews of a carrier based in a Part II state. All the pilot states agreed that the review effort on the part of the Part III review state would be equivalent to that for a carrier based within the Part III state. The policy issue that emerged was whether the Part III review state should provide a recommendation to the Part II base state or whether the Part III state should only transmit its findings, leaving the final decision of whether to approve the permit to the base state.

The Board believed that, in this case, the Part III review state was acting on behalf of all Part III states in conducting the review of the carrier's fitness to transport hazardous waste. Because the Part II state that transmitted the application for a Part III review had elected not to develop the capacity to conduct a Part III review, it seemed inappropriate to ask the Part II state to make a judgment according to the findings of another state. It was decided that the Part III reviewer state should make a specific recommendation to the Part II base state as to whether that state should grant a Part III permit. However, it is the base state's responsibility to transmit that recommendation to the applicant.

Finally, a question was raised about what happens when the Part II base state finds that an applicant meets the threshold requirements for a Part II permit, but the Part III review state recommends that a Part III permit be denied or deferred. The Board recommended that, in such cases, the Part II state issue a Part II permit that would allow the applicant to transport hazardous materials in all states and hazardous waste in Part I and Part II states. This would be particularly relevant when the Part III review state requests additional information that might require a longer review period. However, if the Part III permit is eventually issued, the expiration date would be the same as for the already-issued Part II permit, not extended to the date of the Part III approval. The base state would then have to issue a new set of credentials.

Outlining Rules for Transition

At the Alliance's January 6–7, 1994, meeting in Reno, Nevada, state and industry representatives raised questions about the transition by carriers from the current single-state registration and permitting system to the base state approach. The topic was relevant for the pilot states and will continue to be important in the future as other states join the compact once the federal rule becomes effective.

Based on comments and questions raised at the Reno meeting, the Board determined that the transition rule should, at a minimum, address the following questions.

• Will a motor carrier's authority to transport hazardous materials be interrupted during the transition process?
• What happens to permits that have been obtained in states other than the base state once the carrier receives a uniform national permit?
• Will the motor carrier have to maintain any state-specific credentials during the transition period?
• Will the carrier be assessed again for registration fees it may have already paid under the single-state system?
• Will carriers be required to continually change their base state in accordance with the hierarchy established under the Uniform Program as new states enter the agreement?
• What is a new member state's responsibility to carriers—those based in the state and those that operate in the state—during the transition period?
• What are the motor carrier's responsibilities?

Operating Principles. At the Reno meeting, the Board adopted two principles that should guide state operations during the transition period.

If a motor carrier is a credentialed operator in a state, the transition from the single- state to the base state system should not result in any interruption in authority to transport hazardous materials in that state.

A motor carrier should not be reassessed for registration fees paid to a state for the time period covered by those paid fees.

Interruption of Authority to Transport Hazardous Materials. Preparing the analysis on this issue, the Alliance staff identified two instances in which a motor carrier would be transporting hazardous materials in a state prior to implementation of the Uniform Program: a motor carrier operating in a state under a permit issued by that state prior to the state's participation in the Uniform Program, and a motor carrier operating in a state that does not require a permit.

In the latter case, the motor carrier would have no new obligations. The Uniform Program is not a federal mandate requiring states to permit motor carriers that transport hazardous materials. The program only established uniform procedures and forms for states that elect to do so. Therefore, if a carrier now transports in a state that does not require a permit, the carrier can continue to operate in that state regardless of whether it has obtained the uniform national permit from its base state.

In states that do require a hazardous materials and/or hazardous waste transportation permit, the following scenarios would apply.

• If the motor carrier has both an unexpired permit for that state and a uniform national permit. On the day that the state begins operating under the Uniform Program, state officials must recognize the national permit as a valid credential. Therefore, the unexpired state-specific permit is not necessary and need not be carried in the vehicle. It is the state's responsibility to inform law enforcement authorities to accept the national permit and not detain or delay carriers that are operating under the national permit.
• If the motor carrier has an unexpired permit for that state and has not yet obtained a uniform national permit. The state-specific permit would remain valid until its expiration date. If the