[Federal Register Volume 65, Number 242 (Friday, December 15, 2000)]
[Rules and Regulations]
[Pages 78422-78429]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31920]


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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

49 CFR Parts 385 and 386

[Docket No. FMCSA-00-7332]
RIN 2126-AA54


Sanctions Against Motor Carriers, Brokers, and Freight Forwarders 
for Failure To Pay Civil Penalties

AGENCY: Federal Motor Carrier Safety Administration (FMCSA), DOT.

ACTION: Final rule.

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SUMMARY: The FMCSA implements section 206 of the Motor Carrier Safety 
Improvement Act of 1999 (MCSIA) by amending the penalty provisions of 
the rules of practice of the Federal Motor Carrier Safety Regulations 
(FMCSRs). This action prohibits a motor carrier that does not pay civil 
penalties assessed by the FMCSA, or that does not arrange and abide by 
its payment agreements, from operating in interstate commerce. The rule 
also suspends the registration of a broker, freight forwarder or for-
hire motor carrier that has not paid a civil penalty, or arranged and 
abided by a payment plan. The prohibition or suspension begins on the 
91st day after the payment date specified in the final agency order or 
on the 91st day after the due date of a missed payment arranged in a 
payment plan. A party that continues to operate in violation of a 
prohibition or suspension may be subject to additional penalties. 
However, it will not apply to anyone who is unable to pay a civil

[[Page 78423]]

penalty because the person is a debtor in a case under chapter 11 of 
the Bankruptcy Code.

DATES: This final rule is effective on April 16, 2001.

FOR FURTHER INFORMATION CONTACT: Ms. Deborah M. Freund, Office of Bus 
and Truck Standards and Operations, (202) 366-4009, or Mr. Charles 
Medalen, Office of Chief Counsel, (202) 366-1354, Federal Motor Carrier 
Safety Administration, 400 Seventh Street, SW., Washington, DC 20590-
0001. Office hours are from 7:45 a.m. to 4:15 p.m., e.t., Monday 
through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Background

    This rulemaking implements section 206 of the Motor Carrier Safety 
Improvement Act of 1999 (MCSIA) (Public Law 106-159, 113 Stat. 1748, at 
1763). Section 206 addresses two issues related to delinquent payment 
of penalties. Section 206(a) amends 49 U.S.C. 13905(c) by authorizing 
the Secretary of Transportation (Secretary) to suspend, amend, or 
revoke any part of the registration of a motor carrier, broker, or 
freight forwarder if that entity has not paid a civil penalty within 90 
days of the time specified by official order for payment, or has not 
arranged and abided by a payment plan. However, the Secretary may not 
revoke the registration of a person unable to pay penalties because the 
person is a debtor in a case under chapter 11 of the Bankruptcy Code 
(11 U.S.C. 362 et seq.).
    The term ``registration'' applies to a for-hire motor carrier, 
freight forwarder, and broker that registers with the FMCSA to provide 
transportation under 49 U.S.C chapter 139. This includes an entity that 
held operating authority from the Interstate Commerce Commission as of 
the effective date of the ICC Termination Act of 1995 (ICCTA) (Public 
Law 104-88, 109 Stat. 803), as well as an entity registered by the 
Federal Highway Administration (FHWA) between January 1, 1996, and 
December 31, 1999, and by the FMCSA on or after January 1, 2000.
    Section 206(b) amends 49 U.S.C. 521(b) to prohibit operations in 
interstate commerce by an owner or operator of a commercial motor 
vehicle (CMV) who fails to pay a civil penalty, or to arrange and abide 
by an acceptable payment plan. A CMV owner or operator must cease its 
interstate operations if it has not paid its fine within 90 days of the 
time specified by the Secretary's order for payment, or has not 
arranged and abided by a payment plan. Similar to the exception 
contained in section 206(a), the Secretary may not apply this 
prohibition to anyone unable to pay penalties because the person is a 
debtor in a case under chapter 11 of the Bankruptcy Code.
    The rules of practice for motor carrier proceedings are codified in 
49 CFR part 386. The most recent amendments (65 FR 7753, February 16, 
2000) added proceedings concerning violations of the commercial 
regulations that were formerly implemented and administered by the 
Interstate Commerce Commission.
    The FMCSA described in the preamble to the NPRM (65 FR 56521, 
September 19, 2000) how its current enforcement procedures would be 
affected by Section 206. Briefly, a compliance review may be conducted 
in response to a request to change a safety rating, or to investigate 
potential violations of regulations and complaints. If the compliance 
review results in the initiation of an enforcement action, the official 
document used to notify a broker, freight forwarder, or motor carrier 
is a Notice of Claim (NOC). If the broker, freight forwarder, or motor 
carrier does not respond, the NOC becomes the final agency order by 
default 25 days after it was served, and the party is so notified. If 
the broker, freight forwarder, or motor carrier timely responds and 
challenges the NOC, the FMCSA's Chief Safety Officer opens an 
administrative proceeding. If the NOC is upheld, a final agency order 
(FAO) is issued which usually directs the broker, freight forwarder, or 
motor carrier, to pay a civil penalty.
    The respondent must pay the fine within 30 days of receipt of the 
FAO. The respondent may petition the FMCSA for reconsideration of the 
FAO within 20 days after it is served. If the broker, freight 
forwarder, or motor carrier has not paid its fine in full, or if it has 
not executed an agreement with the appropriate FMCSA Service Center for 
a payment schedule for its fine, the agency issues an accounts 
receivable memorandum to the FHWA Finance Division which will pursue 
collection through administrative channels. (The FHWA is providing 
certain administrative support for the FMCSA under an interagency 
agreement until the FMCSA is authorized to fully staff its 
administrative offices.) If the agency has not received payment 30 days 
after the FAO is served on a broker, freight forwarder, or motor 
carrier, the FHWA will send a letter to the broker, freight forwarder, 
or motor carrier by certified mail, return receipt requested. The FHWA 
sends additional letters if it has still not received payment by 60 
days and 90 days after service of the order. After 180 days, the FHWA 
refers the case to the Department of Treasury for collection of the 
fine in accordance with the Debt Collection Improvement Act of 1996, 
Pub. L. 104-134, 110 Stat. 1321-358.
    Under this final rule implementing section 206, the owner or 
operator of a commercial motor vehicle that fails to pay its fine (or, 
if the agency agreed to accept installment payments, part of its fine) 
within 90 days of the date specified for payment will be barred from 
operating in interstate commerce on the 91st day and may not resume 
operating until it has paid the entire fine in full. In addition, the 
registration of a broker, freight forwarder, or for-hire motor carrier 
that fails to pay fines (or, in case of installment payments, part of a 
fine) within 90 days of the date specified for payment will be 
suspended, after notice and opportunity for a proceeding, on the 91st 
day. The respondent may not operate in interstate commerce until the 
entire fine has been paid in full and its registration restored.

