[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]









     IS FMCSA'S CSA PROGRAM DRIVING SMALL BUSINESSES OFF THE ROAD?

=======================================================================

                                HEARING

                               before the

                      COMMITTEE ON SMALL BUSINESS
                             UNITED STATES
                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             SECOND SESSION

                               __________

                              HEARING HELD
                             JULY 11, 2012

                               __________




[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]




            Small Business Committee Document Number 112-077
              Available via the GPO Website: www.fdsys.gov

                                _____

                  U.S. GOVERNMENT PRINTING OFFICE

76-484                    WASHINGTON : 2012
-----------------------------------------------------------------------
For sale by the Superintendent of Documents, U.S. Government Printing 
Office Internet: bookstore.gpo.gov Phone: toll free (866) 512-1800; DC 
area (202) 512-1800 Fax: (202) 512-2104  Mail: Stop IDCC, Washington, DC 
20402-0001













                   HOUSE COMMITTEE ON SMALL BUSINESS

                     SAM GRAVES, Missouri, Chairman
                       ROSCOE BARTLETT, Maryland
                           STEVE CHABOT, Ohio
                            STEVE KING, Iowa
                         MIKE COFFMAN, Colorado
                     MICK MULVANEY, South Carolina
                         SCOTT TIPTON, Colorado
                      CHUCK FLEISCHMANN, Tennessee
                         JEFF LANDRY, Louisiana
                   JAIME HERRERA BEUTLER, Washington
                          ALLEN WEST, Florida
                     RENEE ELLMERS, North Carolina
                          JOE WALSH, Illinois
                       LOU BARLETTA, Pennsylvania
                        RICHARD HANNA, New York
               NYDIA VELAZQUEZ, New York, Ranking Member
                         KURT SCHRADER, Oregon
                        MARK CRITZ, Pennsylvania
                      JASON ALTMIRE, Pennsylvania
                        YVETTE CLARKE, New York
                          JUDY CHU, California
                     DAVID CICILLINE, Rhode Island
                       CEDRIC RICHMOND, Louisiana
                         GARY PETERS, Michigan
                          BILL OWENS, New York
                      BILL KEATING, Massachusetts

                      Lori Salley, Staff Director
                    Paul Sass, Deputy Staff Director
                     Barry Pineles, General Counsel
                  Michael Day, Minority Staff Director













                            C O N T E N T S

                              ----------                              
                                                                   Page

                           OPENING STATEMENTS

Hon. Allen West..................................................     1
Hon. Nydia Velazquez.............................................     2

                               WITNESSES

Bill Bronrott, Deputy Administrator, Federal Motor Carrier Safety 
  Administration, Washington, DC.................................     3
Daniel A. Miranda, CEO, Hit Em Hard Transportation, Elverta, CA..    18
Jeff Tucker, CEO, Tucker Company Worldwide, Cherry Hill, NJ......    22
Michael Belzer, Ph.D., Associate Professor, Department of 
  Economics, Wayne State University, Detroit, MI.................    24
Anthony Gallo, Senior Analyst, Wells Fargo Securities, LLC, 
  Baltimore, MD..................................................    20

                                APPENDIX

Prepared Statements:
    Bill Bronrott, Deputy Administrator, Federal Motor Carrier 
      Safety Administration, Washington, DC......................    33
    Daniel A. Miranda, CEO, Hit Em Hard Transportation, Elverta, 
      CA.........................................................    47
    Jeff Tucker, CEO, Tucker Company Worldwide, Cherry Hill, NJ..    56
    Michael Belzer, Ph.D., Associate Professor, Department of 
      Economics, Wayne State University, Detroit, MI.............    68
    Anthony Gallo, Senior Analyst, Wells Fargo Securities, LLC, 
      Baltimore, MD..............................................   123
Questions for the Record:
    None.
Answers for the Record:
    None.
Additional Materials for the Record:
    Alliance for Safe, Efficient and Competitive Truck 
      Transportation Statement for the Record....................   127
    Summary and Analysis of FMCSA's Evaluation of the CSA 
      Operational Model Test.....................................   131
    American Trucking Association Statement for the Record.......   136
    Advocates for Highway & Auto Safety Letter for the Record....   143
    ATA's Top Concerns with FMCSA's Compliance, Safety, 
      Accountability Program.....................................   146
    Letter for the Record in support of H.R. 4348................   153
    Road Safe America Letter for the Record......................   155
    Truck Safety Coalition Letter for the Record.................   156

 
     IS FMCSA'S CSA PROGRAM DRIVING SMALL BUSINESSES OFF THE ROAD?

                              ----------                            

                        WEDNESDAY, JULY 11, 2012

                          House of Representatives,
                               Committee on Small Business,
                                                    Washington, DC.
    The Committee met, pursuant to call, at 1:07 p.m., in room 
2360, Rayburn House Office Building, Hon. Sam Graves (Chairman 
of the Committee) presiding.
    Present: Representatives Graves, Chabot, Mulvaney, Landry, 
Herrera Beutler, West, Hanna, Hahn, and Velazquez.
    Mr. West [presiding]. The hearing is now called to order. I 
would like to think the witnesses for appearing today on two 
issues critical to small businesses and our Nation's economy: 
Commercial highway vehicle safety and the efficient and 
affordable transportation of goods.
    The vast majority of commercial motor vehicle firms in 
operation today are small businesses operating 20 trucks or 
less. I think witnesses testifying here today on behalf of 
these firms, and all members of the committee believe that 
increasing highway safety is critically important.
    Annually, Congress authorizes hundreds of millions of 
dollars to be spent on public education campaigns and Federal 
and State and local law enforcement partnerships for the sole 
purpose of keeping our Nation's highways safe. These efforts 
have achieved significant results. Overall, highway fatalities 
are down despite year over year increases in the amounts of 
miles driven by American motorists. These declines have been 
especially pronounced in the highway freight industry.
    Between 2005 and 2010, fatal accidents involving large 
commercial motor vehicles declined by more than 26 percent. 
While there is always room for improvement, it is clear that 
government and private industry efforts to improve safety are 
having a positive effect.
    The purpose of today's hearing is to examine how the 
Federal Motor Carrier Safety Administration's Compliance Safety 
Accountability program, also known as CSA, affects small 
businesses in the commercial trucking industry. Of particular 
importance to small business is the Safety Measurement System 
component of the program, which will be the major focus of our 
discussion today.
    According to FMCSA, the goal of the Safety Measurement 
System, or SMS, is to prospectively identify those operators 
the agency believes are likely to cause a future highway 
accident so that it may target appropriate interventions aimed 
at correcting their behavior.
    Unfortunately, since implementation of this program began 
in 2010, a number of industry stakeholders and third party 
researchers have identified what they believe are serious flaws 
in the Safety Measurement System methodologies. These flaws not 
only call into question the ability of the CSA to achieve its 
primary goal to identify unsafe actors that cause highway 
accidents, but also whether in too many instances the new 
system is identifying safe operators as unsafe.
    Of particular concern to the committee are the significant 
adverse consequences that the inaccurate safety scores may have 
on trucking companies, 97 percent of which are small 
businesses.
    We are fortunate to have with us today witnesses who can 
provide important insight into how this new highway system 
works in real life and what changes may be necessary to improve 
it. Again, I want to thank them for participating, and I now 
turn to Ranking Member Velazquez for her opening statement.
    Ms. Velazquez. Thank you, Mr. Chairman.
    The trucking industry has an enormous impact on our 
economy. According to the Bureau of Transportation Statistics, 
trucks only transport 9 billion tons of freight value of more 
than $8 trillion. The trucking industry is also composed mainly 
of small business operators. Of the 76,000 firms nationwide, 95 
percent have 40 or fewer trucks. The large economic impact is 
not without risk. Over 5,000 people are killed annually in 
commercial motor carrier accidents. A number of steps have been 
taken to improve highway safety over the years, starting in the 
1930s with hours of service limitations.
    Today's hearing will focus on the Department of 
Transportation's newest approach, CSA 2010, to remove unfit 
drivers and carriers from the Nation's highways. The CSA 
program seeks to analyze not only motor carriers but drivers 
who are at risk from a safety standpoint instead of simply 
reporting data which the FMCSA believes demonstrates the safety 
status of the motor carrier or the driver. The goal is to 
measure safety performance across a broad range of indicators, 
including driver fatigue and fitness, drug and alcohol use, 
past history and vehicle maintenance.
    The Federal Motor Carrier Safety Administration has argued 
the changes will have a minimal impact on the transportation 
industry while increasing highway safety and reducing 
casualties. However, some estimate the proposal could decrease 
the pool of commercial drivers by up to 10 percent resulting in 
higher prices on everything from consumer goods to raw 
materials.
    CSA will allow FMCSA to reach a broader spectrum of 
trucking firms than in previous safety audit programs which 
only focus on the worst of the worst of about 1 to 2 percent of 
motor carriers. By expanding oversight FMCSA will be more 
comprehensive in its scope of industry coverage and allow for 
intervention before more serious violations occur.
    Trucking firms are able to access a 5-year history of 
driver crash data and a 3-year history of roadside inspection 
data before hiring drivers. CSA will provide small carriers 
with a level playing field to compete for the best drivers 
while preventing unsafe drivers from gaming the system.
    The program is not without its drawbacks, however, and 
still relies heavily on State level authorities, including the 
police and safety inspectors. Many trucking industry 
representatives contend that crash and inspection data is not 
being properly reported to the FMCSA, resulting in inaccurate 
safety scores. Critics have also pointed to the wide disparity 
in the level of safety enforcement among States. A trucker that 
happens to operate more in States with heavier enforcement will 
have a worse score than a trucker that happens to operate in 
States with lighter enforcement. Again, this can negatively 
impact both drivers and carriers when they compete with out-of-
State firms for business opportunities.
    Today, we will examine how the CSA program is affecting 
small businesses and hear from firms that will be impacted by 
the changes. While the goal is to improve safety by reducing 
safe driving practices, it is imperative that the Federal Motor 
Carrier Safety Administration properly balance highway safety 
with the economic impact on small trucking businesses.
    In advance of the testimony, I want to thank all the 
witnesses who traveled here today for both their participation 
and insight into this important topic. And with that, I yield 
back.
    Mr. West. Thank you, Ranking Member. If the committee 
members have an opening statement prepared, I ask that they be 
submitted for the record.
    I would like to take a moment to explain the timing lights 
for you. You will each have 5 minutes to deliver your 
testimony. The light will start out as green. When you have 1 
minute remaining, the light will turn yellow. Finally, at the 
end of your 5 minutes, it will turn red. I ask that you try to 
adhere to that time limit.
    Our first witness is Mr. Bill Bronrott, who is the Deputy 
Administrator for the Federal Motor Carrier Safety 
Administration. Mr. Bronrott began his service as Deputy 
Administrator in 2010. Prior to that, he served for more than 
10 years as a member of the Maryland General Assembly where he 
was known for his strong advocacy on traffic safety issues.
    Appearing with him is Mr. Joseph DeLorenzo with the 
agency's Office of Enforcement Compliance. He will be on hand 
to assist with any additional questions members may have. 
Deputy Administrator Bronrott, thank you for your appearing 
today. You may now deliver your testimony.

