Source: https://www.federalregister.gov/documents/2012/04/26/2012-10162/amendment-to-agency-rules-of-practice
Timestamp: 2017-02-19 14:24:17
Document Index: 277525066

Matched Legal Cases: ['arts 350', 'art 386', '§\u2009386', '§\u2009386', 'art 89', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', 'art 386', '§\u2009386', '§\u2009386', '§\u2009386', 'art 386', 'art 386', '§\u2009386', '§\u2009386', '§\u2009386', 'art 386', 'art 386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', '§\u2009386', 'art 386', 'art 386', '§\u2009386']

:: Amendment to Agency Rules of Practice
A Rule by the Federal Motor Carrier Safety Administration on 04/26/2012
77 FR 24863
24863-24872
A. Comments to Section 386.18
B. Comments to Section 386.73 Carrier Intent
C. Small Business Impact
V. Discussion of Rule
https://www.federalregister.gov/d/2012-10162
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.
B. Comments to Section 386.73
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.
TIA Transportation Intermediaries Association
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 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.
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.
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 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.
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 out-of-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.
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. 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.
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.
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 high-risk 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.
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 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.
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-of-service 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.
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.
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).
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.
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 during the administrative review process.
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).
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.
ATA recommends that the Agency wait for more specific statutory authority before finalizing § 386.73.
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.
Advocates suggests that FMCSA impose criminal sanctions on reincarnated motor carriers engaging in fraud and evading regulation as part of this regulatory initiative.
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.
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.
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.
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.
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. VI. Regulatory Analyses
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.
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.
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.
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.
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.
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.
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.
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 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.
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.
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.
For the reasons discussed in the preamble, FMCSA amends 49 CFR part 386 as follows:
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.
3. Add § 386.73 to subpart F to read as follows: § 386.73 Operations out of service and record consolidation proceedings (reincarnated carriers).
(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.
(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.
(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-of-service order.
Issued on: April 18, 2012.
See 69 FR 77828, 77829, Dec. 24, 2004; 74 FR 14184, 14185, Mar. 30, 2009.
Enforcement 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.
Regulatory Flexibility Act (5 U.S.C. 601 et seq.) see National Archives at http://www.archives.gov/federal-register/laws/regulatory-flexibility/601.html.
FMCSA Eastern Service Center/Division Field Enforcement Action—Reincarnated Carrier Cases—GAO Engagement 541079 July 1, 2011.
[FR Doc. 2012-10162 Filed 4-25-12; 8:45 am]