March 8, 2011

Electronic On-Board Recorders

Proposed Rule
Summary

Score: 35 / 60

Additional details
Agency
Department of Transportation
Regulatory Identification Number
2126-AB20
Agency Name
Department of Transportation
Rule Publication Date
02/01/2011
Comment Closing Date
04/04/2011
Dollar Year
millions 2008$
Time Horizon (Years)
1

RULE SUMMARY

The Federal Motor Carrier Safety Administration (FMCSA) proposes to amend the Federal Motor Carrier Safety Regulations (FMCSRs) to require certain motor carriers operating commercial motor vehicles (CMVs) in interstate commerce to use electronic on-board recorders (EOBRs) to document their drivers’ hours of service (HOS). Under this proposal, all motor carriers currently required to maintain Records of Duty Status (RODS) for HOS recordkeeping would be required to use EOBRs to systematically and effectively monitor their drivers’ compliance with HOS requirements. Additionally, this proposal sets forth the supporting documents that all motor carriers currently required to use RODS would still be required to obtain and keep, as required by section 113(a) of the Hazardous Materials Transportation Authorization Act (HMTAA).

MONETIZED COSTS & BENEFITS (AS REPORTED BY AGENCY)

Dollar Year
millions 2008$
 
Time Horizon (Years)
1
 
Discount Rates
3%
7%
Expected Costs (Annualized)
$1,952
$1,984
Expected Benefits (Annualized)
$2,699
$2,699
Expected Costs (Total)    
Expected Benefits (Total)    
Net Benefits (Annualized)
$747-891
$715-859
Net Benefits (Total)    

METHODOLOGY

There are twelve criteria within our evaluation within three broad categories: Openness, Analysis and Use. For each criterion, the evaluators assign a score ranging from 0 (no useful content) to 5 (comprehensive analysis with potential best practices). Thus, each analysis has the opportunity to earn between 0 and 60 points.

Criterion Score

Openness

1. How easily were the RIA , the proposed rule, and any supplementary materials found online?
The NPRM is in the docket on regulations.gov but misfiled as a "rule" rather than "proposed rule," so it takes some trial and error to find. The RIA is in the docket. No intuitive set of links or search turns up the proposed rule on the DOT web page.
3/5
2. How verifiable are the data used in the analysis?
Compliance costs and benefits come from prior RIAs, so these would need to be checked to verify. It would be more transparent to simply source to original data sources used in the previous RIAs, rather than the RIAs. New data are sometimes sourced and linked, but sometimes vaguely—e.g., "Current Population Survey" with no further explanantion.
2/5
3. How verifiable are the models and assumptions used in the analysis?
Most assumptions are based on a mix of peer-reviewed studies, government studies, or consulting studies. These are cited but often not linked. Some assumptions (e.g., frequency of required repairs) seem pulled from thin air.
3/5
4. Was the analysis comprehensible to an informed layperson?
The body of the RIA is only 34 pages long, with a lot of details relegated to appendices; this makes it easier to read. Appendices have sufficient information to understand how the RIA arrived at its results. However, some tables are confusing and it takes some work to understand the flow of the calculations. It uses a small amount of economics and industry jargon. It contains excessive use of unnecessary acronyms, such as "HOS" for "hours of service" and "LH" for long haul."
3/5

