MINUTES OF THE SENATE COMMITTEE ON TRANSPORTATION Sixty-eighth Session January 31, 1995 The Senate Committee on Transportation was called to order by Chairman William R. O'Donnell, at 1:45 p.m., on Tuesday, January 31, 1995, in Room 226 of the Legislative Building, Carson City, Nevada. Exhibit A is the Agenda. Exhibit B is the Attendance Roster. COMMITTEE MEMBERS PRESENT: Senator William R. O'Donnell, Chairman Senator Maurice Washington Senator Lawrence E. Jacobsen Senator Jon C. Porter Senator Joseph M. Neal, Jr. Senator Raymond C. Shaffer Senator O. C. Lee STAFF MEMBERS PRESENT: Don O. Williams, Chief Principal Research Analyst Diane Rea, Committee Secretary Vincent Garth, Primary Secretary OTHERS PRESENT: Wayne Teglia, Assistant Director, Department of Transportation (DOT) Jan Christopherson, Administrative Services Officer, Department of Transportation (DOT) Raymond Sparks, Department of Motor Vehicles & Public Safety (DMV) Larry Osborne, Carson City Chamber of Commerce Pam Miller, Government Affairs Director, Association General Contractors (GAAC) Tom Waters, Granite Construction Pat Coward, Nevada Grocery Industry Mary Santina, Executive Director, Retail Association of Nevada Daryl Capurro, Managing Director, Nevada Motor Transport Association, Inc. (NMTA) Daryl Capurro, Nevada Franchised Auto Dealers Association (NFADA) Stephanie Licht, Nevada WoolGrowers Association (NWGA) Stanley Sims, Sims Auto Sales Bob Common, Zane Employee Senator O'Donnell introduced Senate Bill (S.B.) 48: S.B. 48: Revises provisions relating to fees charged by department of transportation for operation of oversize or overweight vehicles. (BDR 43-828) (Exhibit C). Senator O'Donnell asked for any testimony in favor of S.B. 48. Wayne Teglia, Assistant Director, Department of Transportation (DOT) stated that accompanying him was Jan Christopherson, Administrative Services Officer, Department of Transportation (DOT). The DOT has asked for a modification of the means by which DOT establishes fees for overweight permits. DOT issues permits to vehicles that are considered over dimensional - over height, overweight, over length. DOT is concerned with non-reducible loads, meaning vehicles that cannot be reduced in size or dimension. In 1994 DOT issued about 31,000 over dimensional permits; around 11,000 of those were for overweight vehicles. The department currently charges $15.00 for each overweight vehicle, no matter the weight of the load. A number of states have developed a new fee system based upon the weight of the vehicle, (Exhibit D). Mr. Teglia brought a copy of part of the Department of Transportation Federal Register (Exhibit E) drawing attention to item 6. Federal Highways Association (FHWA) is asking each state to evaluate their overweight permitting system to take into consideration costs in addition to administration. A lot of the overweight vehicles that Nevada deals with are manufactured in other states. Most mining and transformer equipment is manufactured in Utah and brought to Nevada. The M.S. Dixie traveled across six states to get to Nevada. That was a panel load in excess of 1 million pounds that Nevada charged $7.50 to be brought in. Utah would have charged $450 and in Washington would have charged $415. Last year DOT was able to increase the fee to $15.00 by increasing the administrative fee. Mr. Teglia brought some pictures (Exhibit F) to show the damage done around Battle Mountain by an extremely heavy load run on single based tires. The DOT has two loads scheduled for mining companies use in Nevada that are in the 1.2 million pound range. DOT is not asking the committee or legislature to establish the fees. They are asking that the restriction that allows the department and the state to only recover the cost associated with administration ... meaning basically the issuance of the permits. The DOT asks that this restriction be removed and the transportation board be allowed to take testimony from industry and the state and to make a determination as to whether Nevada could and should go to some sort of graduated fee schedule. The DOT can present to the board different alternatives based on what other states are doing and what would be most equitable for establishing those fees. They are asking that the restrictive language be removed. Senator O'Donnell stated that what scared him, and probably the committee, most is that to ensure this DOT is not setting the fees. He feels that the committee would rather set the fees than have the DOT take the heat for setting them. Mr. Teglia stated that he could have brought a fee schedule with him. The DOT has actually incorporated the fee schedules into the regulations that are adopted by the department. Senator Neal stated that the changes to the fees could not be made unless the DOT got this bill because it says "the fees do not exceed the estimated costs