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Companies Skirt Safety Rules, Keep Driving

Posted By admin On September 15, 2010 @ 7:35 pm In | Comments Disabled

In just two years, more than 1,000 trucking companies and 20 bus companies that had been shut down for safety violations reopened under new names, according to a recent Government Accounting Office report.

The practice, referred to as “reincarnating,” is one of the ways bus and truck companies skirt rules designed to keep roadways safe.

Reincarnation is relatively simple to do but hard to detect, government officials say. Motor carriers that have been ordered out of business or face fines go online, fill out a form and pay a small fee. The U.S. Department of Transportation issues them a new registration number as if they are a new business.

“All they have to do is click on a name, put in a credit card, and you pop up with a new number,” said Nancy O’Liddy, a lobbyist for Transportation Intermediaries Association, a trucking industry group.

There can be legitimate reasons for motor carrier companies to transfer ownership or re-incorporate – such as divorce, death or relocation. But some companies operate with multiple DOT numbers, while others create new companies and register for new numbers over and over again. Sometimes companies share phone numbers and addresses and even buses.

It’s a system in which it’s hard to distinguish the good operators from the bad and even harder to catch them, regulators and safety experts say.

Sometimes it takes an accident to catch illegal operators. That’s what happened in Sherman, Texas, in 2008 when a driver lost control of his bus, which struck a curb, crashed through the guardrail of a bridge and fell about 8 feet before landing on its side, according to a National Transportation Safety Board report [1]. Seventeen people were killed and 15 injured.

Investigators said one of the front tires of the bus had been recapped in violation of federal regulations. The bus company had lost its authority to operate two months earlier because of safety problems, but its owner simply registered under a new name and kept his buses on the road.

For six years prior to the accident, the NTSB had been urging the Federal Motor Carrier Safety Administration to tighten its registration process. The agency did come up with a program that requires new carriers to undergo safety audits and monitoring for 18 months. But after the Texas accident the NTSB said the new program was not working like it should and that more needed to be done.

The NTSB had more criticism for the FMCSA after a Victoria, Texas, accident, also in 2008, in which a bus driver fell asleep and woke up after the bus drifted into the median. The driver overcorrected and flipped the bus, killing one person and injuring 46 others. The company had taken advantage of registration loopholes to get an operating permit, NTSB investigators said.

The board issued 19 safety recommendations [2] as a result of the accident, including better ways of identifying reincarnated carriers and getting them off the roads.

The attention generated by the two Texas crashes prompted Congress to ask for a study of reincarnated carriers. The Government Accountability Office report [3], released in mid-2009, examined 220 motor coach companies over two years and found that 20 of them had probably registered under false pretenses. It also found 1,073 potentially reincarnated commercial trucking companies.

The numbers, investigators said, were understated because it’s so difficult to catch motor carriers who make small changes in their registrations, such as the spelling of a company name or a change of address or ownership, in order to deceive the agency. Neither did it include cases in which the companies provided bogus information – entirely new names, for example – to hide the reincarnation.

Since the Texas crashes, the FMCSA has begun reviewing applications for signs of reincarnation using a computer matching process to compare applications to a list of motor carriers with poor safety records. New applicants with suspicious profiles are targeted for additional scrutiny, and if a case of reincarnation is discovered the agency denies the company operating authority and takes “aggressive action to place the successor out of business,” according to a statement from the FMCSA.

In written testimony in April 2010 to a Senate subcommittee, FMCSA Administrator Anne Ferro said the new program for buses and some trucks is working. The agency is detecting more bad carriers and turning down their applications, she said.

Checking Carriers

When a company wants to operate a truck or bus across state lines, it has to first register with the FMCSA, which operates under the Department of Transportation.

The company is issued a unique identifying number, or DOT number. For permission to transport passengers, the business also must pay $300 and provide proof of insurance within 90 days to get an additional identifying number, called a motor carrier number.

If a carrier is stopped at a random roadside check, these numbers are checked. If there is a safety violation, the driver might receive what amounts to a ticket and be given a specified amount of time to fix the problem. If there have been previous violations or the safety issue is serious, the vehicle might be ordered of service.

Theoretically, an out-of-service order means that the truck or bus can’t leave the checkpoint until the fine is paid or the safety problem corrected. But “out of service” isn’t always interpreted literally because inspection stations would be crammed with idle trucks. Consequently, most drivers are allowed to travel on. This is one way companies with multiple citations keep driving, according to federal and state officials.