Docket Comments to the NPRM

    The agency received comments from: the American Trucking 
Associations (ATA), the National Private Truck Council (NPTC), 
Advocates for Highway and Auto Safety (AHAS), Larry R. Davidson on 
behalf of the National Association of Transportation Safety 
Professionals (NATSP), the Transportation Lawyers Association (TLA), 
the National Association of Small Trucking Companies (NASTC), and Mr. 
Robert M. Hunziker, an individual.

Definitions and Delegation

    The ATA asks the FMCSA to revise the definition of Assistant 
Administrator to state that ``* * * the decision of the Assistant 
Administrator * * * shall be administratively final.'' The NPRM had 
stated ``the Assistant Administrator is * * * the final agency 
decisionmaker * * *'' The ATA reasons that ``finality in proceedings 
should refer to the finality of the decision--not the finality of the 
decisionmaker.'' The ATA further points to the citation in the statute 
that delegates powers to the Administrator, 49 U.S.C. 113(h), uses the 
term ``administratively final.''
    The ATA also requests the FMCSA to use the term ``owner or operator 
of a commercial motor vehicle'' rather than ``motor carrier'' in 
Sec. 386.83. The ATA commented that 49 U.S.C. 521(b)(8) does not use 
the term ``motor carrier'' and asserted that the meaning of the term in 
that law is different from the

[[Page 78424]]

meaning under 49 U.S.C. 13102(12) and (13) and 49 U.S.C. 31501.

Agency's Response

    The FMCSA believes that both of ATA's comments have merit. The 
agency has, therefore, changed the definition of ``Assistant 
Administrator'' in the manner suggested by ATA, and amended Sec. 386.83 
to refer to ``a CMV owner or operator.''
    The agency addressed the use of the terms ``motor carrier'' and 
``owner or operator'' in the NPRM concerning safety fitness procedures 
(64 FR 44460, at 44462, August 16, 1999). Although the FMCSRs have long 
treated owners and operators of CMVs as ``motor carriers'' (see 49 CFR 
390.5), section 206(b) is clear. It applies specifically to ``the owner 
or operator of a commercial motor vehicle against whom a civil penalty 
is assessed * * *'' [49 U.S.C. 521(b)(8)]. The Congress could have used 
the term ``motor carrier'' as it did in section 521(b)(2)(B), but 
obviously decided not to do so in the MCSIA. In the interest of 
clarity, the FMCSA has therefore replaced the term ``motor carrier'' 
with a slight variant of the statutory language.