of administering the permit system." Why would the DOT need to? Mr. Teglia replied that at the present time DOT is restricted to only the cost of administering the program. It does not allow for the cost of research, when people need to be sent out to do actual measurements and route driving. The thrust behind the bill is to go beyond the administration costs. The bill would generate more money. Senator Shaffer asked why Mr. Teglia did not get testimony prior to coming with the bill to have some idea as to where the state would be without giving the DOT an open hand. Mr. Teglia stated that the bill restricts him from doing this. That is why he is in support of the bill. Senator O'Donnell asked how the DOT "quantified" the road damage. Mr. Teglia stated that he did not know how those figures were arrived at, but it was done through DOT's operations analysis section. Senator Jacobsen questioned the procedure. If he came in for a permit ... would he have to bring any material to indicate what type of equipment he would be moving, the height and weight; and does the DOT tell him what kind of equipment he will have to have? Mr. Teglia stated that an evaluation is done to make sure that the weight on an individual axel will not exceed what is allowed and that the route is capable of handling the load. Senator Lee asked if the frost level is considered when the permits are asked for? Mr. Teglia stated that there are restrictions based on the "frost law." Certain routes are restricted during the time of year when the frost is turning to water. At all times of the year routing is taken into consideration based upon weight. Some roads are not designed to carry the loads. Senator Porter asked if he were transporting something, are there other fees and permits that he would have to pay as an operator; or is the only fee the $7.50? Mr. Teglia stated that there are a number of different licensing fees that go into vehicle registrations based on the average gross weight of the vehicle, but what they are dealing with are special one trip/one of a kind loads. Mr. Teglia continued that the DOT is in the process of trying to issue regional permits. Right now these trucks have to stop and get permits in each state. Each state has different fee schedules and ways of charging. The Federal Highway Administration (FHWA) is looking at a consistent means of calculating these fees for the heavy loads. Senator Neal replied that under the proposed regulations the legislature had no choice. The federal government will start reducing 10 percent of the highway fund that comes to the state, if the legislature does not adopt the sanction. Mr. Teglia stated the DOT was in a "comment period" and FHWA has said either adopt some sort of sliding scale or they will sanction us. This involves any highway and roads where they can run the oversized loads. Senator O'Donnell asked how much is the entire bi-annual budget for road maintenance? Mr. Teglia guessed it was in the neighborhood of $55 million. Senator O'Donnell asked how much would be generated by the fees? Mr. Teglia stated that he took Washington's system and added it to Nevada's and it generates under $500,000 a year in revenue. Washington has one of the higher rates. Senator Porter stated that the "Department's National Transportation Policy (NTP) strongly advocates permit fees ... the cost of pavement damage ranges between 4 and 16 cents per ESAL mile." He stated that it looks like there was an equation where the average cost of an 84,000-pound vehicle traveling 100 miles would be about $64. Senator Neal asked if Mr. Teglia was sure these rates had not been approved. Senator O'Donnell asked if there was anyone else to testify on behalf of S.B. 48; anyone opposed? Larry Osborne, Carson City Chamber of Commerce stated that the chamber's opposition was to the elimination of the limitation of fees where it states that they are established so that they would not exceed the estimated cost of administering the system. The chamber feels that the whole thing was too much and they would oppose the elimination of that paragraph under any of these proposals coming forward from any government agency. Senator Neal stated that the "permit system" includes regulations that might be imposed on the state for the cost. Senator O'Donnell stated for the record, "there is no attorney general's opinion on that" although there could be. Pam Miller, Government Affairs Director, Associated General Contractors (AGC) stated that she was with Tom Waters of Granite Construction Company. They were concerned whether the department would not have some linkage in the administrative costs of taking care of the system, vs how much they can charge. If AGC does not know what the DOT is going to charge for the permits then the contractors cannot build the cost into a bid. This is something that the contractors