[Federal Register Volume 71, Number 245 (Thursday, December 21, 2006)]
[Proposed Rules]
[Pages 76730-76793]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 06-9759]



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Part II





Department of Transportation





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Federal Motor Carrier Safety Administration



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49 CFR Parts 365, 385, 387, and 390



New Entrant Safety Assurance Process; Proposed Rule

  Federal Register / Vol. 71, No. 245 / Thursday, December 21, 2006 / 
Proposed Rules  

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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

49 CFR Parts 365, 385, 387, and 390

[Docket No. FMCSA-2001-11061]
RIN 2126-AA59


New Entrant Safety Assurance Process

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

ACTION: Notice of Proposed Rulemaking (NPRM); request for comments.

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SUMMARY: FMCSA proposes changes to the New Entrant Safety Assurance 
Process that would raise the standard of compliance for passing the new 
entrant safety audit. The agency has identified 11 regulations that it 
believes are essential elements of basic safety management controls 
necessary to operate in interstate commerce and proposes that failure 
to comply with any one of the 11 regulations would result in automatic 
failure of the audit. Under this proposal, carriers would also be 
subject to the current safety audit evaluation criteria in Appendix A 
of part 385. Additionally, if a roadside inspection discloses certain 
violations, the new entrant would be subject to expedited actions to 
correct these deficiencies. The agency proposes to eliminate Form MCS-
150A--Safety Certification for Application for USDOT Number. The agency 
also intends to check compliance with the Americans with Disabilities 
Act and certain household goods-related requirements in the new entrant 
safety audit, if they apply to the new entrant's operation. However, 
failure to comply with these requirements would not impact the outcome 
of the safety audit. These changes would not impose additional 
operational requirements on any new entrant carrier. All new entrants 
would continue to receive educational information on how to comply with 
the safety regulations and be given an opportunity to correct any 
deficiencies found. FMCSA recognizes many new entrants are small 
businesses that are unaware of these requirements and continue to need 
the agency's assistance. Finally, FMCSA would make clarifying changes 
to some of the existing new entrant regulations and establish a 
separate new entrant application procedure and safety oversight program 
for non-North America-domiciled motor carriers. FMCSA believes this 
proposal would improve its ability to identify at-risk new entrant 
carriers and ensure deficiencies in basic safety management controls 
are corrected before the new entrant is granted permanent registration.

DATES: We must receive your comments by February 20, 2007.

ADDRESSES: You may submit comments, identified by DOT DMS Docket Number 
FMCSA-2001-11061, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov. 
Follow the instructions for submitting comments.
     Agency 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 Facility; 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., Monday through Friday, except Federal Holidays.
    Instructions: All submissions received must include the agency name 
and docket number or Regulatory Identification Number (RIN) for this 
rule. All comments received will be posted without change to http://dms.dot.gov, including any personal information provided. For detailed 
instructions on submitting comments and additional information on the 
rulemaking process, see the ``Public Participation'' heading of the 
SUPPLEMENTARY INFORMATION section of this document. For a summary of 
DOT's Privacy Act Statement or information on how to obtain a complete 
copy of DOT's Privacy Act Statement please see the ``Privacy Act'' 
heading under Rulemaking Analyses and Notices.
    Docket: 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 am and 5 pm, Monday through Friday, except 
Federal Holidays.

FOR FURTHER INFORMATION CONTACT: Mr. Arturo H. Ramirez, (202) 366-8088, 
Chief, Enforcement and Compliance Division, Federal Motor Carrier 
Safety Administration (MC-ECE), 400 Seventh Street, SW., Washington, DC 
20590-0001. Office hours are from 7:45 a.m. to 4:15 p.m., ET, Monday 
through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:
    Public Participation: The DMS is available 24 hours each day, 365 
days each year. You can get electronic submission and retrieval help 
and guidelines under the ``help'' section of the DMS web site. If you 
want us to notify you of receiving your comments, please include a 
self-addressed, stamped envelope or postcard or print the 
acknowledgement page that appears after submitting comments on-line.
    Comments received after the comment closing date will be included 
in the docket, and we will consider late comments to the extent 
practicable. FMCSA may, however, issue a final rule at any time after 
the close of the comment period.

Legal Basis for the Rule

    Title 49 U.S.C. 31144 requires the Secretary of Transportation 
(Secretary) to determine whether an owner or operator is fit to operate 
safely. Section 210 of the Motor Carrier Safety Improvement Act of 1999 
[Public Law 106-159, 113 Stat. 1764, December 9, 1999] (MCSIA) added 
Sec.  31144(g) \1\ directing the Secretary to establish regulations to 
require each owner and operator granted new operating authority to 
undergo a safety review within 18 months of starting operations. In 
issuing these regulations, the Secretary was required to: (1) Establish 
the elements of the safety review, including basic safety management 
controls; (2) consider their effects on small businesses; and (3) 
consider establishing alternate locations where such reviews may be 
conducted for the convenience of small businesses. The Secretary was 
also required to phase in the new entrant safety review requirements in 
a manner that takes into account the availability of certified motor 
carrier safety auditors. Congress mandated increased oversight of new 
entrants because studies indicated these operators had a much higher 
rate of non-compliance with basic safety management requirements and 
were subject to less oversight than established operators.
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    \1\ MCSIA originally codified section 31144(g) as Sec.  31144(c) 
and directed that it be added at the end of 49 U.S.C. 31144 
following preexisting subsections (c), (d), and (e). Section 
4114(c)(1) of the Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users (Public Law 109-59, 
119 Stat. 1144, August 10, 2005) (SAFETEA-LU) recodified this 
provision as Sec.  31144(g).
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    In addition to expanding the Secretary's authority under Sec.  
31144, Section 210 of MCSIA was a specific statutory directive 
consistent with the more general pre-existing legal authority provided 
by the Motor Carrier Safety

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Act of 1984 (the 1984 Act) [49 U.S.C. App. 2505 (1988)], which requires 
the Secretary to prescribe regulations on commercial motor vehicle 
safety. The regulations required by the 1984 Act must prescribe minimum 
safety standards for commercial motor vehicles (CMVs). At a minimum, 
the regulations shall ensure: (1) CMVs are maintained, equipped, 
loaded, and operated safely; (2) the responsibilities imposed on 
operators of CMVs do not impair their ability to operate the vehicles 
safely; (3) the physical condition of operators of CMVs is adequate to 
enable them to operate the vehicles safely; and (4) the operation of 
CMVs does not have a deleterious effect on the physical condition of 
the operators (49 U.S.C. 31136(a)).
    This NPRM proposes changes to the New Entrant Safety Assurance 
Process to improve the agency's ability to identify at-risk new entrant 
motor carriers through screening and ensure deficiencies are corrected 
before granting them permanent registration. As such, it implements the 
Sec.  31136(a)(1) mandate that FMCSA regulations ensure CMVs are 
maintained and operated safely. It does not propose any new operational 
responsibilities on drivers pursuant to Sec. Sec.  31136(a)(2)-(4).

