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February 2008
Executive Summary
We work in the most regulated industry in the most regulated state in the union. This report looks at the following changes in the ever-shifting regulatory scene:
- City of Los Angeles – Ad-Hoc Transportation meeting results
- San Joaquin County – Pilot Cars requirements for width reducing Annual Permit Length
- Periodic Smoke Inspection Program, the
CHP BIT Program and Random Drug Testing
- IRS Requiring Water, Mechanic Or Fuel Trucks To Run Clear Fuel
City of Los Angeles – Transportation Ad-Hoc Meeting – Business District
We met with Public Works and Street Services concerning how our industry moves equipment through the City of Los Angeles. We discussed issues that affected haul routes for import/export. This month we will discuss this with the city’s Department of Transportation (DOT).
The following items were discussed at the ad hoc meeting:
- Street Use Permits – Street Closure Permits are not consistent with Transportation Permits. The Street Closure Permit allows a crane, for example, to start setting up in the street and close the lane(s). If the closure is in the Central Traffic District (downtown), you can only travel from 12:01 to 6:00 a.m. within the Central Traffic District, but you can’t park anywhere, which creates a dilemma. We have two separate departments issuing permits and we are going to try to bring them together to work out this problem. We will also be working with DOT on this issue.
Recently a member was cited for traveling during the dead-zone time of 6:00 to 7:00 a.m., where there was no permit that covered his travel. We had already been trying to resolve this issue before it became a problem, so after an Administrative Hearing with the city, this was resolved for our member.
There will also be further discussion on Street Closure Permits at our next ad-hoc meeting.
- 75 Ton Rule – This has created costly delays in the issuance of permits, which we have been trying to eliminate for years. The problem is when you apply for a permit and you exceed 75 tons (150,000 lbs), every permit had to be sent to Engineering for their approval. Anytime you have to have two separate departments approving permits, it’s inevitable that there is going to be a delay, sometimes very long delays. Permits are delayed or not issued, members have to cancel deliveries and there is no sure way to know when and if you were even going to receive your permit.
The Engineering Department agreed that this additional step wasn’t necessary and now only permits that exceed 125 tons (250,000 lbs) or exceeding 9-axles need engineering approval. This major change will be benefiting both industry and the city in eliminating time and delay cost.
- Maximum Allowable Permit – If you have a permit for a 120-ton crane and it breaks down, can you substitute a larger crane and use your existing permit? The answer is no…but if you are using a 150-ton crane, could you substitute a smaller unit and use the same permit? If you were not exceeding the axle weights and any other dimension, the committee felt that you could, but only if you did not list the model number. We agreed to submit some sample permits as examples for their review and they will get back with us. It really would be similar to how Annual Permits are issued, but this would be a single trip application. We will keep you informed.
- Central Traffic District – Travel from Midnight to 6:00 a.m. only in the Downtown Business District restricted from the east curb line of Los Angeles Street, the south curb line of Pico Boulevard, the west curb line of Figueroa Street, and the north curb line of Caesar Chavez Avenue.
- Annual Permits – All expire on February 28th, order early.
We have requested that the City prorate permit fees for permits issues before or after February 28th. Currently if you purchase a permit for example on September 1st, you pay the full price and they are not prorated.
We have an ordinance change that will eliminate this rule and allow permits to be good for one year from the date of issuance. We have requested when the new ordinance is adopted that the current permit be good from the date they were originally issued.
Street Services will contact the Division of Finance and see what can be done.
- Inspection Loads – Better Communication
Industry requested contact numbers for the Inspector assigned to the load in case there is a delay or breakdown, that they have the ability to contact them after hours.
The city thought that was a good idea and is going to require that industry also have a 24-hour emergency number that someone can be contacted in case of an emergency after hours. This change will work for both the city and industry and help efficient goods movement.
San Joaquin County - Pilot Car requirements
for width and trailer length excessive
San Joaquin County in central California has started enforcing pilot car regulations that were not enforced in the past. For example, the county is requiring two pilot cars for any load exceeding 12’ wide, where as other localities only require one pilot car at 12’ wide. The county is raising questions about the number of pilot cars for loads exceeding 85’ in length.
We have provided data to the county to demonstrate the need for uniformity. We have scheduled a meeting with the County in February to further discuss the issues affecting industry.
Periodic Smoke Inspection Program, the
CHP BIT Program and Random Drug Testing –
Contractors with Trucks are Subject to it All
We have received several calls from members since the last report regarding Periodic Smoke Inspection Programs (PSIP). Most said they were just realizing they were not in compliance, not just with the smoke testing issue, but multiple issues. We continue to encourage truck-owning contractors to keep informed. Some contractors don’t realize that they are in the trucking business; but they still need to be aware of what is going on around them.
CHP Biennial Inspection
of Terminals (BIT) Program
If you’re enrolled in the Biennial Inspection of Terminals (or “BIT”) program, you are in the trucking business.
California Vehicle Code (VC) Section 34501.12 requires any person or organization directing the operation of certain trucks or trailers to participate in an inspection program conducted by the California Highway Patrol (CHP). The law requires the CHP to inspect California truck terminals every two years.
If you’re not enrolled and you have trucks and meet the following requirements, you need to be enrolled.
A motor carrier subject to the BIT Program is the registered owner (with some exceptions) of any of the following vehicles, whether or not for hire:
- Any motor truck with three or more axles (including the steering axle) with a gross vehicle weight rating of more than 10,000 pounds.
- Truck tractors.
- Trailers or semitrailers used in combination with the vehicles listed above.
