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Federal Register / Vol. 86, No. 192 / Thursday, October 7, 2021 / Rules and Regulations
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process. Thus, drivers will incur opportunity cost for time spent traveling and out-of-pocket travel costs. The Agencys estimate of driver opportunity costs and reinstatement costs is based on the following assumptions:
1. One day to travel to and from the SDLA and complete the reinstatement process.
2. 10 hours of lost wages.
3. 5,045 drivers subject to mandatory downgrades.
4. A representative driver wage of $31.00 per hour to estimate income forgone.
5. $0.575 per-mile cost for use of private vehicle.37
6. 50 miles round-trip to the SDLA.
Based on these assumptions, the upper bound of annual opportunity costs for one day spent traveling to the SDLA and completing the reinstatement process is estimated at $1.6 million 10
hours 5,045 drivers $31 per hour +
5,045 drivers 50 miles $0.575 per mile, and the 10-year total cost is estimated at $16.3 million. At a 7
percent discount rate, the 10-year cost is estimated at $11.5 million and the annualized cost is estimated at $1.6
million.
Drivers may also incur reinstatement costs attributed to SDLA requirements for restoring the commercial privilege, such as payment of a reinstatement fee, and partial or full retesting.38 The States have established a broad spectrum of procedures for reinstatement of the CLP/
CDL privilege to the drivers license following a downgrade due to invalid medical certification as required by 383.73o4, and the Agency expects that the States will adopt or modify existing procedures when downgrading a CLP/CDL due to a drug or alcohol violation. FMCSA reviewed current procedures used by the States for drivers whose CLP or CDL has been downgraded for failure to maintain their medical certification. The Agency is aware that about half of the States require knowledge and/or skills retesting before removing a downgrade.
However, in these States, retesting is required only if a driver is not able to present a new medical certificate before the expiration of a prescribed grace period. None of these States has a retesting grace period less than six 37 The mileage rate is the General Services Administration current reimbursement rate for use of private vehicles. The mileage rate for private vehicle use is available at https www.gsa.gov/
travel/plan-book/transportation-airfare-rates-povrates/privately-owned-vehicle-pov-mileagereimbursement-rates accessed Oct. 29, 2020.
38 A requirement to retake the knowledge and skills test would cause the driver to forgo income during the 14-day waiting period required before taking the skills test.

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months. In the 2016 RIA, the Agency conservatively assumed that it would take a driver 12 weeks to complete a 108-hour program based on one 9-hour session per week. Thus, the Agency finds that drivers referred to IOT
programs will complete the IOT
program and the RTD process without having to retest to have the CLP or CDL
privilege restored to their license.
Therefore, FMCSA is not estimating reinstatement costs or fee payments resulting from this rule.
Motor Carrier Opportunity Costs Motor carrier opportunity costs are estimated because drivers subject to reinstatement would not be eligible to resume safety-sensitive functions, such as driving, until the SDLA restores the CLP or CDL privilege to the drivers license. This represents a change from current requirements in parts 382 and 40, which permit resumption of safetysensitive functions immediately following a negative RTD test result.
Thus, motor carriers may also incur opportunity costs based on the profits forgone from the loss of productive driving hours between the time the driver completes the RTD process and State reinstatement. The Agency estimates that a motor carrier will lose 10 hours of productive driving time while a driver completes the reinstatement process. FMCSA bases this estimate on current processes the States employ to reinstate a CLP or CDL
privilege following a downgrade of the drivers license due to invalid medical certification.
In concert with the driver opportunity cost estimates, the Agency estimates that motor carriers would lose 50,446
hours of productive driving time each year 5,045 drivers 10 hours while drivers complete the reinstatement process. Broadly speaking, the opportunity cost to the motor carrier the firm of a given regulatory action is the value of the best alternative that the firm must forgo in order to comply with the regulatory action. In this analysis, FMCSA follows the methodology used in the Entry-Level Driver Training rulemakings published in 2016 39 and 2019 40 and values the change in time spent in nonproductive activity as the opportunity cost to the firm, which is represented by the now attainable profit, using three variables: The marginal cost of operating a CMV, an estimate of a typical average motor carrier profit margin, and the change in nonproductive time.
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40 84

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FR 88732 Dec. 8, 2016.
FR 10437 Mar. 21, 2019.

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The American Transportation Research Institute ATRI report, An Analysis of the Operational Costs of Trucking: 2019 Update, found that marginal operating costs were $71.78
per hour in 2018.41 These marginal costs include vehicle-based costs e.g., fuel costs, insurance premiums, etc., and driver based costs i.e., wages and benefits.
Next, the Agency estimated the profit margin for motor carriers. Profit is a function of revenue and operating expenses, and ATA defines the operating ratio of a motor carrier as a measure of profitability based on operating expenses as a percentage of gross revenues.42 Armstrong &
Associates, Inc. 2009 states that trucking companies that cannot maintain a minimum operating ratio of 95 percent calculated as Operating Costs Net Revenue will not have sufficient profitability to continue operations in the long run.43 Therefore, Armstrong & Associates states that trucking companies need a minimum profit margin of 5 percent of revenue to continue operating in the future.
Transport Topics publishes data on the Top 100 for-hire carriers, ranked by revenue.44 For 2014, 39 of these Top 100
carriers also had net income information reported by Transport Topics. FMCSA
estimates that the 39 carriers with both revenue and net income information have an average profit margin of approximately 4.3 percent for 2014. For 2018, 33 of these Top 100 carriers had net income information reported by Transport Topics, with an average profit margin of approximately 6 percent for 2018.45 The higher profit margin experienced in 2018 is reinforced by a Forbes article that found net profit margin for freight trucking companies expanded to 6 percent in 2018, compared with an annual average of between 2.5 percent and 4 percent each 41 ATRI. An Analysis of the Operational Costs of Trucking: 2019 Update. October 2019. Table 10, pg.
19. Available at: https truckingresearch.org/wpcontent/uploads/2019/11/ATRI-Operational-Costsof-Trucking-2019-1.pdf accessed April 19, 2021.
Source data are assumed to be presented in 2018
dollar terms.
42 ATA. American Trucking Trends 2015. Page 79.
43 Armstrong & Associates, Inc. Carrier Procurement Insights. 2009. Pages 45. Available at:
https www.3plogistics.com/product/carrierprocurement-insights-trucking-company-volumecost-and-pricing-tradeoffs-2009/ accessed Jan. 5, 2016.
44 Transport Topics. 2014. Top 100 For-Hire Carriers. Available at: http ttnews.com/top100/forhire/2014 accessed April 19, 2021.
45 Transport Topics. 2018. Top 100 For-Hire Carriers. Available at: https www.ttnews.com/
top100/for-hire/2018 accessed April 19, 2021.

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