[Federal Register Volume 71, Number 241 (Friday, December 15, 2006)]
[Proposed Rules]
[Pages 75433-75437]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: E6-21314]


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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

49 CFR Part 387

[Docket No. FMCSA-2006-26262]
RIN 2126-AB05


Minimum Levels of Financial Responsibility for Motor Carriers; 
Petitions for Rulemaking

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

ACTION: Advance notice of proposed rulemaking (ANPRM); request for 
comments.

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SUMMARY: The Federal Motor Carrier Safety Administration (FMCSA) 
announces it is considering whether to amend its financial 
responsibility requirements for motor carriers in response to two 
petitions for rulemaking. The Government of Canada (Canada) petitioned 
FMCSA to amend these requirements to permit, as acceptable evidence of 
financial responsibility, a policy of insurance issued by a Canadian 
insurance company legally authorized to issue such policies in the 
Province or Territory of Canada where the motor carrier has its 
principal place of business. Canada believes the FMCSA's current 
regulations place Canada-domiciled motor carriers operating in the 
United States at a competitive

[[Page 75434]]

disadvantage with U.S.-domiciled carriers. The Property Casualty 
Insurers Association of America (PCI) petitioned FMCSA to make 
revisions to the MCS-90 and MCS-90B endorsements to clarify that 
language in the endorsements imposing liability for negligence 
occurring ``on any route or in any territory authorized to be served by 
the insured or elsewhere'' does not include liability connected with 
transportation within Mexico. FMCSA seeks input from the public in the 
form of data or other information in response to several questions 
posed in the ANPRM to assist the Agency in evaluating these proposals.

DATES: Comments must be received by February 13, 2007.

ADDRESSES: You may submit comments identified by the docket number 
(FMCSA-2006-26262) by any of the following methods:
     Web site: http://dms.dot.gov. Follow the instructions for 
submitting comments on the DOT electronic docket site.
     FAX: 1-202-493-2251.
     Mail: Docket Management System, U.S. Department of 
Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, 
Washington, DC 20590-0001.
     Hand Delivery: Room PL-401 on the plaza level of the 
Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 
a.m. and 5 p.m., e.t., Monday through Friday, except Federal holidays.
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the online instructions for submitting comments.
    Instructions: All submissions must include the Agency name and 
docket number or Regulatory Identification Number (RIN) for this 
regulatory action. Internet users may access comments received by DOT 
at: http://dms.dot.gov. Note that comments received will be posted 
without change to http://dms.dot.gov, including any personal 
information provided. Refer to the Privacy Act heading for further 
information. If addressing a specific section or question in this 
ANPRM, please clearly identify the section heading or question number 
for each topic addressed in your comments.
    Docket: Copies or abstracts of all documents referenced in this 
notice are in the docket for this rulemaking: FMCSA-2006-26262. For 
access to the docket to read background documents or comments received, 
go to http://dms.dot.gov at any time or to Room PL-401 on the plaza 
level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, 
between 9 a.m. and 5 p.m., e.t., Monday through Friday, except Federal 
holidays.

FOR FURTHER INFORMATION CONTACT: Mr. Thomas Yager, Chief, Division of 
Driver and Carrier Operations (MC-PSD), FMCSA, 400 Seventh Street, SW., 
Washington, DC 20590; Telephone (202) 366-4009, or FAX 202-366-8842.

SUPPLEMENTARY INFORMATION:

