Federal Register / Vol. 77, No. 81 / Thursday, April 26, 2012 / Rules and Regulations 24863 

State and location Community 

No. 

Effective date authorization/cancellation of 

sale of flood insurance in community 

Current effective 

map date 

Date certain 

Federal 

assistance 

no longer 

available in 

SFHAs 

Spring City, City of, Sanpete County .... 490119 May 7, 1976, Emerg; August 5, 1980, Reg; 

May 2, 2012, Susp. 

......do ............... Do. 

Sunnyside, City of, Carbon County ....... 490205 June 16, 1975, Emerg; September 29, 

1978, Reg; May 2, 2012, Susp. 

......do ............... Do. 

Wellington, City of, Carbon County ....... 490037 February 9, 1977, Emerg; February 2, 

1984, Reg; May 2, 2012, Susp. 

......do ............... Do. 

* do = Ditto. 

Code for reading third column: Emerg.—Emergency; Reg.—Regular; Susp.—Suspension. 

Dated: April 12, 2012. 

David L. Miller, 

Associate Administrator, Federal Insurance 

and Mitigation Administration, Department 

of Homeland Security, Federal Emergency 

Management Agency. 

[FR Doc. 2012–10001 Filed 4–25–12; 8:45 am] 

BILLING CODE 9110–12–P 

DEPARTMENT OF TRANSPORTATION 

Federal Motor Carrier Safety 

Administration 

49 CFR Part 386 

[Docket No. FMCSA–2011–0259] 

RIN 2126–AB38 

Amendment to Agency Rules of 

Practice 

AGENCY: Federal Motor Carrier Safety 

Administration, DOT. 

ACTION: Final rule. 

SUMMARY: The Federal Motor Carrier 

Safety Administration (FMCSA) amends 

its Rules of Practice for Motor Carrier, 

Intermodal Equipment Provider, Broker, 

Freight Forwarder, and Hazardous 

Materials proceedings. The Agency 

clarifies that paying the full proposed 

civil penalty in an enforcement 

proceeding, either in response to a 

Notice of Claim (NOC) or later in the 

proceeding, does not allow respondents 

to unilaterally avoid an admission of 

liability for the violations charged. 

Additionally, the Agency establishes 

procedures for issuing out-of-service 

orders to motor carriers, intermodal 

equipment providers, brokers, and 

freight forwarders it determines are 

reincarnations of other entities with a 

history of failing to comply with 

statutory or regulatory requirements; 

these procedures will provide for an 

administrative review before the out-ofservice order takes effect. Finally, the 

Agency establishes a process for 

consolidating Agency records of 

reincarnated companies with their 

predecessor entities. 

DATES: This rule is effective May 29, 

2012. 

ADDRESSES: For access to the docket to 

read background documents, including 

those referenced in this document, or to 

read comments received, go to http:// 

www.regulations.gov at any time and 

insert ‘‘FMCSA–2011–0259’’ in the 

‘‘Keyword’’ box, and then click 

‘‘Search.’’ You may also view the docket 

online by visiting the Docket 

Management Facility in Room W12– 

140, DOT Building, 1200 New Jersey 

Avenue SE., Washington, DC, between 

9 a.m. and 5 p.m., ET Monday through 

Friday, except Federal holidays. 

Anyone is able to search the 

electronic form for all comments 

received into any of our dockets by the 

name of the individual submitting the 

comment (or signing the comment, if 

submitted on behalf of an association, 

business, labor union, etc.). You may 

review the U.S. Department of 

Transportation’s (DOT) complete 

Privacy Act Statement in the Federal 

Register published on January 17, 2008 

(73 FR 3316), or you may visit http:// 

edocket.acces.gpo.gov/2008/pdf/E8- 

785.pdf. 

FOR FURTHER INFORMATION CONTACT: 

Sabrina Redd, Office of Chief Counsel, 

Federal Motor Carrier Safety 

Administration, 1200 New Jersey 

Avenue SE., Washington, DC 20590– 

0001, by telephone at (202) 366–6424 or 

via email at sabrina.redd@dot.gov. 

Office hours are from 9 a.m. to 5 p.m. 

ET, Monday through Friday, except 

Federal holidays. If you have questions 

on viewing or submitting material to the 

docket, contact Renee V. Wright, 

Program Manager, Docket Operations, 

telephone (202) 366–9826. 

SUPPLEMENTARY INFORMATION: 

Table of Contents for Preamble 

I. Abbreviations 

II. Legal Basis for the Rulemaking 

III. Background 

A. Section 386.18 

B. Section 386.73 

IV. Discussion of Comments 

A. Comments to Section 386.18 

B. Comments to Section 386.73 

C. Small Business Impact 

V. Discussion of Rule 

VI. Regulatory Analyses 

I. Abbreviations 

Advocates Advocates for Highway and 

Auto Safety 

AMSA American Moving and Storage 

Association 

ATA American Trucking Associations, Inc. 

HMSP Hazardous Materials Safety Permit 

Program 

IME Institute of Makers of Explosives 

NATC North American Transportation 

Consultants, Inc. 

OOIDA Owner-Operator Independent 

Drivers Association 

TIA Transportation Intermediaries 

Association 

II. Legal Basis for the Rulemaking 

Congress has delegated certain powers 

to regulate interstate commerce to DOT 

in numerous pieces of legislation, most 

notably in section 6 of the Department 

of Transportation Act (DOT Act) (Pub. 

L. 89–670, 80 Stat. 931 (1966)). Section 

6(e)(6)(C) of the DOT Act transferred to 

DOT the authority of the Interstate 

Commerce Commission (ICC) to regulate 

the qualifications and maximum hours 

of service of motor carrier employees, 

the safety of operations, and the 

equipment of motor carriers in interstate 

commerce. This authority, first granted 

to the ICC in the Motor Carrier Act of 

1935 (Pub. L. 74–255, 49 Stat. 543), now 

appears in chapter 315 of title 49 of the 

U.S. Code. The regulations issued under 

this authority became known as the 

Federal Motor Carrier Safety 

Regulations (FMCSRs), appearing 

generally at 49 CFR parts 350–399. The 

administrative powers to enforce 

chapter 315 were also transferred from 

the ICC to the DOT in 1966 and appear 

in chapter 5 of title 49 of the U.S. Code. 

The Secretary of DOT (Secretary) 

delegated oversight of these provisions 

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24864 Federal Register / Vol. 77, No. 81 / Thursday, April 26, 2012 / Rules and Regulations 

to the FHWA, the predecessor agency to 

FMCSA. 

Between 1984 and 1999, a number of 

statutes added to FHWA’s authority. 

Various statutes authorize the 

enforcement of the FMCSRs, the 

Hazardous Materials Regulations 

(HMRs), and the Federal Motor Carrier 

Commercial Regulations (FMCCRs) and 

provide both civil and criminal 

penalties for violations. These statutes 

include the Motor Carrier Safety Act of 

1984 (Pub. L. 98–554, 98 Stat. 2832), 

codified at 49 U.S.C. Chapter 311, 

Subchapter III; the Commercial Motor 

Vehicle Safety Act of 1986 (Pub. L. 99– 

570, 100 Stat. 3207–170), codified at 49 

U.S.C. Chapter 313; the Hazardous 

Materials Transportation Uniform Safety 

Act of 1990 (Pub. L. 101–615, 104 Stat. 

3244), codified at 49 U.S.C. Chapter 51; 

and the ICC Termination Act of 1995 

(Pub. L. 104–88, 109 Stat. 803), codified 

at 49 U.S.C. Chapters 135–149. 

Specifically, the Secretary is authorized 

to prescribe regulations ensuring that 

commercial motor vehicles (CMVs) are 

operated safely under 49 U.S.C. 31136 

(a)(1), and to determine whether an 

owner or operator is fit to safely operate 

CMVs under 49 U.S.C 31144. In order to 

ensure that carriers are fit to safely 

operate, it is necessary to monitor the 

safety performance history of individual 

carriers. FMCSA needs to monitor the 

safety performance history of carriers 

who ‘‘reincarnate’’ as a new carrier 

when faced with enforcement action in 

order to focus Agency enforcement 

efforts. This rule will ensure that 

carriers who have a proven history of 

unsafe operations are not able to evade 

regulation by simply forming a new 

company or obtaining new registration. 