STATEMENT OF BILL BRONROTT, DEPUTY ADMINISTRATOR, FEDERAL MOTOR 
CARRIER SAFETY ADMINISTRATION; ACCOMPANIED BY JOSEPH DeLORENZO, 
            FMCSA'S OFFICE OF ENFORCEMENT COMPLIANCE

    Mr. Bronrott. Thank you very much, Mr. Chairman, and 
Ranking Member Velazquez and members of the committee. Thank 
you for this opportunity to discuss the Compliance Safety 
Accountability program that helps to keep the traveling public 
safe by raising the bar for commercial truck and bus safety.
    Safety is FMCSA's number one priority and CSA is the 
centerpiece of our rigorous safety compliance and enforcement 
strategy. This program is critical to our congressionally 
mandated mission to save lives by reducing crashes involving 
commercial vehicles.
    Compliance and accountability are the keys to safety, and 
it is through CSA, the agency and its State safety enforcement 
partners are able to better identify and address a larger 
number of motor carriers for safety interventions without 
placing an undue burden on small businesses.
    Our Safety Measurement System collects data on the Nation's 
half-million active motor carriers, and we have found that the 
system clearly identifies the 200,000 carriers that are 
involved in over 90 percent of the crashes on our Nation's 
roadways. According to an independent analysis by the 
University of Michigan Transportation Research Institute, SMS 
is a significant improvement over the agency's previous 
measurement system.
    We know that CSA is working. Last year, under CSA, truck 
and bus roadside inspection violations decreased by 8 percent 
and driver violations decreased by 12 percent. This is the 
largest drop in commercial vehicle and driver safety violation 
rates in a decade.
    CSA is allowing the agency to reap these safety benefits 
with less interruption to a carrier's business operations. We 
are keenly aware that 85 percent of commercial vehicle 
operations registered with FMCSA are small businesses. Our 
Safety Measurement System has identified nearly the same number 
of small carriers for intervention as were identified in the 
previous SafeStat system. In fact, less than 10 percent of 
small truck companies exceed the intervention threshold in any 
of the BASICs.
    We are carefully listening and responding to feedback from 
industry, our State partners, and other key stakeholders to 
ensure we are having the greatest impact on safety while 
minimizing the effect on a carrier's operation. FMCSA has 
consolidated all of its publicly available carrier safety 
performance data into one easily accessible CSA Web site that 
receives 30 million hits a year. This helps company owners to 
easily review their safety data and to take action to address 
any safety deficiencies.
    Our DataQs process allows companies to address any 
potential data inaccuracies. Currently of the 3\1/2\ million 
safety inspections conducted, less than 1 percent of 
inspections are challenged. Prior to CSA, our agency safety 
intervention activities primarily focused on compliance 
reviews, and while compliance reviews are effective tools for 
changing unsafe operations, they are also labor and time 
intensive to both the agency and carriers.
    In order to strategically deploy the agency's resources and 
effectively reach more carriers earlier, the agency now 
utilizes a range of safety intervention tools that get to the 
root of the cause of the carrier's safety problems. Analysis 
has shown that these less resource intensive interventions are 
effective at improving carrier performance.
    Finally, next year, early next year, the agency will issue 
a notice of proposed rulemaking to revise its safety fitness 
determinations methodology. The rulemaking would propose better 
integrating roadside inspection data into the carrier's safety 
fitness determination process.
    Mr. Chairman, members of the committee, last year alone, 
4,000 people died and 100,000 others were injured in crashes 
involving commercial vehicles. If today's an average day, 11 of 
our fellow Americans won't make it home alive and another 300 
will be injured. Every life is precious. One death or disabling 
injury is one too many. We need all available tools to identify 
unsafe drivers and companies so that safety deficiencies can be 
addressed before tragedy strikes. FMCSA is working to protect 
the traveling public by identifying unsafe truck and bus 
companies with the highest risk of future crashes.
    CSA leverages the findings of roadside safety inspections 
and investigations that hold carriers accountable to the safety 
rules of the road and thus far CSA is showing great progress 
without any new regulations. It is a big step forward in 
FMCSA's ongoing mission to save lives through early 
intervention compliance, accountability, and crash reduction.
    Mr. Chairman, this concludes my remarks. I would be pleased 
to answer your questions. Thank you very much.
    Mr. West. Thank you, Administrator Bronrott. A couple 
questions I would like to present.
    First, your agency used findings from a 2007 violation 
severity assessment study to develop the SMS methodology. Have 
you released the results of that study as per the stakeholder 
request at this time?
    Mr. Bronrott. The severity study?
    Mr. West. Yes, sir.
    Mr. Bronrott. Let me turn to Mr. DeLorenzo on that.
    Mr. DeLorenzo. Yes, we have. The results of the violations 
of the violation severity study are in the CSA docket. There is 
an open docket for CSA where all of our materials go.
    I also think it is important to point out that that study 
is not the basis of the current violation severity weights that 
are used in the SMS. There are other documents in there in 
addition to what is known as the violation severity study that 
also provide significant background into how those weights were 
determined.
    Mr. West. Now, have those been provided?
    Mr. DeLorenzo. They are in the docket as well, sir.
    Mr. West. Okay. The second question. There is a small 
carrier testifying on the second panel whose BASIC score went 
up a year after initial violations and a number of clean 
inspections. Is there some, you know, explanation why that 
would have happened, are there some bugs in the system that 
need to still be worked out?
    Mr. Bronrott. I think on an individual basis it is hard to 
say. I think we would want to learn more about that individual 
carrier's experience and would be glad as always to meet with 
them and walk through that.
    Mr. West. Okay. Ranking Member Velazquez.
    Ms. Velazquez. Thank you, Mr. Chairman. Administrator 
Bronrott, you stated at a recent Small Business Administration 
Roundtable with the trucking industry that sometime, and you 
just mentioned also today that at some point early next year 
you are going to be proposing, issuing the proposed rule. My 
question to you is will that proposed rule give small and 
independent carriers the opportunity to weigh in on CSA Safety 
Measurement System?
    Mr. Bronrott. Well, as we go through that rulemaking, it 
will be obviously completely open and we will have an open 
docket and open process by which we will be welcoming input 
from all of industry and all of our stakeholders, and I am sure 
it will be a very robust, you know, input.
    Ms. Velazquez. What do you mean by robust input?
    Mr. Bronrott. Well, through any of our rulemaking 
processes, you know, we will have an open docket and that will 
allow anybody, any interested party to express their concerns, 
questions, ideas, on the direction that the NPRM should go. And 
we look forward to that.
    Ms. Velazquez. Yeah. My suggestion is that you should 
provide a vehicle in which not only it is an open docket but 
interaction around the country with these small operators, 
right. And if you have better information, the only way that 
you could have better information is by having this exchange 
interaction and that will facilitate to have at the end of the 
road a better rule.
    Mr. Bronrott. We are eager to do that, and we will follow 
up.
    Ms. Velazquez. Last year, Wells Fargo Equity Research 
authored a report that concluded that there was not meaningful 
statistical relationship between the results in the unsafe 
driving and fatigue driving BASICs and crash frequency base on 
a sample of 200 of the largest motor carriers. How did this 
compare to your agency's own research?
    Mr. Bronrott. Well our--in fact, we did respond to the 
Wells Fargo report and that, our response is on our Web site 
and we would also be glad to submit our response for the record 
here today.
    We did not agree with the conclusions of that report. We 
have repeated studies internally through the Volpe 
Transportation Center and also externally independently through 
UMTRI, the University of Michigan Transportation Research 
Institute, that shows that there is a very, very strong 
correlation between our SMS BASICs and crash risk. And our 
sample looked at tens and tens of thousands of carriers, large 
and small, and we had some issue with the Wells Fargo report 
that looked at solely 200 large companies.
    Ms. Velazquez. Okay.
    Mr. Bronrott. So we are very comfortable.
    Ms. Velazquez. Thank you. And critics claim your new 
enforcement program places additional burdens on the commercial 
motor vehicle industry. Some believe it will force out as many 
as 10 percent of drivers in an effort to avoid detrimental 
carrier scores.
    Is CSA shifting the agency's enforcement resources to 
disproportionately target small trucking companies?
    Mr. Bronrott. No. We are--again, you know, the overwhelming 
majority of carriers are small businesses but they make up a 
very small percentage of those who we find to have the more 
serious violations that require interventions.
    Ms. Velazquez. Okay. Okay, thank you very much.
    Mr. Bronrott. Thank you.
    Mr. West. Thank you, Ranking Member, but I will say that 
Wells Fargo did come back and conduct an examination with 4,600 
carriers and reached the same conclusion.
    Mr. Hanna.
    Mr. Hanna. None at this point, Mr. Chairman.
    Mr. West. Ms. Hahn.
    Ms. Velazquez. Can I ask a question?
    Based on what the chairman just stated, did you respond to 
that second study?
    Mr. DeLorenzo. We haven't responded to the study. We did 
look at it and our preliminary analysis does not change our 
findings. In our response, we looked at over 40,000 carriers, 
all sizes, and are still very comfortable of the relationship 
between the unsafe driving BASIC and the fatigue driving BASIC 
and crash risk.
    Ms. Velazquez. Thank you, Mr. Chairman, for yielding.
    Mr. West. Thank you.
    Ms. Hahn.
    Ms. Hahn. Thank you, Chairman West, Ranking Member 
Velazquez. I think this is a very interesting hearing. This is 
a subject that is very near and dear to my heart, and that is 
our trucking industry. Particularly I have had a lot of 
interest in our owner operator small business affairs. I 
represented the Port of Los Angeles in Los Angeles for 10 years 
when I was on the city council, so I did a lot of work in that 
respect.
    You know, we passed the transportation bill. We actually 
have for the first time national freight policy language in our 
transportation bill. I have founded a bipartisan Port Caucus, 
Chairman West is a part of that caucus, because we think there 
is tremendous connection, of course, between our ports in this 
country, between our trucks, national freight policy and our 
economy and jobs. So we really want to take a look at all the 
aspects of this industry. I think there is a lot of variables 
that go into, unfortunately, crashes and fatalities involving 
our trucking industry. I am a big advocate for special truck 
lanes on freeways. I found my smaller owner-operator, well, all 
of them would come to me and say they don't really like driving 
on the roads with the commuters either. They don't think we 
know how to drive. And many times, as you know, a lane change 
by a small car, you know, can cause a massive jackknife, and by 
the way, which then in Los Angeles of course can clog a freeway 
for 4 to 7 hours, really slowing down commerce. So I, of 
course, want to find all possible reasons we can prevent these 
fatalities.
    I also was a big advocate of moving cargo off peak hours in 
Los Angeles and championed a program which was the first in the 
country, I hope some of my other port folks will look at moving 
cargo off peak so that the truck drivers can move that cargo 
with an incentive off peak hours so they don't have to be on 
the same lanes with those who are trying to get to work in the 
morning or get home in the evening.
    But, two, I want to talk to you about a program that you 
mentioned, Mr. Bronrott, in your written testimony. You talked 
about you know crash weighting, identifying crashes for which a 
carrier had greater responsibility. I am curious to know if you 
could tell us how are those reviews conducted, what kind of 
experience do those folks have that review those crashes, and 
how they make that determination of who was at fault, and more 
importantly, are we gathering data on how do we prevent these 
kinds of crashes in the future?
    Mr. Bronrott. Great questions.
    Well, first of all, currently we do not do crash weighting, 
but what we do know is that there is a very strong correlation 
between crashes and in predicting future crashes. We are now 
working through a process by which we are looking at crash 
weighting as a way to more finely tune CSA and what we our--
Motor Carrier Safety Advisory Committee looked at the issue of 
crash weighting this year and there really was no agreement 
among this very broadly based committee as to what direction 
that we should go with some ideas that were put on the table. 
There was no consensus.
    So it was essentially thrown back to us. And so we are now 
in the process where we are going to have to thoroughly study 
this because it is very important that we get it right. And so 
we are planning on releasing in July of 2013 our report. We are 
going to take this next year to thoroughly turn this inside 
out, and we will report back to you and to the safety and 
trucking community what we have found, and then from there we 
will know what our path forward is in the whole area of crash 
weighting.
    Ms. Hahn. Thank you. And again, and I appreciate this 
hearing, and I appreciate us kind of getting to the bottom of 