Legal Basis for the Rulemaking

    Section 30 of the Motor Carrier Act of 1980 (Pub. L. 96-296, 94 
Stat. 793, July 1, 1980) directed the Secretary of Transportation 
(Secretary) to prescribe regulations establishing minimum levels of 
financial responsibility covering public liability, property damage, 
and environmental restoration for the transportation of property for 
compensation by motor vehicles in interstate or foreign commerce. 
Section 30(c) of the Act provided that motor carrier financial 
responsibility may be established by evidence of one or a combination 
of the following if acceptable to the Secretary: (1) Insurance; (2) a 
guarantee; (3) a surety bond issued by a bonding company authorized to 
do business in the United States; and (4) qualification as a self-
insurer (49 U.S.C. 31139(f)(1)). Section 30(c) required the Secretary 
to establish, by regulation, methods and procedures to assure 
compliance with these requirements. In June 1981, the Secretary issued 
regulations implementing Section 30, which are codified at 49 CFR Part 
387, subpart A.
    Section 18 of the Bus Regulatory Reform Act of 1982 (Pub. L. 97-
261, 96 Stat. 1121 (September 20, 1982) directed the Secretary to 
prescribe regulations establishing minimum levels of financial 
responsibility covering public liability and property damage for the 
transportation of passengers for compensation by motor vehicle in 
interstate or foreign commerce. Section 18(d) of the Act provided that 
motor carrier financial responsibility may be established by evidence 
of one or a combination of the following if acceptable to the 
Secretary: (1) Insurance, including high self-retention; (2) a 
guarantee; and (3) a surety bond issued by a bonding company authorized 
to do business in the United States (49 U.S.C. 31138(c)(1)). Section 
18(d) required the Secretary to establish, by regulation, methods and 
procedures to assure compliance with these requirements. In November 
1983, the Secretary issued regulations implementing Section 18, which 
are codified at 49 CFR Part 387, subpart B.
    This advance notice of proposed rulemaking (ANPRM) is based on the 
Secretary's authority to establish methods and procedures to assure 
that for-hire motor carriers of property and passengers maintain 
acceptable evidence of financial responsibility in accordance with 49 
U.S.C. 31138(c)(1) and 31139(f)(1). This authority has been delegated 
to FMCSA by the Secretary pursuant to 49 CFR 1.73(f).

Background

The Canada Petition

    The Government of Canada (Canada) submitted a Petition for 
Rulemaking to amend 49 CFR part 387 on September 29, 2005. Canada 
specifically requested that FMCSA amend Sec.  387.11, which provides 
that a policy of insurance or surety bond does not satisfy FMCSA's 
financial responsibility requirements unless the insurer or surety 
furnishing the policy or bond is--
    (a) Legally authorized to issue such policies or bonds in each 
State in which the motor carrier operates; or
    (b) Legally authorized to issue such policies or bonds in the State 
in which the motor carrier has its principal place of business or 
domicile, and is willing to designate a person upon whom process, 
issued by or under the authority of any court having jurisdiction of 
the subject matter, may be served in any proceeding at law or equity 
brought in any State in which the motor carrier operates; or
    (c) Legally authorized to issue such policies or bonds in any State 
of the United States and eligible as an excess or surplus lines insurer 
in any State in which business is written, and is willing to designate 
a person upon whom process, issued by or under the authority of any 
court having jurisdiction of the subject matter, may be served in any 
proceeding at law or equity brought in any State in which the motor 
carrier operates.
    Canada asked FMCSA to consider amending this provision to permit 
insurance companies, licensed either provincially or federally in 
Canada, to write motor vehicle liability insurance policies, to issue 
the Form MCS-90 endorsements on insurance policies to meet FMCSA's 
financial responsibility requirements. Form MCS-90 is the endorsement 
for motor carrier policies of insurance for public liability, which 
for-hire motor carriers of property must maintain at their principal 
place of business. Motor carriers domiciled in Canada and Mexico must 
also carry a copy of the Form MCS-90 on board each vehicle operated in 
the United States.
    At present, the combined effects of Sec. Sec.  387.7 and 387.11 
require Canada-

[[Page 75435]]