III. Background 

On December 13, 2011, FMCSA 

published a notice of proposed 

rulemaking (76 FR 77458), with the 

intent to amend its rules of practice for 

motor carrier, intermodal equipment 

provider, broker, freight forwarder, and 

hazardous materials proceedings. 

FMCSA received seven public comment 

submissions regarding the NPRM. These 

comments are discussed in part IV, 

Discussion of Comments. 

A. Section 386.18 

FMCSA published a comprehensive 

revision of its Rules of Practice on May 

18, 2005. This revision can be found in 

49 CFR part 386 (70 FR 28467). The 

revision was intended to increase the 

efficiency of Agency administrative 

enforcement procedures, enhance due 

process, improve public understanding 

of the Agency’s procedures, and 

accommodate recent programmatic 

changes. 

Under § 386.11(c) of the revised Rules 

of Practice, civil penalty enforcement 

proceedings are initiated through 

service of an NOC, which is usually 

issued by the FMCSA Division 

Administrator for the State in which the 

respondent maintains its principal place 

of business. The NOC, which is usually 

based on a compliance review or other 

type of investigation or enforcement 

intervention, sets forth the provisions of 

law allegedly violated by the respondent 

and the underlying facts pertinent to the 

alleged violations; proposes a civil 

penalty; and provides information 

regarding the time, form, and manner 

whereby the respondent could pay, 

contest, or otherwise seek resolution of 

the claim. Prior to 2005, the Rules of 

Practice were silent on whether 

payment of the proposed civil penalty 

in response to the NOC, or at a 

subsequent stage of the proceeding, 

constituted an admission of the 

violations alleged in the NOC. 

The 2005 revision of the Rules of 

Practice added a new § 386.18 titled 

‘‘Payment of the claim.’’ That section 

provided that payment of the full 

amount claimed may be made at any 

time before issuance of a Final Agency 

Order. After the issuance of a Final 

Agency Order, claims are subject to 

interest, penalties, and administrative 

charges in accordance with 31 U.S.C. 

3717; 49 CFR part 89; and 31 CFR 901.9. 

If respondent elects to pay the full 

amount as its response to the Notice of 

Claim, payment must be served upon 

the Field Administrator at the Service 

Center designated in the Notice of Claim 

within 30 days following service of the 

Notice of Claim. No written reply is 

necessary if respondent elects the 

payment option during the 30-day reply 

period. Failure to serve full payment 

within 30 days of service of the Notice 

of Claim when this option has been 

chosen may constitute a default and 

may result in the Notice of Claim, 

including the civil penalty assessed by 

the Notice of Claim, becoming the Final 

Agency Order in the proceeding 

pursuant to § 386.14(c). Unless objected 

to in writing, submitted at the time of 

payment, payment of the full amount in 

response to the Notice of Claim 

constitutes an admission by the 

respondent of all facts alleged in the 

Notice of Claim. Payment waives 

respondent’s opportunity to further 

contest the claim, and will result in the 

Notice of Claim becoming the Final 

Agency Order. 

In a small number of enforcement 

proceedings, respondents paid the full 

amount of the claim with written 

objection, either in their reply to the 

NOC or at a later stage of the 

proceeding. In such cases, the 

respondents argued that payment with 

written objection terminated the 

proceeding without an admission of 

liability. The FMCSA Field 

Administrators, who were responsible 

for prosecuting enforcement 

proceedings before the Agency, 

contended that respondents could not 

unilaterally terminate an enforcement 

proceeding by making full payment 

without an admission of liability. 

In a case decided on November 3, 

2010, In the Matter of Homax Oil Sales, 

Inc., Docket No. FMCSA–2006–26000, 

Order Denying Petition for 

Reconsideration (Homax), FMCSA’s 

Assistant Administrator reasoned that 

allowing respondents to unilaterally 

terminate proceedings by paying the 

proposed penalty in full and lodging an 

objection under § 386.18(c) was 

inconsistent with the Agency’s 

enforcement policy and section 222 of 

the Motor Carrier Safety Improvement 

Act (MCSIA), which requires that the 

Agency assess the maximum statutory 

penalty for each violation of law by any 

person ‘‘who is found to have 

committed a pattern of violations of 

critical or acute regulations issued to 

carry out such a law or to have 

previously committed the same or 

related violation of critical or acute 

regulations issued to carry out such a 

law.’’ The Assistant Administrator 

concluded that if a carrier was allowed 

to unilaterally terminate an enforcement 

proceeding without an admission, the 

case could not count as prior history for 

future civil penalty calculations under 

section 222 of MCSIA or under 49 

U.S.C. 521(b)(2)(D), which requires the 

Agency to consider, among other things, 

a respondent’s history of prior offenses. 

Allowing unilateral termination of a 

proceeding by a respondent without an 

admission would permit carriers with 

abundant financial resources to 

repeatedly violate the Agency’s 

regulations without facing escalating 

civil penalties despite a history of 

noncompliance with the regulations. 

The Assistant Administrator 

acknowledged that the regulatory text of 

§ 386.18(c) was less than clear regarding 

the consequences of full payment with 

written objection and recommended 

that the meaning of the paragraph be 

clarified through rulemaking. 

As was noted in Homax, in an April 

1996 Notice of Proposed Rulemaking 

(NPRM), FHWA proposed the following 

language with respect to the full 

payment issue: ‘‘Unless otherwise 

provided in writing by mutual consent 

of the parties, payment and/or 

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Federal Register / Vol. 77, No. 81 / Thursday, April 26, 2012 / Rules and Regulations 24865 

compliance with the order constitutes 

an admission of all facts alleged in the 

notice of violation [called a Notice of 

Claim under the current Rules of 

Practice] and a waiver of the 

respondent’s opportunity to contest the 

claim, and results in the notice of 

violation becoming the final agency 

order.’’ (61 FR 18865, Apr. 29, 1996) 

FHWA’s reasoning for this language 

was that ‘‘future agency enforcement 

actions may be based on, and certain 

consequences may flow from, prior and 

continued violations of the safety 

regulations.’’ (61 FR 18875–76, Apr. 29, 

1996) 

FMCSA revised this proposal, 

renumbered as § 386.18(c), in an 

October 2004 Supplemental Notice of 

Proposed Rulemaking (SNPRM) (69 FR 

61628, Oct. 20, 2004) to read as follows: 

‘‘Unless objected to in writing, payment 

of the full amount in its reply 

constitutes an admission by the 

respondent of all facts alleged in the 

notice of claim. Payment waives 

respondent’s opportunity to further 

contest the claim, and will result in the 

notice of claim becoming the final 

agency order.’’ 

This proposed change was intended 

to make ‘‘it clear that, unless the parties 

otherwise agree in writing, respondent’s 

payment of the full claim amount as its 

reply to the notice of claim constitutes 

an admission.’’ (69 FR 61622) 

The final rule published on May 18, 

2005 (70 FR 28467), adopted that 

provision with little change. In the 2010 

Homax Order, the Assistant 

Administrator concluded that, 

notwithstanding the removal of the 

language requiring mutual consent of 

the parties from the regulatory text, the 

preamble of the rule showed that the 

Agency intended to adopt the mutual 

consent requirement originally 

proposed in 1996. 

In a subsequent case, In the Matter of 

Associated Pipe Contractors, Inc., 

Docket No. FMCSA–2008–0159, Order 

Terminating Proceeding and Closing 

Docket, January 10, 2011, the Agency 

addressed the implications of full 

payment of the proposed civil penalty at 

any time before issuance of a Final 

Agency Order, in accordance with 49 

CFR 386.18(a). In Associated Pipe 

Contractors, the carrier paid the full 

penalty with written objection several 

months after contesting the NOC and 

requesting administrative adjudication. 

Section 386.18(a), which applied to this 

situation rather than Section 386.18(c), 

was silent regarding whether a carrier 

could unilaterally terminate an 

enforcement proceeding without an 

admission of liability under those 

circumstances. The Agency concluded 

that the same concerns expressed in the 

Homax decision apply to such a 

payment and that § 386.18(a) should be 

clarified to be consistent with that 

decision. 

