Citation Audits Nevadas Answer to Noncompliant Carriers Nevada

Citation Audits – Nevada’s Answer to Non-compliant Carriers Nevada Department of Motor Vehicles Dawn Lietz Supervising Auditor II

Breakout Teaser w Does your jurisdiction cite carriers for violations of IRP/IFTA, Dyed Fuel, or Overweight combinations? w Do you know what your jurisdiction does with the information? w Is your jurisdiction doing everything it can to create an atmosphere of compliance for its carriers?

Breakout Teaser w See how Nevada is earning an average rate of return equal to $492. 00 per hour without creating an additional burden on staff or law enforcement personnel. w Hear the lessons learned to avoid some of the pitfalls we faced during early implementation.

Citation Audits – Nevada’s Answer to Non-compliant Carriers Nevada Department of Motor Vehicles Dawn Lietz Supervising Auditor II

Goals w Share how Nevada has increased revenue through administrative fine procedures. w Share statistical information w Define who, what, when, & why an audit is conducted. w Lessons learned.

How Nevada has Increased Revenue thru Enforcement w Since FY 04 (July 2003 – June 2007) Nevada has collected an additional $298, 026 for the Highway Fund. n n Dyed Fuel = $103, 753 IFTA = $77, 379 IRP = $76, 251 Overweight = $40, 643

Statistics – Assessments Citation Assessments Type of Citation FY 04 FY 05 FY 06 FY 07 Total by Type Dyed Fuel $34, 555 $21, 739 $63, 109 $42, 713 $162, 116 IFTA Citations $2, 843 $4, 810 $42, 628 $94, 893 $145, 174 IRP Citations $4, 385 $6, 629 $48, 238 $81, 369 $140, 620 OW Citations $6, 060 $3, 182 $35, 230 $29, 630 $74, 102 Total by FY $47, 843 $36, 359 $189, 204 $248, 605 $522, 012

Statistics - Collections Citations Paid Type of Citation FY 04 FY 05 FY 06 FY 07 Total by Type Dyed Fuel $23, 216 $12, 262 $40, 643 $27, 631 $103, 752 IFTA Citations $1, 719 $3, 202 $25, 195 $47, 263 $77, 379 IRP Citations $2, 767 $4, 564 $30, 035 $38, 885 $76, 251 OW Citations $4, 581 $2, 568 $15, 308 $18, 187 $40, 643 Total by FY $32, 283 $22, 596 $111, 181 $131, 966 $298, 026

Statistics - % Assessed versus Collected % of Citations Assessed and Collected Type of Citation FY 04 FY 05 FY 06 FY 07 Total by Type Dyed Fuel 67. 2% 56. 4% 64. 7% 63. 2% IFTA Citations 60. 5% 66. 6% 59. 1% 49. 8% 59. 0% IRP Citations 63. 1% 68. 9% 62. 3% 47. 8% 60. 5% OW Citations 75. 6% 80. 7% 43. 5% 61. 4% 65. 3% Average by FY 66. 6% 68. 1% 57. 3% 55. 9% 62. 0%

Statistics – Staff Time Type of Citation FY 04 FY 05 FY 06 FY 07 Total by Type Dyed Fuel 113 45 71 17 246 IFTA Citations 144 77 153 136 511 IRP Citations 116 12 150 167 445 OW Citations 49 6 26 78 159 Total Hours 422 140 400 399 1, 360

Statistics – Return per Hour Staff Time vs. Amount Collected = Return per hour Type of Citation FY 04 FY 05 FY 06 FY 07 Average by Type Dyed Fuel $206 $275 $570 $1, 602 $663 IFTA Citations $12 $41 $164 $347 $141 IRP Citations $24 $367 $201 $233 $206 OW Citations $93 $467 $589 $232 $345 Average per hour $84 $287 $381 $603 $339

Analysis of Program Effectiveness w In the Spring of 2005, an analysis of the citation audits was conducted to evaluate the effectiveness of the program. n IRP/IFTA citation audits were costing us money to process. l Staff time to process was too high and not cost beneficial. w Created merge templates to simplify staff time and create consistency in audit format. w Added Administrative Fines to IRP and IFTA citations, in addition to any other permit fees due.

Administrative Changes w Nevada Revised Statutes (NRS) provide authority to assess an Administrative Fine for any violation of the chapter(s). Therefore, the decision was made to assess a progressive administrative fine for non-compliance in addition to the permit fees and fuel taxes due.