Regulatory History

    In response to the MCSIA statutory mandate, on May 13, 2002, FMCSA 
published an interim final rule (IFR) titled New Entrant Safety 
Assurance Process (67 FR 31978), which became effective January 1, 
2003. Although operating authority has generally been construed in the 
past to mean registration of for-hire carriers subject to the 
jurisdiction transferred from the former Interstate Commerce Commission 
following enactment of the ICC Termination Act of 1995 [Public Law 104-
88, 109 Stat. 888, December 29, 1995] (ICCTA), FMCSA interpreted 
Section 210 of MCSIA as extending this concept to all carriers subject 
to Federal safety jurisdiction (see 67 FR 31979, May 13, 2002). For 
this reason, FMCSA applied the New Entrant Safety Assurance Process to 
all domestic and Canada-domiciled new entrants, regardless of whether 
they needed to register with FMCSA under 49 U.S.C. 13901. Mexico-
domiciled new entrants are covered under a separate application process 
and safety monitoring system (see 67 FR 12652, 67 FR 12701, and 67 FR 
12757 published March 19, 2002).
    Under the current New Entrant Safety Assurance Process, FMCSA 
provides applicants with an application package including, upon 
request, educational and technical assistance materials. The applicant 
must complete the application, including Form MCS-150A--Safety 
Certification for Application for USDOT Number, which requires the 
carrier to certify procedures are in place for basic safety management 
controls. Following completion of the application forms, FMCSA 
registers the new entrant and assigns a United States Department of 
Transportation (USDOT) Number. For-hire motor carriers, unless 
providing transportation exempt from ICCTA registration requirements, 
also are required to obtain FMCSA operating authority under 49 U.S.C. 
13902, prior to commencing operations. The new entrant safety 
monitoring period begins when FMCSA issues the new entrant provisional 
registration via a USDOT Number and continues for 18 months. To 
maintain its provisional registration, a new entrant must comply with 
all FMCSA regulations and applicable hazardous materials regulations.
    Within the first 18 months of a new entrant's operation, FMCSA will 
conduct a safety audit (SA) of the carrier's operations to educate the 
carrier on compliance with the Federal Motor Carrier Safety Regulations 
(FMCSRs) and Hazardous Materials Regulations (HMRs) and to determine if 
the carrier is exercising basic safety management controls as defined 
in 49 CFR 385.3. An SA is not a compliance review. It does not result 
in a safety rating. These terms are defined in Sec.  385.3.
    During the SA, FMCSA gathers information by reviewing the carrier's 
compliance with ``acute'' and ``critical'' provisions of the FMCSRs and 
applicable HMRs. Acute regulations are those where the consequences of 
non-compliance are so severe as to require immediate corrective actions 
by a motor carrier, regardless of the overall basic safety management 
controls of the motor carrier (e.g., allowing a driver with a suspended 
license to operate a vehicle). Critical regulations are defined as 
those where noncompliance relates to management or operational controls 
and are indicative of breakdowns in a carrier's management controls 
(e.g., allowing a driver to operate a vehicle before his/her medical 
exam). Parts of the FMCSRs and HMRs having similar characteristics are 
combined together into six regulatory areas called ``factors.'' The SA 
scoring evaluates each of the following factors and determines the 
adequacy of the carrier's safety management controls based on this 
evaluation. The six factors are:

Factor 1--General: Parts 387 and 390.
Factor 2--Driver: Parts 382, 383, and 391.
Factor 3--Operational: Parts 392 and 395.
Factor 4--Vehicle: Parts 393 and 396 and inspection data for the last 
12 months.
Factor 5--Hazardous Materials: Parts 171, 177, 180 and 397.
Factor 6--Accident: Recordable Accident Rate per Million Miles.

    For each instance of noncompliance with an acute regulation, 1.5 
points are assessed against the carrier. For each instance of 
noncompliance with a critical regulation, 1 point is assessed. For 
factors 1-5, if the combined violations of acute and critical 
regulations for each factor are equal to three or more points, the 
carrier is determined not to have basic safety management controls for 
that individual factor. If the recordable accident rate (factor 6) is 
greater than 1.7 recordable accidents per million miles for an urban 
carrier (1.5 for all other carriers), the carrier is determined to have 
inadequate basic safety management controls (i.e., the carrier fails 
the factor). If the carrier's accident rate is anywhere between zero 
and 1.5 (1.7 for urban carriers), the carrier is considered to have 
adequate safety management controls in factor 6. A new entrant fails 
the SA if it fails three or more separate factors. Currently, FMCSA is 
studying a new approach to assessing the severity of violations as part 
of its announced CSA 2010 initiative (69 FR 51748). This initiative may 
ultimately replace the ``acute and critical'' methodology described 
here.
    If the SA discloses the new entrant's basic safety management 
controls are adequate, the carrier retains the new entrant registration 
and continues to be monitored until the end of the 18-month period. 
FMCSA will grant permanent registration only if the new entrant 
successfully completes the monitoring period. If the basic safety 
management controls are inadequate, the new entrant is given an 
opportunity to correct the deficiencies. To provide that opportunity, 
FMCSA notifies the new entrant that unless the deficiencies are 
remedied, the registration will be revoked in 45 days (for carriers 
using passenger vehicles with a capacity to transport 16 or more 
passengers or vehicles transporting hazardous materials as defined 
under 49 CFR Sec.  383.5) or 60 days (for all other new entrants). 
FMCSA may extend the compliance period if it determines the new entrant 
is making a good faith effort to remedy the problems. If, within the 45 
or 60 days, the new entrant fails to respond to the notice or fails to 
correct the deficiencies, FMCSA issues an out-

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of-service order prohibiting further operations in interstate commerce 
and revokes the new entrant registration.

Discussion of the Proposed Rule

    FMCSA decided to publish an NPRM rather than a final rule because 
today's action proposes substantive changes to the May 13, 2002 IFR. 
These proposals would benefit from further notice and comment before 
promulgation as a final rule. Following is a discussion of these 
proposed changes.