To address these concerns, therefore, 

FMCSA proposed to revise its Rules of 

Practice by amending 49 CFR 386.18(a) 

and (c) to clarify that payment of the full 

amount of the proposed civil penalty 

constitutes an admission of all facts 

alleged in the NOC, unless otherwise 

agreed by the parties. 

B. Section 386.73 

FMCSA discovered that a number of 

motor carriers have submitted new 

applications for registration, often under 

a new name, in order to continue 

operating after having been placed out 

of service for safety-related reasons; to 

avoid paying civil penalties; to 

circumvent denial of applications for 

operating authority based on a 

determination that they were not fit, 

willing, or able to comply with the 

applicable statutes or regulations; or to 

otherwise avoid a negative compliance 

history. Other motor carriers attempt to 

avoid enforcement or other 

consequences associated with a negative 

compliance history by creating or using 

an affiliated company under common 

operational control. They then shift 

customers, vehicles, drivers, and other 

operational activities to that affiliated 

company when FMCSA places one of 

the commonly controlled companies out 

of service. The practice of 

‘‘reincarnating’’ as a new carrier or of 

operating affiliated companies to 

circumvent Agency enforcement actions 

and avoid a negative compliance history 

or enforcement action has created an 

unacceptable risk of harm to the public 

because it results in the continued 

operation of at-risk carriers and thwarts 

FMCSA’s ability to carry out its safety 

mission. 

The danger posed by ‘‘reincarnation’’ 

became evident following a fatal bus 

crash in Sherman, Texas in 2008. 

Investigation revealed that the motor 

carrier involved did not have operating 

authority from FMCSA. Instead, it had 

an application for authority pending 

with the Agency, but was a 

reincarnation of another bus company 

that FMCSA had recently placed out of 

service. Following the Sherman, Texas 

bus crash, FMCSA began a vetting 

process that involves a comprehensive 

review of applications for passenger 

carrier and household goods operating 

authority to determine whether the 

applicants are reincarnations or 

affiliates of other motor carriers with 

negative compliance histories or are 

otherwise not fit, willing, and able to 

comply with the applicable regulations. 

Although the vetting program is a 

significant improvement to the 

operating authority review process, it is 

not a complete solution to the 

reincarnation problem. Accordingly, in 

this rule FMCSA establishes new 

procedures to prohibit reincarnated or 

affiliated carriers from successfully 

evading accountability for their 

compliance history. 

FMCSA is authorized to suspend, 

amend, or revoke a motor carrier’s 

registration for willful failure to comply 

with applicable safety regulations, an 

FMCSA order, or a condition of its 

registration pursuant to 49 U.S.C. 13905. 

Motor carriers that obtain registration by 

creating a new company or an affiliate 

company for the purpose of avoiding 

FMCSA orders, regulations, or 

enforcement actions procure the 

registration by fraud—by knowingly 

misrepresenting and/or withholding 

material information. FMCSA has 

authority to sanction these motor 

carriers, which have already 

demonstrated an unwillingness or 

inability to comply with applicable 

safety regulations, by suspending, 

amending, or revoking their registration 

and/or by imposing applicable civil 

penalties. 

To address these challenges, FMCSA 

proposed to revise its Rules of Practice 

by adding new section 386.73. This 

section authorizes FMCSA to issue outof-service orders to motor carriers, 

intermodal equipment providers, 

brokers, and, freight forwarders 

determined to be reincarnated or 

operating as affiliates to avoid 

enforcement action or a negative 

compliance history, and it would 

provide a mechanism for administrative 

review of such orders. The rule would 

also establish procedures to consolidate 

the compliance records of reincarnated 

or affiliated entities. These procedures 

more fully implement the Agency’s 

current authority to prohibit unsafe 

entities from operating while, at the 

same time, providing due process for 

companies that seek to challenge a 

finding that they are reincarnated. 

IV. Discussion of Comments 

FMCSA received seven comments in 

response to the NPRM (76 FR 77458, 

Dec. 13, 2011). The commenters 

included a highway safety advocacy 

organization, a transportation 

consultant, and associations 

representing third party logistics 

professionals, moving and storage 

companies, explosives manufacturers 

and distributors, trucking companies, 

and independent owner operators. 

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24866 Federal Register / Vol. 77, No. 81 / Thursday, April 26, 2012 / Rules and Regulations 

1See 69 FR 77828, 77829, Dec. 24, 2004; 74 FR 

14184, 14185, Mar. 30, 2009. 

2Enforcement data show that 3,237 civil penalty 

cases were resolved by payment in full without a 

settlement agreement in 2011, compared to 1,741 

such cases in 2010. Approximately 400 more 

Notices of Claim were issued in 2011 than in 2010. 

Overall, most commenters supported 

FMCSA’s objectives for changing its 

rules of practice. Several commenters 

expressed concerns with the Agency’s 

proposal regarding the payment of 

claims. A couple of commenters 

strongly supported the proposed 

provisions for ‘‘reincarnated carriers.’’ 

These comments are discussed in 

greater detail below. 

A. Comments to Section 386.18 

Comments 

The Agency received three comments 

in response to its proposal to amend 49 

CFR 386.18(a) and (c) to clarify that full 

payment of a proposed civil penalty at 

any stage of an enforcement proceeding 

will be considered an admission of 

liability, unless the parties otherwise 

agree in writing. The Owner-Operator 

Independent Drivers Association 

(OOIDA) supported this proposal, 

stating that ‘‘[t]he proposed 

modification shifts the focus back to 

safety, and does so while affording full 

due process to those responding to 

claims.’’ OOIDA noted, however, that 

the elimination of a ‘‘nolo contendre 

plea option (payment without admitting 

guilt)’’ would likely increase the 

number of negotiated or litigated claims 

and require additional Agency resources 

to handle this increase. 

The American Trucking Associations, 

Inc. (ATA) had reservations about, and 

the American Moving and Storage 

Association (AMSA) opposed, the 

proposed amendments to § 386.18. 

Although ATA stated that it generally 

agrees with the safety objectives 

underlying the proposal, it believes that 

the proposal would result in a ‘‘reversal 

of the increased efficiency in 

enforcement procedures that [the] Rules 

of Practice were intended to achieve’’ 

and divert FMCSA enforcement 

resources from high-risk carriers. ATA 

also urges that FMCSA establish a clear 

and reasonable policy directing Agency 

officials to agree to settlements of 

enforcement claims without admissions 

of guilt in appropriate cases where there 

is not likely to be a significantly 

deleterious effect on public safety. 

AMSA believes that the proposal, by 

eliminating the nolo contendre plea 

option, is unfair to innocent carriers that 

make a business decision to pay the 

penalty in order to resolve a case in the 

most cost-efficient manner. AMSA also 

believes that the proposal may result in 

an increased burden on FMCSA 

resources because carriers are less likely 

to settle cases where an admission of 

liability could result in civil litigation or 

personal injury suits arising out of the 

admitted violations. 

FMCSA Response 

The FMCSA is committed to the 

expeditious resolution of enforcement 

proceedings, and continues to believe 

that allowing unilateral termination of 

such proceedings without an admission 

of liability conflicts with important 

Agency policies and statutory mandates 

designed to hold carriers accountable 

for regulatory violations when 

calculating penalties in potential future 

enforcement cases. This is particularly 

important in the context of maximum 

civil penalty cases subject to section 222 

of MCSIA. The Agency’s policy 

statements regarding implementation of 

section 222 have stated that in order for 

maximum penalties to be assessed 

under that section based on previously 

closed enforcement cases, the violations 

in those cases must have been 

adjudicated or admitted.1

Thus, allowing a respondent to 

terminate a proceeding without either 

an adjudication or admission would 

permit a carrier with abundant financial 

resources to repeatedly violate the 

regulations without running the risk of 

being penalized as a repeat offender, 

either for purposes of applying section 

222 of MCSIA or calculating the 

appropriate penalty under 49 U.S.C. 

521(b)(2)(D), which requires the Agency 

to consider, among other things, the 

respondent’s history of prior offenses. 