Changes made to Citation Audit Program in July 2005 w A law change (AB 255) effective July 1, 2005 increased the total dyed fuel violation from $10 per gallon or $1, 000 whichever was greater to: n n n $2, 500 for a first offense $5, 000 for a second offense $10, 000 for a third or subsequent offense

Law Change - Continued w Additionally, AB 255 provided for a $10, 000 fine for anyone guilty of failing to control access to dyed fuel. n Statement of Acknowledgment and Intended Use. Suppliers l Cardlocks l Bulk Tank Operators l

Program Effectiveness w In the Spring of 2007, another analysis was conducted. This analysis revealed that the cost benefit has greatly increased over the benefit two years ago. n Weaknesses were still identified in the amount collected and new procedures have been established to strengthen this process.

New Processes w The audit report has been modified to include a notification that the Department intends to file a lien against any real and/or personal property if payment is not received within 30 days. w An auditor has been assigned the responsibility of forwarding the information to the base state of the violators. n So far, base jurisdictions that have been contacted have agreed to put holds on the violators accounts until fees have been paid.

Assessed Comparison Assessed FY 04 - 05 vs FY 06 - 07 Type of Citation Total 04 - 05 Total 06 - 07 % Increase Dyed Fuel $56, 294 $105, 822 187. 98% IFTA Citations $7, 653 $137, 521 1796. 86% IRP Citations $11, 013 $129, 606 1176. 80% OW Citations $9, 242 $64, 860 701. 81% Total by FY $84, 203 $437, 809 519. 95%

Audits Paid Comparison Audits Paid FY 04 - 05 vs FY 06 - 07 Type of Citation Total 04 - 05 Total 06 - 07 % Increase Dyed Fuel $35, 478 $68, 274 192. 44% IFTA Citations $4, 921 $72, 458 1472. 31% IRP Citations $7, 331 $68, 921 940. 17% OW Citations $7, 149 $33, 494 468. 53% Total by FY $54, 879 $243, 147 443. 06%

Assessed vs Paid Comparison % of Audits Assessed and Collected FY 04 - 05 vs FY 06 - 07 Type of Citation Total 04 - 05 Total 06 - 07 % Increase Dyed Fuel 123. 6% 129. 1% 104. 45% IFTA Citations 127. 0% 108. 9% 85. 73% IRP Citations 131. 9% 110. 1% 83. 41% OW Citations 156. 3% 104. 8% 67. 07% Total by FY 538. 9% 452. 9% 84. 04%

Staff Time Comparison Staff Time FY 04 - 05 vs FY 06 - 07 Type of Citation Total 04 - 05 Total 06 - 07 % Increase Dyed Fuel 157 89 56. 24% IFTA Citations 221 289 130. 70% IRP Citations 128 317 247. 40% OW Citations 55 104 191. 71% Total by FY 561 799 142. 35%

Return per Hour - Comparison Return per Hour FY 04 - 05 vs FY 06 - 07 Type of Citation Total 04 - 05 Total 06 - 07 % Increase Dyed Fuel $240 $1, 086 451. 76% IFTA Citations $27 $256 958. 24% IRP Citations $195 $217 111. 04% OW Citations $280 $410 146. 42% Total by FY $186 $492 265. 16%

Dyed Diesel Citation Audits What generates a Dyed Diesel audit? w. Nevada Highway Patrol (NHP) Commercial/Passenger Vehicle Stops n. Regular traffic citations Compliance Enforcement Division (CED) n. Vehicle Inspections n

What is a Dyed Diesel Citation? w This type of citation is generated when a motor carrier is caught operating a vehicle on the public highway with untaxed Dyed Diesel Fuel. w NHP during the traffic stop randomly checks for dyed fuel in the tank of the vehicle. w DMV’s CED during a routine vehicle inspection. w If it is determined the fuel in the tank is dyed, a citation is issued. A positive reading is anything over 1 part per million. (Fuel is dyed at a minimum of 12 parts per million at the terminal. ) w The citation or notice is then forwarded to our office where an audit is generated.

Statutory Authority NRS 366. 735 - Misuse or alteration of dyed special fuel: Administrative fine; suspension or revocation of license. NRS 366. 203 - Addition of dye to certain exempt special fuel; operation or maintenance on highway of vehicle containing dyed special fuel.

How is the audit conducted? w Confirm the vehicle’s registered weight. (Under/over 26 K lbs. ) w Review the citation to determine the PPM reading. w Confirm whether a prior violation has occurred within 3 years. NOTE: A field audit may also be conducted, applying fuel tax, penalty and interest on all dyed fuel without substantial documentation proving qualified use of dyed. w Registrant’s base state is advised of the violation. w In addition to any fuel tax due, assessments are made as follows: n n n $2, 500 for the first instance. $5, 000 for a second instance. $10, 000 for a third or subsequent instance.