Analysis

5. How well does the analysis identify the desired outcomes and demonstrate that the regulation will achieve them?
4/5
Does the analysis clearly identify ultimate outcomes that affect citizens’ quality of life?
The ultimate outcome is to increase the safety associated with operating a commercial motor vehicle. For purposes of this proposed rule, it appears that the FMCSA asserts that a decrease in the likelihood of a fatigue-related traffic accident translates into a safer operating environment.
5/5
Does the analysis identify how these outcomes are to be measured?
It identifies a change in the number of accidents and associated reduction in accident-related monetary costs. The actual source of benefits (lives saved? Property damage avoided?) is vague and not quantified because the analysis takes a monetized cost-per-crash figure from other research as its starting point.
4/5
Does the analysis provide a coherent and testable theory showing how the regulation will produce the desired outcomes?
Electronic monitoring leads to increased compliance, which reduces fatigue-related crashes. FMCSA makes the argument that a lack of sleep leads to more traffic accidents and that the current standards are not adequate. Instead, the FMCSA believes that a recorder is necessary to track the number of hours a truck driver is on the road. Given that a recorder (with a built-in GPS) can log a driver's hours on the road, he/she will be less likely to falsify the documents that log his/her hours of driving. Essentially, the recorder is increasing the probability that one will be caught "fixing" the numbers. This is completely plausible since many drivers are paid based on the number of hours they work. If a government regulation is limiting the number of hours one may work, it is possible that the records are not honest. For the regulation to improve safety, one must assume drivers will not spend the additional time off doing anything that increases fatigue.
4/5
Does the analysis present credible empirical support for the theory?
Empirical evidence is presented on the effectiveness of electronic monitoring and the effect of compliance with the rules on fatigue-related crashes. Calculation of accident reduction from shorter hours is conservative in that it does not assume drivers use the additional time to sleep.
5/5
Does the analysis adequately assess uncertainty about the outcomes?
It performs a sensitivity analysis assuming more rapid rate of voluntary adoption, changes in other DOT efforts to improve enforcement, and different values of a statistical life. Enforcement effectiveness is estimated using lower bound of 95 percent confidence interval to be conservative. It acknowledges uncertainty about whether manufacturers and carriers can meet mandate by 2014 and asks for comment on this. It makes no explicit acknowledgement of uncertainty about how drivers will choose to use their time
3/5
6. How well does the analysis identify and demonstrate the existence of a market failure or other systemic problem the regulation is supposed to solve?
1/5
Does the analysis identify a market failure or other systemic problem?
DOT claims violation of current regulations is common. It does not explain why drivers wilfully endanger their safety, why companies pressure drivers to do this knowing that they will have to pay compensating wage differentials and have higher crash-related costs, or why companies must be forced to adopt electronic on-board monitoring when the paperwork savings almost exceeds the (high) estimate of costs. A similar final rule was previously issued that required companies to install recorders if that motor carrier was found to have a 10 percent violation rate during a compliance review, which suggest much of the problem is a few bad actors rather than an industry-wide problem. Since trucking companies are liable for damages caused by their drivers, it is not clear why they would not take adequate safeguards.
0/5
Does the analysis outline a coherent and testable theory that explains why the problem (associated with the outcome above) is systemic rather than anecdotal?
The closest it comes is a couple assertions that economic pressures prompt companies and drivers to violate the rules. There is no discussion of whether the resulting costs are internalized or borne by external parties.
1/5
Does the analysis present credible empirical support for the theory?
The RIA mentions an online survey of drivers that shows large percentages violate current hours-of-service regulations. It is unclear whether the survey is representative. The actual analysis, however, implies lower violation rates. The evidence shows trucking is not as safe as it could be but does not really identify the reason for the violations.
1/5
Does the analysis adequately assess uncertainty about the existence or size of the problem?
The sensitivity analysis assumes a more rapid rate of voluntary adoption by trucking companies. This acknowledges uncertainty about the size of the problem.
3/5
7. How well does the analysis assess the effectiveness of alternative approaches?
4/5
Does the analysis enumerate other alternatives to address the problem?
Three main alternatives are considered. One of the major differences between the three is the number of types of drivers affected by the proposed rule. Results are also calculated for all three alternatives under a longer implementation schedule.
5/5
Is the range of alternatives considered narrow (e.g., some exemptions to a regulation) or broad (e.g., performance-based regulation vs. command and control, market mechanisms, nonbinding guidance, information disclosure, addressing any government failures that caused the original problem)?
The three alternatives would apply the same electronic on-board requirement to successively larger groups of carriers. These are not fundamentally different approaches, just application of the same regulation to different groups of carriers or different timing. DOT requests comment on, but does not analyze, an option that would allow exemptions for carriers that have low levels of violations.
2/5
Does the analysis evaluate how alternative approaches would affect the amount of the outcome achieved?
Benefits are calculated for all three alternatives under both the proposed and the alternative implementation schedule.
5/5
Does the analysis adequately address the baseline? That is, what the state of the world is likely to be in the absence of federal intervention not just now but in the future?
The baseline is the level of noncompliance under current regulations, calculated by updating 2003 compliance data to reflect changes predicted for regulations that have changed since then. Baseline also includes predictions of voluntary adoption, so this is not counted as an effect of the rule. Includes analysis of two alternative baselines that depend on which hours-of-service regulation DOT adopts in another ongoing proceeding.
4/5
8. How well does the analysis assess costs and benefits?
3/5
Does the analysis identify and quantify incremental costs of all alternatives considered?
Costs are calculated separately in a parallel fashion for each alternative. Calculations of some individual costs, however, are not always provided in the RIA. For instance, although the analysis discusses the cost associated with creating new parking spaces for trucks (trucks stops, rest areas, etc.), the cost for all three options are not broken up by option. Instead it is lumped into a compliance cost category for each option.
4/5
Does the analysis identify all expenditures likely to arise as a result of the regulation?
It includes the cost of equipment and of compliance. Compliance costs include increased labor costs due to changes in schedules. It appears to be pretty comprehensive. Wage costs are based solely on nonunion wages, which may understate these costs.
4/5
Does the analysis identify how the regulation would likely affect the prices of goods and services?
It presents convincing empirical evidence that hiring more truck drivers will not increase wages. There is no discussion of how increased costs might be passed through to customers. It is odd, though, because it is conceivable that the prices for carrier services will increase given the need to purchase an maintain the on-board system.
2/5
Does the analysis examine costs that stem from changes in human behavior as consumers and producers respond to the regulation?
Benefit estimate nets out the effects (reduction in safety, a cost) of employing additional, less experienced drivers. Since there is no discussion of impact on customers, there's no discussion of the effects of substitutes on costs or safety.
2/5
If costs are uncertain, does the analysis present a range of estimates and/or perform a sensitivity analysis?
The analysis does perform a sensitivity analysis. Given the uncertainty of implementation, the analysis examines the effects of both a one-year implementation and five-year implementation for all three alternatives. Uncertainty analysis also considers differing rates of voluntary adoption.
4/5
Does the analysis identify the alternative that maximizes net benefits?
Tables very clearly show costs, benefits, and net benefits for all options considered, and the text points out the alternative with the highest net benefits. The discussion also describes the alternative that maximizes the net safety benefits.
5/5
Does the analysis identify the cost-effectiveness of each alternative considered?
No, but cost-effectiveness could have been calculated from the information in the RIA and prior RIAs.
2/5
Does the analysis identify all parties who would bear costs and assess the incidence of costs?
DOT estimates that 99 percent of the carriers affected are small businesses, so it did not perform a separate small business analysis. There is no discussion of cost pass-through to customers or how/whether the regualtion might differentially affect different types of drivers.
2/5
Does the analysis identify all parties who would receive benefits and assess the incidence of benefits?
Paperwork cost savings are divided between drivers and firms. It is unclear who receives the benefits from safety since the starting point is a cost-per-crash figure rather than quantification of effects of crashes on lives, property, etc.
2/5