- Any truck or combination of a truck and any other vehicle, transporting hazardous materials that require placards, a hazardous material transportation license or hazardous waste transporter registration, including pickups used for this purpose.
- Any motor truck with a gross vehicle weight rating of more than 10,000 pounds (excluding a pickup truck as defined in 471 VC), while towing any trailer or semitrailer that results in a combination length over 40 feet (excluding trailer coaches, camp trailers, and utility trailers, as those terms are defined in the Vehicle Code).
This brings up another requirement that our member maybe overlooking.
Random Drug Testing Required
One member called us to say that the employee who was handling the company’s drug testing program is no longer with the company, so they were unaware of the issue. That is no excuse and when CHP shows up you will receive an “Unsatisfactory” Carrier Inspection rating during your BIT Inspection. The drug testing issue is a sensitive one, involves both state and federal regulations and if you are a union signatory contractor, provisions detailing your responsibility as part a labor agreement. This is not a subject for a single employee but is at the core of your business and not something to be left in the hands of one person in your firm. This is another one of those cases where it is critical that you belong to an association and that you make use of your association membership to get the information you need to operate within the rules – all the rules.
Red Dyed Fuel - Part Four
IRS Requiring Water, Mechanic
Or Fuel Trucks To Run Clear Fuel
We discussed this issue in both August and September’s “Special Report” and I thought that was the end of it – so as they say in most television infomercials – “But wait, there’s more!”
We have been in conversations with the Internal Revenue Service office in Southern California that is stepping up federal enforcement and they are telling us the scope of their field investigations is expanding and they are looking for misuse of red dyed fuel water, mechanic or fuel trucks, whether or not they are licensed for use on roads.
As usual, in California, we have two sets of red dye tax rules, state and federal, for which we have to have compliance strategies. The federal fuel tax rules are enforced by the IRS, state fuel and tax rules are enforced by the state Board of Equalization (BOE).
The state BOE has an exemption for the construction industry to report red dyed fuel that is periodically used in an on-road application such as a water truck. To do this, you have to request a Diesel Qualified Highway Vehicle Operator (DH) Permit from the BOE.
Diesel User Account (DU)
You are required to register for this program if you use tax-paid diesel fuel in an exempt manner. Exempt usage includes, but is not limited to the following: gallons used in vessels, in vehicles operated off-highway, in construction equipment exempt from Department of Motor Vehicle registration and operated off-highway, in the operation of power take-off (PTO) equipment, in vehicles operated on highways under the jurisdiction of the U.S. Department of Agriculture and in reefer units.
Go to www.boe.ca.gov/pdf/boe400fta.pdf. The permit is free. As part of this permit program, you are required to submit an accounting of the number of miles your vehicle traveled on the highway, divide those miles by the trucks fuel mileage/gallon to determine the total on-road fuel usage and then you pay the 18-cent per gallon fuel tax on that fuel alone.
The IRS doesn’t recognize this process. We talked to both the state and the feds only to be told they only have information on what their requirements are and they are not concerned what the other is doing – they each have their own rules and world. The IRS made it very clear that they are going to enforce their rules and do not get involved with state related rules. They don’t want to see red diesel in a vehicle if the answer to any of the following question is yes:
- any application if the vehicle is registered,
- required to be registered
- should be registered.
We discussed military applications and the IRS agreed that these types of vehicles were never intended to be registered. I guess I could understand if every state had its own rules and they were different, it could be confusing, plus there may be certain authority issues that could complicate the enforcement.
The Problem
A contractor member was working on a local project when an IRS agent showed up, got out his dipstick and tested one water truck. The inspector found red fuel in the tank and promptly fired off a warning. This was not a company water truck, but an owner-operator, who was fueled by the contractor. According to the IRS agent, this doesn’t relieve the owner-operator of his responsibility, so there could be two tickets coming out of one case such as this.
This is a big problem. If the IRS conducts an audit and enforces the Internal Revenue Code penalty of $1,000 or $10 per gallon per machine, whichever is greater, plus payment of the tax, this could be a costly problem, not just for the “offender”, but our industry.
Our member thought that red dyed fuel used in an off-road application was exempt. This member firm uses water trucks on its jobs to meet the fugitive dust rules of the South Coast Air Quality Management District, as do many other association members. Most of these trucks are transported from one project to another on a lowbed. These vehicles are not intended for the highway, they are for off-highway use only. Our industry understood these vehicles were exempt from the red dyed diesel rules. The state agrees, but the IRS apparently doesn’t.
The Solution
The answer to this problem will be for you to use taxed clear fuel and apply for a refund at the end of each year with the BOE, which involves a lot of time, burdensome recordkeeping and paperwork. According to the IRS, this is the only solution to the problem. There are no exceptions when it comes to water trucks, unless it was originally a military application. If you have specific questions regarding the IRS rules or their enforcement, contact their office at (714) 347-9445.
Also, see related story on page 18 of Feb 2008 issue, Washington State Patrol.
Our Message to The Industry:
“If you have any problems with a local agency and you find yourself asking ‘why we are having to do things this way’ and the agency tells you’ this is the way we have always done it,’ let me know. We are here to make California transportation operations as smooth and safe as possible.
Respectfully submitted,
Gregory D. Dineen
Industry Transportation Consultant
cc: John Hakel, AGC D. Cash Benton, SCCA
Richard Paine, ECA Sam Meyer, MCOG
Richard Lambros, BIA Lee Brown, CDTOA
Aimee Shook, DCA Jeff Hunter, CTTA
Michael Vlaming, COA Michael Lewis, CIAQC
Doug Ball, SC&RA |