This not only impedes the Agency’s 

ability to implement important statutory 

mandates, but also gives an unfair 

advantage to those carriers with greater 

financial resources, who may be 

tempted to treat civil penalties as 

merely a cost of doing business. 

In 2011, the year following the Homax 

decision, the number of cases resolved 

through payment of the penalty in full 

increased more than 85% over the 

previous year.2 In contrast, carriers have 

resisted admissions of liability by 

making full payment of the civil penalty 

with written objection in only a handful 

of cases. Consequently, we do not 

anticipate a significant increase in the 

number of contested cases coming 

before the Agency as a result of the 

modifications to § 386.18 and believe 

that ATA’s and AMSA’s concerns about 

diversion of agency resources from highrisk carriers are unwarranted. Even if 

these modifications result in a small 

increase in the Agency’s enforcement 

case backlog, enhancing motor carrier 

safety by holding repeat offenders 

accountable is more important than 

maintaining a potentially slightly 

reduced docket of administrative 

adjudications. 

The Agency disagrees with AMSA 

that the proposal adopts a ‘‘bit of a 

guilty-until-proven innocent approach 

* * *.’’ Innocent carriers will continue 

to have the opportunity to contest the 

allegations in the NOC in accordance 

with the procedures established in the 

Agency’s Rules of Practice. The FMCSA 

enforcement program and counsel will 

continue to have the burden of proving 

any contested allegations. Although in 

some circumstances a motor carrier may 

decide it is less expensive to settle a 

case than to contest a NOC, that is a 

business decision, and the carrier’s 

desire to avoid future consequences of 

the settlement should not take 

precedence over the need to protect the 

public against potentially unsafe 

carriers and to comply with statutory 

mandates. 

In response to ATA’s request that 

FMCSA establish clear and reasonable 

policies governing the circumstances 

under which the Agency will settle 

enforcement claims without requiring 

an admission of guilt, FMCSA may 

establish internal policies that will 

identify appropriate cases that may be 

settled without including an admission 

of liability in the Settlement Agreement. 

B. Comments to Section 386.73 Carrier 

Intent 

Comment 

Advocates for Highway and Auto 

Safety (Advocates) disagrees with 

proposed § 386.73(c)(1), which requires 

FMCSA to consider whether the new or 

affiliated entity was created for the 

purpose of evading statutory, regulatory, 

or other legal requirements. Advocates 

propose that FMCSA consider only the 

results of the carrier’s conduct without 

regard to the carrier’s intent or 

motivation behind the conduct. 

Advocates believe that requiring 

consideration of motivation and intent 

could unreasonably burden the 

Agency’s evaluation of the factors in 

§ 386.73(c) because proving intent is 

difficult and the same activity can be 

ambiguous if intent must be considered. 

Advocates suggests, therefore, that the 

agency eliminate the wording ‘‘for the 

purpose of’’ from the language proposed 

for § 386.73(c)(1), and replace it with the 

phrase ‘‘and has resulted in the evasion 

of’’ in referencing the creation of an 

affiliate that was involved in evading 

the law. 

ATA, on the other hand, supports 

FMCSA’s inclusion of a motor carrier’s 

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Federal Register / Vol. 77, No. 81 / Thursday, April 26, 2012 / Rules and Regulations 24867 

intent or motivation as a factor for 

FMCSA to consider when determining 

whether a motor carrier attempted to 

avoid a statutory or regulatory 

requirement. ATA requests, however, 

that FMCSA weight the factors listed in 

§ 386.73(c), with the first factor 

concerning the motor carrier’s intent 

being weighted the heaviest. 

FMCSA Response 

A motor carrier’s intent behind a 

particular course of conduct should be 

relevant if it shows an attempt to avoid 

compliance with applicable regulations 

or the consequences of past violations. 

A motor carrier would not, however, be 

able to avoid liability merely by 

asserting it had some legitimate 

business purpose for the corporate 

transaction or affiliate structure. Under 

the final rule, FMCSA will evaluate the 

motor carrier’s stated purpose in light of 

all the available evidence and by 

considering each of the 13 factors 

identified in § 386.73(c). If the totality of 

the available information demonstrates 

that the carrier’s stated business 

purpose is consistent with the evidence, 

then the motor carrier would not be 

subject to an out-of-service order and/or 

record consolidation order. Conversely, 

if the totality of the available 

information demonstrates that the 

carrier’s stated purpose is inconsistent 

with the evidence, then the motor 

carrier would be subject to an out-ofservice order and/or record 

consolidation order. 

FMCSA does not take lightly its 

authority to place a motor carrier’s 

operations out of service, and the 

Agency recognizes that such orders pose 

a significant penalty. Accordingly, 

FMCSA intends to apply § 386.73 to 

those motor carriers that engage in 

egregious instances of noncompliance 

and evasion. Advocates’ proposed 

modification (removing consideration of 

intent) is contrary to the intent of the 

rule, that is, to ensure that carriers that 

form a new company to purposely evade 

regulation are identified and put out of 

service. FMCSA is authorized to 

establish such a standard but declines to 

exert its regulatory authority in this 

manner. ATA’s proposed modification 

(weighting the factors, with intent being 

weighted the heaviest) could result in a 

rigid application of the rule and require 

FMCSA to disregard relevant evidence 

that a motor carrier attempted to avoid 

a statutory or regulatory requirement. 

For these reasons, FMCSA declines to 

modify the § 386.73 as proposed by 

either Advocates or ATA. 

Comment 

IME expressed concerns over how the 

factors listed in § 386.73(c) and (d) will 

be applied. IME noted that some of its 

members operate multiple fleets that 

have common ownership, but are 

considered to be separate entities. IME 

further notes that these motor carriers 

may engage in one or even all of the 

activities described in § 386.73(c)(3) 

through (13). IME requests that FMCSA 

explain the circumstances under which 

the factors contained in § 386.73(c) and 

(d) will be applied. 

FMCSA Response 

A motor carrier would not be subject 

to an out-of-service order under § 386.73 

unless the motor carrier created or 

attempted to create a new identity or 

affiliate relationship for the purpose of 

avoiding a statutory or regulatory 

requirement or FMCSA enforcement 

action. Motor carriers who change their 

operational model for a legitimate 

business purpose and not to avoid 

FMCSA regulation or enforcement 

would not be affected by this rule. 

Section 386.73(c) describes the factors 

FMCSA will evaluate to determine 

whether a motor carrier created or 

attempted to create a new identity or 

affiliate relationship to avoid FMCSA 

regulation or enforcement. Section 

386.73(d) describes the potential 

sources of information FMCSA may use 

to make its determination. FMCSA’s 

determination will be based on 

consideration of all relevant 

information, and one factor or potential 

source of evidence is not necessarily 

more significant than another. Where 

the greater weight of the evidence shows 

that a motor carrier created a new 

identity or shifted its operations to 

another, commonly owned and 

controlled, entity to avoid FMCSA 

authority or negative safety performance 

history, the motor carrier will be placed 

out of service and/or have its records 

consolidated with the records of the 

preexisting or affiliated entity. 

FMCSA modified § 386.73(c)(13), now 

386.73(c)(2), to clarify that the safety 

performance history FMCSA will 

consider to determine whether a motor 

carrier created a new identity or affiliate 

relationship to avoid FMCSA 

enforcement is the past safety 

performance history of the original 

motor carrier. FMCSA also modified 

§ 386.73(d) to clarify that FMCSA will 

consider all information relevant to the 

motor carrier operations and the factors 

identified in § 386.73(c). The original 

rule text provided that FMCSA would 

consider information related to the 

motor carrier’s operations, but did not 

reference information that might be 

relevant to the factors in § 386.73(c). 

FMCSA corrected this by clarifying that 

FMCSA will consider all information 

relevant to the motor carrier’s 

operations and the factors in § 386.73(c). 

Comment 

The Transportation Intermediaries 

Association (TIA) supports FMCSA’s 

efforts to target motor carriers who 

attempt to avoid statutory or regulatory 

requirements. TIA suggests, however, 

that FMCSA implement a timely 

administrative review process and place 

carriers in a probation status pending 

the administrative review. 

