Thursday, July 2, 2015

SMS Update

SMS Update
            1.         Legislative Initiatives.  There are 3 Bills pending in Congress:

                        (1)        H.R. 1120 – "To Enhance Interstate Commerce by Creating a National Hiring Standard for Motor Carriers."  Introduced by John Duncan (R-TN) on 2/26/15.  This Bill, supported by TIA, would establish a new hiring standard of "licensed, authorized and insured" and is designed to protect shippers, brokers and intermediaries against negligent selection lawsuits.

                        (2)        H.R. 5532 – Reintroduced as H.R. 1371 – "Safer Trucks and Buses Act of 2015." Introduced by Lou Barletta (R-PA) on March 16, 2015.  Supported by NASTC, OOIDA and ATA, this Bill would require removal of SMS methodology from the website pending further study of its efficacy and a report back to Congress.

                        (3)        S. 1454 -Transportation and Logistics Hiring Reform Act. The third Bill which has been introduced in the Senate by Deb Fischer from Nebraska would combine both the House Bills and would force the Agency to address its job of coming up with a safety fitness determination.
While it seems that Congress and industry as a whole is finally getting the issue, there are two problems:  (1) Congress seems deadlocked in getting a highway funding bill which SMS methodology could coattail; and (2) The Agency still seems recalcitrant in responding to broad based criticism.

            2.         Changes to SMS Methodology.  Attached is a Notice from the Agency of further changes it proposes to SMS methodology.  Comments are due July 29th.  Any member with concerns is urged to share them with us.  The Agency appears to continue to solicit opinions but not to address the overriding issues.  See

            3.         Finally, there are rumors of rulemaking.  The Agency has sent a safety fitness determination rule to OMB for approval.  Its contents are unknown but it appears to abandon percentile rankings for purposes of making an actual safety fitness determination. Eliminating peer groups and percentile rankings unfortunately will not solve the problems of misuse of SMS data unless the Agency answers the following systemic problems:

                        (1)        The law of large numbers/inadequate data.  Both the Gimpel and the GAO Study say there is insufficient data to accurately statistically measure 90% of the carriers the Agency regulates.

                        (2)        Data accuracy, enforcement inconsistencies and corrupted data preclude an accurate assessment of carrier compliance (an 80% error factor occurs in the Agency's measurement of crashes because preventability cannot be determined).

                        (3)        Due process – Any monthly publication of statistical findings based on roadside inspections alone could deprive carriers of freight before they have any opportunity to appeal.

In any event, the Agency is clearly under pressure from NHTSA and others to act more quickly on identifying "at-risk" carriers.  The "independent" intra-agency report Secretary Foxx commissioned over a year and a half ago has issued a report with voluminous recommendations.  See  It offers a lot of suggestions but no answer to the criticism that was represented to the task force concerning the flaws in the methodology. 

In sum, over 4 years in the making, we may soon have a rule to respond to and only several months in which to do it.  Believe it or not, rulemaking will be the court of first impression which the Agency actually has to come to grips with a cost benefit analysis and overcoming the showing that SMS methodology and its use has an overwhelming anti-competitive effect, particularly on small carriers.

We have had progressive interventions, focused audits, using SMS methodology and broad "stakeholder" second guessing in the name of safety.  If this DOT crash data for the years since SMS methodology and progressive intervention have been in place, the Agency cannot point to a quantifiable improvement in crash reduction to justify that its initiative has been successful.

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