Notice of Claim

    The TLA and the NASTC submitted similar comments. Both 
organizations contend that the FMCSA's procedures concerning the 
transformation of a Notice of Claim into a Final Agency Order in case 
of a failure to comply with the requirements for a response, constitute 
rulemaking without notice-and-comment. In the words of the NASTC, ``The 
FMCSA fails to describe the manner in which a Notice of Claim defaults 
into a Final Agency Order, even when a motor carrier timely contests 
the alleged infractions.'' The NASTC contends that ``FMCSA utilizes 
this procedure, particularly in situations where a motor carrier has no 
legal representation, which is the situation in which most NASTC 
members find themselves.'' The TLA asserts that the preamble to the 
September 19, 2000 NPRM ``provided an incomplete presentation of how 
the new penalties fit within the existing procedures.''
    A motor carrier or other regulated entity that contests a Notice of 
Claim must provide a response in writing that complies with 49 CFR 
386.14(b). Section 386.14(b)(1) requires ``[a]n admission or denial of 
each allegation of the claim or notice and a concise statement of facts 
constituting each defense.'' Section 386.14(b)(3) requires ``[a] 
statement of whether the respondent wishes to negotiate the terms of 
payment or settlement of the amount claimed, or the terms and 
conditions of the order.'' These requirements have been in the FMCSRs 
since 1985 (50 FR 40306, October 2, 1985). Section 386.14(e) provides 
that ``[i]f the respondent does not reply to a Claim Letter within the 
time prescribed in this section, the Claim letter becomes the final 
agency order in the proceeding 25 days after it is served.''
    The TLA and NASTC cited the same administrative cases in support of 
their views (In the Matter of Robert D. Bennet, Docket No. FHWA-98-4779 
(December 10, 1998) and In the Matter of Bergerson-Caswell, Inc., 
Docket No. OMCS-99-6497 (November 29, 1999)). In Bennett, the Associate 
Administrator for Motor Carriers said that ``the Regional Director [a 
position since eliminated] or Resource Center Operations Manager may 
issue to the respondent a declaration that the Notice of Claim has 
become the final agency order pursuant to 49 CFR 386.14(e) because a 
`reply,' in accordance with 49 CFR 386.14(b), had not been submitted'' 
(p. 3). The TLA asserts that ``the existing regulations contain no 
indication that a Field Administrator is empowered to determine the 
carrier's timely NOC response is legally insufficient.''

Agency's Response

    The NPRM summarized the penalty procedures in part 386 as an aid to 
readers who might not be familiar with them. The summary was not meant 
to be a complete statement of the agency's procedures. The comments 
submitted by the TLA and NASTC amount to collateral attacks on the 
Bennett and Bergerson-Caswell decisions and are thus beyond the scope 
of this rulemaking. A brief discussion of those cases may be useful, 
however. Bennett requires the Resource Center Operations Manager, when 
issuing a declaration of default, to ``include a notice that the 
respondent has an opportunity to petition the Associate Administrator 
[now Chief Safety Officer] for review of the declaration. If no 
petition is submitted, the Notice of Claim is both the final order and 
the final agency order'' (p. 3). Bennett therefore gives the respondent 
actual notice of the default and an opportunity to contest the 
declaration of default. Under the Administrative Procedure Act (APA), 
notice and comment rulemaking is not required if a person subject to a 
rule has been personally served or otherwise has actual notice of the 
rule (49 U.S.C. 553(b)). Furthermore, the opportunity to contest a 
default created by Bennett and reaffirmed by Bergerson-Caswell is not 
specifically provided for in Part 386. These two cases therefore 
enhanced the rights of respondents, and did so in a manner entirely 
consistent with the APA.

Notice and Opportunity for Proceeding

    The ATA and the NATSP expressed concern that Sec. 386.84 of the 
NPRM does not provide for prior notice and opportunity for a proceeding 
before the suspension or revocation of registration, as required by 
section 206. The NATSP also believes that the agency should give 
similar procedural rights under Sec. 386.83, although that is not 
required by statute.

Agency's Response

    The proposal in the NPRM to give respondents written notice 45 days 
after the date a penalty was due (Secs. 386.83(b) and 386.84(b)), was 
intended to meet the statutory requirement for ``notice and an 
opportunity for a proceeding'' (49 U.S.C. 13905(c)(1)) and to extend 
that right to a driver and private motor carrier as well. The FMCSA has 
amended the sections in question to make those rights more explicit. In 
order to comply with section 206, however, the show cause proceeding 
included in the final rule is necessarily limited in nature. A 
respondent's operations in interstate commerce will be prohibited, or 
its registration suspended, on the 91st day after payment was due 
unless it can show that it has paid in full or filed for bankruptcy 
under chapter 11. There are no other defenses.

Protest Procedure

    Mr. Hunziker believes it would not be appropriate to prohibit a 
motor carrier from operating if the motor carrier was protesting or 
appealing the assessment of a civil penalty.

Agency's Response

    The FMCSA's rules of practice provide a motor carrier several 
opportunities to contest the agency's findings in enforcement actions. 
These are described in 49 CFR part 386 and were summarized in the NPRM 
(65 FR 56521, at 56523-4). Section 206 does not give the agency 
discretion to hold the statutory penalties in abeyance when the 
respondent is more than 90 days overdue in making payment, even if a 
legal challenge has been filed. That principle is stated in 
Secs. 386.83(b)(3) and 386.84(b)(3). Both the NPRM and the final rule, 
however, recognize that a Federal Circuit Court of Appeals might issue 
a stay.

Effective Presentation of Warning Text

    AHAS and the ATA recommend that the FMCSA's letters to motor 
carriers

[[Page 78425]]

whose payments are delinquent contain language presented in a format 
and typeface that emphasizes the requirement for the motor carrier to 
cease its operations in interstate commerce if it does not pay its fine 
by the specified date. The ATA offered specific language for a ``Legal 
Warning.''

Agency's Response

    The FMCSA will revise the text and format of the letters it sends 
to motor carriers to emphasize this requirement.