Strengthening the Safety Audit

    In FY 2000, FMCSA published a report titled ``Analysis of New 
Entrant Motor Carrier Safety Performance and Compliance Using 
SafeStat,'' which compared the safety performance of new entrant 
carriers to that of experienced carriers. A copy of the report is in 
the docket for this rule. The report indicated new entrant carriers had 
significantly higher crash involvement than experienced carriers. New 
entrant carriers had significantly worse driver safety compliance and 
performance compared to experienced carriers. To a lesser degree, new 
entrant carrier vehicle safety compliance and performance were also 
worse than for experienced carriers. For these reasons, FMCSA intends 
to ensure all new entrant carriers have basic safety programs and 
controls in place before granting permanent registration.
    In response to comments to the 2002 IFR (see the section below 
titled ``Discussion of Comments''), as well as feedback from FMCSA 
field staff and State partners administering the New Entrant Safety 
Assurance Process, the Administrator convened an internal working group 
in the summer of 2003 to review and improve the process. The working 
group identified 11 regulatory violations which reflect a clear lack of 
basic safety management controls yet are not properly weighted by the 
existing SA. Under the current system, a new entrant could commit one 
of these 11 violations and still pass the SA. The group recommended 
that FMCSA strengthen the SA pass/fail criteria to give more 
appropriate weight to these 11 basic safety management requirements and 
clarify several vague regulatory requirements.
    Based on this recommendation, FMCSA proposes that committing any 
one of the following 11 regulatory violations would result in an 
automatic failure of the SA:
    1. Sec.  382.115(a)/Sec.  382.115(b)--Failing to implement an 
alcohol and/or controlled substances testing program (domestic and 
foreign motor carriers, respectively).
    2. Sec.  382.211--Using a driver who has refused to submit to an 
alcohol or controlled substances test required under part 382.
    3. Sec.  382.215--Using a driver known to have tested positive for 
a controlled substance.
    4. Sec.  383.37(a)--Knowingly allowing, requiring, permitting, or 
authorizing an employee with a commercial driver's license which is 
suspended, revoked, or canceled by a State or who is disqualified to 
operate a commercial motor vehicle.
    5. Sec.  383.51(a)--Knowingly allowing, requiring, permitting, or 
authorizing a driver to drive who is disqualified to drive a commercial 
motor vehicle.
    6. Sec.  387.7(a)--Operating a motor vehicle without having in 
effect the required minimum levels of financial responsibility 
coverage.
    7. Sec.  391.15(a)--Using a disqualified driver.
    8. Sec.  391.11(b)(4)--Using a physically unqualified driver.
    9. Sec.  395.8(a)--Failing to require a driver to make a record of 
duty status.
    10. Sec.  396.9(c)(2)--Requiring or permitting the operation of a 
commercial motor vehicle declared ``out-of-service'' before repairs are 
made.
    11. Sec.  396.17(a)--Using a commercial motor vehicle not 
periodically inspected.
    The agency believes carriers committing these violations do not 
have the basic safety management controls in place to safely operate in 
interstate commerce. The working group identified, and FMCSA accepted, 
these 11 infractions because they are so basic to ensuring safety that 
no carrier should be allowed to operate if any of these violations are 
found and not corrected. For example, implementation of an alcohol and 
controlled substances testing program is a fundamental requirement for 
any interstate carrier. A carrier that has implemented a program to 
ensure its drivers do not operate after testing positive for drugs or 
alcohol will reduce the risk of that carrier/driver being involved in a 
fatal accident. Allowing drivers who refuse to submit to drug or 
alcohol testing to drive indicates the carrier does not have an 
effective drug and alcohol testing program. Similarly, only qualified 
drivers should be permitted to drive. A carrier does not exercise 
sufficient safety management controls if it uses drivers who are 
disqualified from operating a CMV, physically unqualified, or who have 
had their commercial driver's license suspended, revoked, or canceled.
    Additionally, the primary mission of the agency is to reduce 
crashes, injuries and fatalities involving large trucks and buses. For 
this mission to succeed, carriers must operate safe vehicles. To 
accomplish this, vehicles must be periodically inspected and kept in 
safe operating condition. Therefore, a new entrant would fail the 
safety audit if it does not inspect its vehicles periodically or 
operates any vehicle declared out-of-service before making the required 
repairs.
    Further, driver fatigue has been identified as a contributing 
factor in many CMV crashes. To achieve the highest level of safety, 
carriers must have a system to safeguard the public against fatigued 
drivers by ensuring their drivers adhere to the agency's hours-of-
service limitations. Hours-of-service violations comprise the largest 
percentage of driver out-of-service violations at the roadside. One 
effective safety management control for preventing fatigued drivers 
from operating a CMV is to have in place a system requiring drivers to 
submit records of duty status or other records, as appropriate. This 
recordkeeping requirement is fundamental to an effective driver 
monitoring system.
    Finally, the agency believes it is essential for the traveling 
public to receive adequate compensation for personal injuries or 
property damage caused by CMVs operating on the highways. Therefore, 
carriers lacking required minimum financial responsibility would not be 
permitted to operate.
    FMCSA emphasizes that the purpose of the proposed revision is to 
improve the safety management of new entrants, not to remove them from 
operations. The agency believes the regulations identified above are 
evidence of whether a new entrant has a systemic program to ensure it 
has the basic safety management controls to operate in interstate 
commerce.
    As discussed above, when a new entrant fails an audit, even for one 
of the automatic failures described above, it will be afforded due 
process and given time to correct its failures and improve its safety 
management controls. This proposal emphasizes FMCSA's commitment to 
highway safety and would allow the agency to ensure new entrants are 
not permitted to operate without first correcting serious deficiencies 
in a timely manner.
    FMCSA believes it is incumbent upon all new entrant carriers to be 
informed about, and familiar with, the FMCSRs prior to receiving a 
safety audit. To this end, FMCSA provides outreach and educational 
materials to carriers to help them prepare for the audit. Carriers 
discovered to have committed one of the

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11 violations identified above, after having been informed of the need 
to comply prior to receiving permanent registration, and found to have 
not corrected the deficiency, will not be permitted to continue to 
operate. Establishing these 11 violations as grounds for failing the 
safety audit would promote public safety by encouraging new entrants to 
correct serious deficiencies in their safety management controls and 
reducing the number of potentially unsafe carriers operating on the 
nation's highways.
    It should be noted that most of these 11 regulations correspond to 
requirements necessary for Mexico-domiciled long-haul carriers to 
obtain authority to operate in the United States, as established by 
Congress under Section 350(a)(1)(B) of the Fiscal Year 2002 DOT 
Appropriations Act [Public Law 107-87, Title III, sec. 350, 115 Stat. 
864, Dec. 18, 2001]. The requirements applicable to Mexico-domiciled 
long-haul carriers are:
     Verification of a controlled substances and alcohol 
testing program consistent with 49 CFR part 40;
     Verification of a carrier's system of compliance with 
hours-of-service rules, including hours-of-service records;
     Verification of proof of financial responsibility;
     An evaluation of that motor carrier's safety inspection, 
maintenance, and repair facilities or management systems, including 
verification of records of periodic vehicle inspections; and
     Verification of drivers' qualifications, including a 
required commercial driver's license.