this. I think the trucking industry is really at the backbone 
really of the goods movement industry in this country, and I 
know for a fact a lot of these independent owner-operators, 
they have a tough row to hoe. I mean, these guys, particularly 
in areas like Los Angeles where the congestion is so bad, they 
get paid by the load, they don't get paid by the hour. So 
sometimes they can make a one round trip to the port of Los 
Angeles to either pick up or drop off, and many of them talk 
about how they are not earning the kind of decent wages to 
actually make a real living. So we want to do whatever we can 
to support them but we also of course don't want to compromise 
at all on the public safety as we embrace this industry.
    Thank you.
    Mr. West. Thank you, Ms. Hahn.
    Mr. Mulvaney.
    Mr. Mulvaney. Thank you, Mr. Chairman. Mr. Deputy 
Administrator, help me. This is a new industry for me, so help 
me understand the process by which you all establish these 
scorecards, these BASICs, the scores that you give to the 
various carriers. Walk me through a typical process.
    Mr. Bronrott. Well, the previous measurement that we used 
was made up of four categories that were far more general than 
the CSA program. And so we have come up with seven categories 
within which we can look at a carrier's and driver safety 
performance and that gives us a far clearer, more granular 
picture of what is going on out there so that we can make 
decisions about who we should, you know, intervene with and, 
you know, before a tragedy occurs.
    Mr. Mulvaney. What are the seven categories?
    Mr. Bronrott. Well, they include the fatigue and compliance 
with hours of service. I have got the list here if you want. 
Joe, if you want to run down the----
    Mr. DeLorenzo. I probably won't be able to come up with all 
seven just because you are asking me. Unsafe driving, fatigue 
driving, controlled substances, there is the crash indicator, 
vehicle maintenance. How many did I get?
    Mr. Mulvaney. Four or five. Unsafe driving. What do I have 
to do to get a bad mark on unsafe driving?
    Mr. DeLorenzo. Essentially what occurs, what each of the 
BASICs is it is comprised of violations that are found on the 
roadside or through our investigative process. So the 
violations that are found on the roadside are uploaded by our 
State enforcement partners. They go up into our system, and 
they are then associated with that carrier in the appropriate 
category. So the example you used is an unsafe driving. So if a 
carrier is pulled over for a speeding violation, that would get 
loaded up and associated with that BASIC. Carriers are then----
    Mr. Mulvaney. Hold on a second. Just get the ticket written 
or actually get convicted?
    Mr. DeLorenzo. No. An inspection, a State inspection report 
completed. A State inspection process and a ticket written or 
citation are two completely separate processes. So this SMS 
consists of violations on inspection reports.
    Mr. Mulvaney. And how do I, if I get a, whatever rating I 
get, how do I get it, how do I improve my rating in the future? 
What do I have to do in order to lower my score? What steps do 
I have to take to accomplish that?
    Mr. DeLorenzo. In order to lower your score, it would be 
the result of additional clean inspections. So the violations 
are, we score on a 24 month period. So violations drop off 
after that time period is up, they get weighted lower as time 
goes on and additional clean inspections because you are 
compared on a per inspection basis. So clean inspection reports 
would then also help you to lower your score.
    Mr. Mulvaney. If I have got a bad driver who has had two or 
three speeding things, let us say, that lowers or that raises 
my score and I fire that driver I move him some place else, 
does that help my score or not?
    Mr. DeLorenzo. It does not.
    Mr. Mulvaney. And why not?
    Mr. DeLorenzo. Because those violations stay in the system 
associated with your company as a look at your overall safety 
management practices. Over time they will decrease and clean 
inspections by your other drivers will also help to lower your 
score.
    Mr. Mulvaney. Wouldn't firing an unsafe driver be a safe 
practice? Wouldn't that be what you want me to do?
    Mr. DeLorenzo. Yes, it would.
    Mr. Mulvaney. But I wouldn't get credit for it.
    Mr. DeLorenzo. Not until the time period passes, correct.
    Mr. Mulvaney. Okay. Interesting.
    Deputy Administrator Bronrott, you mentioned that the 
previous system that was four different categories, how did 
that one, why did you all get rid of that?
    Mr. Bronrott. Well, again, the decision was that it was, 
there were broader categories and that we could have a, that it 
was time to look at more specific areas where we could have 
some intervention if need be.
    Mr. Mulvaney. Did you use any of the same categories from 
the old system in the new system?
    Mr. Bronrott. We did.
    Mr. Mulvaney. And the same data?
    Mr. Bronrott. Well, I think it is all the--well, Joe is one 
of the----
    Mr. DeLorenzo. The data used in the current SMS is more 
comprehensive than the data that was used in SafeStat. When we 
went from 4 to 7, we also made another important change which 
was under the old system we looked at only those violations 
that were serious enough to be considered out of service 
violations. The current system, SMS, uses all violation data in 
the system.
    Mr. Mulvaney. If I get pulled over, if I am a trucker in 
South Carolina and I get pulled over by my local enforcement 
folks and they write me up for something, and I later challenge 
that, does that, how do you all treat that on my scoring, and I 
win. Let's say they cited me for unsafe movement or some 
maintenance violation, and I convinced them that they were 
wrong in their initial assessment, how does that impact my 
score?
    Mr. Bronrott. Well, we do have a process through which you 
can challenge it, and we work with each of the States in a 
process known as DataQs. So you can go to the respective State 
where the violation occurred, and you can challenge that. And 
through that process, it is either dismissed or not.
    Mr. Mulvaney. And the last question. But if it has been, if 
I have convinced the State folks that I was not in the wrong, 
does it automatically come off my rating or not?
    Mr. Bronrott. It will.
    Mr. Mulvaney. Okay. Thank you, gentleman. I apologize for 
going over, Mr. Chairman.
    Chairman Graves [presiding]. Mr. Chabot.
    Mr. Chabot. Thank you, Mr. Chairman. Yeah, just a couple 
questions. I assume that you have had some feedback, some 
criticism, some concern from people in the trucking industry, 
is that correct?
    Mr. Bronrott. Well, we have had questions, we have had 
concerns, and we have also kept the phone lines open. We built 
a big table around which we have allowed those voices to be 
heard. So we have heard them, and we welcome whatever 
questions, concerns that are out there.
    Mr. Chabot. And what are the nature of the concerns that 
you have heard from folks in the industry?
    Mr. Bronrott. Well, they are varied, and I won't try to 
characterize.
    Mr. Chabot. That is what I am asking you to do. What are 
some of the questions that people have raised where they have 
said, well, here is something we don't think is fair or that we 
think is very tough for us to meet or is unfair or whatever. I 
mean, what types of things. That is what I am asking you.
    Mr. Bronrott. Well, a number of things. One thing is you 
know, the issue of the crash weighting. It has been one major 
question that has come up.
    Mr. Chabot. You said crash weighting?
    Mr. Bronrott. Um-hmm.
    Mr. Chabot. Does that mean, what does that mean exactly? If 
you have an accident, how heavily that weighs against you, and 
is that what you are talking about or something else?
    Mr. Bronrott. Yeah, I mean that is, that is right. It is. 
So we are looking at--you know, currently we just look at 
involvement without, you know, looking at you know faults and 
that is not part of the scoring or rating, that is not part of 
what we do.
    Mr. Chabot. Let me stop you there if I can to make sure if 
I heard you right. You said currently you just take into 
consideration the fact that an accident happened and that is 
counted against you. It doesn't matter whose fault it was? Is 
that what you said?
    Mr. Bronrott. Well, it is used as an indicator because we 
know from repeated studies, this is something that is very firm 
in the work that we have done over the course of the years, 
even prior to CSA with the earlier measurement system, that 
there is a very strong positive correlation between crash 
involvement and the chance of a future crash. We take it 
seriously. But we are, you know, looking at this issue of crash 
weighting, as I mentioned earlier, about this process that we 
are going through to, you know, to study this and to report 
back in a year on a path forward on that.
    Mr. Chabot. But again, just to make sure that I understand 
what you are saying again, the fact that it doesn't matter 
whose fault it was. It is still counted. I am a truck driver, 
and I stop at a traffic light, and somebody is not paying 
attention behind me or perhaps they are intoxicated and they 
crash into the back of me, and I have done nothing wrong. I was 
stopping at a red light. You are saying that that would be 
weighted against me?
    Mr. Bronrott. Well, it----
    Mr. Chabot. Well, yes or no.
    Mr. Bronrott. Let me defer to Mr. DeLorenzo just to be 
clear.
    Mr. DeLorenzo. Yes, it is.
    Mr. Chabot. Okay. There is the answer, yes. And if it 
happened a second time I was at another traffic light and I 
hadn't done anything wrong and I am stopped there paying 
attention but somebody else is drunk behind me in another 
vehicle and they slam into the back of me, now I have had a 
second offense that I am held responsible for; is that correct? 
Yes or no.
    Mr. DeLorenzo. Yes.
    Mr. Chabot. Okay. And that is an example of some of the 
concern that you have had raised in the trucking community 
because, that is the first one that you raised is the accident 
weighting so, or weighing. Are there some other things that 
they have raised that they are concerned about, and I am 
assuming there are. And what would be some of the others. I 
have only got 51 seconds here.
    Mr. Bronrott. Joe, do you have anything to add?
    Mr. DeLorenzo. The other concerns and where we spend a lot 
of our time is on data quality and data sufficiency. So I mean 
there are always questions with the amount of data that we are 
always dealing with as to what is the quality of the data and 
that is when Mr. Bronrott in his remarks you know mentioned the 
DataQ system that we have available.
    Mr. Chabot. Now, does data quality mean that they are not 
keeping adequate records under your standards; is that what you 
are meaning?
    Mr. DeLorenzo. No data quality meaning the quality of the 
data in our system. So the quality of the data that is uploaded 
from the States into our system that is used in determining 
their SMS scores, which is again----
    Mr. Chabot. They are concerned about that particular issue?
    Mr. DeLorenzo. Yes.
    Mr. Chabot. Okay.
    Does overweight vehicles at all, any history of having--
would that be counted against them?
    Mr. DeLorenzo. Size and weight is not included.
    Mr. Chabot. That is not included, okay. Thank you very 
much.
    Chairman Graves. Mr. West.
    Mr. West. I already asked questions.
    Chairman Graves. Mr. Landry.
    Mr. Landry. How can you hold somebody accountable for 
something that is not their fault? Would you be willing to say, 
you know what, Congress all these studies that we embark upon 
and all of these crazy policies and regulations that we premise 
on these studies, if we can't, if we don't show proof that they 
work, would you be willing to resign? I mean, why can you all 
hold the American citizen accountable but yet we can't hold 
y'all accountable. You see, I mean it is patently unfair for 
you to weight someone's record, to tarnish someone's record 
when it is not their fault? We have a court system that is 
designed to weigh that.
    Let me ask you a question. How do you feel about onboard 
data recorders being mandated by the Federal Government? Do you 
support that?
    Mr. Bronrott. Well, the agency does.
    Mr. Landry. Okay. Okay. Well, let me ask you a question. 
You work for the President of the United States. Is that not 
correct?
    Mr. Bronrott. Correct.
    Mr. Landry. So he is your boss.
    Mr. Bronrott. Correct.
    Mr. Landry. See, I am used to the business world. You know 
the President of a company? That is who I report to. I usually, 
if he puts out an edict or a policy, I normally, I would think 
as an employee I would follow that. Do you know that the 
President has singled out on board recorders as costing small 
business over $2 billion to implement and that he believes that 
they should not have been implemented. Did you not get that 
memo that he sent to the Speaker?
    Mr. Bronrott. Well, I am familiar with the numbers and I 
also know that----
    Mr. Landry. Well, you are familiar with his position? Is 
his position that he supports it or he doesn't support it?
    Mr. Bronrott. He does.
    Mr. Landry. He does support it. So what he spent to the 
Speaker is basically a lie?
    Mr. Bronrott. The OMB and our agency made it clear that 
there is a net gain to industry of over $2 billion a year by 
the implementation of EOBRs.
    Mr. Landry. A net gain. It is going to cost the industry, 
according to the President, $2 billion. And 90 percent of that 
industry are small businesses. Now the big guys, they like it. 
Okay. Because when they--they implement it already, because 
their fleets are so large that that is a better way to manage 
those fleets. And of course when you implement it on the little 
guy, okay, it drives them out of business and the big guy gets 
bigger, and I am sick and tired of that over here. Because what 
happens is big corporations come up here, they convince you all 
to do something that they want to do. If they want those on 
board recorders that is their business. But don't force the 
little guy out there who is struggling to make ends meet.
    Ms. Velazquez. Would the gentleman yield for a minute?
    Mr. Landry. The gentleman will yield.
    Ms. Velazquez. Mr. Bronrott, if I am driving my car and I 