Applicable Statutes NRS 366. 735 Misuse or alteration of dyed special fuel: Administrative fine; suspension or revocation of license. 1. The Department may take disciplinary action in accordance with subsection 2 against any person who: (a) Sells or stores any dyed special fuel for a use which the person selling or storing such fuel knows, or has reason to know, is a taxable use of the fuel; (b) Willfully alters or attempts to alter the strength of composition of any dye in any special fuel intended to be used for a taxable purpose; or (c) Uses dyed special fuel for a taxable purpose. 2. For any violation described in subsection 1, the Department may: (a) If the violation is a first offense, impose an administrative fine of not more than $2, 500 and suspend any license issued to that person pursuant to this chapter for not more than 30 days; (b) If the violation is a second offense within a period of 4 years, impose an administrative fine of not more than $5, 000 and suspend any license issued to that person pursuant to this chapter for not more than 60 days; and (c) If the violation is a third or subsequent offense within a period of 4 years, impose an administrative fine of not more than $10, 000 and revoke any license issued to that person pursuant to this chapter.

Statement of Acknowledgement and Intended Use w Pursuant to new legislation in 2005, a “Statement of Acknowledgement and Intended Use” is required for all purchasers and distributors of dyed diesel fuel. (Including companies with bulk tanks or cardlocks. ) n n Purpose: To reduce the amount of untaxed dyed diesel fuel used on the highway in an illegal manner. Increased Accountability: All distributors are responsible for ensuring anyone with access to dyed diesel fuel are aware of the fines and penalties associated with illegal highway use. Controlled Access: Distributors are required to control the access to the dyed diesel fuel to only those persons who have signed the statement. Penalties: Pursuant to NRS 366. 733, anyone who fails to control the access to the dyed diesel fuel is subject to a $10, 000. 00 fine, per occurrence.

IFTA Citation Audits What generates an IFTA audit? w. NHP Commercial Vehicle Stops n. Regular traffic citations n

What is an IFTA Citation? w This type of citation is generated when a commercial motor carrier is caught without a fuel permit or valid IFTA credentials. w NHP during the traffic stop checks for valid IFTA stickers displayed on both sides of the vehicle or a valid fuel permit. w If the Trooper is unable to confirm valid fuel credentials a citation is issued. w The citation or notice is then forwarded to our office where an audit is generated.

Statutory Authority NRS 366. 220 – Mandatory licensing requirements; restriction on authority to sell or distribute dyed special fuel; regulations of Department. NRS 366. 223 - Temporary permit for special fuel; regulations of Department. NRS 366. 720 - Unlawful acts; criminal penalties.

How is the audit conducted? w Review the NHP citation to determine the vehicle’s registered owner at the time of the citation. w Check to see if prior offenses have occurred. w A vehicle operating without a valid fuel permit or IFTA credentials is considered unlicensed. w Permit fees are $30. 00 for 24 hours. (No in-out privileges) w Administrative Fine is $500 for the 1 st instance. n n $1, 500 for 2 nd instance. $2, 000 for 3 rd instance $2, 500 for 4 th and subsequent instances. Registrant’s base state is advised of each offense.

Applicable Statutes NRS 366. 740 Imposition and deposit of administrative fines; opportunity for hearing; injunctions and other remedies. 1. Except as otherwise provided in NRS 366. 733 and 366. 735, the Department may impose an administrative fine, not to exceed $2, 500, for a violation of any provision of this chapter, or any regulation or order adopted or issued pursuant thereto. 2. The Department shall afford to any person fined pursuant to this section or NRS 366. 733 or 366. 735 an opportunity for a hearing pursuant to the provisions of NRS 233 B. 121. 3. All administrative fines collected by the Department pursuant to subsection 1 or NRS 366. 733 or 366. 735 must be deposited with the State Treasurer to the credit of the State Highway Fund. 4. In addition to any other remedy provided by this chapter, the Department may compel compliance with any provision of this chapter and any regulation or order adopted or issued pursuant thereto by injunction or other appropriate remedy. The Department may institute and maintain in the name of the State of Nevada any such enforcement proceedings.

IRP Citation Audits What generates an IRP audit? w. NHP Commercial Vehicle Stops n. Regular traffic citations n. Expired registration tags n 100% Base state plates (non-apportioned) n

What is an IRP Citation? w This type of citation is generated when a commercial motor carrier is caught without a trip permit or IRP cab card with authorized Nevada travel. w NHP during the traffic stop checks for a valid cab card or trip permit. w If the Trooper is unable to confirm valid registration, or the carrier did not purchase enough miles, a citation is issued. w The citation or notice is then forwarded to our office where an audit is generated.

Statutory Authority NRS 706. 491 – Motor Carriers must be licensed. NRS 706. 521 – Temporary Permit for certain motor vehicles; fees. NRS 706. 756 - Unlawful acts; criminal penalties.