domiciled motor carriers operating in the United States to either: (1) 
Obtain insurance through a Canada-licensed insurer, which enters into a 
``fronting agreement'' with a U.S.-licensed insurer, whereby the U.S. 
insurer permits the Canadian insurer to sign the Form MCS-90 as its 
agent, and the entire risk is contractually ``reinsured'' back to the 
Canadian insurer by the U.S. insurer; or (2) obtain two separate 
insurance policies, one valid in Canada written by a Canadian insurer 
and one valid in the United States written by a U.S. insurer. Canada 
indicates that the first option is by far the most common. Canada 
suggested that the result of these requirements is an additional 
administrative burden, inconvenience, and cost not faced by U.S.-
domiciled motor carriers operating into Canada. Approximately 17,000 
Canadian motor carriers with 184,000 power units operate in the United 
States.
    Canada requested that FMCSA amend 49 CFR part 387 so that an 
insurance policy issued by a Canadian insurance company satisfies the 
financial responsibility requirements. The insurance company must be 
legally authorized to issue such a policy in the Province or Territory 
of Canada in which the Canadian motor carrier has its principal place 
of business or domicile. The company must also be willing to designate 
a person upon whom process, issued by or under the authority of any 
court having jurisdiction of the subject matter, may be served in any 
proceeding at law or equity brought in any State in which the motor 
carrier operates.
    If accepted, the amendment would eliminate the need for Canadian 
insurance companies to link with a U.S. insurance company to legally 
insure Canadian motor carriers that operate in the United States. It 
should be noted that although Canada's petition only seeks to amend 49 
CFR 387.11, its proposal necessarily implicates other sections of part 
387, which would have to be changed for the sake of consistency. 
Section 387.35 applies the Sec.  387.11 requirements to motor passenger 
carriers, which must obtain a Form MCS-90B endorsement. Furthermore, 
Sec.  387.315 imposes the same requirements on motor carriers who must 
file evidence of insurance with FMCSA and Sec.  387.409 applies these 
requirements to freight forwarders.
    The Security and Prosperity Partnership of North America (SPP) 
reinforces the resolution of cross-border motor carrier insurance 
issues. The President of the United States, the Prime Minister of 
Canada, and the President of Mexico announced this initiative on March 
23, 2005. The initiative reflects the goal of improving the 
availability and affordability of insurance coverage for motor carriers 
engaged in cross-border commerce in North America. On June 27, 2005, a 
Report to the Leaders was signed on behalf of the United States by the 
Secretaries of Homeland Security, Commerce, and State. One of the 
stated initiatives in the report is to ``Seek ways to improve the 
availability and affordability of insurance coverage for carriers 
engaged in cross-border commerce in North America.'' The following key 
milestone is stated for this initiative:

    U.S. and Canada to work towards possible amendment of the U.S. 
Federal Motor Carrier Safety Regulations to allow Canadian insurers 
to directly sign the MCS-90 form concerning endorsement for motor 
carrier policies of insurance for public liability: by June 2006.

    Canada advocates a change to part 387 to assist in meeting the 
stated goals of the SPP. Achieving a seamless motor vehicle liability 
insurance policy between Canada and the United States for motor 
carriers would contribute to enhancing the competitive and efficient 
position of North American business. FMCSA recognizes the importance of 
considering these requests, and has granted the petitions by initiating 
this rulemaking proceeding to solicit public comment on the safety, 
legal, and economic ramifications of Canada's proposal and PCI's 
related proposal.

The PCI Petition

    The Property Casualty Insurers Association of America's (PCI) 
petition, filed on July 2, 2004, was prompted by a Federal Court 
decision holding that the Form MCS-90B endorsement applied to a crash 
that occurred in Mexico, based on language in the endorsement stating 
that it applied to transportation ``on any route or on any territory 
authorized to be served by the insured or elsewhere.'' PCI requested 
that the endorsement be amended by inserting the phrase: ``within the 
United States of America, its territories, possessions, Puerto Rico, 
and Canada'' following the words ``or elsewhere.''
    PCI believes a territorial limitation excluding transportation in 
Mexico would work in concert with Canada's request because granting 
Canada's request without addressing PCI's request could put both U.S. 
and Canadian insurers in the position of violating the Mexican Federal 
law, which requires third-party liability insurance to be written by 
Mexico-domiciled insurers alone. PCI suggested that application of the 
Form MCS-90 and MCS-90B endorsements to accidents occurring in Mexico 
also appears to contradict the original intent of the endorsements to 
apply to interstate commerce within the United States, not 
internationally.