am at a stop sign and another car comes in and hit me, will the 
insurance company score that against me in terms of my premium?
    Mr. Bronrott. As a passenger vehicle driver or as a truck 
driver? To be honest, I don't know the answer with respect to--
--
    Ms. Velazquez. Well, I do know because I was driving but 
what I am saying is that the private sector, the insurance 
company will factor that in. There is not much difference.
    Mr. Landry. Reclaiming my time. I would disagree with the 
fact-- first of all, the insurance companies are private 
contractors. Okay. That is a private contract between an 
individual and another company. The government is not involved 
in that contract. And if certain insurance companies penalize 
you when you do nothing wrong then you should seek out an 
insurance company that doesn't penalize you for doing so. I 
don't believe, because I've had accidents before and those 
accidents that were not my fault, my insurance company did not 
penalize me for that. Sure they were reported but they did not 
penalize me for somebody rear ending me. I would say that your 
insurance company is getting away with murder.
    But going back to these onboard recorders, I don't 
understand how the President gets up, gets up in front of the 
national media and says to the American people that he is for 
small businesses and that he is for doing away with regulations 
that burden small businesses and that you, as his 
representative, you as his mouthpiece, come here and tell us 
that you are willing and promote a regulation that imposes a $2 
billion cost on small businesses in this country. Can you 
explain that to me? I mean, because it doesn't add up where I 
come from.
    Mr. Bronrott. Four thousand people die every year on our 
highways. Our mission, congressionally mandated mission is to 
stop it. A 100,000 people are injured every year. Our charge is 
safety. And EOBRs will help save hundreds of lives a year. 
EOBRs will also have a net savings to industry in the billions.
    Mr. Landry. So you are willing, you are willing to 
compromise all of these small businesses, the American dream 
out there; you can't find a better way to save 4,000 people a 
year, for 4,000 people; is that right? Four thousand people 
we're going to spend $2 billion. Or 500,000. Yeah. That is the 
cost of 500,000 per person. Maybe we should pay those persons 
not to get on the road.
    I mean look, I am trying to understand because at some 
point there becomes a balance between the industry and the 
safety, okay, and we have seen over the last 20 years that you 
all have done a terrible job of doing--not just you but this 
Federal Government has done it. That is why we have this 
committee. Because it is breaking the small businesses out 
there. And so I don't understand when the boss says whoa, I 
don't like this idea, you just go plowing right ahead, say 
don't worry, boss, I think you are wrong. Or maybe the boss is 
telling the American people one thing and you something else. 
What is it? Is he telling you to go ahead with it? Are you 
getting a mandate from the White House that you should go 
ahead; basically the letter that he sent to the Speaker of the 
House is disingenuous?
    Mr. Bronrott. Well, with respect to----
    Mr. Landry. That is a yes or no.
    Mr. Bronrott. I am not sure there is a yes or no.
    Mr. Landry. Mr. Chairman, I am out of time.
    Chairman Graves. Ms. Beutler.
    Ms. Herrera Beutler. Thank you, Mr. Chairman, and I guess I 
would like to hear because this is an issue that is important 
to me. You know, we all care about safety, right? This isn't a 
question of whether or not we care about safety. I don't think 
safety and our small business owners are mutually exclusive. I 
mean to assume that is irrational.
    One of the things I would like to know for sure on this 
topic is, is there a proven, because so from what I have seen, 
and it largely is you know a small versus large issue, you 
know, for a small two person independent owner operator type 
driver who hauls logs on a--in southwest Washington State, on 
a--inconsistent basis, right, whenever we get a tree sale, when 
there is a chance they bid a job, they get it or they don't. It 
doesn't happen consistently. It is not like a major freight 
mobility company that is constantly on the road. For them to 
put this type of equipment into a truck doesn't seem as 
necessary, right, because if there is one or two people you are 
in an owner operator type situation, I don't think they are 
going to have a hard time communicating with each other about 
where they are, and what time they are leaving. Keeping up with 
the rules and the regs of the road, so to speak.
    So I, too, would like to understand how the President calls 
this a $2 billion mandate on small businesses who are the 
backbone of our economy, and we need jobs in our neck of the 
woods, we are double digit unemployment, right, how the 
President calls this a $2 billion mandate and yet you are 
telling me it is $2 billion plus. Please explain that briefly.
    Mr. Bronrott. Well, every rule goes through an analysis of 
the costs of, you know, investing and then, you know, the net 
gains, and that is where that ends up. But you know, fatigue is 
a leading cause of crashes, and far too many of them involving 
death and injury. It is a serious issue.
    Ms. Herrera Beutler. And I get that. How does that not 
jive, though? How is the President saying one thing and I hear 
you saying something else?
    Mr. Bronrott. I see.
    Ms. Herrera Beutler. That is what I am interested in 
because that is a major miscommunication.
    Mr. Bronrott. Well, you know, we are working with, we have 
worked with small business on so many aspects of our rules and 
regs and our, you know, work with OOIDA over the years. They 
are part of, they are a key part of our safety advisory 
committee.
    Ms. Herrera Beutler. And how many of the OOIDA 
recommendations on this issue have you taken into account when 
you were pushing this rule?
    Mr. Bronrott. I don't know.
    Ms. Herrera Beutler. Any? A couple? A majority? A minority?
    Mr. Bronrott. I really don't know.
    Ms. Herrera Beutler. Okay. Okay. Thank you, Mr. Chairman. I 
yield back.
    Chairman Graves. Mr. Hanna.
    Mr. Hanna. Four thousand lives. You are never going to get 
it to zero. Nobody wants any--I remember the Director of the 
EPA saying that their job wasn't to look at the money, the cost 
expense, the difficulties, the loss of jobs and opportunity, 
that it was only to look at the environment. I can understand 
that. I don't agree with it, but I understand it. Do you feel 
the same way in your business?
    Mr. Bronrott. It is not how we do it. We must consider 
economic impacts as part of the rulemaking process.
    Mr. Hanna. Right. But I mean, when you do that, does that 
tell me that you automatically if something costs more than it 
saves, that that is the direction you go, or is it more 
subjective than that?
    Mr. Bronrott. I don't know.
    Mr. Hanna. Shouldn't you know that? I mean, it says 
director there or Deputy Administrator. Wouldn't you know if 
that is such a vital part of what you do is burdening 
businesses with additional costs which may or may not be 
reasonable, wouldn't you think that that would be the ultimate 
thing that you would know especially in this environment? 
Respectfully.
    Mr. Bronrott. Well, our agency is about safety and that is 
what we focus on. That is what our 1,100 employees wake up 
every morning committed with great passion to do.
    Mr. Hanna. Excuse me. You just said that you look at both 
sides and you make a decision, but apparently you don't. It is 
only about safety, which you know, you could say that to me and 
I don't know that I would have a retort necessarily. So it 
isn't an equation that you arrived at that weighs the cost-
benefits. It is all about safety all the time?
    Mr. Bronrott. Well, we must calculate what the costs are.
    Mr. Hanna. When was the last time that you looked at a cost 
that was greater than the rule you were about to enact?
    Mr. Bronrott. I can't say.
    Mr. Hanna. So you never have. There has never been anything 
more important or balanced towards business over safety 
necessarily that you can think of?
    Mr. Bronrott. Right.
    Mr. Hanna. Mr. Chairman, I am set. I would like to 
contribute my time to anybody that would like it.
    Mr. Landry. I just, again, want to give you an opportunity 
to answer the question of who, of what position, is this 
administration, as a representative of the President of the 
United States, do you stand 100 percent behind small businesses 
and do you take up the President on his challenge to eliminate 
burdensome regulations that cost billions of dollars?
    Mr. Bronrott. Yes.
    Mr. Landry. Okay. So do I also have your commitment that we 
are not going to continue to move forward with onboard 
recorders for 90 percent of an industry that doesn't want them 
or doesn't need them and it is going to cost more, it is going 
to be an additional cost for them?
    Mr. Bronrott. Well, you know, the EOBRs are cost effective 
and we are----
    Mr. Landry. You just said, you can't answer, that is an 
oxymoron. You are saying one thing but you are meaning another. 
You are saying, oh, yeah, don't worry, small businesses, we are 
with you all. But on the same token you are telling them here 
is the bill. Sell your truck maybe to one of the big majors, 
six of the big majors; 90 percent of this industry is small 
businesses. You are going to impose a $2 billion regulation on 
the backs of an industry that is made up of 90 percent small 
business owners? Is that what you are going to do?
    Mr. Bronrott. It is not how we see it.
    Mr. Landry. But that is what you are going to. It might not 
be how you see it. Look, I like to deal with facts. Is it a 
fact it is going to cost those small businesses $2 billion, is 
that a fact?
    Ms. Velazquez. I would like to ask the gentleman what is 
that $2 billion tax that you are talking about? Where is that 
from?
    Mr. Landry. Well, the President of the United States sent 
to the Speaker of the House a list of preliminary cost 
estimates for regulations that he deemed he was going to look 
into and basically get rid of. And part of that list was these 
electronic onboard recorders and hours of service supporting 
documents, and he has, this has come from the White House, $2 
billion.
    Ms. Velazquez. Well, at least he is doing that is 
proactive. When it comes to rules and regulations, the Bush 
administration, one of the highest number of regulations----
    Mr. Landry. The Bush administration is gone. I am trying to 
let the President. Look, I agree with him. I agree with him. I 
am with him. Very seldom do me and the President see eye to eye 
but I am with him on this. His problem is the guy who works for 
him is not. Can you, I mean, can you hold him accountable?
    Ms. Velazquez. Well, you know what? Come to my district 
where HIE's bus company got into a crash in the Bronx and 16 
people were killed. Ask the Department of Labor how, how, how 
much is worth one person who is killed? Please, give me a 
break.
    Mr. Landry. Well, yeah. That is fine if that is the way you 
feel. But make sure you tell all of those small businesses out 
there, the little guy out there that you are not really for 
them.
    Ms. Velazquez. It is not about it. It is about creating a 
balanced approach and providing a mechanism where small 
businesses had the opportunity to come before them and express 
and provide their input.
    Mr. Landry. But with all due respect, the other side of the 
aisle claims to be the party of the little guy. We sit here in 
this committee every day with all due respect and claim when we 
go back to our districts that we are for the little guy. And 
the President gets up there and he gets on prime time and he 
says that. But you know what? The actions don't match the 
rhetoric. That is the only--look, if you don't want to be with 
the little guy, don't be with him, but just be honest. That is 
all.
    Chairman Graves. With that I have one quick question which, 
talking about this crash accountability process study which you 
cited I think just briefly a second ago, that was promised in 
2010. That has been 2 years ago. Do you have any intention to 
release those findings or are you going to release those 
findings?
    Mr. Bronrott. Well, we are. First of all, thank you very 
much for the chance to testify before you. I thank you for that 
question. I explained earlier that we presented, you know, the 
proposal to our advisory committee, our Safety Advisory 
Committee and there was no consensus there. And so it was 
brought back to us to determine next steps. And so we have 
decided that we are going to take a thorough look at it. We are 
going to study it. We are going to report back in July of 2013 
as to a path forward, and at that point we will be able to 
report back to you.
    Chairman Graves. So you are just starting the process now?
    Mr. Bronrott. Well, we are going to, based on what we heard 
back from our advisory committee we are taking all of that in 
and starting that process, yes.
    Chairman Graves. Okay. So it will be 3 years to come to 
that, whatever conclusion it is?
    Mr. Bronrott. Well, I can't put a date on it but we are 
looking at it.
    Chairman Graves. It was 2 years from now. Thank you, Deputy 
Administrator. I appreciate you being here. We will seat the 
second panel, please. Have the second panel come forward, 
please.
    Mr. Bronrott. Appreciate it very much. Thank you all.
    Chairman Graves. Bring the hearing back to order, and I am 
with our second panel of witnesses. We appreciate all of you 
being here. We appreciate all of you coming in. Some of you 
come from a ways away, and we greatly appreciate that and again 
we look forward to hearing the testimony.
    Our first witness is going to be Mr. Daniel Miranda, CEO of 
Hit Em Hard Transportation, which is a small trucking firm 
located in Miranda, California. Mr. Miranda has been in 
business for more than a decade. Prior to starting his own 
trucking company, he also served in a number of law enforcement 
agencies in California. He is going to be testifying today on 
behalf of the Owner-Operator Independent Drivers Association. 
Mr. Miranda, we appreciate you being here.

