Fuel Smarts

Economists Report HOS Plan Understates Costs, Overstates Benefits

August 15, 2000

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In a study prepared for the American Trucking Associations, a leading economic consulting firm concludes that the federal government's hours of service proposal would cost the trucking industry five times more than the government's estimate, and that it overstates the potential safety benefits of the reform.
In a detailed report issued yesterday, National Economic Research Associates says the hours of service proposal would cost the trucking industry $19.1 billion over the next 10 years -- a number the consultants call conservative.
According to NERA, the DOT analysis completely failed to account for the cost of at least 50,000 new trucks as well as driver wages and benefits totaling $8.7 billion over 10 years.
The NERA study also claims that the government has overestimated the highway safety benefits of the proposed rules by more than 500 percent.
"The FMCSA overstates benefits by overstating the number of fatal crashes attributable to truck driver fatigue," reads the report. "Once the baseline is adjusted for crashes from other causes, benefits fall by $3.1 billion over 10 years. NERA finds that the proposed rule will lead to approximately 19 avoided fatalities per year, compared to the FMCSA's finding of 115 per year."
The report says the FMCSA claims the number of fatigue-related fatalities would fall by 20 percent -- but offers no reference to any specific studies or statistical support.
NERA also says that the different components of the proposal should be looked at separately. "The FMCSA's bundling of the rule's components obscures the Administration's own findings," say the researchers. "Separating the costs and benefits associated with the paperwork reduction component of the rule reveals that the rule's other components -- a reduction in driver's hours and an on-board monitor requirement -- fail a cost-benefit test, even based on the FMCSA's own assumptions."
The only way the FMCSA could make the proposal pass a cost-benefit test, NERA says, was by including significant savings from paperwork reduction alone that have nothing to do with reducing the number of fatigue-related crashes.
"This study confirms what responsible truck drivers have said all along," says Walter B. McCormick, ATA president and CEO: "This plan could make the roads less safe, it is unworkable, and it will have a negative effect on our economy."

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