FMCSA Response 

Section 386.73(g) describes the 

administrative review procedures 

available to motor carriers served with 

an operations-out-of service or record 

consolidation order. In reviewing TIA’s 

comment, FMCSA determined that 

administrative review procedure should 

be clarified by adding language to 

explain when an out-of-service order or 

record consolidation order is effective. 

FMCSA modified the rule accordingly. 

The administrative review procedure is 

explained below. 

Under § 386.73(g), an order is 

effective 21 days after it is served, 

unless the motor carrier requests 

administrative review within 15 days of 

service of the order. If the motor carrier 

fails to request administrative review, or 

requests administrative review after the 

15-day period, the motor carrier must 

cease operations and its records may be 

consolidated. If the motor carrier 

requests administrative review within 

15 days, however, the order is 

automatically stayed and the motor 

carrier may continue operating and its 

records will not be consolidated during 

the period of administrative review. The 

Agency Official may file a motion with 

the Assistant Administrator to vacate 

the automatic stay. The motion must be 

served on the motor carrier who may 

respond in opposition the motion 

within 15 days. The Assistant 

Administrator may grant the motion 

only if he or she finds good cause to 

vacate the stay. 

The administrative review procedures 

ensure motor carriers receive notice of 

FMCSA’s intended action and have a 

fair opportunity to be heard. The 

procedures also ensure that FMCSA can 

efficiently and expeditiously address 

motor carriers that attempt to avoid 

FMCSA authority or enforcement 

action. Accordingly, FMCSA declines to 

establish a ‘‘probation’’ status for motor 

carriers who are permitted to operate 

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during the administrative review 

process. 

Operating Authority 

Comment 

TIA recommends that every licensed 

company (broker, forwarder, and 

carrier) be required to re-register its 

operating authority annually and that 

failure to comply with this requirement 

should result in cancellation of the 

company’s authority. The commenter 

asserts that Congress is considering 

legislation supported by TIA, ATA, and 

OOIDA that would tie continuation of 

authority to an existing requirement, 

either the Unified Carrier Registration 

Agreement or the Unified Registration 

System (URS). 

FMCSA Response 

TIA’s suggested annual registration 

recommendation is beyond the scope of 

this rulemaking, which does not involve 

the DOT registration process. The 

Agency has a rulemaking proceeding in 

progress regarding the DOT registration 

process, under Docket No. FMCSA–97– 

2349, which proposes to replace certain 

existing DOT registration systems with 

a new URS. TIA submitted comments in 

that proceeding on December 20, 2011, 

in which it made similar 

recommendations. TIA’s comments on 

this issue, therefore, will be addressed 

in the URS rulemaking proceeding. 

Statutory Authority 

Comment 

ATA recommends that the Agency 

wait for more specific statutory 

authority before finalizing § 386.73. 

FMCSA Response 

FMCSA does not require additional 

statutory authority to establish this new 

section. As stated in the ‘‘Legal Basis for 

the Rulemaking’’ section of the rule, 

FMCSA has statutory authority to 

prescribe regulations ensuring that 

CMVs are operated safely and to 

determine whether an owner or operator 

is fit to operate a CMV safely. Section 

386.73 of the Agency’s Rules of Practice 

is issued under that rulemaking 

authority and lays out procedures for 

placing out of service and/or 

consolidating the safety records of 

carriers that avoid FMCSA’s regulations. 

Comment 

Advocates suggests that FMCSA 

impose criminal sanctions on 

reincarnated motor carriers engaging in 

fraud and evading regulation as part of 

this regulatory initiative. 

FMCSA Response 

Advocates note that criminal 

sanctions against reincarnated carriers 

cannot be sought as part of an 

administrative proceeding. Because Part 

386 applies only to administrative 

proceedings, this comment is outside 

the scope of this rulemaking. In any 

event, FMCSA does not currently have 

the statutory authority to independently 

seek criminal sanctions, but will 

continue to cooperate with both State 

and Federal law enforcement partners in 

seeking criminal penalties against 

unsafe carriers where appropriate. 

Out of Scope 

Comment 

OOIDA requested that a subsection (6) 

be added to the proposed § 386.73(b), 

which describes when record 

consolidation is appropriate, to require 

consolidation when new or affiliated 

entities are registered primarily to 

‘‘[a]void paying liabilities owed to 

creditors, including but not limited to 

the parties actually providing 

transportation services.’’ OOIDA 

requested that FMCSA add this 

subsection to protect its members from 

carriers that reincarnate to escape 

financial obligations to drivers. This 

change is outside the scope of the 

current rulemaking, which is focused on 

safety rather than financial regulation. 

Our current legal authority does not 

provide for determinations of the legal 

rights between third parties in payment 

disputes. 

TIA suggests that FMCSA should 

apply § 386.73 to ‘‘broker trust fund 

providers’’ as well as motor carriers, 

intermodal equipment providers, 

brokers and freight forwarders. This 

comment is outside the scope of the 

current rulemaking, which is focused on 

safety rather than financial regulation. 

Moreover, FMCSA has no jurisdiction 

over broker trust fund providers. 

IME suggests that FMCSA focus its 

efforts on correcting problems in 

existing programs, rather than 

proceeding with this rule. IME suggests 

FMCSA address its petition regarding 

the Hazardous Materials Safety Permit 

Program (HMSP), which it states is 

directly affected by the proposed 

rulemaking. This comment is outside 

the scope of the current rulemaking. But 

FMCSA is planning to address the 

HMSP in a future rulemaking, as stated 

in FMCSA’s response to IME’s petition 

in that matter. 

OOIDA commented that FMCSA’s 

DataQ dispute resolution process does 

not afford due process to carriers and 

drivers. DataQ’s is the process by which 

carriers may challenge the accuracy of 

enforcement data uploaded into the 

Agency’s information systems (e.g., does 

the report accurately identify the carrier, 

driver and vehicle and date and location 

of the intervention). OOIDA’s comments 

regarding the DataQ dispute resolution 

process are outside the scope of this 

section of the rulemaking, which is 

limited to the notice of claim resolution 

process. 

C. Small Business Impact 

Comment 

North American Transportation 

Consultants, Inc. (NATC) believes the 

analysis presented in the NPRM 

concerning the impact that all aspects of 

the rule would have on small businesses 

did not take into consideration the 

difficulties small businesses encounter 

in being able to afford legal counsel to 

provide protection of their rights. 

FMCSA Response 

First, as mentioned in the Regulatory 

Flexibility Act section, only six carriers 

paid a civil penalty with a written 

objection from 2008 thru 2011, 

indicating a minimal economic impact 

that would arise from changes to 

§ 386.18 (a) and (c). Second, the 

regulatory changes adopted here do not 

significantly alter the position of small 

businesses. This is a procedural rule 

that would not affect entities already in 

compliance, or those that are out of 

compliance but do not attempt to avoid 

the consequences of non-compliance by 

reincarnating as a new or affiliated 

entity. 

Although small businesses are 

entitled to retain legal representation 

during enforcement proceedings 

initiated under 49 CFR part 386, in most 

cases they choose to represent 

themselves. The changes do not increase 

the burden on motor carriers with 

respect to their options concerning legal 

representation. 

V. Discussion of Rule 

This rule amends regulations in 49 

CFR part 386 pertaining to 

administrative practices and procedures 

and civil penalties. FMCSA adopts the 

language from the NPRM into the final 

rule with additional clarifying language 

to § 386.73(c) and (d). 

FMCSA added language to § 386.73 

(g)(8) to clarify the administrative 

review procedure regarding the 

Assistant Administrator’s authority to 

vacate the automatic stay of any order 

issued under § 386.73. 

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3Regulatory Flexibility Act (5 U.S.C. 601 et seq.) 

see National Archives at http://www.archives.gov/ 

federal-register/laws/regulatory-flexibility/601.html. 

4FMCSA Eastern Service Center/Division Field 

Enforcement Action—Reincarnated Carrier Cases— 

GAO Engagement 541079 July 1, 2011. 

VI. Regulatory Analyses 

Executive Order (E.O.) 12866 

(Regulatory Planning and Review) and 

DOT Regulatory Policies and Procedures 

FMCSA has determined that this rule 

is not a significant regulatory action 

within the meaning of Executive Order 

(E.O.) 12866, as supplemented by E.O. 