Expedited Action

    Under existing Sec.  385.307(a), having ``an accident rate or 
driver or vehicle violation rate that is higher than the industry 
average for similar motor carrier operations' triggers an expedited SA 
or compliance review of the new entrant. (The reference to a ``driver 
or vehicle violation rate'' is an error and should read ``driver or 
vehicle out-of-service rate.'') The agency proposes to replace the 
abbreviated expedited action provisions under Sec.  385.307(a) with the 
same ``Expedited Action'' provisions applicable to Mexico-domiciled 
carriers under Sec.  385.105. As the agency stated in proposing the 
expedited action provisions for Mexico-domiciled carriers, we believe 
these violations pose the greatest threat to public safety and raise 
serious questions about a carrier's willingness and ability to conduct 
safe operations. See 66 FR 22416 (May 3, 2001). In addition to 
identifying potentially unsafe new entrant carriers, expanding the 
expedited action provisions would also make the treatment of Mexico-
domiciled new entrants and all other new entrants more uniform.
    This change would improve the New Entrant Safety Assurance Process 
by tightening scrutiny of new entrants before and after the safety 
audit. New entrants discovered with these violations could be 
identified during a roadside inspection or by any other means even if 
the agency had not yet conducted a safety audit.
    Discovery of certain violations during a roadside inspection or by 
any other means would subject the new entrant to expedited action. If 
the carrier had not already submitted to an audit, the carrier would be 
flagged for review as soon as practicable. If the carrier already had 
submitted to an audit before discovery of an ``expedited action 
violation,'' FMCSA would send the carrier a letter requesting evidence 
of corrective action within 30 days of the notice or the carrier's 
registration would be revoked. Additionally, if FMCSA determined the 
violation warranted a more thorough review of the carrier's operation, 
the agency would schedule a compliance review. The following actions 
would trigger expedited action against the motor carrier:
     Using a driver who does not have a valid commercial 
driver's license.
     Operating vehicles that have been placed out-of-service 
for violations of the Federal Motor Carrier Safety Regulations or 
compatible State laws and regulations without taking necessary 
corrective action.
     Being involved in, through action or omission, a hazardous 
materials incident involving--
     A highway route controlled quantity of certain radioactive 
materials (Class 7).
     Any quantity of certain explosives (Class 1, Division 1.1, 
1.2, or 1.3).
     Any quantity of certain poison inhalation hazard materials 
(Zone A or B).
     Being involved in, through action or omission, two or more 
hazardous materials incidents involving hazardous materials other than 
those listed above.
     Using a driver who tests positive for controlled 
substances or alcohol or who refuses to submit to required drug or 
alcohol tests.
     Operating a motor vehicle that is not insured as required.
     Having a driver or vehicle out-of-service rate of 50 
percent or more based on at least three inspections within a 
consecutive 90-day period.
    The last item above would replace the ``vehicle or driver violation 
rate that is higher than the industry average for similar motor carrier 
operations'' requirement under Sec.  385.307. From an operational 
standpoint, the ``50 percent or more threshold'' would provide for more 
effective and efficient monitoring of new entrant performance because 
it is a non-subjective and easily measured rate.

Applicability of Proposed Requirements to Current New Entrants

    The changes in today's notice of proposed rulemaking, if 
promulgated as a final rule, would apply to motor carriers still 
subject to the current new entrant safety monitoring process on the 
final rule's effective date. Assuming all changes are adopted, these 
new entrants would be subject to expedited enforcement action for 
committing any of the seven violations or actions identified under the 
section ``Expedited Action.'' If a current new entrant has not had a 
safety audit prior to the final rule effective date, it would be 
audited in accordance with the safety audit procedures adopted in the 
final rule, including the applicable 11 automatic failure factors 
identified under the section ``Strengthening the Safety Audit.'' 
However, the automatic failure factors would not be retroactively 
applied to safety audits completed prior to the final rule's effective 
date. The safety audit outcomes determined prior to the final rule's 
effective date would remain unchanged by the final rule.

Form MCS-150A--Safety Certification for Application for USDOT Number

    The purpose of the MCS-150A is for a new entrant to certify it has 
a system in place to ensure compliance with the FMCSRs and applicable 
HMRs. However, based on the SAs conducted to date, FMCSA has found many 
new entrants certified on the MCS-150A they are knowledgeable about the 
FMCSRs and applicable HMRs and have in place the safety management 
controls necessary to conduct interstate operations, but are not, in 
fact, in compliance with the FMCSRs and applicable HMRs. Therefore, 
while the intent of the MCS-150A is valid, in practice it fails. 
Consequently, FMCSA is proposing to eliminate the form. Conforming 
amendments are proposed to eliminate mention of the MCS-150A throughout 
the regulations.

Timing of Administrative Reviews

    The administrative review provisions in current Sec.  385.327 are 
ambiguous with respect to the time during which a carrier is allowed to 
file a request for administrative review and when it must file a 
request for administrative review,

[[Page 76734]]

if it wants the review to be completed before its registration is 
revoked. FMCSA is proposing to revise the section to clarify that, if a 
new entrant disagrees with the findings of an SA, the new entrant must 
file a request for an administrative review within 90 days of the date 
of the notice of audit failure or within 90 days of the notice of its 
corrective action being insufficient. However, if a new entrant wants a 
decision before the revocation takes effect, the new entrant must file 
a request for review within 15 days of the date of the notice of audit 
failure. Requests filed after 15 days will be considered, but it is 
possible the revocation would take effect before the administrative 
review process is completed, even if the new entrant eventually 
prevails and its registration is restored.

``Chameleon'' Carriers

    The agency is concerned about carriers attempting to evade 
enforcement actions and/or out-of-service orders issued against them by 
re-registering as new entrants and operating as different entities 
under new USDOT Numbers. We call these entities ``chameleon'' carriers.
    Such a carrier might attempt to conceal its former identity by 
leaving blank the response to items 16 and 17 on the ``Motor Carrier 
Identification Number--Application for USDOT Number'' (Form MCS-150). 
Items 16 and 17 of the MCS-150 request the carrier's USDOT Number or MC 
or MX Number. In other cases, the carrier may attempt to hide the fact 
that its USDOT Number is revoked by falsifying the response to item 28 
on the MCS-150, which asks whether the carrier's USDOT Number 
registration is currently revoked by FMCSA, and if so, requires the 
carrier to list this number. Item 30 on the MCS-150 requires the 
carrier to certify the information provided on the MCS-150 is true, 
correct and complete. Unfortunately, some carriers deliberately fail to 
disclose information regarding their history in order to evade civil 
penalties assessed against the company or to circumvent out-of-service 
orders and other operational restrictions by obtaining new USDOT 
Numbers. Often these chameleon carriers go undetected until the agency 
conducts an SA or compliance review.
    The agency is committed to ensuring only safe carriers are 
permitted to continue operating on our nation's highway. FMCSA has the 
authority to correct, modify, or revoke new entrant registration issued 
inadvertently, or obtained by fraud, misrepresentation or other 
wrongful means. Proposed Sec.  385.306 clarifies what action may be 
taken against any carrier not providing truthful and complete 
information on its MCS-150.
    If a carrier obtains a new USDOT Number after being ordered to 
cease operations based on a failed safety audit, prior Unsatisfactory 
rating, failure to pay a civil penalty or any other reason, and the 
information is discovered after the carrier received another USDOT 
Number, the agency will revoke the carrier's new registration and may 
also take additional enforcement action against the carrier. If a 
carrier obtains a new USDOT Number, but was not subject to an 
outstanding order to cease operations under a previous number, the 
agency may determine the new USDOT Number should not be revoked and, 
instead, link the history of the two companies by identifying in our 
database the new USDOT Number as the primary active number. The old 
USDOT Number would be listed in the database as one under which the 
carrier has also done business, and its safety history, including 
enforcement actions against the carrier, would be imputed to the new 
entity.
    A carrier that ceased interstate operations and wishes to reapply 
should submit an updated MCS-150 and list its old USDOT Number when 
applying. The agency would reactivate the USDOT Number upon approval of 
the application.

