A bill that would change how Oklahoma oversees trucking is drawing conflict of interest questions because the legislation’s sponsor owns trucks as part of his business.
The Journal Record’s Sarah Terry-Cobo reports Senate Bill 1380, by state Sen. Mark Allen, R-Spiro, would remove the Oklahoma Corporation Commission’s oversight of private motor carriers and give it to the Department of Public Safety. Allen is the owner of oilfield service company Allen Rathole Inc., and he owns 17 motor carrier vehicles that are used to haul oilfield equipment. He hires eight drivers, according to the Journal Record.
The bill would transfer trucking enforcement from the Corporation Commission to the Department of Public Safety. It would expand jurisdiction on for-hire motor carriers, such as trucks that haul loads for other companies.
But it effectively removes the state’s oversight of private motor carriers that weigh 26,000 pounds or more, such as companies that haul their own loads. The measure would also eliminate commercial insurance requirements for private motor carriers unless they were hauling hazardous material. Those vehicles would carry the same type of insurance that the general public carries on non-commercial vehicles.
Terry-Cobo writes that state officers, including legislators, cannot use their office to enrich themselves or for personal gain, according to the state’s ethics rules. However, ethics rules allow legislators to run general industry-related bills, even if they have a material financial interest.
University of Central Oklahoma energy finance professor Stuart MacDonald told the Journal Record that the ethics issues in this situation are not cut and dry.
MacDonald said if Allen owns trucks, then SB 1380 is potentially problematic as it relates to ethical concerns and potential conflicts of interest. But it is a balancing act, because if he recuses himself from voting on the measure, then his constituents would be denied representation.
“Public policy affects all of us, so where do you draw the line?” MacDonald said.
Allen is on a task force that is examining a potential overhaul of the Oklahoma Corporation Commission. Terry-Cobo writes that in February Allen said the bill is necessary, and that lawmakers should not wait until the oversight task force finishes its work.
Terry-Cobo told KGOU that the OCC has its own administrative court system. That’s important for oversight because the OCC receives between 30,000 and 40,000 citations every year, she says. If the Department of Public Safety has oversight, then the citations would move in the local district courts of the ports of entry.
“Those are the places where trucks get checked to make sure they're following the rules when they enter the state of Oklahoma,” Terry-Cobo said.
Another concern with the bill is the U.S. Environmental Protection Agency gave OCC the responsibility to monitor the disposal of wastewater from fracking and drilling operations in disposal wells.
“If another agency like DPS does it, then the state might not comply with federal groundwater protection rules,” Terry-Cobo said.
Jacob McCleland: You're listening to the Business Intelligence Report, a weekly conversation about business news in Oklahoma. I'm Jacob McCleland and I'm talking today with Sarah Terry-Cobo. She's the senior reporter at the Journal Record newspaper. Sarah thank you so much for joining us.
Sarah Terry-Cobo: Hi Jacob, thanks for having me.
McCleland: So you reported this week on a piece of legislation that could raise some conflict of interest concerns. The bill by Republican state Sen. Mark Allen would change oversight rules for the trucking industry. But Allen owns an oil service business that has trucks. First set this up for us. Tell us a little about Allen's business.
Terry-Cobo: Right. So the company is called Allen Rathole, Inc. and his employees provide rat hole services to the oil and gas drillers here in the state. Now these rathole services are just one part of drilling a well. It's basically they're getting the site prepared before the big rig comes to do the actual drilling. And so they own their own big rigs, their own semi trucks and they haul materials to the sites. They have 17 trucks according to the U.S. Department of Transportation's records.
McCleland: Now Allen's bill eliminates commercial insurance requirements for private motor carriers unless they're hauling hazardous materials. And it moves oversight of carriers who hold 26,000 pounds or more from the Oklahoma Corporation Commission to the Department of Public Safety. So there's still oversight but it's from a different agency. Why is this a concern?
Terry-Cobo: Well even though it may seem more logical for DPS to regulate trucks the bill actually expands requirements for the for-hire truckers like those who haul loads for somebody else, but effectively eliminates regulation for those trucks that weigh 26,000 pounds or more and who haul their own loads, like a rathole services company. We need to go back in time a little bit to understand one concern and that's the reason why the Corporation Commission was selected in the first place. The Oklahoma Corporation Commission has its own administrative court system which is really important for oversight because you've got 30,000 to 40,000 citations a year and you need a court to handle all those tickets. If it moves from OCC to DPS as it shifts the burden of those tens of thousands of tickets into local district courts where these ports of entry are located. And those are the places where trucks get checked to make sure they're following the rules when they enter the state of Oklahoma.
Terry-Cobo: There's another reason for concern. The U.S. Environmental Protection Agency gave the Corporation Commission responsibility to make sure wastewater from fracking and from drilling operations are disposed of properly in these disposal wells. So if another agency like DPS does it, then the state might not comply with federal groundwater protection rules.
McCleland: How this legislation potentially run afoul of international trucking compacts right?
Terry-Cobo: Well these are rules that allow trucks from Canada and from other states to cross state lines and not have to pay registration fees and fuel taxes every time they go into a new state. Basically everyone pays into a big fund and then states like Oklahoma get a slice of that based on the truck traffic. If we were violating those international compacts, then the state would be at risk for sanctions - think monetary penalties - and also we would lose out on that slice of money that the state now gets from those compacts.
McCleland: Now you spoke with an energy finance professor at the University of Central Oklahoma Stuart McDonald who said the ethical questions here are not really cut and dry. What's his take on this?
Terry-Cobo: It's interesting here because he says that if Senator Allen owns trucks it is potentially problematic because of this conflict of interest provisions that this state ethics rules have. You can't run a bill that directly benefits you. But there's a provision in state ethics rules that allows a lawmaker to run a general industry bill on behalf of his or her constituents. So if he recuses himself, then he's not representing his constituents. But as I understand state ethics rules, you're supposed to recuse yourself in a situation in which your impartiality could be questioned.
McCleland: So how could Senator Mark Allen's company benefit from this possible new new oversight arrangement?
McCleland: Well with effectively no state oversight of private motor carriers, he wouldn't be subject to citations. Those are fees and fines for not following the rules. Also his drivers, unless they're carrying hazardous materials, federal rules don't require this big private carriers to have commercial insurance, which is much more expensive than the kind that you and I carry on our vehicles. So no state oversight no commercial insurance requirements.
McCleland: And what does Senator Allen say about some of the the ethics questions?
Terry-Cobo: Not much. Unfortunately his legislative aide asked me to submit questions via e-mail. But our editorial policy doesn't allow us to do that. So I sent some general general themes via e-mail but they weren't able to accommodate a phone interview on Thursday or Friday.
McCleland: Sarah Terry-Cobo is a senior reporter for The Journal Record newspaper. Sarah thank you so much. T.
Terry-Cobo: Hanks for having me, Jacob. Great to be here.
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