13563 (76 FR 3821, January 21, 2011), 

or within the meaning of DOT 

regulatory policies and procedures. The 

estimated cost of the rule is not 

expected to exceed the $100 million 

annual threshold for economic 

significance; any costs associated with 

the rule are expected to be minimal. 

Moreover, the Agency does not expect 

the rule to generate substantial 

congressional or public interest. The 

rule would not impose new 

requirements upon carriers and thus 

should result in minimal or no 

economic burdens. The revisions clarify 

existing rules and implement 

procedures that would not require a 

change in the business practices of 

already compliant motor carriers. 

Regulatory Flexibility Act 

The Regulatory Flexibility Act of 1980 

(5 U.S.C. 601–612) requires Federal 

agencies to consider the effects of the 

regulatory action on small business and 

other small entities and to minimize any 

significant economic impact. The term 

‘‘small entities’’ includes small 

businesses and not-for-profit 

organizations that are independently 

owned and operated and are not 

dominant in their fields, and 

governmental jurisdictions with 

populations of less than 50,000.3

Accordingly, the DOT policy titled, 

‘‘Proper Consideration of Small Entities 

in Agency Rulemaking’’ requires an 

analysis of the impact of all regulations 

on small entities and mandates that 

agencies strive to lessen any adverse 

effects on these businesses. 

Under the Regulatory Flexibility Act, 

as amended by the Small Business 

Regulatory Enforcement Fairness Act of 

1996 (Pub. L. 104–121, 110 Stat. 857), 

this rule is not expected to have a 

significant economic impact on a 

substantial number of small entities. 

The rule’s clarification of how payment 

of claims affects admissions of liability 

reflects current FMCSA policy, as 

discussed in the background section. 

Even before the current policy was 

enunciated through administrative 

adjudication, this portion of the rule did 

not have a significant impact. From 

2008 through 2011, the Agency 

adjudicated only six cases in which the 

respondent motor carrier paid a civil 

penalty with written objection, which 

indicates the minimal impact the rule is 

expected to have. 

FMCSA estimates that fewer than 50 

carriers annually will be affected and 

placed out of service by the rule as it 

pertains to reincarnated or affiliated 

carriers, from data provided by the U.S. 

General Accountability Office (GAO) 

Engagement Report (June 2008–July 

2011).4 Therefore, this rule would not 

disproportionately impact small 

entities. Consequently, I certify that a 

regulatory flexibility analysis is not 

necessary. 

Assistance for Small Entities 

In accordance with section 213(a) of 

the Small Business Regulatory 

Enforcement Fairness Act of 1996, 

FMCSA wants to assist small entities in 

understanding this rule so that they can 

better evaluate its effects on them. If the 

rule affects your small business, 

organization, or governmental 

jurisdiction and you have questions 

concerning its provisions or options for 

compliance, please consult the FMCSA 

point of contact, Sabrina Redd, listed in 

the FOR FURTHER INFORMATION CONTACT

section of this rule. 

Small businesses may send comments 

on the actions of Federal employees 

who enforce or otherwise determine 

compliance with Federal regulations to 

the Small Business Administration’s 

Small Business and Agriculture 

Regulatory Enforcement Ombudsman 

and the Regional Small Business 

Regulatory Fairness Boards. The 

Ombudsman evaluates these actions 

annually and rates each agency’s 

responsiveness to small business. If you 

wish to comment on actions by 

employees of FMCSA, call 1–888–REG– 

FAIR (1–888–734–3247). FMCSA will 

not retaliate against small entities that 

question or complain about this rule or 

any policy or action of the Agency. 

Unfunded Mandates Reform Act 

This rule will not impose an 

unfunded Federal mandate, as defined 

by the Unfunded Mandates Reform Act 

of 1995 (2 U.S.C. 1532 et seq.), that 

would result in the expenditure by 

State, local, and tribal governments, in 

the aggregate, or by the private sector, of 

$141.3 million (which is the value of 

$100 million in 2010 after adjusting for 

inflation) or more in any 1 year. 

E.O. 13132 (Federalism) 

A rule has implications for 

Federalism under Section 1(a) of E.O. 

13132 if it has ‘‘substantial direct effects 

on the States, on the relationship 

between the national government and 

the States, or on the distribution of 

power and responsibilities among the 

various levels of government.’’ FMCSA 

has determined that this rule will not 

have substantial direct effects on States, 

nor would it limit the policymaking 

discretion of States. Nothing in this 

document preempts any State law or 

regulation. 

Indian Tribal Governments 

This rule does not have tribal 

implications under E.O. 13175, 

Consultation and Coordination with 

Indian Tribal Governments, because it 

does not have a substantial direct effect 

on one or more Indian tribes, on the 

relationship between the Federal 

Government and Indian tribes, or on the 

distribution of power and 

responsibilities between the Federal 

Government and Indian tribes. 

Paperwork Reduction Act 

Under the Paperwork Reduction Act 

of 1995 (44 U.S.C. 3501 et seq.), Federal 

agencies must obtain approval from the 

Office of Management and Budget 

(OMB) for each collection of 

information they conduct, sponsor, or 

require through regulations. FMCSA has 

determined that there is no new 

information collection requirement 

associated with this rule. 

National Environmental Policy Act 

FMCSA analyzed this rule for the 

purpose of the National Environmental 

Policy Act of 1969 (42 U.S.C. 4321 et 

seq.) and determined this action is 

categorically excluded from further 

analysis and documentation in an 

environmental assessment or 

environmental impact statement under 

FMCSA Order 5610.1 (69 FR 9680, 

March 1, 2004), Appendix 2, paragraphs 

(6)(u)(1), (6)(u)(2), and (6)(y)(7). The 

Categorical Exclusion (CE) in paragraph 

(6)(u)(1) addresses rules concerning 

compliance with regulations; the CE in 

paragraph (6)(u)(2) addresses 

regulations concerning civil penalties; 

and the CE in paragraph (6)(y)(7) 

addresses rules for record keeping. The 

various changes in this rule are covered 

by one or a combination of these three 

CEs. Therefore, this action does not 

have any effect on the quality of the 

environment. The Categorical Exclusion 

determination is available for inspection 

or copying in the Regulations.gov Web 

site listed under ADDRESSES. 

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FMCSA also analyzed this rule under 

the Clean Air Act, as amended (CAA), 

section 176(c) (42 U.S.C. 7401 et seq.), 

and implementing regulations 

promulgated by the Environmental 

Protection Agency. Approval of this 

action is exempt from the CAA’s general 

conformity requirement since it does 

not affect direct or indirect emissions of 

criteria pollutants. 

E.O. 13211 (Energy Effects) 

FMCSA analyzed this rule under E.O. 

13211, Actions Concerning Regulations 

That Significantly Affect Energy Supply, 

Distribution, or Use. The Agency has 

determined that it is not a ‘‘significant 

energy action’’ under that order because 

it is not a ‘‘significant regulatory action’’ 

under E.O. 12866 and is not likely to 

have a significant adverse effect on the 

supply, distribution, or use of energy. 

Therefore, no Statement of Energy 

Effects is required. 

E.O. 13045 (Protection of Children) 

E.O. 13045, Protection of Children 

from Environmental Health Risks and 

Safety Risks (62 FR 19885, Apr. 23, 

1997), requires agencies issuing 

‘‘economically significant’’ rules, if the 

regulation also concerns an 

environmental health or safety risk that 

an agency has reason to believe may 

disproportionately affect children, to 

include an evaluation of the regulation’s 

environmental health and safety effects 

on children. As discussed previously, 

this rule is not economically significant. 

Therefore, no analysis of the impacts on 

children is required. In any event, we do 

not anticipate that this regulatory action 

could in any respect present an 

environmental or safety risk that could 

disproportionately affect children. 

E.O. 12988 (Civil Justice Reform) 

This action meets applicable 

standards in sections 3(a) and 3(b)(2) of 

E.O. 12988, Civil Justice Reform, to 

minimize litigation, eliminate 

ambiguity, and reduce burden. 

E.O. 12630 (Taking of Private Property) 

This rule would not effect a taking of 

private property or otherwise have 

taking implications under E.O. 12630, 

Governmental Actions and Interference 

with Constitutionally Protected Property 

Rights. 