Reapplication Process

    Current Sec.  385.329(a) states a new entrant whose new entrant 
registration has been revoked and whose operations have been placed 
out-of-service must wait 30 days after the revocation date to reapply. 
Current Sec.  385.329(b) states the motor carrier will be required to 
initiate the application process ``from the beginning,'' demonstrate it 
has corrected the deficiencies resulting in revocation, and otherwise 
ensure it has adequate basic safety management controls. Some have 
interpreted ``from the beginning'' to mean the carrier must resubmit 
all documents submitted when the new entrant initially applied for new 
entrant registration and, if the application is accepted, undergo 
another SA and receive a new USDOT Number. The agency proposes to 
address the reapplication issue by establishing two separate procedures 
based upon what caused the revocation.
    Under proposed Sec.  385.329(b), a new entrant whose registration 
is revoked for failing the safety audit would reapply by submitting an 
updated Form MCS-150 and providing evidence of corrective action (which 
FMCSA would review for adequacy). If FMCSA concludes the re-applicant 
has taken adequate corrective action, it would grant the application 
and the re-applicant would not be subject to a second SA. The carrier 
would remain a new entrant, retain the same USDOT Number and continue 
to be monitored for 18 months from the date the new application is 
approved. For-hire motor carriers must also reapply for operating 
authority under 49 U.S.C. Sec.  13902, if their operating authority was 
revoked.
    If FMCSA revokes a new entrant's registration because it refused to 
submit to an audit, the new entrant would be required to submit an 
updated MCS-150, retain the same USDOT Number, and submit to an SA as 
soon as practicable once the new application is approved. FMCSA intends 
to flag these carriers so they will receive an SA as soon as 
practicable once they reenter the program. In all instances, a carrier 
reapplying for new entrant authority would be prohibited from operating 
in interstate commerce until its new application is approved. As in the 
case above, a new 18-month monitoring period would start upon approval 
of the new application.
    To retain historical information on a revoked new entrant's past 
performance, FMCSA would require the new entrant to retain the same 
USDOT Number when reapplying for registration. This is consistent with 
what FMCSA has done in the past and is currently doing whenever a 
carrier is placed out-of-service and subsequently remedies whatever 
deficiencies resulted in the out-of-service order.

Household Goods

    Currently, the SA does not evaluate compliance with FMCSA's 
household goods (HHG) regulations (49 CFR part 375). In order to 
strengthen its oversight of the HHG industry, FMCSA is proposing to 
include questions regarding HHG requirements in the audit. Because the 
HHG requirements are not safety related, however, FMCSA would not count 
the answers toward the pass/fail determination. Instead, any violations 
found would be enforced through other means (e.g., a compliance 
review).

Americans With Disabilities Act

    The SA also does not evaluate compliance by passenger carriers with 
the Americans with Disabilities Act of 1990 [Public Law 101-336, 104 
Stat. 327, July 26, 1990] (ADA). DOT regulations at 49 CFR part 37 
prohibit discrimination against individuals with disabilities in the 
provision of transportation services, and require

[[Page 76735]]

certain vehicles to be readily accessible to and usable by such 
individuals. In order to strengthen its oversight over ADA issues, 
FMCSA is proposing to include questions regarding ADA compliance in 
audits of new entrant passenger carriers. As with violations of the HHG 
requirements, FMCSA would not count the answers toward the pass/fail 
determination. Instead, any violations found would be enforced by 
forwarding apparent violations to the U.S. Department of Justice or, if 
the carrier is a recipient of DOT financial assistance, through DOT 
administrative enforcement action.

Other Changes

    Today's proposal would amend Sec.  385.319, which concerns the new 
entrant's responsibilities for remedying deficient safety management 
practices discovered during the safety audit. It adds an additional 
category of passenger carriers to the description of which carriers 
must remedy deficiencies within 45 days of notification by FMCSA--new 
entrants that haul passengers in a vehicle used or designed to 
transport between 9 and 15 passengers for compensation.\2\ The 
corrective action periods in Sec.  385.319(c) were modeled after the 
45- and 60-day effective dates of Unsatisfactory safety ratings in 49 
CFR 385.11. Section 385.11 subjects all motor carriers transporting 
passengers by CMV to the 45-day requirement, including CMVs designed to 
transport between 9 and 15 passengers for compensation. The May 2002 
IFR inadvertently failed to apply the 45-day requirement to small 
vehicle passenger carriers, subjecting them instead to the 60-day 
period applicable to property carriers not hauling hazardous materials 
requiring placarding. We propose to amend Sec.  385.319(c), as well as 
Sec. Sec.  385.323, 385.325, and 385.327 to make them consistent with 
Sec.  385.11. Section 385.319 has also been rewritten to cross 
reference the definition of CMVs relating to hazardous materials 
carriers in 49 CFR 390.5 for purposes of consistency.
---------------------------------------------------------------------------

    \2\ Under existing FMCSA regulations, most of the FMCSRs do not 
apply to the transportation of passengers in such vehicles within a 
75 air-mile radius of the driver's work reporting location, or when 
the carrier is not directly compensated. See 49 CFR Sec.  
390.3(f)(6). However, section 4136 of SAFETEA-LU eliminated the 75 
air-mile distance limitation. Therefore, all carriers transporting 
passengers in CMVs designed to carry between 9 and 15 passengers 
will be subject to the new entrant requirements, provided such 
carriers are directly compensated. In a separate rulemaking, Sec.  
390.3(f)(6) will be amended to achieve consistency with this 
statutory change.
---------------------------------------------------------------------------

    Current Sec.  385.337(a) states: ``The initial refusal to permit an 
SA to be performed may subject the new entrant to the penalty 
provisions in 49 U.S.C. Sec.  521(b)(2)(A).'' The term ``initial'' 
before the word ``refusal'' unnecessarily limits FMCSA's ability to 
impose penalties against recalcitrant carriers. Therefore, FMCSA is 
proposing to remove the word ``initial'' before the word ``refusal''; 
this change would permit FMCSA to consider any refusal as a basis for 
imposing penalties.