Request for Information and Comments

    FMCSA requests data and comments in response to the following 
questions, as well as on other issues related to the two petitions.
    A. Regarding the proposal to allow Canadian insurance companies to 
issue commercial motor vehicle insurance policies covering Canadian 
motor carriers while operating in the United States:
    (1) What has been the experience of motorists or other claimants 
for crashes involving other types of vehicles, such as passenger cars 
driven in the United States but insured by Canadian firms, in 
collecting damage claims filed with Canadian insurance companies for 
incidents that occur in the United States? Are the consumer protection 
systems in place in Canada adequate to ensure proper consideration of 
claims filed by U.S. citizens and businesses?
    (2) Would it be more difficult to execute a U.S. court judgment 
against a Canadian motor carrier insured by a Canadian insurance 
company compared to a Canadian motor carrier insured by a U.S. 
insurance company?
    (3) Would Canadian insurance companies be legally bound, under 
Canadian law, to make payment to U.S. claimants based on a final 
judgment issued by a U.S. court?
    (4) If Canadian insurance companies were allowed to write coverage 
for Canadian motor carriers operating in the United States, would there 
likely be economic impacts associated with a potential increase in 
unpaid claims?
    (5) Although the petition proposes amending only Sec.  387.11, is 
there any reason why the proposal should not be extended to include 
insurance policies issued to Canadian passenger carriers and freight 
forwarders?
    B. Regarding the PCI proposal to modify text in Form MCS-90 to 
exclude coverage for transportation occurring in Mexico:
    (1) How would U.S. and Canadian insurance companies be impacted by 
defining the term ``any territory'' to include or exclude 
transportation within Mexico?
    (2) Does the manner in which ``any territory'' is defined have any 
impact on the U.S. public? If so, whom would it affect in particular?
    (3) How have the courts addressed the meaning of the term ``any 
territory'' on the MCS-90 or MCS-90B form?
    (4) Is there a U.S. public interest in including any territory 
outside the

[[Page 75436]]

United States in the coverage provided by the MCS-90 or MCS-90B 
endorsement?
    (5) Would applying the MCS-90 and MCS-90B endorsements to 
transportation in Mexico expose U.S. and Canadian motor carriers and 
insurers to criminal liability?
    (6) What evidence is there to support PCI's contention that the 
endorsements were not intended to apply to transportation in Mexico?
    If addressing a specific request for comments in this ANPRM, please 
clearly identify the related section heading or question number for 
each topic addressed in your comments.

Privacy Act

    Anyone is able to search the electronic form of 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 DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (65 FR 19477) or you may visit http://dms.dot.gov.
    Comments received after the comment closing date will be included 
in the docket and the Agency will consider late comments to the extent 
practicable. FMCSA may, however, issue a notice of proposed rulemaking 
at any time after the close of the comment period.

Rulemaking Analyses and Notices

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

    FMCSA has determined this ANPRM is not a significant regulatory 
action within the meaning of Executive Order 12866 and the Department 
of Transportation regulatory policies and procedures (44 FR 11034, 
February 26, 1979).
    The Agency is not yet in a position to analyze fully any potential 
actions it may initiate in response to this ANPRM. FMCSA seeks comments 
about the following issues to guide our analysis for a potential notice 
of proposed rulemaking:
    (1) The costs and benefits of potentially effective and reasonably 
feasible alternatives to the current regulations, including improving 
the current regulation and reasonably viable non-regulatory actions; 
and
    (2) Any preliminary impact assessments of these regulatory and non-
regulatory alternatives.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601-612), as amended by 
the Small Business Regulatory Enforcement and Fairness Act (RFA) (Pub. 
L. 104-121), requires Federal agencies to analyze the impact of 
regulatory alternatives on small entities, unless FMCSA certifies that 
a regulatory alternative will not have a significant economic impact on 
a substantial number of small entities, and to consider non-regulatory 
alternatives that could achieve our goal while minimizing the burden on 
small entities. The RFA applies to rules only at the proposed and final 
stage and, therefore, does not apply to this ANPRM. FMCSA requests 
comments on the potential impacts on small entities to assist its small 
entity analysis if the Agency decides to issue a Notice of Proposed 
Rulemaking.

Executive Order 13132 (Federalism)

    Although the Agency believes there are no Federalism issues, we are 
not yet in a position to analyze fully any potential actions in 
accordance with the principles and criteria contained in Executive 
Order 13132 (64 FR 43255, August 10, 1999).
    The Agency specifically requests comment from State and local 
officials on any Federalism issues.

Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4; 2 U.S.C. 
1532) requires each agency to assess the effects of its regulatory 
actions on State, local, and tribal governments and the private sector. 
Any agency promulgating a final rule likely to result in a Federal 
mandate requiring expenditures by a State, local, or tribal government, 
or by the private sector of $120.7 million or more in 2003 dollars in 
any one year, must prepare a written statement incorporating various 
assessments, estimates, and descriptions that are delineated in the 
Act. Although FMCSA believes there would be no unfunded mandates 
arising from any change in the current regulatory standards, the Agency 
is not yet in a position to analyze fully any potential actions it may 
initiate and that may meet the requirements of the Unfunded Mandates 
Reform Act.
    FMCSA seeks specific comments whether such impacts are likely for 
any regulatory or non-regulatory alternative for Agency consideration.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), a 
Federal agency must obtain approval from OMB for each collection of 
information it conducts, sponsors, or requires through regulations. 
This ANPRM calls for no new collection of information. However, the 
Agency is not yet in a position to analyze fully any potential action 
we may initiate that may fall within the scope of the Paperwork 
Reduction Act.