need to have an idea on the cost. Tom Waters, Granite Construction Company, stated the contractors basically use two types of overweight permits. The blanket permit is purchased on a prorated basis for vehicles that continually haul overweight loads throughout the state. Those permits are approximately $2400 per vehicle, per year. The other permits are used to move the construction equipment throughout the state. It is his understanding that the permits and the fees from the permits are not to fund road maintenance or road wear and tear, but to fund the administration of the permits. The permits are necessary to regulate what roads go where throughout the state. The permits to regulate the disbursement of the load for the highway; the right width and height for where the hauled material is going, and special routing to avoid damage to the roads and bridges. Senator Neal stated that the old law suggests that the board of directors authorized the movement of oversized vehicles. The highway board did not need this bill to raise fees, if necessary. Ms. Miller stated that Associated General Contractors (AGC) would be very concerned if they thought Nevada was going to be sanctioned on their highway funds. Senator Washington asked when a person goes to get a permit, does the DOT not give that person a route to avoid damage to the road? Mr. Waters stated that the routing was a very distinct process of the permit. Taken into consideration are the weights, bridges, overhead structures, underpasses, and pilot cars where the traffic is heavy or two lane roads. The same fee is paid regardless of the route. Pat Coward, Nevada Grocery Industry, introduced Mary Santina, Executive Director, Retail Association of Nevada (RAN). Ms. Santina stated that she was here in opposition of taking the fees out of statute. The DOT is not a revenue producer and should pay the cost of administration. When an agency has control over fees it not only exceeds legislative expectation, but usually legislative intent. Senator Neal asked what if the brackets were removed from the bill and the committee added "and repairs of the road." Ms. Santina stated that RAN does not do excess weight and heavy duty hauling. She would suggest that the department work with the construction people and come up with some language that might take this into consideration. Mr. Coward stated that the intent is more the recouping of the fee system itself. When the committee gets into the repair of roads, they are approaching a different subject. Senator O'Donnell asked Mr. Teglia if $500,000 was built into the budget. Mr. Teglia stated the DOT had no way of knowing what actual fees might be looked at. The DOT only did a projection using the Washington state formula because it would give some idea as to the revenues that might be generated if they adopted a similar fee schedule. There are only five states, besides Nevada, that have a fixed fee. Daryl Capurro, Managing Director, Nevada Motor Transport Association (NMTA), a trade association, representing the trucking industry operating in and through the state of Nevada, stated that NMTA feels the legislative intent was for the recovery of fees in running the permit system. The DOT is now asking to have that changed to being a major revenue rather than an enforcement regulatory nature. He feels that some things mentioned by Mr. Teglia should be included in the permit cost system; inspection of roadways and paperwork. All the additional costs; highway patrol, pilot cars and the like, are all borne by the carrier. All the costs can now be allocated to the cost of the permit. There is no uniformity throughout the states for the permit fees, operating hours or types of equipment. There needs to be a western regional uniformity as to when those vehicles can be operated. Senator Jacobsen asked if they increased the fees could the same procedure be used to get to where they need to be now? Mr. Capurro stated that he thought the law currently allowed the DOT to charge the fees they were seeking. Senator Jacobsen asked if Mr. Capurro would be more comfortable if he knew what scheme the DOT was going to put together before seeing the committee take action on the bill. Mr. Capurro stated that he would feel a lot more comfortable if there were workshops and hearings held between now and the next legislative session and then a proposal involving what those fees would be brought back to the committee. He did not feel the DOT had enough information to be able to provide the committee with what that schedule should be. Senator Neal asked who was supposed to repair the roads. Mr. Capurro stated that is why the state has registration, fuel tax laws and the laws that create the revenue going into the state highway fund for the maintenance, repair and construction of highways. Senator Neal stated that apparently the