The New Entrant Safety Assurance Process and Non-North America-
Domiciled Motor Carriers

    Congress ratified the Central American Free Trade Agreement in the 
summer of 2005. In preparation for implementation of this treaty, FMCSA 
examined the agency's programs to ensure that any CMVs entering the 
United States from Central American countries were operating safely. 
Central American motor carriers, and indeed any motor carrier from a 
country other than the United States, Canada, or Mexico (non-North 
America-domiciled motor carriers), are not covered by FMCSA's existing 
New Entrant oversight programs. There are 64 carriers from Central 
American countries that have registered with the agency to operate CMVs 
in the United States.
    The registered Central American carriers are domiciled in 
Guatemala, El Salvador, Belize, Honduras, Panama, and Nicaragua. The 
average vehicle fleet size for these carriers is one or two tractor-
trailers. Sixty-three of the 64 carriers classified their operations as 
private motor carriers of property. A single carrier listed its 
operation type as private motor carrier of passengers (business). Most 
of the Central American carriers contracted with the same processing 
agent located in Brownsville, Texas, to file the USDOT Number 
application with FMCSA. Each of the carriers, including the passenger 
carrier, listed general freight or motor vehicles as its cargo type.
    FMCSA has considered several options for a safety monitoring 
process for non-North America-domiciled motor carriers, including (1) 
subjecting them to the safety monitoring process for Mexico-domiciled 
carriers; (2) subjecting them to the New Entrant Safety Assurance 
Process for U.S. and Canada-domiciled carriers; or (3) developing an 
alternate oversight program compatible with existing regulatory 
authority.
    The safety monitoring system for Mexico-domiciled carriers is based 
upon standards set out in the NAFTA Arbitral Panel Report \3\ dated 
February 6, 2001, and the provisions of Section 350 of the FY 2002 
Department of Transportation Appropriations Act. The NAFTA Arbitral 
Panel (the Panel) noted that: (1) The United States is not required to 
treat applications from Mexico-domiciled trucking firms in exactly the 
same manner as applications from U.S. or Canadian firms, as long as 
they are reviewed on a case by case basis; and (2) given the different 
enforcement mechanisms in place in the United States and Mexico, it may 
be justifiable for the United States to address legitimate safety 
concerns through different methods of ensuring compliance with the U.S. 
regulatory regime. Similarly, the Panel found it may not be 
unreasonable for the United States to implement different procedures 
with respect to service providers from another NAFTA country if 
necessary to ensure compliance with its own local standards by these 
service providers.
---------------------------------------------------------------------------

    \3\ In the Matter of Cross-Border Trucking Services, Secretariat 
File No. USA-MEX-98-2008-01, Final Panel, (February 6, 2001).
---------------------------------------------------------------------------

    Mexico's motor carrier safety regulatory system lacks several of 
the components that are central to the U.S. system. As the Panel found, 
the U.S. is responsible for the safe operation of motor carriers within 
U.S. territory, regardless of the carriers' country of origin, and 
FMCSA believes we must ensure each carrier is safe to protect U.S. 
highway users. The safety monitoring process for Mexico-domiciled 
carriers provides FMCSA with the necessary level of assurance, in a 
manner consistent with the Panel's findings, and the relevant 
provisions of NAFTA. It ensures that Mexican motor carriers seeking 
U.S. operating authority are capable of complying with the U.S. safety 
regulatory regime.
    The New Entrant Safety Assurance Process for U.S. and Canada-
domiciled carriers is based upon an in-depth understanding of the 
safety systems in each country and a long history of cross-border truck 
and bus operations. Because FMCSA lacks understanding and experience 
with the safety systems of Central American and other non-North 
American countries, the agency deems it appropriate to adopt an 
alternate method of overseeing the compliance and safety of non-North 
America-domiciled-motor carriers. The alternate oversight method for 
non-North America-domiciled motor carriers is similar to FMCSA's 
oversight program for Mexico-domiciled motor carriers. It also is 
consistent with sec. 210(a) of MCSIA because it would require a safety

[[Page 76736]]

review of a new entrant non-North America-domiciled motor carrier 
within the first 18 months of operations. FMCSA would implement the 
minimum requirements provision of sec. 210(b) for these carriers 
through Form OP-1(NNA). Because sec. 210(a) of MCSIA requires the 
Secretary to issue regulations mandating safety reviews of all new 
entrant carriers, today's action proposes such regulations for non-
North America-domiciled motor carriers. Due to FMCSA's lack of 
knowledge regarding the safety regimes of their home countries (as 
opposed to Canada and Mexico), FMCSA will use experience gained through 
the alternate oversight safety monitoring system to determine whether 
further regulatory changes may be appropriate in the future. The agency 
requests information on the safety systems of Central American and 
other non-North American countries.

Monitoring the Safety of Existing Non-North America-Domiciled Motor 
Carriers

    FMCSA will educate, review and monitor the 64 registered non-North 
America-domiciled motor carriers and any additional non-North American 
carriers issued a USDOT Number prior to the effective date of any final 
rule promulgated for today's notice of proposed rulemaking. Compliance 
reviews will be conducted within three months on all existing non-North 
America-domiciled motor carriers to assess their compliance with U.S. 
regulations. With respect to additional non-North America-domiciled 
carriers that register with FMCSA before the effective date of any 
final rule promulgated for today's notice of proposed rulemaking, FMCSA 
will (1) manually review each application for USDOT Number (Form MCS-
150) filed by non-North America-domiciled motor carriers to ensure they 
are complete and accurate; and (2) conduct a compliance review of these 
carriers within 6-12 months of issuing a USDOT Number registration and/
or operating authority. FMCSA will monitor all non-North America-
domiciled motor carriers for violations of the 11 regulations that the 
agency considers as minimum standards for safe operations (the same 
violations proposed as automatic failure factors in this NPRM) and 
conduct an expedited compliance review of any non-North America-
domiciled motor carrier when a violation of these regulations is 
discovered. While the consequences of undergoing a compliance review 
and failing a new entrant safety audit may be somewhat different (civil 
penalties, a safety rating, and perhaps an operations out-of-service 
order resulting from a compliance review compared to proposed 
revocation of new entrant operating authority resulting from a new 
entrant safety audit), FMCSA believes conducting a compliance review is 
an equivalent level of oversight due to its comprehensive nature, the 
resultant safety rating for the carrier, and the possibility of civil 
penalties. In addition, non-North America-domiciled motor carriers 
would be subject to the same cross-border inspections as Mexico-
domiciled carriers. Vehicles operated by non-North America-domiciled 
motor carriers will be subject to the same inspection standards as 
other CMVs entering or operating within the United States and will be 
inspected at the U.S.-Mexico international border unless displaying a 
valid safety decal.
    Through the agency's process of gathering information on non-North 
America-domiciled motor carriers, another group of carriers from 
Central America has been identified. This group of carriers allegedly 
drives or flies drivers into interior States to purchase used tractor/
trailers, school buses, farm equipment, and other vehicles. These 
vehicles are transported to Central America through the United States 
and Mexico without proper registration, insurance or licensing. This 
migration of exports from the United States is funneled primarily 
through one location--the Los Indios Port of Entry to Mexico.
    To address this situation, FMCSA will initially educate southbound 
non-North America-domiciled motor carriers by providing warnings and 
informing them of the requirements for complying with the Federal Motor 
Carrier Safety Regulations. Following the educational period, FMCSA 
will perform periodic compliance strike force activities targeting non-
registered southbound traffic at the Los Indios Port of Entry to 
Mexico. Non-compliant carriers will receive enforcement action ranging 
from roadside inspection citations to placing drivers and vehicles out 
of service, if warranted. FMCSA requests comments on this alternate 
oversight system for non-North America-domiciled motor carriers.