Owners and operators who want to avoid paying fines or fixing their vehicles sometimes simply re-register with the FMCSA and get a new DOT number. Then if they’re stopped, the only information that comes up is their new profile.

Nearly 11 million commercial vehicles were inspected at roadside checkpoints and weigh stations from 2007 through May 2010, according to a News21 analysis of the FMCSA inspection and citation database. About one in five, or 2.3 million, received out-of-service orders for violations of one kind or another.

Most of those were vehicles owned by small companies, according to the analysis. Businesses like Wal-Mart Transportation, with 6,570 trucks, and Swift Transportation Co. of Arizona, with 16,048 trucks, had out-of-service rates of 4 percent and 16 percent, respectively – well under the average.

In addition to roadside checks, the FMCSA conducts compliance audits of motor carrier companies to see that they’re meeting safety standards. But fewer than 4 percent of all carriers are audited each year.

At the same time, trucks and buses were involved in more than 4,000 fatal accidents in 2008, the latest year for which data is available. They accounted for a little more than 12 percent of all road fatalities.

Stronger Oversight

The FMCSA has been aware of problems with reincarnated carriers at least since 2005, when an attorney working for the agency wrote an internal memo to administrators vividly describing the issue. The memo [4], provided to News21 and the Center for Public Integrity [5] by a congressional staffer who did not want to be identified, states that a “significant number of these carriers are reincarnating or morphing into new business entities and continuing to operate.”

The attorney also wrote that reincarnated carriers would be difficult and expensive to battle legally. The FMCSA would “have the burden to establish that the second company is essentially an alter ego” of the business.

The congressional source provided a list of 20 bus companies [6] the GAO suspected of reincarnation. It included motor carrier operations from New York to California that dodged fines from $1,000 to $20,000 by opening new companies. These new companies often used the same addresses, names, drivers and phone numbers as the old businesses.

Transportation officials acknowledged the problems in the 2009 GAO report on reincarnated carriers. At the same time, they told the GAO that catching such carriers is labor intensive and requires far more documentation from carriers than is usually required.

In April of this year, FMCSA Administrator Anne Ferro assured a Senate subcommittee on transportation that the agency is taking steps to more closely monitor new bus and truck companies.

The agency is using a mix of approaches, including raising standards for new operators, requiring operators to maintain safety standards in order to remain in business and removing high-risk operators from highways, Ferro said. Since December 2009, she said, 4,808 new carriers were inspected and 2,184 had failed.

Some caution against implementing too many regulations. “The tougher that you make it to be legally registered the more apt you are to get (companies) that will just chose to operate unregistered,” said Ken Presley, vice president of industry relations for the United Motorcoach Association, an industry advocacy group.

Others argue that the states need to take at least some of the responsibility for motor carriers operating within their borders. Twenty-four states have passed laws that allow them to suspend or revoke the registrations of motor carriers that have been ordered out of service, according to the FMCSA.

States already conduct the majority of commercial vehicle inspections, and that’s more work than they can handle, said Bob Barton of the Nevada Highway Patrol, who inspects new motor carrier companies in Las Vegas. Barton said inspecting just one company can take from an hour and a half to two days.

When he suspects a company is trying to evade regulations, Barton said, there are “very few things that I can do.” Nevada does not have a law that allows it to suspend or revoke the registrations of motor carriers that have been ordered out of service.

The NTSB says the federal government should take primary responsibility for truck and bus oversight because interstate commerce is a national industry. “A bad apple is a bad apple whether it is Minnesota or Washington,” said Paula Sind-Prunier, the board’s chief of safety recommendations.

Sept. 26, 2010


Article printed from News21 – National: http://national.news21.com

URL to article: http://national.news21.com/2010-2/truck-and-bus-companies-reincarnate-to-keep-driving-ntsb

URLs in this post:

[1] report: http://www.ntsb.gov/publictn/2009/HAR0902.htm

[2] recommendations: http://www.ntsb.gov/Publictn/2009/HWY-08-MH-011.htm

[3] report: http://www.gao.gov/new.items/d09924.pdf

[4] memo: http://national.news21.com/wp-content/uploads/2010/09/Oversight_document3.pdf

[5] Center for Public Integrity: http://www.publicintegrity.org/

[6] list of 20 bus companies: http://national.news21.com/wp-content/uploads/2010/09/Oversight_document4.pdf

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