Highway Board was saying to the legislature that they have a problem ... Is there anything that the legislature can do so Nevada achieves this uniformity with other states? Mr. Capurro stated that there have been attempts made by Nevada in conjunction with our surrounding western states for uniformity in other permit areas such as the L-1 permit, which is the longer combination blanket permit. He stated that Nevada had also achieved uniformity with respect to the weight allowed per square inch of tire surface. Nevada is in line with what the other states have adopted. Mr. Capurro continued by saying there are other problem areas that need to be looked at and the problems could be solved on a regional basis ... adopting the hours of operation, weight bill operation, pilot cars, and other issues. The state has not gone far enough with the authority they already have, before approaching this legislature with changes of respective fees only. Senator Jacobsen stated that it would be nice for the committee to have on record a permit so they could actually see what it consists of. Maybe the legislators would realize the things that are required ... Nevada is somewhat unique due to industries and mining that other states do not have. Mr. Capurro responded that there are published regulations on the permits that use a color coding for roads that can be used. Stephanie Licht, Secretary/Treasurer Nevada WoolGrowers Association, stated that oversize, over length and overweight vehicles cost $2300 per year to register and operate. In the livestock industry those trucks are not used daily. In Idaho they have $35 fee, Utah is $22, Wyoming is less than $100; and the concerned parties are having trouble understanding that and wonder if there is not a way the fee structure throughout the state could be figured on a per-trip-basis. The permits have to be purchased from Carson City, because there is not a satellite office in the Battle Mountain area. The state does no inspection, they do not require insurance; operators just pay the $2300 and are out the door. Mr. Teglia stated that the DMV is there to discuss the super loads and fixed loads. They have 11,000 permits each year that deal with overweight vehicles. Senator Jacobsen asked if the DMV had control of the time of the week or day that those vehicles can be on the road. Mr. Teglia responded that the trucks were restricted from holiday travel, hours of darkness; depending on the specifics of the road. The drivers generally tell DMV what routes they want. Senator O'Donnell closed the hearing on S.B. 48 and opened the hearing on S.B. 49. SENATE BILL 49: Repeals provision authorizing dealer of vehicles to register certain number of vehicles without payment of privilege tax. (BDR 43-900) (Exhibit G). Raymond Sparks, Deputy Director Department of Motor Vehicles and Public Safety (DMV), stated that S.B. 49 was requested by the DMV. The bill is an attempt to repeal Nevada Revised Statutes (NRS) 482.321 which established the dealer special registration procedures. Dealers licensed in the state of Nevada can register up to 12 vehicles in their name without paying any privilege tax. Mr. Sparks continued that the DMV is not really sure why the dealers were issued this privilege. The DMV is concerned about the revenue loss to the state of Nevada, and to the local government and counties from the tax that is collected upon registration. Car dealers have registered their personal motor homes with the special registration and have avoided paying the vehicle privilege tax, which would be considerable. The last estimate done was a few years ago and showed a loss of $220,000 a year. He continued by saying there is a consequence that would occur which is known in the industry as "auto brokering" which is a business being licensed in the state of Nevada as a used vehicle dealer, but is trading in new vehicles. The customer seeks them out, tells them what vehicle they want, the auto broker purchases that vehicle from a dealer, registers the vehicle under the special registration and then transfers the ownership to the customer. By registering the vehicle to himself, it becomes a used vehicle. A new vehicle is one that has never been registered. Senator Porter asked if when a broker is involved and sells a car to a consumer; is he required, as a dealership, to notify his customer that this is a used vehicle? Mr. Sparks replied that he was not aware of any requirement that the broker has to advise the customer that he is buying a used vehicle. He cannot advertise it as a new vehicle. The broker cannot provide the maintenance service due to lack of facilities. Senator Lee asked for clarification as to where he would go for factory warranty? Mr. Sparks replied that the franchise dealers would have to address that. His opinion would be that the purchaser would go to a franchise