Investigation of Kentucky For-Hire Requirements Report Number: KTC-18-20/SPR16-518-1F DOI: https://doi.org/10.13023/ktc.rr.2018.20 R A I L R O A D C R O S S I N G ROAD WORK AHEAD Kentucky Transportation Center College of Engineering, University of Kentucky, Lexington, Kentucky in cooperation with Kentucky Transportation Cabinet Commonwealth of Kentucky The Kentucky Transportation Center is committed to a policy of providing equal opportunities for al persons in recruitment, appointment, promotion, payment, training, and other employment and education practices without regard for economic, or social status and will not discriminate on the basis of race, color, ethnic origin, national origin, creed, religion, political belief, sex, sexual orientation, marital status or age. Kentucky Transportation Center College of Engineering, University of Kentucky, Lexington, Kentucky in cooperation with Kentucky Transportation Cabinet Commonwealth of Kentucky © 2018 University of Kentucky, Kentucky Transportation Center Information may no tbe used, reproduced, or republished without KTC’s written consent. KENTUCKY Kentucky Transportation Center • University of Kentucky Transporation Center 176 Raymond Building • Lexington, KY 40506 • 859.257.6898 • www.ktc.uky.edu Kentucky Research Report KTC-18-20/SPR16-518-1F Investigation of Kentucky For-Hire Requirements Andrew Martin, Ph.D. Research Scientist Valerie Keathley, Ph.D. Research Associate and Jennifer Walton, P.E. Research Engineer Kentucky Transportation Center College of Engineering University of Kentucky Lexington, Kentucky In Cooperation With Kentucky Transportation Cabinet Commonwealth of Kentucky The contents of this report reFlect the views of the authors, who are responsible for the facts and accuracy of the data presented herein. The contents do not necessarily reflect the ofFicial views or policies of the University of Kentucky, the KentucKy Transportation Center, the Kentucky Transportation Cabinet, the United States Department of Transportation, or the Federal Highway Administration. This report does not constitute a standard, speciFication, or regulation. The inclusion of manufacturer names or trade names is for identification purposes and should not be considered an endorsement. December 2018 1. Report No. 2. Government Accession No. 3. Recipient’s Catalog No KTC-18-20/SPR16-518-1F 4. Title and Subtitle 5. Report Date Investigation of KentucKy For-Hire Requirements December 2018 6. Performing Organization Code 7. Author(s): 8. Performing Organization Report No. Andrew Martin, Valerie Keathley, JenniFer Walton KTC-18-20/SPR16-518-1F 9. Performing Organization Name and Address 10. Work Unit No. (TRAIS) KentucKy Transportation Center College of Engineering University of KentucKy 11. Contract or Grant No. Lexington, KY 40506-0281 SPR 16-518 12. Sponsoring Agency Name and Address 13. Type of Report and Period Covered KentucKy Transportation Cabinet Final Report State OFFice Building 14. Sponsoring Agency Code Frankfort, KY 40622 15. Supplementary Notes Prepared in cooperation with the Kentucky Transportation Cabinet 16. Abstract This study analyzes the costs and beneFits of the KentucKy For-Hire operating authority, which is issued to all carriers who pick up and drop oFf Freight in KentucKy on a For-hire basis. It reviews current statutory and regulatory requirements, calculates the costs and benefits of administering Kentucky For-Hire, reviews the legal history of trucking regulation and deregulation, reports on a survey of other states about their practices with intrastate operating authority, and proposes three alternatives to current policies. The primary benefit of KentucKy For-Hire is that it enables the KentucKy Transportation Cabinet to verify carriers have commercial liability insurance. Several major challenges confront KentucKy For-Hire — the costs of administering the program exceed the revenue it generates, the requirement is loosely enforced, and violations potentially punish the commercial vehicle operator instead of the motor carrier owner or management. Each solution attempts to address one or more of these challenges. The study analyzes the benefits and challenges of the proposed policy alternatives. The report concludes with a supplementary chapter pertaining to the regulation of transportation network companies and parcel delivery service subcontractors. 17. Key Words 18. Distribution Statement KentucKy For-Hire, intrastate operating authority, commercial liability Only distributed by permission of insurance, civil penalties KYTC. 19. Security Classification (report) 20. Security Classification (this 21. No. of Pages 19.Security UnclassiFied page) 91 Classification UnclassiFied (report) UnclassiFied Table of Contents Executive Summary ...................................................................................................................................... 1 1. Statutory Requirements For Kentucky For-Hire ........................................................................................ 2 1.1 Report Objective and Organization ..................................................................................................... 2 1.2 Statutes Related to Intrastate Operating Authority CertiFicates .......................................................... 2 1.2.1 Authority Provided Under Chapter 281 ....................................................................................... 2 1.2.2 Omnibus Revisions to Chapter 281 .............................................................................................. 3 1.3 Kentucky Statutes Governing Intrastate Commercial Vehicle Activities ........................................... 3 1.3.1 Exempted Intrastate Activities ..................................................................................................... 3 1.3.2 Regulated Intrastate Activities ..................................................................................................... 4 1.3.3 Kentucky For-Hire ....................................................................................................................... 4 1.3.4 Fees For Intrastate CertiFicates ...................................................................................................... 5 1.3.5 Background Checks Required For Certain Intrastate Operating Authority CertiFicates ............... 5 1.3.6 Insurance Requirements For Intrastate Transportation ................................................................. 6 1.3.7 Penalties ....................................................................................................................................... 7 1.4 Statutes and Administrative Regulations Related to Household Goods CertiFicates .......................... 7 1.4.1 Estimates of Charges .................................................................................................................... 8 1.5 Conclusion ........................................................................................................................................... 8 2. Kentucky For-Hire Administrative and Regulatory Process ................................................................... 10 2.1 StafFing For Kentucky For-Hire CertiFicate Administration .............................................................. 10 2.2 Process For Kentucky For-Hire ......................................................................................................... 10 2.2.1 Kentucky For-Hire Application ................................................................................................. 10 2.2.2 Annual Renewal For Kentucky For-Hire .................................................................................... 18 2.2.3 Application Process For Interstate Authority and Kentucky For-Hire ....................................... 21 2.3 Proof of Insurance Requirements For Kentucky For-Hire Authority ................................................ 21 2.4 Enforcement of Kentucky For-Hire .................................................................................................. 22 2.5 Conclusion ......................................................................................................................................... 22 3. Costs and Benefits of Kentucky For-Hire Authority .............................................................................. 24 3.1 Costs of Administering Kentucky For-Hire Authority ..................................................................... 24 3.2 Costs of Administering Household Goods Authority ....................................................................... 26 3.3 Costs of Migrating KentucKy For-Hire From ALTS to the Motor Carrier Portal ............................. 28 3.4 Benefits of Kentucky For-Hire .......................................................................................................... 28 3.4.1 Enforcement of Kentucky For-Hire ........................................................................................... 28 3.4.2 Insurance VeriFication and Compliance Check .......................................................................... 29 KTC Research Report Investigation of Kentucky For-Hire Requirements 3.4.3 Kentucky For-Hire and Household Goods Revenues ................................................................ 30 3.5 Costs vs. Benefits .............................................................................................................................. 31 3.6 Conclusion ........................................................................................................................................