       STATEMENTS OF DANIEL A. MIRANDA, CEO, HIT EM HARD 
  TRANSPORTATION, ELVERTA, CALIFORNIA, ON BEHALF OF THE OWNER-
  OPERATOR INDEPENDENT DRIVERS ASSOCIATION; JEFF TUCKER, CEO, 
TUCKER COMPANY WORLDWIDE, CHERRY HILL, NJ; DR. MICHAEL BELZER, 
  PH.D., ASSOCIATE PROFESSOR, DEPARTMENT OF ECONOMICS, WAYNE 
   STATE UNIVERSITY, DETROIT, MI; AND ANTHONY GALLO, SENIOR 
      ANALYST, WELLS FARGO SECURITIES, LLC, BALTIMORE, MD

                 STATEMENT OF DANIEL A. MIRANDA

    Mr. Miranda. Thank you, Chairman Graves. Good afternoon. My 
name is Daniel Miranda, and I am from Elverta, California. I 
have been a professional truck driver for over a decade, and 
since 2010 I have operated my own small business trucking 
company with two drivers. Prior to becoming a truck driver, I 
served as a police officer. I am also a member of the Owner-
Operator Independent Drivers Association, commonly known as 
OOIDA.
    The majority of trucking in this country is small business, 
as 93 percent of our Nation's motor carriers own 20 or fewer 
trucks.
    Today, I am going to talk to you about my experience with 
the Federal Motor Carrier Safety Administration's Compliance, 
Safety and Accountability program, commonly known as CSA or CSA 
2010. I believe my experience is similar to others in the 
trucking industry, particularly little guys like me, and point 
to the oppressive and punitive nature of CSA in its current 
form.
    There are three overarching problems with CSA. The system 
lacks fairness and accuracy, unfair arbitrary severity of 
weights for violations, and the failure of CSA to account for 
whether a truck driver is actually at fault for an accident 
reported in the CSA.
    In short, CSA, though well intentioned, is today a program 
with flaws that have wide-reaching implications for motor 
carriers, especially small carriers like me.
    How does this system single out small business? FMCSA urges 
shippers and brokers to use carriers that have been inspected 
versus those who have not been. And the shipping community 
feels they will be liable if they do not use carriers with 
positive CSA ratings, something that only happens when a 
carrier undergoes a lot of clean inspections.
    Small carriers are less likely to see this happen to them, 
especially when compared to a large carrier with hundreds or 
thousands of trucks. Once a small carrier gets into the system, 
the only way to stay relevant is by receiving completely clean 
inspections. But these inspections are highly subjective. Law 
enforcement, as I know full well, can be overzealous at times, 
and not understanding. The result for small carriers is that 
just a few minor violations can send your score skyrocketing, 
making you untouchable to shippers and brokers because they see 
you as a risk, even though a driver or carrier may have 
millions of accident-free driving miles.
    This is a reality that I am still living through firsthand 
as a small trucker. Last May, one of my drivers had a series of 
log book violations around how he was characterizing his time, 
plus a minor violation regarding reflective tape on his 
trailer. Regardless of the merits of these violations I took 
remedial action with this driver, requiring him to attend 
additional training on hours of service and how to correctly 
record the duty status.
    Knowing the negative impacts that these violations would 
have on my company's score with CSA and the ability of my 
business to respond, I decided to challenge one of them under 
the only procedure FMCSA currently has, which is the DataQ 
system. The problem with the DataQ system is that the decision 
on whether or not the violation should be overturned more often 
than not rests in the hands of the very same police officer 
that recorded the violation, even when a citation stemming from 
the violation is overturned by a court of law. It works the 
same way if you are issued just a warning. In the CSA system, 
that is still a violation, with the original officer as judge, 
juror, and executioner.
    I also reached out to the FMCSA and asked them what I could 
do to improve my score under CSA. They told me that I needed to 
obtain more clean inspections. So I did that, showing that we 
are a compliant company and that we fixed whatever problems may 
have existed before. However, my score actually went up, the 
exact opposite result of what should have happened. This is a 
terrible message to send to small businesses, that the survival 
of their business is beholden to a computer system that is 
clearly out of touch with reality.
    This lack of reality continues under other parts of CSA. A 
driver who is cited for failing to sign his daily vehicle 
inspection report sometimes totally unrelated to fatigue or 
safety is assigned a severity weight of 4, only slightly lower 
than a violation for an improper lane change while driving, 
something that is clearly a safety issue. There is no crash 
fault indicator under CSA, meaning that one truck involved in 
an accident looks like any other.
    What does this mean in real life? A fellow small truck 
driver was hit by multiple vehicles as part of a large 
accident. Despite the fact that the trucker stopped his truck 
and did not hit anyone, under the CSA, the seven fatalities and 
26 injuries are still listed in his record with no notation 
about what happened. And how does a system like that help law 
enforcement focus on safety? And how can a trucker view it as 
anything more than a tool for punishment?
    One final comment on how today's CSA hurts small business. 
I spoke earlier about how inspections generate scores. But 
under some categories with CSA, especially the one dealing with 
driver fatigue, you also must have a violation to generate a 
score. If a carrier has no violations of hours of service, they 
don't have a score. Yet brokers and shippers are told to only 
look for carriers with scores. With many small carriers not 
having scores because they do not have violations, they are 
often out in the cold while the larger carriers with violations 
get the load simply because they have a score.
    Mr. Chairman Graves, I appreciate the time and the ability 
that I have had to come here and testify before you, sir.
    Chairman Graves. Thank you very much. Our next witness is 
Anthony Gallo. He serves as the Managing Director and Senior 
Equity Research Analyst at Wells Fargo Securities. His 
testimony is going to cover recent reports by his firm that 
raise questions regarding the accuracy of the new safety 
management system and its potential to misidentify carriers as 
unsafe.
    Mr. Gallo, thank you for being here.