Use

9. Does the proposed rule or the RIA present evidence that the agency used the analysis?
Research on benefits clearly played a major role in some decisions. The clearest evidence DOT uses the analysis is its discussion of net benefits, below. The Federal Register notice states that a key element allowing proposal of this broader rule was DOT's increase in the value of a statistical life, which increased the monetary value of the benefits. This seems odd because even a lower value of a statistical life would lead to positive net benefits in the RIA.
5/5
10. Did the agency maximize net benefits or explain why it chose another alternative?
The preamble notes that the statutory mandate is to ensure safety but keep costs on drivers and companies reasonable. DOT explicitly says it selected the proposal because it is the option that maximizes net benefits. DOT rejected one wider proposal because the incremental costs of the wider regulation exceeded the incremental benefits.
4/5
11. Does the proposed rule establish measures and goals that can be used to track the regulation's results in the future?
The background section notes that transportation safety is the department's top strategic priority. DOT does not establish goals and measures for the regulation, but it would be easy to do using the RIA as a framework. Given that the proposed rule is designed to decrease the number of fatigue-related traffic accidents for commericial truck drivers, one could assume that DOT could establish goals using this as the measure.
1/5
12. Did the agency indicate what data it will use to assess the regulation's performance in the future and establish provisions for doing so?
There is no commitment to gathering data in the future. However, the RIA demonstrates that DOT has access to much of the relevant data that could be used for retrospective analysis. Data from the electronic on-board system could be used to assess the change in fatigue-related accidents.
2/5
 
Total 35 / 60