How is the audit conducted? w Review the NHP citation to determine the vehicle’s registered owner at the time of the citation. w Check to see if prior offenses have occurred. w A vehicle operating without a valid permit or cab card authorizing Nevada travel is considered unregistered. w Permit fees are $5. 00, plus $0. 15 per mile. w Administrative Fine is $500 for the 1 st instance. n n $1, 000 for 2 nd instance. $1, 500 for 3 rd instance. $2, 500 for 4 th and subsequent instances. Registrant’s base state is advised of the offense.

Applicable Statutes w NRS 482. 565 Administrative fines for violations other than deceptive trade practices; injunction or other appropriate remedy; enforcement proceedings. w 1. Except as otherwise provided in NRS 482. 554, the Department may impose an administrative fine, not to exceed $2, 500, for a violation of any provision of this chapter, or any rule, regulation or order adopted or issued pursuant thereto. The Department shall afford to any person so fined an opportunity for a hearing pursuant to the provisions of NRS 233 B. 121. w 2. All administrative fines collected by the Department pursuant to subsection 1 must be deposited with the State Treasurer to the credit of the State Highway Fund. w 3. In addition to any other remedy provided by this chapter, the Department may compel compliance with any provision of this chapter and any rule, regulation or order adopted or issued pursuant thereto, by injunction or other appropriate remedy and the Department may institute and maintain in the name of the State of Nevada any such enforcement proceedings.

Regulatory Authority w NAC 482. 930 Administrative fine: Imposition and payment; failure to pay. (NRS 482. 160, 482. 565) w 1. Except as otherwise provided in subsection 2 and NAC 482. 042, if the Department imposes administrative fines pursuant to the provisions of NRS 482. 565, it will impose such fines for violations occurring within the 3 -year period immediately preceding the most recent offense according to the following schedule: w (a) For a first offense, a fine of not less than $100 nor more than $500. w (b) For a second offense, a fine of not less than $500 nor more than $1, 000. w (c) For a third offense, a fine of not less than $1, 000 nor more than $1, 500. w (d) For a fourth or subsequent offense, a fine of not less than $1, 500 nor more than $2, 500. w For the purposes of paragraphs (b), (c) and (d) of this subsection, a cease and desist order issued by the Department shall be deemed to be a first offense.

Overweight Citations What generates an Overweight audit? w. NHP Commercial Vehicle Stops n. Regular traffic citations n

What is an Overweight Citation? w This type of citation is generated when a motor carrier is caught carrying excessive weight on the public highway. w NHP during the traffic stop checks for an overweight permit and what axle combinations are authorized by the permit. w If the Trooper suspects the vehicle is in violation of the permit, the vehicle and associated trailers are weighed. A citation is issued if the suspect vehicle is found to be overweight. w The citation or notice is then forwarded to our office where an audit is generated. (NOTE: Exceeding tandem axle or bridge weight is not covered through DMV audit. )

Statutory Authority NRS 484. 745 Maximum weight on axles. NRS 706. 531 Combinations of vehicles: Special identifying devices; display; transfer; fee; penalties. NRS 482 Additional fees for registration of motor truck, truck-tractor or bus; penalty.

How is the audit conducted? w Confirm the vehicle’s registered weight. w Review the Overweight Permit to determine the allowable weight and axle combination. w Review the NHP citation to determine the vehicle’s total weight at the time of the citation. w A vehicle operating in excess of the permit, or without a valid permit in the vehicle, is considered to have no permit at all. (NRS 484. 767) w Assessment is $60 per 1, 000 lbs. of excess weight. n Amount is divided by 12 and multiplied by the number of months remaining from the date of the citation to December 31 st.

Applicable Statutes NRS 484. 769 Penalties for operation of oversized or overweight vehicle without permit or in violation of permit. 1. It is unlawful for any person to operate or move any vehicle or equipment described in NRS 484. 739 or 484. 759 to 484. 7631, inclusive, over any highway without first obtaining a permit, or to violate or evade any of the terms or conditions of the permit when issued. A person violating any of the provisions of NRS 484. 759 to 484. 767, inclusive, is guilty of a misdemeanor. 2. Any person operating or moving any vehicle or equipment described in NRS 484. 739 or 484. 759 to 484. 7631, inclusive, over any highway under the authorization of a permit for continuous use or multiple trips over a limited time and who violates any weight limitation in excess of the weight authorized by the permit must be punished, upon conviction, as provided in NRS 484. 757.

Lessons Learned w Know the laws in your jurisdiction before you set up the audit program. n n We had the authority to assess the additional administrative fines, but did not recognize it until two years later. As long as you have the legal authority to assess fines, it is very easy to set up a progressive sanctioning process through regulations. Make sure you have the collection process in place to avoid a backlog of uncollected audits. Work with neighboring jurisdictions to assist you in the collection process. Often times they appreciate the audit leads that result from the citations.