National Environmental Policy Act

    This ANPRM is not expected to have environmental impacts, although 
the Agency is not yet in a position to analyze fully any potential 
actions under the requirements of the National Environmental Policy Act 
of 1969 (42 U.S.C. 4321 et seq.) and our environmental procedures Order 
5610.1, issued on March 1, 2004, 69 FR 9680. The Agency believes 
potential actions we may initiate in response to this ANPRM may be 
categorically excluded (CE) from further environmental documentation 
under Appendix 2.6.d. and 2.6.v. of Order 5610.1, which contain 
categorical exclusions for regulations concerning the training, 
qualifying, licensing, certifying, and managing of personnel and 
regulations establishing financial responsibility requirements. In 
addition, FMCSA believes potential actions the Agency may initiate 
would not involve extraordinary circumstances that would affect the 
quality of the environment.

Clean Air Act

    FMCSA is not yet in a position to analyze fully any potential 
actions under the requirements of the Clean Air Act (CAA), as amended, 
section 176(c), (42 U.S.C. 7401-7671) and implementing regulations 
promulgated by the Environmental Protection Agency. FMCSA believes 
potential actions the Agency may initiate would be exempt from the 
CAA's general conformity requirement since they would involve policy 
development and civil enforcement activities, such as investigations, 
inspections, examinations, and the training of law enforcement 
personnel. See 40 CFR 93.153(c)(2). The Agency anticipates potential 
actions we may initiate in response to this ANPRM would not result in 
any emissions increase or result in emissions that are above the 
general conformity rule's de minimis emission threshold levels, because 
potential actions would merely relate to insurance coverage across 
borders.
    The Agency seeks comment on the effect on the environment of any 
potential action alternatives.

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Executive Order 12630 (Taking of Private Property)

    The Agency is not yet in a position to analyze fully any potential 
actions that may constitute a taking of private property or otherwise 
have taking implications under Executive Order 12630, Governmental 
Actions and Interference with Constitutionally Protected Property 
Rights.
    FMCSA seeks comment on whether potential actions it may initiate in 
response to this ANPRM would constitute a taking of private property or 
otherwise have implications under Executive Order 12630.

Executive Order 12372 (Intergovernmental Review)

    The Agency is not yet in a position to analyze fully any potential 
actions that may require intergovernmental consultation on Federal 
programs and activities under Executive Order 12372, as amended.
    FMCSA seeks comment on whether potential actions the Agency may 
initiate in response to this ANPRM would require any intergovernmental 
consultation on Federal programs and activities under Executive Order 
12372, as amended.

Executive Order 13211 (Energy Supply, Distribution, or Use)

    FMCSA is not yet in a position to analyze fully any potential 
actions that may affect energy supply, distribution, or use under 
Executive Order 13211, Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use.
    The Agency seeks comment on whether potential actions the Agency 
may initiate in response to this ANPRM would affect any regulatory or 
non-regulatory alternatives that may significantly affect energy 
supply, distribution, or use.

Executive Order 12988 (Civil Justice Reform)

    The Agency is not yet in a position to analyze fully any potential 
actions that may meet 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.
    The Agency seeks comment on whether potential actions FMCSA may 
initiate in response to this ANPRM would meet the standards in 
Executive Order 12988.

List of Subjects in 49 CFR Part 387

    Buses, Freight, Freight forwarders, Hazardous materials 
transportation, Highway safety, Insurance, Intergovernmental relations, 
Motor carriers, Motor vehicle safety, Moving of household goods, 
Penalties, Reporting and recordkeeping requirements, Surety bonds.

    Issued on: November 28, 2006.
John H. Hill,
Administrator.
 [FR Doc. E6-21314 Filed 12-14-06; 8:45 am]
BILLING CODE 4910-EX-P