National Technology Transfer and 

Advancement Act (Technical 

Standards) 

The National Technology Transfer 

and Advancement Act (15 U.S.C. 272 

note) directs agencies to use voluntary 

consensus standards in their regulatory 

activities unless the agency provides 

Congress, through OMB, with an 

explanation of why using these 

standards would be inconsistent with 

applicable law or otherwise impractical. 

Voluntary consensus standards are 

technical standards (e.g., specifications 

of materials, performance, design, or 

operation; test methods; sampling 

procedures; and related management 

systems practices) that are developed or 

adopted by voluntary consensus 

standards bodies. 

FMCSA is not aware of any technical 

standards used to address Agency rules 

of practice by motor carriers, intermodal 

equipment providers, brokers, freight 

forwarders, and handlers of hazardous 

materials and therefore, did not 

consider any such standards. 

Privacy Impact Assessment 

FMCSA conducted a privacy impact 

assessment of this rule as required by 

section 522(a)(5) of the FY 2005 

Omnibus Appropriations Act, Public 

Law 108–447, 118 Stat. 3268 (Dec. 8, 

2004) [set out as a note to 5 U.S.C. 

552a]. The assessment considers any 

impacts of the rule on the privacy of 

information in an identifiable form and 

related matters. FMCSA has determined 

this rule would have no privacy 

impacts. 

List of Subjects in 49 CFR Part 386 

Administrative practice and 

procedure, Brokers, Freight forwarders, 

Hazardous materials transportation, 

Highway safety, Motor carriers, Motor 

vehicle safety penalties. 

For the reasons discussed in the 

preamble, FMCSA amends 49 CFR part 

386 as follows: 

PART 386—RULES OF PRACTICE FOR 

MOTOR CARRIER, INTERMODAL 

EQUIPMENT PROVIDER, BROKER, 

FREIGHT FORWARDER, AND 

HAZARDOUS MATERIALS 

PROCEEDINGS 

■ 1. The authority citation for part 386 

continues to read as follows: 

Authority: 49 U.S.C. 113, chapters 5, 51, 

59, 131–141, 145–149, 311, 313, and 315; 

Sec. 204, Pub. L. 104–88, 109 Stat. 803, 941 

(49 U.S.C. 701 note); Sec. 217, Pub. L. 105– 

159, 113 Stat. 1748, 1767; Sec. 206, Pub. L. 

106–159, 113 Stat. 1763; subtitle B, title IV 

of Pub. L. 109–59; and 49 CFR 1.45 and 1.73. 

■ 2. Amend § 386.18 by revising 

paragraphs (a) and (c) to read as follows: 

§ 386.18 Payment of the claim. 

(a) Payment of the full amount 

claimed may be made at any time before 

issuance of a Final Agency Order and 

will constitute an admission of liability 

by the respondent of all facts alleged in 

the Notice of Claim, unless the parties 

agree in writing that payment shall not 

be treated as an admission. After the 

issuance of a Final Agency Order, 

claims are subject to interest, penalties, 

and administrative charges, in 

accordance with 31 U.S.C. 3717; 49 CFR 

part 89; and 31 CFR 901.9. 

* * * * * 

(c) Unless otherwise agreed in writing 

by the parties, payment of the full 

amount in response to the Notice of 

Claim constitutes an admission of 

liability by the respondent of all facts 

alleged in the Notice of Claim. Payment 

waives respondent’s opportunity to 

further contest the claim and will result 

in the Notice of Claim becoming the 

Final Agency Order. 

■ 3. Add § 386.73 to subpart F to read 

as follows: 

§ 386.73 Operations out of service and 

record consolidation proceedings 

(reincarnated carriers). 

(a) Out-of-service order. An FMCSA 

Field Administrator or the Director of 

FMCSA’s Office of Enforcement and 

Compliance (Director) may issue an outof-service order to prohibit a motor 

carrier, intermodal equipment provider, 

broker, or freight forwarder from 

conducting operations subject to 

FMCSA jurisdiction upon a 

determination by the Field 

Administrator or Director that the motor 

carrier, intermodal equipment provider, 

broker, or freight forwarder or an officer, 

employee, agent, or authorized 

representative of such an entity, 

operated or attempted to operate a 

motor carrier, intermodal equipment 

provider, broker, or freight forwarder 

under a new identity or as an affiliated 

entity to: 

(1) Avoid complying with an FMCSA 

order; 

(2) Avoid complying with a statutory 

or regulatory requirement; 

(3) Avoid paying a civil penalty; 

(4) Avoid responding to an 

enforcement action; or 

(5) Avoid being linked with a negative 

compliance history. 

(b) Record consolidation order. In 

addition to, or in lieu of, an out-ofservice order issued under this section, 

the Field Administrator or Director may 

issue an order consolidating the records 

maintained by FMCSA concerning the 

current motor carrier, intermodal 

equipment provider, broker, and freight 

forwarder and its affiliated motor 

carrier, intermodal equipment provider, 

broker, or freight forwarder or its 

previous incarnation, for all purposes, 

upon a determination that the motor 

carrier, intermodal equipment provider, 

broker, and freight forwarder or officer, 

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employee, agent, or authorized 

representative of the same, operated or 

attempted to operate a motor carrier, 

intermodal equipment provider, broker, 

or freight forwarder under a new 

identity or as an affiliated entity to: 

(1) Avoid complying with an FMCSA 

order; 

(2) Avoid complying with a statutory 

or regulatory requirement; 

(3) Avoid paying a civil penalty; 

(4) Avoid responding to an 

enforcement action; or 

(5) Avoid being linked with a negative 

compliance history. 

(c) Standard. The Field Administrator 

or Director may determine that a motor 

carrier, intermodal equipment provider, 

broker, or freight forwarder is 

reincarnated if there is substantial 

continuity between the entities such 

that one is merely a continuation of the 

other. The Field Administrator or 

Director may determine that a motor 

carrier, intermodal equipment provider, 

broker, or freight forwarder is an 

affiliate if the business operations are 

under common ownership and/or 

common control. In making this 

determination, the Field Administrator 

or Director may consider, among other 

things, the following factors: 

(1) Whether the new or affiliated 

entity was created for the purpose of 

evading statutory or regulatory 

requirements, an FMCSA order, 

enforcement action, or negative 

compliance history. In weighing this 

factor, the Field Administrator or 

Director may consider the stated 

business purpose for the creation of the 

new or affiliated entity. 

(2) The previous entity’s safety 

performance history, including, among 

other things, safety violations and 

enforcement actions of the Secretary, if 

any; 

(3) Consideration exchanged for assets 

purchased or transferred; 

(4) Dates of company creation and 

dissolution or cessation of operations; 

(5) Commonality of ownership 

between the current and former 

company or between current companies; 

(6) Commonality of officers and 

management personnel; 

(7) Identity of physical or mailing 

addresses, telephone, fax numbers, or 

email addresses; 

(8) Identity of motor vehicle 

equipment; 

(9) Continuity of liability insurance 

policies or commonality of coverage 

under such policies; 

(10) Commonality of drivers and other 

employees; 

(11) Continuation of carrier facilities 

and other physical assets; 

(12) Continuity or commonality of 

nature and scope of operations, 

including customers for whom 

transportation is provided; 

(13) Advertising, corporate name, or 

other acts through which the company 

holds itself out to the public; 

(d) Evaluating factors. The Field 

Administrator or Director may examine, 

among other things, the company 

management structures, financial 

records, corporate filing records, asset 

purchase or transfer and title history, 

employee records, insurance records, 

and any other information related to the 

general operations of the entities 

involved and factors in paragraph (c) of 

this section. 

(e) Effective dates. An order issued 

under this section becomes the Final 

Agency Order and is effective on the 

21st day after it is served unless a 

request for administrative review is 

served and filed as set forth in 

paragraph (g) of this section. Any motor 

carrier, intermodal equipment provider, 

broker, or freight forwarder that fails to 

comply with any prohibition or 

requirement set forth in an order issued 

under this section is subject to the 

applicable penalty provisions for each 

instance of noncompliance. 

(f) Commencement of proceedings. 