                   STATEMENT OF ANTHONY GALLO

    Mr. Gallo. Good afternoon, Chairman Graves, Ranking Member 
Velazquez, and members of the committee. As you mentioned, I am 
Anthony Gallo. I am honored to be here today. I am a Managing 
Director and the Senior Equity Research Analyst covering 
transportation at Wells Fargo Securities. I have been covering 
the transportation industry since the early 1990s. I have held 
other roles at Wells Fargo and its predecessors, including Co-
Head of Equity Research.
    My research is largely conducted in the context of 
providing investment ideas to institutional investors such as 
pension funds and mutual funds. I publish fundamental research 
on the trucking, railroad, and parcel segments. My written 
testimony includes a list of companies that I cover as well as 
important disclosures and an attestation that my research 
reflects my personal views about the subjects, securities, or 
issuers discussed. The views I express today are my own and not 
the views of Wells Fargo.
    We published three reports on CSA; the first in March of 
2011 and the most recent report on July 2 of this year. In the 
normal course of our research we examined regulatory issues 
that pertain to our companies and the industry. We are often 
trying to determine how a specific regulation will affect the 
economics and competitive framework of our companies. Truck 
safety, small business, and statistics are areas that I am 
expected to be knowledgeable about as an analyst covering this 
space.
    In our first report, we examined CSA results for roughly 
the two dozen publicly traded trucking companies. In our second 
report, we touched on 200 of the largest carriers. And our most 
recent report covered 4,600 trucking companies. Of the 4,600 
trucking companies, 82 percent had fewer than 250 trucks; 60 
percent had fewer than 100 trucks. Each carrier in our data set 
had at least 50 inspections.
    In each of our reports we discussed the lack of any 
meaningful statistical relationship between CSA BASIC scores 
and accident rates. In each of our studies, we ran regression 
analysis of BASIC scores against accident rates. Our analysis 
led us to conclude that the criteria used to judge motor 
carrier safety did not coincide with the actual crash rates. 
Additionally we highlighted areas that we thought were 
problematic with the program, including unexplainable variances 
in inspection rates and the inconsistencies of enforcement 
protocols by States. In our most recent report we dealt in the 
inequities of crash reporting.
    Our second report published on November 4, 2011, titled 
``Good Intentions, Unclear Outcomes'' seemed to generate quite 
a buzz. On March 16 of this year the FMCSA actually published a 
formal response to our November report. In short, they 
disagreed with our findings. We were flattered that a well 
respected organization such as the FMCSA responded to our work. 
And we took very seriously the additional perspectives that 
they provided. We looked deeply into the FMCSA responses. We 
sought advice and perspective from industry experts, and we 
subsequently expanded our data set to the 4,600 motor carriers. 
We published our findings on July 2. We titled the report 
``CSA: Another Look With Similar Conclusions.''
    Our most recent 22-page report has been submitted as part 
of our written testimony. I offer the following summary 
conclusions from that report:
    First, we did not find a meaningful statistical 
relationship between the assigned BASIC scores for unsafe 
driving, fatigue driving, driver fitness, or vehicle 
maintenance when compared against actual accident rates either 
measured for number of power units or miles driven.
    Second, we found unexplainable variances in enforcement by 
States. For example, in our data set, Indiana represented over 
35 percent of all BASIC violations for exceeding the speed 
limit by one to five miles an hour. We also learned that 
variances in crash inspection reporting are such that the FMCSA 
actually rates States good, fair, or poor based on 
``completeness, timeliness, accuracy, and consistency'' of 
reporting in these important areas.
    Third, we found a wide variety of inspection rates by 
carriers. The one pattern we did observe was that small 
carriers with 25 to 49 trucks were inspected at two to three 
times the frequency of large carriers.
    In concluding my comments, I would like to offer the 
following observations that I hope you find helpful in your 
assessment:
    First, CSA is a Federal program enforced at the State 
level, but inspection and enforcement protocols vary in 
unexplainable ways. Small carriers are likely to frequent a 
fewer number of States than larger carriers, thereby making 
them exposed to the vagaries of any one State.
    Secondly, small carriers appear to be inspected at a 
greater frequency. In addition to lost productivity, two out of 
every three inspections result in some violation, creating a 
vicious cycle for the carrier.
    Lastly, the trucking customers are struggling with what to 
do with the CSA methodologies. They tell us that they are 
unsure of their risks when FMCSA rates a carrier satisfactory 
but there may be a BASIC threshold violation for, say, vehicle 
maintenance.
    We ask, is vehicle maintenance BASIC enough of a reason to 
drop a carrier? If a shipper establishes carrier protocols that 
incorporate CSA, how should they handle carriers with no BASIC 
scores and are not scored in all the BASICs? Large carriers are 
using their favorable CSA scores in soliciting business. 
Further, it is often difficult to replace a large carrier on 
short notice. Conversely, it may be easy to replace a small 
carrier who temporarily moves beyond a threshold but whose 
violations linger for 24 months or longer. This could cause a 
loss of business at a small carrier who could otherwise be 
safe.
    Thank you for your time. I would be happy to answer any 
questions.
    Chairman Graves. Thank you, Mr. Gallo.
    Our next witness is Jeff Tucker. Mr. Tucker is the CEO of 
Tucker Worldwide, a third generation small family run freight 
brokerage business located in Cherry Hill, New Jersey. He is 
also a founding member of the Transportation Intermediaries 
Association and a member of the American Trucking Association, 
where he serves on the organization's Government Freight 
Committee. Thank you for being here, Mr. Tucker.

                    STATEMENT OF JEFF TUCKER

    Mr. Tucker. Chairman Graves, Ranking Member Velazquez, and 
members of the Small Business Committee, thank you for the 
invitation to testify.
    As a transportation brokerage, I own no trucks. I hire 
thousands. Others have explained how CSA works and doesn't. So 
my focus today is going to be on the dangerous hiring, 
negligent hiring risks worsened by FMCSA's mischaracterizations 
and misguided promotion of the CSA program.
    Partly due to flaws in CSA, but primarily due to FMCSA's 
recent actions and statements, the agency has created a heavy 
burden on American business. For the record, TIA and my company 
support FMCSA and safety and we are willing and even eager to 
spend money on safety. It is important to us and it matters. 
For example, in the past few years, I added a lawyer to my 
staff. I have added a director of risk management to my staff. 
And I voluntarily adopted ISO 9000 standards so that my 
procedures cane followed and audited, all due to this liability 
that I am facing. I have turned away a majority of carriers who 
wish to do business with me. Not sure why yet.
    Like others today, I can tell you that today's system does 
not promote safety. Instead, it imposes a tremendous burden on 
brokers, carriers, U.S. manufacturers, and small business. Why? 
Because CSA is a relative system. It is graded on a curve. It 
is not a safety rating, but it is designed to prioritize FMCSA 
intervention. No study published has shown that high BASIC 
scores predict future crash. ``Relative'' means that if the 
agency decided it could intervene with 25 carriers per year and 
there were only 100 carriers, 25 would have a high score, even 
if they were safe and compliant.
    We don't doubt at all that CSA has helped prioritize FMCSA 
and law enforcement resources. But when CSA is used for 
purposes other than for law enforcement, CSA has serious flaws 
and harms small business. Despite these many flaws, FMCSA has 
chosen to plow ahead and market it for something it was not 
designed, as a carrier selection tool for shippers, brokers, 
and insurers. The program FMCSA uses to choose which carriers 
to send letters to or schedule audits of is now being marketed 
by the agency to shippers and brokers for carrier selection 
without facts, data, science, or direction from FMCSA telling 
us specifically what carriers or what CSA score not to use.
    FMCSA has imposed tremendous new risk and cost on small 
business. My company happily participates in promoting safety. 
We spend good money on it. That is not the issue. The issue is, 
FMCSA has created a strawman and by their actions have forced 
all the businesses who hire motor carriers to chase the 
strawman in hopes of improving safety. This isn't safety. This 
is waste.
    FMCSA hasn't told us what BASIC score is unsafe. They 
haven't told us who not to use. But they have given accident 
lawyers jet fuel for their negligent hiring lawsuits against 
small business and impose great costs on small business to 
protect themselves against such lawsuits.
    In 2004, a Federal court created a new interpretation of 
the common law known as ``duty of reasonable care.'' Succeeding 
cases built upon it with the result of brokers and shippers 
must now second guess if a fully authorized motor carrier 
licensed by FMCSA is safe to operate using subsets of FMCSA 
data that don't determine fitness, most of which are 
purposefully hidden from us. Doing something less may be deemed 
by certain courts and jurisdictions as negligent hiring.
    Since CSA is relative and graded on a curve, there will 
always be a number of motor carriers with an alert in one or 
more of seven different scores. Which carrier is more 
dangerous, one with a 60 or a 72? We heard from the Deputy 
Administrator that he doesn't know. He can't answer that 
question for the committee here today. I can't answer it 
either. They can't answer it without looking at far more data 
that we don't have access to, without further investigation, 
and as you heard, without going back to the office and maybe 
even going and doing an onsite audit.
    Many shippers, it should be noted, will not use motor 
carriers just because they have an alert in one of these 
arbitrary scores. But good brokers and shippers guaranteed will 
be sued with impunity because they used a carrier with a high 
relative subjective score graded on a curve.
    FMCSA's responsibility is to issue carrier licenses and 
enforce compliance to safety standards they set. It should be 
their sole responsibility to tell the public which carriers are 
safe and not safe to use. Until a safety fitness determination 
rulemaking next year is developed for public comment and 
ultimately developed into a final rule, we ask that FMCSA 
define who the high risk carriers are, list them, and send them 
in a file daily to the public.
    Two, that FMCSA immediately convene a CSA stakeholder 
subcommittee of experts and listen to them; that Congress ask 
the GAO to review CSA in light of their previous investigation 
at the agency's relative safety scores; and finally, that 
Congress should remove lawsuits involving interstate commerce 
to Federal courts.
    I apologize for taking more time. Thank you very much.
    Ms. Velazquez. Mr. Chairman, it is my pleasure to introduce 
Michael Belzer. He is an Associate Professor of Economics at 
Wayne State University. He received his Ph.D. from Cornell in 
1993, focusing his research on the dynamics of deregulation and 
institutional structure on industrial relations in the trucking 
industry.
    Dr. Belzer is the author of Sweatshops on Wheels: Winners 
and Losers in Trucking Deregulation and numerous peer reviewed 
articles on trucking industry economics, labor, and 
occupational safety. He has also led numerous projects for the 
FMCSA, including a 2009 study on safety issues facing the 
curbside bus industry. He created and chaired the 
transportation research board committee on trucking industry 
research. And he is a member of numerous other transportation 
policy committees.
    Dr. Belzer is currently developing a strategic economic 
development plan to transform southeast Michigan into a global 
freight transportation hub.
    Thank you for being here. And welcome.

             STATEMENT OF DR. MICHAEL BELZER, PH.D.

