Knight-Swift Transportation (NYSE: KNX) is appealing to federal regulators that it be exempt from having to provide certain record-keeping requirements for its drivers citing onerous and unnecessary costs.
A letter from Knight-Swift attorneys recently made public by the Federal Motor Carrier Safety Administration (FMCSA) explains that Knight Transportation's first attempt at the exemption, in a request filed in October 2016 before its 2017 merger with Swift Transportation, went without a response after the agency confirmed it had been received.
"Consequently, their application languished for over three years without an answer from FMCSA," wrote Sean Scapellato, a partner with the law firm Cobb Dill Hammett.
"Now, Knight-Swift are harmed for reasons beyond their control and not of their making. Without exemption relief from agency record-keeping requirements…the costs are staggering and continue to escalate" due to computer system limitations at the Arizona Department of Motor Vehicles (DMV), he said. Knight-Swift is based in Phoenix.
Knight Transportation's initial request seeking a two-year exemption from federal rules explained that the company's process for ensuring its newly hired drivers were medically examined and certified goes above and beyond the FMCSA's requirements, rendering them redundant
"Our commitment to safety means that we have historically chosen to bear the cost of re-certifying drivers during the hiring process," the company wrote in 2016. "However, the added costs of obtaining duplicate MVR [motor vehicle records] challenges the resources we have devoted to this area." It warned that if not granted the exemption, "our fleet's safety and individual driver's safety will surely not be served," it stated.
In data included in its second exemption request, Knight's MVR and associated staffing costs amounted to roughly $215,000 in 2016, when the company listed 4,694 drivers. The costs for the combined Knight-Swift in 2019, now with close to 18,000 drivers, has ballooned to close to approximately $2.2 million, according to company.
Scapellato also pointed out that Knight-Swift is the subject of an ongoing non-ratable safety review, contending that an FMCSA safety investigator questioned the company on how it could prove that their drivers have been medically certified. "The answer to this query is clearly set out in the 2016 exemption application" and that the investigator should know that Arizona's DMV is not yet compliant due to the computer issues, he said.
Knight-Swift is seeking an expedited review of the revised exemption, which the company wants in place until the Arizona DMV's computer system is compliant with federal regulations.
Comments on the exemption are due 30 days after it is published in the Federal Register, scheduled for December 23.
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