The Field Administrator or Director may 

commence proceedings under this 

section by issuing an order that: 

(1) Provides notice of the factual and 

legal basis of the order; 

(2) In the case of an out-of-service 

order, identifies the operations 

prohibited by the order; 

(3) In the case of an order that 

consolidates records maintained by 

FMCSA, identifies the previous entity 

and current or affiliated motor carriers, 

intermodal equipment providers, 

brokers, or freight forwarders whose 

records will be consolidated; 

(4) Provides notice that the order is 

effective upon the 21st day after service; 

(5) Provides notice of the right to 

petition for administrative review of the 

order and that a timely petition will stay 

the effective date of the order unless the 

Assistant Administrator orders 

otherwise for good cause; and 

(6) Provides notice that failure to 

timely request administrative review of 

the order constitutes waiver of the right 

to contest the order and will result in 

the order becoming a Final Agency 

Order 21 days after it is served. 

(g) Administrative review. A motor 

carrier, intermodal equipment provider, 

broker, or freight forwarder issued an 

order under this section may petition for 

administrative review of the order. A 

petition for administrative review is 

limited to contesting factual or 

procedural errors in the issuance of the 

order under review and may not be 

submitted to demonstrate corrective 

action. A petition for administrative 

review that does not identify factual or 

procedural errors in the issuance of the 

order under review will be dismissed. 

Petitioners seeking to demonstrate 

corrective action may do so by 

submitting a Petition for Rescission 

under paragraph (h) of this section. 

(1) A petition for administrative 

review must be in writing and served on 

the Assistant Administrator, Federal 

Motor Carrier Safety Administration, 

1200 New Jersey Ave. SE., Washington, 

DC 20590–0001, Attention: 

Adjudications Counsel, or by electronic 

mail to FMCSA.Adjudication@dot.gov. 

A copy of the petition for administrative 

review must also be served on the Field 

Administrator or Director who issued 

the order, at the physical address or 

electronic mail account identified in the 

order. 

(2) A petition for administrative 

review must be served within 15 days 

of the date the Field Administrator or 

Director served the order issued under 

this section. Failure to timely request 

administrative review waives the right 

to administrative review and constitutes 

an admission of the facts alleged in the 

order. 

(3) A petition for administrative 

review must include: 

(i) A copy of the order in dispute; and 

(ii) A statement of all factual and 

procedural issues in dispute. 

(4) If a petition for administrative 

review is timely served and filed, the 

petitioner may supplement the petition 

by serving documentary evidence and/ 

or written argument that supports its 

position regarding the procedural or 

factual issues in dispute no later than 30 

days from the date the disputed order 

was served. The supplementary 

documentary evidence or written 

argument may not expand the issues on 

review and need not address every issue 

identified in the petition. Failure to 

timely serve supplementary 

documentary evidence and/or written 

argument constitutes a waiver of the 

right to do so. 

(5) The Field Administrator or 

Director must serve written argument 

and supporting documentary evidence, 

if any, in defense of the disputed order 

no later than 15 days following the 

period in which petitioner may serve 

supplemental documentary evidence 

and/or written argument in support of 

the petition for administrative review. 

(6) The Assistant Administrator may 

ask the parties to submit additional 

information or attend a conference to 

facilitate administrative review. 

(7) The Assistant Administrator will 

issue a written decision on the request 

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24872 Federal Register / Vol. 77, No. 81 / Thursday, April 26, 2012 / Rules and Regulations 

for administrative review within 30 

days of the close of the time period for 

the Field Administrator or the Director 

to serve written argument and 

supporting documentary evidence in 

defense of the order, or the actual filing 

of such written argument and 

documentary evidence, whichever is 

earlier. 

(8) If a petition for administrative 

review is timely served in accordance 

with this subsection, the disputed order 

is stayed, pending the Assistant 

Administrator’s review. The Assistant 

Administrator may enter an order 

vacating the automatic stay in 

accordance with the following 

procedures: 

(i) The Agency Official may file a 

motion to vacate the automatic stay 

demonstrating good cause why the order 

should not be stayed. The Agency 

Official’s motion must be in writing, 

state the factual and legal basis for the 

motion, be accompanied by affidavits or 

other evidence relied on, and be served 

on the petitioner and Assistant 

Administrator. 

(ii) The petitioner may file an answer 

in opposition, accompanied by 

affidavits or other evidence relied on. 

The answer must be served within 

10 days of service of the motion. 

(iii) The Assistant Administrator will 

issue a decision on the motion to vacate 

the automatic stay within 10 days of the 

close of the time period for serving the 

answer to the motion. The 30-day 

period for review of the petition for 

administrative review in paragraph 

(g)(5) of this section is tolled from the 

time the Agency Official’s motion to lift 

a stay is served until the Assistant 

Administrator issues a decision on the 

motion. 

(9) The Assistant Administrator’s 

decision on a petition for administrative 

review of an order issued under this 

section constitutes the Final Agency 

Order. 

(h) Petition for rescission. A motor 

carrier, intermodal equipment provider, 

broker, or freight forwarder may petition 

to rescind an order issued under this 

section if action has been taken to 

correct the deficiencies that resulted in 

the order. 

(1) A petition for rescission must be 

made in writing to the Field 

Administrator or Director who issued 

the order. 

(2) A petition for rescission must 

include a copy of the order requested to 

be rescinded, a factual statement 

identifying all corrective action taken, 

and copies of supporting 

documentation. 

(3) Upon request and for good cause 

shown, the Field Administrator or 

Director may grant the petitioner 

additional time, not to exceed 45 days, 

to complete corrective action initiated at 

the time the petition for rescission was 

filed. 

(4) The Field Administrator or 

Director will issue a written decision on 

the petition for rescission within 60 

days of service of the petition. The 

written decision will include the factual 

and legal basis for the determination. 

(5) If the Field Administrator or 

Director grants the request for 

rescission, the written decision is the 

Final Agency Order. 

(6) If the Field Administrator or 

Director denies the request for 

rescission, the petitioner may file a 

petition for administrative review of the 

denial with the Assistant Administrator, 

Federal Motor Carrier Safety 

Administration, 1200 New Jersey Ave. 

SE., Washington, DC 20590–0001, 

Attention: Adjudication Counsel or by 

electronic mail to 

FMCSA.Adjudication@dot.gov. The 

petition for administrative review of the 

denial must be served and filed within 

15 days of the service of the decision 

denying the request for recession. The 

petition for administrative review must 

identify the disputed factual or 

procedural issues with respect to the 

denial of the petition for rescission. The 

petition may not, however, challenge 

the underlying basis of the order for 

which rescission was sought. 

(7) The Assistant Administrator will 

issue a written decision on the petition 

for administrative review of the denial 

of the petition for rescission within 60 

days. The Assistant Administrator’s 

decision constitutes the Final Agency 

Order. 

(i) Other orders unaffected. If a motor 

carrier, intermodal equipment provider, 

broker, or freight forwarder subject to an 

order issued under this section is or 

becomes subject to any other order, 

prohibition, or requirement of the 

FMCSA, an order issued under this 

section is in addition to, and does not 

amend or supersede such other order, 

prohibition, or requirement. A motor 

carrier, intermodal equipment provider, 

broker, or freight forwarder subject to an 

order issued under this section remains 

subject to the suspension and revocation 

provisions of 49 U.S.C. 13905 for 

violations of regulations governing their 

operations. 

(j) Inapplicability of subparts. 

Subparts B, C, D, and E of this part, 

except § 386.67, do not apply to this 

section. 

■ 4. Amend Appendix A to part 386, 

section IV, by redesignating paragraph 

h. as paragraph i. and adding a new 

paragraph h. to read as follows: 

Appendix A to Part 386—Penalty 

Schedule; Violations of Notices and 

Orders 

* * * * * 

IV. * * * 

h. Violation — Operating in violation of an 

order issued under § 386.73. Penalty—Up to 

$16,000 per day the operation continues after 

the effective date and time of the out-ofservice order. 

* * * * * 

Issued on: April 18, 2012. 

Anne S. Ferro, 

Administrator. 

[FR Doc. 2012–10162 Filed 4–25–12; 8:45 am] 

BILLING CODE P 

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