Enforcement of Cease-Operations Sanction

    Citing the discussion of current fine-collection procedures in the 
NPRM, AHAS noted that because section 206 imposes more serious 
penalties than previous law--prohibition on operation or suspension of 
registration--the FMCSA should ``put forward a plan to enforce this 
sanction and the law on a much more aggressive time schedule than for 
mere collection of unpaid fines.''

Agency's Response

    The FMCSA is developing procedures to vigorously enforce the 
cessation-of-operations provisions of the statute and implementing 
regulations. The procedures will include methods to provide rapid and 
effective notification to FMCSA field staff and State motor carrier 
safety and vehicle licensing agencies.

Economic Impacts

    AHAS agrees with the FMCSA's determination that this rulemaking 
would have minimal economic impact on the motor carrier industry. No 
other commenters addressed this aspect of the NPRM.

Penalty Assessment Process

    The NATSP charged that the agency's method of determining penalties 
creates a ``due process problem.'' The NASTP apparently believes the 
FMCSA should negotiate an ``appropriate penalty'' with a motor carrier 
(or other respondent) before issuing a Notice of Claim. In addition to 
not involving a motor carrier directly ``in the determination of the 
amount of the penalty,'' the FMCSA refuses to allow independent 
evaluation of its method of applying the statutory factors for setting 
penalties. The NATSP believes that the FMCSA imposes fines at arbitrary 
levels that are impossible for a small or medium-sized motor carrier to 
pay, and that these firms would thus be forced out of business. The 
NATSP suggests ``referring penalty assessment to an independent 
Administrative Law Judge, or to the Department of Treasury, or the 
Department of Justice.''

Agency's Response

    These comments are outside the scope of this rulemaking. In 
preparing a Notice of Claim, the FMCSA does not consult with a motor 
carrier about the proper amount of the penalty, nor should it. The 
responsibility of choosing penalties that will induce future compliance 
with the FMCSRs rests with the agency alone. If the respondent believes 
the penalty assessed is too high, it can try to negotiate a lower 
amount with the agency's enforcement staff. Alternatively, it could 
file a motion for reduction with the Chief Safety Officer. That 
official may or may not agree to lower the penalty originally assessed; 
both courses of action are reflected in proceedings decided over the 
past decade. The final outcome will depend on the facts of the 
particular case.
    The Justice or Treasury Departments cannot decide what penalties 
should be assessed against motor carriers in Notices of Claim; Congress 
has assigned that authority exclusively to the Department of 
Transportation. An Administrative Law Judge (ALJ), though certainly 
unbiased, is not independent of the FMCSA. ALJs hear cases at the 
request of the Chief Safety Officer, and their initial findings may be 
overruled by that Officer. The FMCSA's enforcement proceedings comply 
with all legal and constitutional requirements.
    Even on the purely factual level, the NATSP's comments are 
incorrect. There is no evidence that any substantial number of motor 
carriers has been forced out of business as a result of paying fines 
levied by this agency.

General Comments

    The NPTC stated that it supported the NPRM provisions. It cautioned 
the agency to use its enforcement authority wisely and to ensure that 
fines and other penalties were set at levels appropriate to the nature 
of the violations found.
    The AHAS also support the NPRM and believe that the new regulations 
should provide a ``powerful deterrent'' to improve safety.

Agency's Response

    The FMCSA and its predecessor agencies did not have the authority 
to suspend or revoke operating authority solely on the basis of non-
payment of fines. Section 206 of the MCSIA provided that authority for 
the first time.

Discussion of Final Rule

    The revisions to 49 CFR part 386 are a straightforward 
implementation of the amendments to 49 U.S.C. 521(b) and 49 U.S.C. 
13905(c) made by section 206 of the MCSIA. The regulatory language 
published in the NPRM is being adopted today with only a few changes.

Terms of Prohibition

    A CMV owner or operator that fails to pay a civil penalty in full 
within 90 days after the date specified in the FMCSA's FAO must cease 
operating CMVs in interstate commerce starting the next day (that is, 
on day 91). The CMV owner or operator will not be allowed to operate in 
interstate commerce until the FMCSA has received full payment of the 
penalty.
    If the CMV owner or operator fails to make an installment payment 
on schedule, the payment plan is void and the entire debt is payable 
immediately. A CMV owner or operator that fails to pay the full 
outstanding balance of its civil penalty within 90 days after the date 
of the missed installment payment, is prohibited from operating in 
interstate commerce on the next (i.e., the 91st) day. The CMV owner or 
operator will not be allowed to operate in interstate commerce until 
the FMCSA has received full payment of the entire penalty.
    The rule will apply prospectively. It will only apply to FAOs 
issued on or after the effective date of the final rule. FAOs issued 
before that date are not subject to the provisions of the rule.
    The rule does not apply to a broker, freight forwarder, CMV owner 
and operator, or other person who is unable to pay because the person 
is a debtor in a case under chapter 11, title 11, United States Code.
    If the FMCSA has not received payment 45 days after service of the 
FAO, the agency will send the broker, freight forwarder, or CMV owner 
or operator a notice by certified mail, return receipt requested. This 
notice provides the motor carrier, broker, or freight forwarder one 
additional notice and an opportunity to show cause why its operations 
in interstate commerce should not be forbidden, or its registration 
suspended, on the 91st day after service of the FAO. If the broker, 
freight forwarder, or motor carrier can prove that the FMCSA has 
received timely payment in full, or that it has filed bankruptcy 
proceedings under chapter 11 of the Bankruptcy Code, it must notify the 
FMCSA immediately, and the prohibition or suspension will be reversed.
    The FMCSA will be taking necessary actions on the 91st day to 
notify its State