Proposed Registration and Safety Monitoring Process for Non-North 
America-Domiciled Motor Carriers Applying for a USDOT Number

    Today's action proposes regulations governing the registration and 
safety monitoring of new entrant non-North America-domiciled motor 
carriers. The proposals are discussed as follows:

A. Proposed Application Process for Non-North America-Domiciled Motor 
Carriers
B. Proposed New Form--OP-1(NNA) for Non-North America-Domiciled Motor 
Carriers Requesting New Entrant Registration
C. Proposed Safety Monitoring System for Non-North America-Domiciled 
Motor Carriers.
A. Proposed Application Process for Non-North America-Domiciled Motor 
Carriers
    FMCSA proposes to add a new subpart H to part 385 to address the 
specific requirements of the application process for all non-North 
America-domiciled motor carriers applying for a USDOT Number. First, 
proposed Sec.  385.601 explains that subpart H would apply to any non-
North America-domiciled motor carrier that wants to operate within the 
United States to provide transportation of property or passengers in 
interstate commerce.
    Proposed Sec.  385.603 requires these applicants to file--
     Proposed Form OP-1(NNA)--Application for U.S. Department 
of Transportation (USDOT) Registration by Non-North America-Domiciled 
Motor Carriers,
     Form MCS-150--Motor Carrier Identification Report, and
     A notification of the means used to designate process 
agents.
    The application would need to be filled out in English and be 
complete to be considered. Information on obtaining applications is 
also provided.
    Proposed Form OP-1(NNA) would serve the dual purpose as being an 
application for new entrant registration (for all non-North America-
domiciled carriers) and operating authority (for for-hire carriers 
subject to the requirements of 49 CFR part 365). Together with the MCS-
150, the OP-1(NNA) would provide a more complete picture of the 
carrier's operational characteristics as well as its safety compliance 
and other key information than could be obtained through either form 
alone.
    FMCSA would not impose a registration fee for new entrant 
registration unless the applicant also requires operating authority 
under part 365, for which an application fee is charged. Under FMCSA's 
current regulations, a non-North America-domiciled for-hire carrier of 
non-exempt commodities must submit Form OP-1 and pay a $300 application 
fee. Conforming amendments are proposed to Sec. Sec.  365.101 and 
365.105 to clarify that a non-North America-domiciled motor carrier 
would request operating authority by using Form OP-1(NNA)

[[Page 76737]]

and consequently be subject to the application fee.
    Form MCS-150 would be used to obtain a USDOT Number. Conforming 
amendments have been made to proposed Sec.  390.19 to require a non-
North America-domiciled motor carrier to file the MCS-150 before 
beginning operations within the United States and to submit an updated 
form every 24 months after issuance of a USDOT Number.
    Form BOC-3. The non-North America-domiciled motor carrier 
additionally would be required to notify the agency regarding 
designation of process agents by either: (1) Submission in the 
application package of Form BOC-3--Designation of Agents-Motor 
Carriers, Brokers and Freight Forwarders, or (2) a letter stating that 
the applicant will use a process agent that will submit the Form BOC-3 
electronically.
    Proposed Sec.  385.605 would require a non-North America-domiciled 
carrier to use only drivers who possess a valid commercial driver's 
license and to subject those drivers to drug and alcohol testing as 
required under 49 CFR part 382. Acceptable commercial driver's licenses 
would include: (1) A CDL, (2) Canadian commercial driver's license or 
(3) a Licencia de Federal de Conductor issued by Mexico. FMCSA believes 
the CDL and corresponding drug and alcohol testing requirements are 
justified because drivers' licenses issued by the various non-North 
American countries may not meet FMCSA standards or State licensing 
standards regarding commercial motor vehicles not requiring a CDL.
    In proposed Sec.  385.607, FMCSA explains how the agency would 
process an application for new entrant registration filed by a non-
North America-domiciled motor carrier. To the extent practicable, the 
agency would validate the accuracy of information and certifications 
with data in its databases, and the databases of the governments of the 
country where the carrier's principal place of business is located. 
FMCSA would not grant new entrant registration unless the carrier 
passes a pre-authorization safety audit (discussed later in this 
section). The criteria governing the pre-authorization safety audit are 
fully explained in a new Appendix to part 385, subpart H, which is 
modeled after the pre-authorization safety audit for certain Mexico-
domiciled carriers.
    After completing the pre-authorization safety audit, FMCSA would 
issue a USDOT Number if the applicant passes the audit.\4\ However, the 
applicant will not be authorized to, and must not, begin operating 
within the United States unless it has filed evidence of financial 
responsibility pursuant to 49 CFR part 387 and designated a process 
agent.
---------------------------------------------------------------------------

    \4\ Applications by for-hire carriers subject to part 365 would 
also be subject to a 10-day protest period. In such cases, a USDOT 
Number would not be issued until after the protest period has 
elapsed and any protests filed have been denied.
---------------------------------------------------------------------------

    The proposed Appendix to 49 CFR part 385, subpart H, sets forth 
criteria governing the pre-authorization safety audit. During the pre-
authorization safety audit, FMCSA would validate the accuracy of 
information provided in the application and determine whether the 
carrier has basic safety management controls necessary to ensure safe 
operations. FMCSA would gather information by reviewing a motor 
carrier's compliance with ``acute'' and ``critical'' regulations in the 
FMCSRs and HMRs. As stated under the discussion of the New Entrant 
Safety Assurance Process for U.S. and Canada-domiciled carriers, FMCSA 
is studying a new approach to assessing the severity of violations as 
part of its announced CSA 2010 initiative. This initiative may 
ultimately replace the ``acute and critical'' methodology described in 
the Appendix to part 385, subpart H.
    Conforming amendments are proposed for Sec. Sec.  387.7 and 387.31 
to require all non-North America-domiciled motor carriers--private and 
for-hire--to maintain and file evidence of financial responsibility 
with the agency as a condition of registration. FMCSA believes 
conditioning registration upon receipt of evidence of financial 
responsibility is appropriate for all non-North America-domiciled motor 
carriers because the financial responsibility standards within their 
countries of domicile may not meet U.S. Federal and State requirements. 
Section 4120 of The Safe, Accountable, Flexible, Efficient 
Transportation Equity Act: A Legacy for Users (SAFETEA-LU) [Pub. L. 
109-59, 119 Stat. 1762, August 10, 2005] created new Sections 
31138(c)(4) and 31139(c) in title 49 of the U.S. Code, authorizing 
FMCSA to require filing of evidence of financial responsibility by 
private property and passenger motor carriers under its jurisdiction. 
However, only those private motor carriers domiciled in non-North 
American countries would be subject to financial responsibility filing 
requirements under this proposal. FMCSA plans to address the issue of 
extending financial responsibility requirements to U.S. and Canada-
domiciled private motor carriers in a separate rulemaking.\5\
---------------------------------------------------------------------------