    Mr. Belzer. Thank you very much. On June 1, 2011, a 
discount intercity bus carrying 59 people to New York's 
Chinatown crashed, killing four people and injuring more than 
50 others. The carrier had a long history of violations and 
crashes and a safety rating far worse than the rest of the 
intercity bus industry. A driver fatigue rating of 86 on a 
scale of 1 to 100 meant that before the crash Federal officials 
had rated it among the most unsafe bus carriers. Its driver 
fitness rating of 99.7 meant that it ranked in the bottom 1 
percent. Sky Express should not have been on the road. And 
after the crash, the FMCSA banned it from interstate service. 
Although the ban was too late for the victims, under U.S. 
regulations it still does not prevent the company from 
continuing to operate intrastate.
    Safety advocates' call to require seat belts, stronger 
rules, and more driver training do not address the problems 
that led to the crash and would not prevent future crashes. 
Intense competition created by deregulation created the safety 
problem. We do not have to repeal deregulation to solve it, but 
we have to address the problems this competition creates. If 
insanity is doing the same thing over and over and expecting a 
different result, we are all crazy. Preventible crashes like 
this will happen again for the same reasons regardless of how 
many times we rework the algorithms of CSA or replace the 
entire program altogether. In short, CSA tries to address 
safety problems. We cannot remedy them until we begin to 
address trucking's systemic problems.
    I have examined the link between CMV driver compensation 
work pressure and driver safety. Research establishes a pay 
safety link that is important for policy because it shows that 
the economic force that is inherent in transport competition 
tends to produce unintended safety and health consequences for 
drivers and passengers. My full report on the economics of 
safety, which I submitted to the committee, applies to both 
truck and bus. Transport deregulation brought lower consumer 
prices, but this bus crash showed the dark side. Deregulation 
has increased competition among carriers in all modes, hauling 
both passengers and freight, and has reduced compensation. CSA 
in its current form places pressure on drivers without 
addressing underlying causes. In the trucking industry, poor 
compensation for drivers causes a misperception of a driver 
shortage that isn't there and causes carriers to look for 
cheaper labor, such as that found in Mexico. Everyone who has 
passed introductory economics knows that more drivers will be 
attracted to trucking by a better job package, including 
compensation. Opening the border to Mexican truck drivers would 
bring worse pay, as Mexican drivers compete with American small 
business drivers and employees at a quarter of the cost. No 
regulation can overcome the effect of markets that drive down 
price.
    This creates an economic sustainability problem. The CMV 
driver's workplace is the public highway, and unsafe drivers 
become a public hazard; what we in economics call a negative 
externality. While people buy transport services for an 
apparent market price, it does not include safety and health 
costs. Economic efficiency requires that price incorporate all 
costs and benefits associated with commercial movement and 
failure to incorporate the full safety and environmental costs 
sends incorrect signals to the market, creating an implicit 
public subsidy of unsafe operators.
    If the insurance market worked perfectly, the risks 
associated with low paying carriers would show up in higher 
cost insurance. This market does not work well because 
insurance companies cannot rate motor carriers and charge 
accordingly. These crashes are low probability/high impact 
events that insurance companies just don't like.
    These findings are consistent with economic theory because 
we expect that carriers pay drivers their market value 
determined by their personal employment history, driving 
record, training and education, experience, driving skills, 
temperament, and other factors. These factors explain the 
differences in safety outcomes. For every 1 percent in pay, we 
have found 1 to 4 percent better safety, controlling for the 
factors that we can. Higher pay produces better carrier and 
driver safety. We don't yet know whether safety pays, but 
clearly higher driver pay causes safety. Since price should 
include all costs in an efficient market, the environmental and 
safety costs associated with cheap labor and cutthroat 
competition create unsustainable supply chains that make 
everyone less well off.
    Three solutions would go a long way to resolve this 
problem: Number one, get government regulators out of their 
silos. FMCSA and the Department of Labor should cooperate with 
industry and with each other to talk about how to promote 
economic conditions that improve highway safety. The DOL has 
the authority to regulate compensation, and perhaps it is time 
to reconsider certain exemptions for the trucking industry 
under the Fair Labor Standards Act.
    Number two, implement chain of responsibility and safe pay 
rules, like those enacted by the Australian Parliament this 
year, to create a level playing field in a deregulated 
environment. The owner operator model is valuable and we need 
to preserve small business in the trucking industry. Other 
nations like Australia maintain a competitive industry that 
supports small business truckers and doesn't compromise safety. 
One way to do this is to address underlying systemic problems 
such as the failure to pay truckers for loading and unloading 
time.
    Number three, tighten regulations on subcontracting 
balances the power between contractors and trucking companies, 
as Australians have done. This would give owner drivers a fair 
shake. In short, help level the playing field by giving small 
businesses more negotiating power to keep costs low and safety 
benefits high.
    Thank you very much.
    Chairman Graves. Mr. West.
    Mr. West. Thank you, Mr. Chairman. And thank you to the 
panel for being here. My first question: Any time we deal with 
regulations, I always ask, did the Federal Government come down 
and talk to you all, the practitioners, and try to get a 
bottom-up review of this SMS process before it was pushed down 
upon you?
    Mr. Tucker. I can try to answer that.
    We, myself personally along with my trade association, the 
TIA, Transportation Intermediaries Association, have met 
several times with FMCSA. And we have told the Administrator 
herself and another Deputy Administrator--in fact, he 
volunteered in front of hundreds of our members a few months 
ago to sit with us before they issued their guidance document 
that shippers and brokers would have to somehow use or suggest 
they use CSA. We asked them, please don't do that. Please sit 
with us. That would be devastating to business if you did that. 
It is not ready for that yet. And both times we felt were going 
to have that meeting. And 1 week before the meeting was held, 
the documents were published. So we sat and talked about why 
did that happen. The documents actually said they listened to 
us, our association and another association, which was I think 
a mischaracterization of what occurred.
    That is my perspective.
    Mr. Miranda. Mr. West, being a small business trucking 
company owner, being a trucker on the road myself, no, they 
didn't come down and talk to me. They didn't come to the truck 
stop and talk to the drivers. They didn't come and talk to any 
of the people who really are affected by this. They are 
changing my life. They are changing the way I feed my family 
without talking to us at all. And I will tell you and I will 
assure you that it is bringing economic impact to my family and 
to the families that I help support daily in great numbers. And 
they are not caring about anything we say. And we have called 
and asked questions, even how this thing works. And they won't 
answer the question.
    Mr. West. Then this is my follow up to that because I 
believe that in place of something that you don't agree works 
very well, what would you all seek to try to implement or 
institute? Because we have to have safety on our highway 
system. So what are some of your recommendations? Since we do 
have the guy back there from the regulation and compliance 
section, what were some of the things that you would present to 
him that he can take back right now today?
    Mr. Belzer. Can I throw something out?
    Mr. West. Sure, Doctor.
    Mr. Belzer. This is Dr. Belzer.
    Mr. West. I know.
    Mr. Belzer. Well, I know there is a record here of some 
kind.
    So I have spoken with them and met with them many times. I 
have served on some panels and different things like that. In 
fact, Anne Ferro asked me to come down and speak to the MCSAC a 
couple of years ago about the economics of safety question. I 
actually applied for a position on MCSAC when there were some 
openings but I didn't get the job or the opportunity to serve. 
However, I have actually done a lot of studies for them over 
the years, different times and most recently, actually, one on 
using the large truck crash causation study.
    Mr. West. I only have 1 minute and 38 seconds.
    Mr. Belzer. Very quickly. I proposed to them some years ago 
a benchmarking program which I developed which is in many ways 
a lot like CSA but allows immediate feedback to the carriers on 
how to improve their operations. And it was developed based on 
sound science relative to the causes of truck crashes and 
started from that perspective and worked back to come up with a 
rating.
    So I would recommend that they take a look at that again. 
And we would be glad to be helpful with that.
    Mr. West. Now is that something that the gentlemen here 
could be in agreement on?
    Mr. Tucker. I think I have something much quicker and 
faster that would improve safety immediately. And we have asked 
this in writing and in various meetings. We asked--the FMCSA is 
required to identify high risk carriers. We have asked them to 
identify them in a list, give them to us, update that daily to 
the industry. We will stop using those carriers overnight. It 
is a small percentage, very small. We asked for daily changes 
in the safety ratings. When a safety rating goes from 
satisfactory to unsatisfactory sometimes it will take 5 to 6 
weeks for us to find that out. We asked them to issue that in a 
daily file. And then thirdly, we have asked, when they place a 
carrier out a service for a lot of different reasons, they are 
not able to pull the carrier's authority. So they tell the 
carrier, you can't go on the road, but they can't pull their 
authority. We have asked them, look, we don't care if you pull 
their authority. Just tell us who you placed out of service. We 
will not use them.
    Unfortunately, instead of concentrating on those concrete, 
clear safety issues, they have advocated we use this relative 
score.
    Mr. Gallo. Sir, in my line of work, if the numbers aren't 
right, you either need to fix them or pull them.
    Mr. Miranda. Mr. West, I would bring to you that not only 
should you look at how to correct it but we need to look at, 
the correction is looking at education. We are not educating. 
We are putting a very arbitrary decision making by someone 
saying that you violated something with no proof that you 
violated it. You are not convicted by any judge, jury, peers. 
You are just, by an officer, saying that you did something. Me, 
as a police officer, I have spent many years in the law 
enforcement community. And I am here to tell you that the 
officer is wrong sometimes. Sometimes he doesn't understand the 
law. Sometimes he doesn't understand. Sometimes he makes 
mistakes. That makes him human. This does not give for any 
human factor. This says that he gets to decide who gets to stay 
in business and who doesn't. And me, as a small carrier, I am 
telling you, that is going to put a lot of small carriers out 
of business. It is going to put a lot of families not eating 
and on the welfare lines. I urge you to really think about this 
long and hard.
    Mr. West. Thank you, panel. Thank you, Mr. Chairman. I 
yield back.
    Ms. Velazquez. So I just would like to ask Mr. Miranda, 
would you be supportive of what Mr. Tucker recommended to the 
Administrator?
    Mr. Miranda. No, ma'am.
    Ms. Velazquez. Including the list.
    Mr. Miranda. I don't know what OOIDA's standpoint would be, 
but for me as a small trucker, no because the problem is----
    Ms. Velazquez. Okay. I just needed a yes or no answer. 
Thank you.
    Mr. Gallo, you heard Administrator Bronrott when I asked 
him about your study. And then we asked about the updated study 
and the response that he made. So the FMCSA's data set that was 
used was still magnitudes larger than yours. I believe that is 
five times larger than yours. So is it possible that your 
sample size is still too small to accurately determine the 
relationship between the BASIC and accident probability?
    Mr. Gallo. Yes. Thank you. I should clarify my earlier 
statement. I said I was flattered. Actually, I got a pit in my 
stomach when I first read the report. So when we went back to 
it, we did dig very deeply.
    No, a 200 carrier set is certainly adequate by most 
statistical measures. But part of the reason why we broadened 
our study to 4,600 carriers was for that reason. And again, we 
found virtually no statistical correlation. So math is math. I 
would encourage them to rerun their numbers if they like. But I 
do have some additional comments if you would care for me to 
comment on the UMTRI report.
    Ms. Velazquez. Okay.
    Dr. Belzer, some trucking firms have increased driver pay 
and found that it increased the overall safety record of the 
company. However, current market forces prevented them from 