[[Page 78426]]

partner agencies that a particular broker, freight forwarder, or motor 
carrier is forbidden to operate in interstate commerce. Immediately 
notifying FMCSA that full payment or a bankruptcy filing has been made 
will prevent a motor carrier's CMVs from being needlessly detained at 
ports of entry and weigh stations.

Effective Date of Final Rule

    The effective date of this final rule is April 16, 2001, or 120 
days from today. First, the new consequences of non-payment of a 
penalty are severe. The FMCSA wants to provide sufficient time for 
motor carriers to become aware of this new rule. Second, the agency 
requires the additional time to make necessary changes to its 
information systems and correspondence procedures so the communications 
between the agency and brokers, freight forwarders, and motor carriers 
are handled in a timely and efficient manner.

Technical Amendment Modifying Title of Part 386

    The FMCSA is modifying the title of Part 386 to show that brokers, 
freight forwarders, and hazardous material transportation are also 
subject to these proceedings.

Rulemaking Analyses And Notices

Executive Order 12866 (Regulatory Planning and Review) and DOT 
Regulatory Policies and Procedures

    The FMCSA has determined that this regulatory action is not 
significant within the meaning of Executive Order 12866 nor under the 
regulatory policies and procedures of the DOT (44 FR 11034, February 
26, 1979). This rule will prohibit any broker, freight forwarder, or 
motor carrier or driver in interstate commerce that has not paid a 
penalty assessed by the FMCSA within 90 days of the final agency order, 
or has not abided by a payment plan that it had arranged with the 
FMCSA, from operating in interstate commerce.
    Based upon the data presented in the NPRM, the FMCSA anticipates 
that this rulemaking will have minimal economic impact on the 
interstate motor carrier industry. Statistics on enforcement actions 
taken during each of Federal fiscal years 1996 through 1999 indicate 
that approximately 300 to 500 motor carriers per year did not pay their 
assessed penalties within 90 days after receiving a final agency order. 
Under this regulation, these motor carriers will be required to cease 
their operations in interstate commerce until they have paid their 
penalties. That sanction may induce most such motor carriers to pay the 
civil penalty within 90 days or to abide by their agreed-upon payment 
plans. It is assumed that the costs of paying the fines, which have 
historically averaged between $3,500 and $5,500, would be less than the 
potential significantly higher cost of not paying, and facing the 
shutdown of interstate operations. Thus, the entities involved would 
take steps to achieve compliance with the lower cost alternative. For 
the purpose of this analysis, the FMCSA estimates that between 50 and 
75 percent of these motor carriers would pay their fines within 90 days 
rather than face additional sanctions. Therefore, approximately 75 to 
250 motor carriers annually might not pay their assessed fines and 
would face the penalties attached to this rule. This estimate is 
conservative because it does not account for those motor carriers in 
chapter 11 bankruptcy proceedings that are not subject to this rule.
    Based upon its analysis of statistical information concerning motor 
carriers' improvement in their safety ratings, the FMCSA believes that 
the vast majority of motor carriers interested in continuing their 
operations would be able to do so. The adverse impact of this rule on 
those few motor carriers not involved in bankruptcy proceedings which 
fail to pay their penalties in a timely manner, is exactly the effect 
intended by Congress.
    This rule will only affect the operations of the small number of 
motor carriers that do not pay civil penalties assessed as part of 
enforcement actions. The number of motor carriers involved is expected 
to continue to be extremely small--fewer than one-tenth of one percent 
of motor carriers per year listed as active in the MCMIS. The FMCSA 
believes the number of motor carriers potentially subject to this level 
of impact is much smaller than the number of motor carriers that cease 
operations every year as a result of normal economic fluctuations. This 
rulemaking reinforces the importance of complying with the safety 
regulations by putting into place a mechanism to require motor carriers 
to pay penalties assessed, unless they are unable to pay because they 
are debtors in chapter 11 bankruptcy proceedings.
    This rule imposes no new costs upon motor carriers, brokers, and 
freight forwarders. Those entities should see no change to their 
operations, provided they pay assessed monetary penalties within the 
time frames that they arrange with the FMCSA. Based upon the extremely 
small number of motor carriers projected to be affected, the agency 
believes that the overall adverse economic effects of this rulemaking 
will be minimal. This rule will allow the FMCSA to require those very 
few motor carriers that do not pay civil penalties, or abide by payment 
agreements, to cease their operations in interstate commerce. A broker, 
freight forwarder, or for-hire motor carrier operating in interstate 
commerce may also lose its operating authority until it pays its 
overdue civil penalties. This rule provides the FMCSA with an essential 
tool to take prompt and effective action against these motor carriers.

