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Legislator’s bill would deregulate his family business

The Journal Record

OKLAHOMA CITY – A state legislator authored a bill that would change oversight of the trucking industry, raising conflict-of-interest concerns.

Sen. Mark Allen, R-Spiro, has owned oil-field services company Allen Rathole Inc. for decades and his Senate Bill 1380 would effectively deregulate private motor carriers like his, removing Oklahoma Corporation Commission’s transportation division oversight of trucks. But the ethical issues at hand aren’t necessarily cut and dry, said University of Central Oklahoma energy finance professor Stuart MacDonald. It’s important to balance private business interests and the ability of a legislator to represent his constituents.

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.

The Corporation Commission in 2017 received about $4.3 million in fines motor carriers paid for all violation types. The agency uses those fines to pay for enforcement, among other things, including staff salaries for workers that operate five ports of entry. If the measure passes, the citation money would go to DPS in the first year, and some commission staffers would be transferred to DPS the following year.

Commissioner Todd Hiett said he had many concerns about the bill, including removing money from the agency but leaving the staff. Though the bill appears to cut and paste the Department of Public Safety’s authority for the commission’s, it’s not that simple.

“Once the bill goes into effect, all our authority is removed, but can’t be transferred to DPS until they put in procedural rules,” Hiett said.

That could take a year or more.

Ethics rules

State officers, including legislators, can’t misuse their office for personal gain or to enrich themselves or family members, according to state ethics rules. If a state officer or the person’s family have a material financial interest in a private business, it must be disclosed to the Oklahoma Ethics Commission.

Allen’s financial disclosure for 2016 notes he and his wife co-own Allen Rathole Inc., an Arkoma-based business, Ethics Commission records show. He owns 17 interstate motor carrier vehicles that carry oil-field equipment and employs eight drivers affiliated with Allen Rathole, according to U.S. Department of Transportation records queried on April 5. He is listed as the registered agent for the company, which has been in business since 1979, Oklahoma Secretary of State records show.

His Senate biography page notes he worked side-by-side with his father in the oil-field service company until he purchased it in 1989. Rathole services are part of the process of drilling oil wells.

Allen has not filed a disclosure form for 2017. The deadline to file financial disclosures to the Ethics Commission is May 15.

Ethics rules include a provision that allows legislators with material financial interest to run general industry-related bills. It requires state officers to recuse themselves from matters in which impartiality could be reasonably questioned. The agency’s annotated rules provide context for the rule development history and applicability.

One example describes a situation in which a person is on the board of an agency that regulates industries including trucking and whose husband owns a trucking company.

“Eagleton (agency board member) should disqualify from matters involving the trucking industry,” according to the rules.

But the rules don’t prohibit legislators from gathering information or advocating policy positions on behalf of their constituents, as long as those activities are legal, non-threatening and non-coercive.

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 one of the members of a task force that is overseeing a potential agency overhaul of the Corporation Commission.

Allen acknowledged in appropriations and budget committee hearings on April 2 that the governor’s task force is examining the agency. He said in February that the bill was necessary and the Legislature shouldn’t wait for the Corporation Commission oversight task force to finish. A contractor will provide recommendations and the task force will deliver recommendations to lawmakers in November.

He said he had been working on several related bills for seven years.

Corporation Commission records show his company’s drivers have been warned three times and cited seven times between 2001 and 2012 and have been fined $1,525.

Funding concerns

The agency’s staff and commissioners have detailed overall concerns about insufficient funding for months, including about $7 million the Legislature took from its revolving funds over four years. Without trucking oversight, it would lose about $4 million in fine money the first year the law is in effect, but keep the staff for a year before workers are transferred to the Department of Public Safety.

DPS is understaffed and underfunded too. Legislators raised those concerns on April 2 during a hearing. Rep. Donnie Condit said the DPS office in McAlester was closed for three days a few weeks ago.

“It’s nothing against DPS, but because of their staffing and our funding to them, they have to close that office and we want to hand more to them?” Condit said.

That would also shift about 30,000 truck citations annually to the district courts where ports of entry are located. Condit said he was worried district courts weren’t equipped for the influx.

Hiett said if SB 1380 passes, the state would immediately become non-compliant with international trucking compacts, putting the state at risk for sanctions. That would make it difficult for the trucking industry to operate if the state didn’t comply with International Fuel Tax Agreements or the International Registration Plan.

He said he was aware of the potential ethics concerns related to Allen’s ownership of private motor carriers. But the agency’s main focus is ensuring they can continue to operate the oversight systems effectively, in addition to the general concerns about the bill’s structure.

The measure passed out of the Senate Appropriations Committee on Feb. 28 and was referred to the Appropriations and Budget Committee in March. Allen voted in favor of the bill on March 13, records show. The bill’s author on April 2 requested the bill be laid over. It was scheduled to be heard Thursday at 1:30 p.m. but did not appear on the agenda.

Allen’s office responded to requests for comment but was unable to facilitate an interview.

About Bo Broadwater

Bo Broadwater joined The Journal Record Legislative Report as legislative report manager in October 2017. Bo is a member of the Warr Acres City Council and very active in his community. For the past several years, he has been the owner of a small business that provides window treatments such as shutters, blinds and shades as well as window and door replacement. He was a candidate for the Oklahoma House of Representatives in 2016. He attended Oklahoma State University-Oklahoma City and the University of Oklahoma and graduated with a degree political science.

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