dealer for the warranty work. The vehicle is new, with low mileage, however, technically under Nevada law it is used because it was registered prior to the purchase. Senator Porter asked if the advantage to a broker was that he did not have to pay the same licensing, permits, bonding, insurance and other fees? Mr. Sparks replied that the broker was licensed as a used vehicle dealer. The fees and bonding requirement are the same as for any other dealer in the state. The brokers have the advantage because they do not have the capital investment in a show room and large inventory of a maintenance facility. Daryl Capurro, Executive Director, Nevada Franchised Auto Dealers Association (NFADA), stated that NFADA supported the concept that the DMV is trying to accomplish. He asked the committee to consider amending the law to make the 12 plates non-transferable. S.B. 49 states "The dealer is not subject to the payment of privilege taxes on these registrations" ... NFADA asks that the committee put a period there and delete the plates could be transferable. The maintenance and warranty work is on the shoulders of the franchise dealer who had nothing to do with the sale of that vehicle. Most of those vehicles are purchased from out-of-state. Senator Neal asked if the Senate had this before them in the Sixty-seventh Session? Mr. Capurro replied that it was presented before the taxation committee and was never acted on. Stanley Sims, Sims Auto Sales testified that the new car dealers were asking the committee to tax the brokers. He stated that he is a broker and that this is a "competition bill." The new car dealers created the law. The consumers support the brokers because the new car dealers take advantage of customers. Brokers use the plates strictly to transfer a new car to the used car status. Service departments make a lot of money every year from the contracts and warranties on these vehicles. California has legalized brokers. Because of the competition and popularity of the broker, the new car dealers cut off the brokers so they have to go out of state to buy the new cars. Mr. Capurro stated that the reason auto dealers in the state of Nevada ceased doing business with brokers is because of the compliance of the law as well as the fact that the manufacturers have orders out to the dealers telling them not to deal with brokers. Senator Neal asked if the manufacturers are saying that manufacturers will not honor the warranty, would that not be the same for any other dealership that comes under or purchases cars from that manufacturer? Mr. Capurro explained that it is not that the manufacturers will not honor the warranty, because as franchise dealers they are responsible for honoring the warranty of the manufacturer. Dealers do the warranty work on vehicles that are sold. The problem is that the manufacturer, because of the various problems associated with brokers, does not want to provide additional problems for their franchise network in providing warranty work. When the vehicle is sold outside the channels, that becomes one that is not in the planning potential of the franchised dealers, therefore is an additional burden on the process. Many of these brokers in Nevada are not attaching the used car guide to the window of the vehicle. They may only have possession of this vehicle for 1 hour before turning it over to the buyer. By federal law, they are required to have that used car guide in the window, which describes the responsibilities for used car sales. Senator Porter asked if Mr. Capurro would support regulating this industry? Mr. Capurro replied that NMTA has looked at this possibility and in the event there is a bill that comes in to legalize that operation, they would insist that the brokers have the same responsibilities to maintain and do warranty work on the vehicles. Bob Common, Zane Employee, stated he has worked for Zane for a year. He has heard stories from Zane customers that justifies why people are seeking out brokers. Customers come to brokers because they can get a fair deal and are treated like human beings. Customers get their warranties and the brokers are not taking advantage of the customers. Mr. Sims stated that the bonding in California is $5,000; in Nevada bonding is $50,000 and a person has to have good credit. Mr. Sparks stated for the record that Mr. Capurro had talked to DMV about the amendment to the bill and while the DOT would prefer to see the bill the way they introduced it; because to amend it would not completely eliminate the problem, the DMV would not have any opposition to the amendment. Senator O'Donnell closed the hearing on S.B. 49. Senator O'Donnell closed the meeting at 3:20 p.m. RESPECTFULLY SUBMITTED: Diane C. Rea, Committee Secretary APPROVED BY: Senator William R. O'Donnell, Chairman DATE: Senate Committee on Transportation January 31, 1995 Page