Regulatory Flexibility Act

    In compliance with the Regulatory Flexibility Act (5 U.S.C. 601-
612) the FMCSA has evaluated the effects of this rulemaking on small 
entities. The only motor carriers economically impacted by this rule 
will be those who do not pay their civil penalties by the 90th day 
after the FMCSA's final agency order or that have failed to arrange and 
abide by a payment plan.
    Motor carriers can avoid the consequences of this rule simply by 
paying their civil penalties. The FMCSA does not assess fines at a 
level that would cause a motor carrier to shortchange its safety and 
soundness of operations in order to pay its fine. In determining the 
level of penalties, the FMCSA takes into account, among other things, a 
motor carrier's ability to pay. The FMCSA also allows motor carriers to 
arrange a payment plan with the agency. Both of these considerations 
are tailored to the financial needs of small motor carriers and are 
part of the agency's current procedures. Therefore, the FMCSA hereby 
certifies that this regulatory action will not have a significant 
economic impact on a substantial number of small entities.

Unfunded Mandates Reform Act of 1995

    This rule does not impose a Federal mandate resulting in the 
expenditure by State, local, or tribal governments, in the aggregate, 
or by the private sector, of $100 million or more in any one year (2 
U.S.C 1531 et seq.).

Executive Order 12988 (Civil Justice Reform)

    This action meets applicable standards in sections 3(a) and 3(b)(2) 
of Executive Order 12988, Civil Justice Reform, to minimize litigation, 
eliminate ambiguity, and reduce burden.

Executive Order 13045 (Protection of Children)

    We have analyzed this action under Executive Order 13045, 
``Protection of Children from Environmental Health

[[Page 78427]]

Risks and Safety Risks.'' This rule is not economically significant and 
does not concern an environmental risk to health or safety that would 
disproportionately affect children.

Executive Order 12630 (Taking of Private Property)

    This rule implements a statutory mandate to prohibit motor carriers 
that do not pay assessed penalties from operating in interstate 
commerce. Motor carriers can avoid all of the implications of this 
mandate by complying with the FMCSRs, thereby avoiding adverse 
enforcement actions. Failing that, the motor carrier can avoid the new 
sanctions under this rule by paying penalties assessed within 90 days 
of the final agency order. If the motor carrier has arranged a payment 
plan with the FMCSA, it can avoid the new sanctions by abiding by its 
payment plan. The FMCSA therefore certifies that this rule has no 
takings implications under the Fifth Amendment or Executive Order 
12630, Governmental Actions and Interference with Constitutionally 
Protected Property Rights.

Executive Order 13132 (Federalism)

    This action has been analyzed in accordance with the principles and 
criteria contained in Executive Order 13132, dated August 4, 1999. The 
FMCSA has determined this rule does not have a substantial direct 
effect on, or sufficient federalism implications for, the States, nor 
will it limit the policymaking discretion of the States.
    Nothing in this document directly preempts any State law or 
regulation. It will not impose additional costs or burdens on the 
States. Although the FMCSA is revising part 386 of the FMCSRs, States 
are not required to adopt part 386 as a condition for receiving Motor 
Carrier Safety Assistance Program grants. Also, this action will not 
have a significant effect on the States' ability to execute traditional 
State governmental functions.

Executive Order 12372 (Intergovernmental Review)

    Catalog of Domestic Assistance Program Number 20.217, Motor Carrier 
Safety. The regulations implementing Executive Order 12372 regarding 
intergovernmental consultation on Federal programs and activities do 
not apply to this program.

Paperwork Reduction Act

    This action does not involve an information collection that is 
subject to the requirements of the Paperwork Reduction Act of 1995, 44 
U.S.C. 3501-3520.

National Environmental Policy Act

    The agency has analyzed this action for the purpose of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and has 
determined under DOT Order 5610.1C (September 18, 1979) that this 
action does not require any environmental assessment.

List of Subjects

49 CFR Part 385

    Highway safety, Motor carriers.

49 CFR Part 386

    Highway safety, Motor carriers, Rules of practice.

    In consideration of the foregoing, the FMCSA amends title 49, Code 
of Federal Regulations, Chapter III, parts 385 and 386 as set forth 
below:

PART 385--SAFETY FITNESS PROCEDURES

    1. Revise the authority citation for part 385 to read as follows:

    Authority: 49 U.S.C. 113, 504, 521(b)(5)(A) and (b)(8), 5113, 
31136, 31144, 31502; and 49 CFR 1.73.


    2. Add Sec. 385.14 to read as follows:


Sec. 385.14  Motor carriers, brokers, and freight forwarders delinquent 
in paying civil penalties: prohibition on transportation.

    (a) A CMV owner or operator that has failed to pay civil penalties 
imposed by the FMCSA, or has failed to abide by a payment plan, may be 
prohibited from operating CMVs in interstate commerce under 49 CFR 
386.83.
    (b) A broker, freight forwarder, or for-hire motor carrier that has 
failed to pay civil penalties imposed by the FMCSA, or has failed to 
abide by a payment plan, may be prohibited from operating in interstate 
commerce, and its registration may be suspended under the provisions of 
49 CFR 386.84.