continuing to pay the elevated rate. What can we do to strike 
the right balance between regulations and pay to create a safer 
highway system?
    Mr. Belzer. Well, I think probably the most important thing 
we can do is start with the perspective that the economic 
competition is driving these outcomes and try to think about 
what we can do to change the economic balance. We don't want to 
encourage cutthroat behavior. We don't want to encourage a race 
to the bottom, as some people call it. And I think the way the 
deregulation in competition transport works, it tends to drive 
that process.
    I now teach transportation economics to graduate students. 
And as I do that, it is more clear to me that it is the 
competition itself that is causing the problem. So we have to 
address ways of kind of putting boundaries around it. And one 
of them could be, for example, paying drivers for the 
nondriving labor. Once you do that, they will self regulate.
    Ms. Velazquez. Dr. Belzer, I was shocked to find that FMCSA 
has very little power to remove unsafe trucks and buses from 
the roadways. And I found that because this accident impacted 
some of my constituents, the one in the Bronx. Do you think 
that the new disciplinary measures of the CSA program are 
enough to address the safety concerns posed by the curbside bus 
industry?
    Mr. Belzer. So I don't know the details of the CSA. But I 
don't believe that it is dealing with the economic competition 
that is driving this process. This is like the little Dutch boy 
and his finger in the dike and the water keeps flowing. And the 
difficulty that we have when we have this kind of cutthroat 
competition, which was what was involved in that particular 
crash, that is not the kind of thing that is going to get fixed 
by a regulation that makes it more difficult for people to 
operate. It is going to be probably a proactive effort to make 
sure that the people who are doing the work are getting paid 
for it. So I think that is really what it comes down to.
    Ms. Velazquez. Okay. Thank you.
    Chairman Graves. Mr. Hanna.
    Mr. Hanna. Doctor, the way it is set up now, it is sort of 
like a bell curve. Everybody is scored. And some people have to 
get a bad score. Some people have to get a good score. Mr. 
Tucker thinks that is ridiculous. It doesn't make any sense to 
me either. What do you think of it?
    Mr. Belzer. It sort of reminds me of the curve in the 
classroom, right, so I can get in trouble on that one.
    But I think that it is very difficult. When I set up the 
trucking industry benchmarking program, I actually partnered 
with the California Trucking Association. What we were going to 
try to do was to implement this association wide in California. 
Ultimately, I couldn't, on a voluntary basis, get enough 
carriers to participate in it to----
    Mr. Hanna. It doesn't make any sense. If a trucker scores 
well and the bulk of truckers, 99 percent of them score well, 
why shouldn't they all have a good score? And conversely, why 
should everybody be penalized because somehow the bell curve 
idea is being used? You know, along with the pay idea, I 
understand that and I agree with it. I wonder also, part of the 
problem is that the scoring, the way trucking companies are 
penalized runs with the company, not necessarily the driver. 
And one of my complaints about OSHA, having been in business 
for so many years, is not that they penalize people as a 
company, but that there is no accountability on the part of the 
driver. They are almost treated as if they were a piece of 
equipment in terms of their accountability. It sounds as though 
it is the same here.
    Mr. Belzer. There is more accountability in trucking than 
there would be in your standard business, I think. And the 
reason is everybody who drives a commercial motor vehicle has 
to have that license, and that license personally travels with 
them throughout their career. So the reason why this pay thing 
works--and some of my best supporters are nonunion companies, 
like J.B. Hunt and companies like Schneider, companies like 
that, they want to know if the driver has got a safety problem. 
That safety problem goes to that driver, that driver's record 
right along. And that is different from what happens if 
somebody climbs a ladder and falls off. It very difficult to 
track that kind of stuff back. This is pretty trackable.
    Mr. Hanna. Mr. Tucker, I watched you as you were listening 
to Mr. Belzer. I wonder if you have a question you would like 
to ask him on my time.
    Mr. Tucker. I have a few things I would probably like to 
say.
    Mr. Hanna. You have got 2\1/2\ minutes.
    Mr. Tucker. I really hesitate as a free market kind of 
person. I am a brokerage, right. So I have to buy and sell. And 
I love the free market. I would hesitate going down the road of 
somehow regulating pricing for trucking. It will be something 
that industry will rail against. I think you will have the 
National Association of Manufacturers and every other trade 
association screaming. It will be a bloody war, I think. It 
will wake up every association that is out there because 
eventually it will raise prices to all of us.
    The reality is, right now, prices are going up. It is a 
supply and demand. Trucking is a leading indicator. We came out 
of the recession far faster and sooner than the country did. We 
went into it faster as well. Right now, I can tell you that the 
rates that truckers are getting are better. The returns are 
better. Actually, this person would be far better to tell you.
    Mr. Hanna. To Dr. Belzer's point, it doesn't necessarily 
mean that the driver is getting the benefit of that. What do 
you say to that?
    Mr. Tucker. That is a very good point. But right now, in 
good economies, like we are having right now in trucking--not 
the greater economy but in trucking--drivers get signing 
bonuses to come on to trucking companies. And drivers are 
very--right now, there was a trade association recently, one of 
the largest carriers in the country said, I have got something 
like 68 brand new tractors and trailers he can't fill with 
drivers. And he is giving away signing bonuses to fill those 
seats.
    So I have a hard time trying to mess with a market that has 
its ups and downs but works, in my opinion.
    Mr. Hanna. Thank you, chairman. I yield back.
    Chairman Graves. Mr. Landry.
    Mr. Landry. Real quick, it just occurred to me, do any of 
y'all know how many people, how many lives are lost on our 
highways due to poor roads and bridges and poor infrastructure? 
Dr. Belzer?
    I heard that 4,000 are caused by it.
    Mr. Belzer. Well, there are 4,000 some that are killed 
every year in truck related crashes and some 49,000 are 
killed----
    Mr. Landry. Such things as roadways, any idea? I am just 
curious because that is our job to make sure that the roads are 
safe. I don't know. Mr. Miranda, do you believe that our 
roadways, especially the Federal roadways are in A plus shape?
    Mr. Miranda. My answer to that is, no, sir.
    Mr. Landry. That is absurd. And then the fact that we can't 
even do our job but yet now we want to regulate your business 
as well and tell you how you have to drive safer, but we can't 
provide a transportation system that is at least of A or B 
quality.
    Mr. Miranda. I would tend to agree with you, Mr. Landry. As 
a matter of fact, I would comment that of those 4,000, nobody 
is taking into account how many of those accidents were the 
primary cause of collision factor, whether road conditions or 
weather conditions.
    Mr. Landry. Right. Now let me ask you, do you have an 
onboard recorder? How many trucks do you have?
    Mr. Miranda. I have three trucks I have got under my 
authority, sir.
    Mr. Landry. Do you have any onboard recorders?
    Mr. Miranda. No, sir. I couldn't afford it. If I had to put 
those on today, I would have to close my doors.
    Mr. Landry. Oh, no.
    Mr. Miranda. I am trying to figure out where Mr. Tucker 
sees this great economy. Because maybe the brokers are taking 
it and putting it in their pockets, but it ain't coming to the 
drivers, I will tell you that much.
    Mr. Landry. So you are basically saying that if you were 
mandated to put those recorders on, you would probably have to 
close your door.
    Mr. Miranda. No. There is no question. I would close my 
door, sir. Right now, I am running on about a 7 percent profit 
margin.
    Mr. Landry. And you have, you said, three trucks?
    Mr. Miranda. Yes, sir.
    Mr. Landry. Now you are the boss over those three trucks, 
right?
    Mr. Miranda. I don't know if I would consider myself a 
boss, but I am in charge.
    Mr. Landry. You are in charge. And so when you give an 
order that those drivers are supposed to implement that order--
you said you were in law enforcement; is that right?
    Mr. Miranda. I have been in law enforcement, yes, sir.
    Mr. Landry. Worked for the sheriff's office or the 
municipal?
    Mr. Miranda. I worked for the L.A. County Sheriff's Office. 
I also worked for the Oakland Housing Authority.
    Mr. Landry. Now when the sheriff put down a policy or said, 
this is the way I want it done, what would happen if y'all 
deputies didn't follow his command?
    Mr. Miranda. Normally you got some days on the beach or got 
fired or both.
    Mr. Landry. So the President of the United States says that 
he doesn't like it. He agrees with you. He thinks that you 
can't afford those onboard recorders. But yet the person who 
works for him says that regardless of what the President says, 
we are going to put those in your truck. I mean, does that seem 
counterintuitive to the way the chain of command works?
    Mr. Miranda. It seems very counterintuitive to me, sir.
    Mr. Landry. Let me ask you a question. If we mandate this, 
how many more businesses like yourself do you think are going 
to close?
    Mr. Miranda. My opinion or what can I state as a fact?
    Mr. Landry. Well, I mean, give me your opinion.
    Mr. Miranda. My opinion is, I would say probably--you take 
almost any trucking company below 10, and they are probably 
going to be out of business within 30 to 90 days.
    Mr. Landry. But I mean, the transportation industry won't 
come to a grinding halt. What would it look like?
    Mr. Miranda. J.B. Hunt, Schneider, Swift, U.S. Express, 
Covenant. That kind of company.
    Mr. Landry. So basically this regulation will force you out 
of business and into the hands of a major corporation?
    Mr. Miranda. Yes, sir.
    Mr. Landry. That is where they would deliver you to?
    Mr. Miranda. Yes, sir.
    Mr. Landry. That is not the American way.
    Mr. Miranda. That is not what I fought in the trenches for. 
That is not what I went to war for when I joined the Army.
    Mr. Landry. Oh, you were in the Army too then?
    Mr. Miranda. Yes, sir.
    Mr. Landry. So when the general put down an edict or he 
gave an order--and Mr. West is a great American. He served as 
well. I did as well in uniform. And I know when they told us 
something, that normally it meant----
    Mr. Miranda. That was the marching order. I didn't get to 
think about it. I just did it.
    Mr. Landry. Right. Unless it was something, you know, that 
was just unethical or immoral.
    Mr. Miranda. No, I never did anything morally----
    Mr. Landry. Right. But you wouldn't take an order that 
would put your life in danger?
    Mr. Miranda. Yes, sir, I took orders that put my life in 
danger, but I would not----
    Mr. Landry. In other words, an order that you felt----
    Mr. Miranda. That went against my beliefs? No, sir.
    Mr. Landry. Right. Right. Right. So evidently, maybe the 
Director doesn't believe what the President says. And maybe in 
his heart, he just wants to see y'all spend another $2 billion 
implementing this regulation and driving you out of business.
    Mr. Miranda. I am not sure if he is trying to drive us out 
of business. But I don't think he has ever been behind the 
wheel of a truck. And I think I would like to invite him to 
come on out. I am sure if I couldn't put him in one of my 
trucks, I am sure one of the members of OOIDA would be more 
than happy to take him for a ride and show him the realistic 
world of truck driving.
    Mr. Landry. Thank you.
    Chairman Graves. With that, I want to thank all of our 
witnesses for----
    Ms. Velazquez. Mr. Chairman, I have a follow up question.
    Chairman Graves. Sure.
    Ms. Velazquez. Mr. Gallo, going back to the study, can you 
submit for the record at least and tell me what was the 
breakdown that the news survey containing 4,600 new operators, 
if there were different business sizes that were included in 
that sample. Do you have a breakdown for that?
    Mr. Gallo. Yes, I do. And also, in our written testimony, 
we included our research report. It is on page 7 of that 
report.
    82 percent were below 250 trucks. I can give you the actual 
numbers if you like.
    Ms. Velazquez. 82 percent below----
    Mr. Gallo. 82 percent below 250 trucks.
    Ms. Velazquez. Okay. So within that sample of 82 percent--
because that is a big number, 82 percent.
    Mr. Gallo. Yes. So if we break it down further, between 100 
and 249 trucks, there were 1,047 motor carriers. From 50 to 99, 
there were 1,368 motor carriers. And then from 25 to 49, there 
were 1,379 firms that we looked at.
    Ms. Velazquez. Thank you.
    Chairman Graves. With that, I want to thank all of our 
witnesses for appearing today. Obviously your testimony has 
been very helpful, obviously demonstrating the impact that 
Washington regulations have on small business.
    With that, I would ask unanimous consent that all Members 
have 5 legislative days to submit statements and supporting 
materials for the record. Without objection, that is so 
ordered.
    With that, the hearing is adjourned.
    [Whereupon, at 2:52 p.m., the committee was adjourned.]


[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]