PART 386--RULES OF PRACTICE FOR MOTOR CARRIER, BROKER, FREIGHT 
FORWARDER, AND HAZARDOUS MATERIALS PROCEEDINGS

    3. Revise the authority citation for part 386 to read as follows:

    Authority: 49 U.S.C. 113, chapters 5, 51, 59, 131-141, 145-149, 
311, 313, and 315; sec. 206, Pub. L. 106-159, 113 Stat. 1763; and 49 
CFR 1.45 and 1.73.


    4. Revise the heading of part 386 to read as set forth above.

    5. Revise Sec. 386.1 to read as follows:


Sec. 386.1  Scope of rules in this part.

    The rules in this part govern proceedings before the Assistant 
Administrator, who also acts as the Chief Safety Officer of the Federal 
Motor Carrier Safety Administration (FMCSA), under applicable 
provisions of the Federal Motor Carrier Safety Regulations (49 CFR 
parts 350-399), including the commercial regulations (49 CFR parts 360-
379) and the Hazardous Materials Regulations (49 CFR parts 171-180). 
The purpose of the proceedings is to enable the Assistant Administrator 
to determine whether a motor carrier, property broker, freight 
forwarder, or its agents, employees, or any other person subject to the 
jurisdiction of the FMCSA, has failed to comply with the provisions or 
requirements of applicable statutes and the corresponding regulations 
and, if such violations are found, to issue an appropriate order to 
compel compliance with the statute or regulation, assess a civil 
penalty, or both.

    6. In Sec. 386.2, remove ``Federal Highway Administration'' and add 
``Federal Motor Carrier Safety Administration'' each place it appears; 
and add the new definitions of Assistant Administrator, Broker, Final 
agency order, and Freight forwarder, in alphabetical order, to read as 
follows:


Sec. 386.2  Definitions.

* * * * *
    Assistant Administrator means the Assistant Administrator of the 
Federal Motor Carrier Safety Administration. The Assistant 
Administrator is the Chief Safety Officer of the agency pursuant to 49 
U.S.C. 113(d). Decisions of the Assistant Administrator in motor 
carrier, broker, freight forwarder, and hazardous materials proceedings 
under this part are administratively final.
* * * * *
    Broker means a person who, for compensation, arranges or offers to 
arrange the transportation of property by an authorized motor carrier. 
A motor carrier, or person who is an employee or bona fide agent of a 
carrier, is not a broker within the meaning of this section when it 
arranges or offers to arrange the transportation of shipments which it 
is authorized to transport and which it has accepted and legally bound 
itself to transport.
* * * * *
    Final agency order means a notice of final agency action issued 
pursuant to this part by either the appropriate FMCSA Field 
Administrator (for default judgements under Sec. 386.14(e)), the FMCSA 
Chief Safety Officer, or an Administrative Law Judge (ALJ),

[[Page 78428]]

typically requiring payment of a civil penalty by a broker, freight 
forwarder, driver, or motor carrier.
    Freight forwarder means a person holding itself out to the general 
public (other than as an express, pipeline, rail, sleeping car, motor, 
or water carrier) to provide transportation of property for 
compensation in interstate commerce, and in the ordinary course of its 
business:
    (1) Performs or provides for assembling, consolidating, break-bulk, 
and distribution of shipments;
    (2) Assumes responsibility for transportation from place of receipt 
to destination; and
    (3) Uses for any part of the transportation a carrier subject to 
FMCSA jurisdiction.
* * * * *

    7. Add Secs. 386.83 and 386.84 to read as follows:


Sec. 386.83  Sanction for failure to pay civil penalties or abide by 
payment plan; operation in interstate commerce prohibited.

    (a)(1) General rule. A CMV owner or operator that fails to pay a 
civil penalty in full within 90 days after the date specified for 
payment by the FMCSA's final agency order is prohibited from operating 
in interstate commerce starting on the next (i.e., the 91st) day. The 
prohibition continues until the FMCSA has received full payment of the 
penalty.
    (2) Civil penalties paid in installments. The FMCSA Service Center 
may allow a CMV owner or operator to pay a civil penalty in 
installments. If the CMV owner or operator fails to make an installment 
payment on schedule, the payment plan is void and the entire debt is 
payable immediately. A CMV owner or operator that fails to pay the full 
outstanding balance of its civil penalty within 90 days after the date 
of the missed installment payment, is prohibited from operating in 
interstate commerce on the next (i.e., the 91st) day. The prohibition 
continues until the FMCSA has received full payment of the entire 
penalty.
    (3) Appeals to Federal Court. If the CMV owner or operator appeals 
the final agency order to a Federal Circuit Court of Appeals, the terms 
and payment due date of the final agency order are not stayed unless 
the Court so directs.
    (b) Show Cause Proceeding. (1) The FMCSA will notify a CMV owner or 
operator in writing if it has not received payment within 45 days after 
the date specified for payment by the final agency order or the date of 
a missed installment payment. The notice will include a warning that 
failure to pay the entire penalty within 90 days after payment was due, 
will result in the CMV owner or operator being prohibited from 
operating in interstate commerce.
    (2) The notice will order the CMV owner or operator to show cause 
why it should not be prohibited from operating in interstate commerce 
on the 91st day after the date specified for payment. The prohibition 
may be avoided only by submitting to the Chief Safety Officer:
    (i) Evidence that the respondent has paid the entire amount due; or
    (ii) Evidence that the respondent has filed for bankruptcy under 
chapter 11, title 11, United States Code. Respondents in bankruptcy 
must also submit the information required by paragraph (d) of this 
section.
    (3) The notice will be delivered by certified mail or commercial 
express service. If a CMV owner's or operator's principal place of 
business is in a foreign country, the notice will be delivered to the 
CMV owner's or operator's designated agent.
    (c) A CMV owner or operator that continues to operate in interstate 
commerce in violation of this section may be subject to additional 
sanctions under paragraph IV (h) of appendix A to part 386.
    (d) This section does not apply to any person who is unable to pay 
a civil penalty because the person is a debtor in a case under chapter 
11, title 11, United States Code. CMV owners or operators in bankruptcy 
proceedings under chapter 11 must provide the following information in 
their response to the FMCSA:
    (1) The chapter of the Bankruptcy Code under which the bankruptcy 
proceeding is filed (i.e., chapter 7 or 11);
    (2) The bankruptcy case number;
    (3) The court in which the bankruptcy proceeding was filed; and
    (4) Any other information requested by the agency to determine a 
debtor's bankruptcy status.


Sec. 386.84  Sanction for failure to pay civil penalties or abide by 
payment plan; suspension or revocation of registration.

    (a)(1) General rule. The registration of a broker, freight 
forwarder, or for-hire motor carrier that fails to pay a civil penalty 
in full within 90 days after the date specified for payment by the 
FMCSA's final agency order, will be suspended starting on the next 
(i.e., the 91st) day. The suspension continues until the FMCSA has 
received full payment of the penalty.
    (2) Civil penalties paid in installments. The FMCSA Service Center 
may allow a respondent broker, freight forwarder, or for-hire motor 
carrier to pay a civil penalty in installments. If the respondent fails 
to make an installment payment on schedule, the payment plan is void 
and the entire debt is payable immediately. The registration of a 
respondent that fails to pay the remainder of its civil penalty in full 
within 90 days after the date of the missed installment payment, is 
suspended on the next (i.e., the 91st) day. The suspension continues 
until the FMCSA has received full payment of entire penalty.
    (3) Appeals to Federal Court. If the respondent broker, freight 
forwarder, or for-hire motor carrier appeals the final agency order to 
a Federal Circuit Court of Appeals, the terms and payment due date of 
the final agency order are not stayed unless the Court so directs.
    (b) Show Cause Proceeding. (1) The FMCSA will notify a respondent 
broker, freight forwarder, or for-hire motor carrier in writing if it 
has not received payment within 45 days after the date specified for 
payment by the final agency order or the date of a missed installment 
payment. The notice will include a warning that failure to pay the 
entire penalty within 90 days after payment was due, will result in the 
suspension of the respondent's registration.
    (2) The notice will order the respondent to show cause why its 
registration should not be suspended on the 91st day after the date 
specified for payment. The prohibition may be avoided only by 
submitting to the Chief Safety Officer:
    (i) Evidence that the respondent has paid the entire amount due; or
    (ii) Evidence that the respondent has filed for bankruptcy under 
chapter 11, title 11, United States Code. Respondents in bankruptcy 
must also submit the information required by paragraph (d) of this 
section.
    (3) The notice will be delivered by certified mail or commercial 
express service. If a respondent's principal place of business is in a 
foreign country, it will be delivered to the respondent's designated 
agent.
    (c) The registration of a broker, freight forwarder or for-hire 
motor carrier that continues to operate in interstate commerce in 
violation of this section after its registration has been suspended may 
be revoked after an additional notice and opportunity for a proceeding 
in accordance with 49 U.S.C. 13905(c). Additional sanctions may be 
imposed under paragraph IV (h) of appendix A to part 386.
    (d) This section does not apply to any person who is unable to pay 
a civil penalty because the person is a debtor

[[Page 78429]]

in a case under chapter 11, title 11, United States Code. Brokers, 
freight forwarders, or for-hire motor carriers in bankruptcy 
proceedings under chapter 11 must provide the following information in 
their response to the FMCSA:
    (1) The chapter of the Bankruptcy Code under which the bankruptcy 
proceeding is filed (i.e., chapter 7 or 11);
    (2) The bankruptcy case number;
    (3) The court in which the bankruptcy proceeding was filed; and
    (4) Any other information requested by the agency to determine a 
debtor's bankruptcy status.

    8. Add paragraph h to part IV of Appendix A to part 386 to read as 
follows:

Appendix A to Part 386--Penalty Schedule; Violations of Notices and 
Orders

* * * * *
    IV. * * *
    h. Violation--Conducting operations during a period of 
suspension under Secs. 386.83 or 386.84 for failure to pay 
penalties.
    Penalty--Up to $10,000 for each day that operations are 
conducted during the suspension period.

    Issued on: December 7, 2000.
Brian M. McLaughlin,
Acting Assistant Administrator.
[FR Doc. 00-31920 Filed 12-14-00; 8:45 am]
BILLING CODE 4910-EX-P