    \5\ Mexico-domiciled private carriers are subject to the same 
financial responsibility filing requirements as U.S. for-hire 
carriers pursuant to 49 U.S.C. 13902(g).
---------------------------------------------------------------------------

    The new entrant registration would not become permanent unless the 
carrier successfully completes the proposed 18-month safety monitoring 
system proposed under new subpart I to part 385. Successful completion 
of the safety monitoring system includes having each CMV operated in 
the United States pass a North American Standard commercial motor 
vehicle inspection every 90 days (as indicated by issuance of a valid 
safety decal for each of these vehicles) and obtaining a Satisfactory 
safety rating as a result of the required compliance review.
    Under proposed Sec.  385.609, the applicant must notify FMCSA 
within 45 days of any changes or corrections to certain key information 
in the Form OP-1(NNA) or the Form BOC-3--the form used to designate a 
process agent. Failure to do so would be grounds for revocation or 
suspension of its new entrant registration.
B. Proposed New Form--OP-1(NNA) for Non-North America-Domiciled Motor 
Carriers Requesting New Entrant Registration
    Proposed Form OP-1(NNA) and its instructions are based extensively 
on the OP-1(MX) form with certain modifications applicable to non-North 
America-domiciled applicants. Proposed Section I of the form solicits 
information about the applicant's name, address, official 
representative, and form of business. Proposed Section IA would require 
the applicant to disclose any existing operations in the United States, 
including whether it had previously applied for a USDOT Number. 
Proposed Section II solicits information about any relationships or 
affiliations with other entities registered with FMCSA or its 
predecessor agencies. This information would help FMCSA verify the 
applicant's domicile in a non-North American country and determine 
whether the applicant holds similar registration in its country of 
domicile. Information regarding registration with the applicant's 
country of domicile would enable FMCSA to confirm motor carrier safety 
issues with its licensing authority.
    Under proposed Section III of the form, the applicant would 
identify the type(s) of registration requested. FMCSA would require a 
separate filing fee for each type of registration requested. Section 
4303(f) of SAFETEA-LU

[[Page 76738]]

imposed a January 1, 2007, deadline for the agency to modify carrier 
registrations for non-exempt for-hire motor carriers under 49 U.S.C. 
chapter 139 to eliminate distinctions between common and contract 
carriers. Accordingly, FMCSA has removed the common and contract 
carrier designations from the description of types of registration 
under proposed Section III and modified the proposed instructions for 
Section III to explain which for-hire registrations require a 
registration fee.
    Proposed Section IV notifies the applicant of financial 
responsibility requirements. Consistent with long-haul Mexico-domiciled 
new entrants, all non-North America-domiciled applicants (private and 
for-hire) would be required to file evidence of financial 
responsibility with the agency as a condition of registration. FMCSA 
also proposes making the cargo insurance requirement for non-North 
America-domiciled motor carriers consistent with what was proposed in 
the Unified Registration System NPRM (70 FR 28990 published May 19, 
2005). The May 19, 2005, NPRM proposes that only household goods 
carriers must maintain and file evidence of cargo insurance with the 
agency. FMCSA would modify proposed Form OP-1(NNA) if the Unified 
Registration System final rule results in different cargo insurance 
requirements.
    Under proposed Section V, the applicant would certify and 
substantiate that it has a system in place to ensure compliance with 
applicable requirements covering driver qualifications, hours of 
service, drug and alcohol testing, vehicle condition, accident 
monitoring, and hazardous material transportation. Substantiation would 
be in the form of narrative responses describing how the applicant will 
monitor hours of service, how it will maintain an accident register and 
how it will monitor accidents. FMCSA would also require that the 
applicant include the names of individuals in charge of its safety 
program and drug and alcohol testing and identify specific locations 
where the applicant maintains current FMCSRs. Information obtained 
under Section V would enable FMCSA to evaluate, upon initial 
application, the safety compliance program of the applicant. FMCSA 
would reject an application that could not offer a specific, 
unambiguous plan to ensure compliance.
    Proposed Section VI of the form would include new registration 
requirements for motor carriers of household goods created under 
Section 4204 of SAFETEA-LU. Section 4204 amended 49 U.S.C. 13902(a) to 
require such an applicant to: (1) Provide evidence of participation in 
an arbitration program and a copy of its notice to shippers about the 
availability of binding arbitration; (2) identify its tariff and 
provide a copy of the notice of the availability of the tariff for 
inspection; (3) certify it has read, and is willing to comply with all 
U.S. Federal laws regarding consumer protection, estimating, consumers' 
rights and responsibilities, and options for limiting liability for 
loss and damage; and (4) disclose certain financial, operational and 
familial relationship with any other entity involved in the 
transportation of household goods within 3 years of the proposed date 
of registration.
    Proposed Section VII would require the applicant to specify the 
scope of registration, indicating intended principal border crossing 
points.
    Under proposed Section VIII, the applicant would be required to 
make specific certifications regarding compliance with laws of the 
United States. The applicant would need to affirm its willingness and 
ability to provide the proposed service and to comply with all 
pertinent statutory and regulatory requirements. Certifications under 
proposed Section VIII would remind the applicant of statutory and 
regulatory responsibilities which, if neglected or violated, might 
subject the applicant to disciplinary or corrective action by FMCSA. 
The applicant would need to confirm its understanding that its process 
agent is deemed its official representative within the United States 
for receipt of filings and notices relating to the administrative and 
judicial process in connection with enforcement of Federal statutes and 
regulations. Finally, the applicant would need to certify that it is 
not currently disqualified from operating a commercial motor vehicle in 
the United States.
    Proposed Section IX, the final section of the form, includes the 
applicant's oath attesting to the accuracy and truthfulness of 
application responses and certification of compliance with certain U.S. 
Federal and State laws regarding distribution or possession of 
controlled substances.
C. Proposed Safety Monitoring System for Non-North America-Domiciled 
Motor Carriers
    Today's action proposes a new subpart I to part 385 covering the 
proposed safety monitoring system for non-North America-domiciled new 
entrants.
    Proposed Sec.  385.701 defines the following terms used in new 
subpart I to part 385:
    (1) Compliance review has the same meaning as in 49 CFR Sec.  
385.3.
    (2) New entrant registration is the provisional registration under 
49 CFR part 385, subpart H that FMCSA grants to a non-North America-
domiciled motor carrier to provide interstate transportation within the 
United States. It will be revoked if the registrant is not assigned a 
Satisfactory safety rating following a compliance review conducted 
during the safety monitoring period established in subpart I.
    (3) Non-North America-domiciled motor carrier means a motor carrier 
of property or passengers whose principal place of business is located 
in a country other than the United States, Canada or Mexico.
    Proposed Sec.  385.703 describes elements of the safety monitoring 
system for non-North America-domiciled new entrant motor carriers. The 
safety monitoring system would include roadside monitoring and a 
compliance review within 18 months of receiving a USDOT Number. 
Additionally, the non-North America-domiciled carrier would be 
required--throughout the 18-month safety monitoring period and for 
three years after its new entrant registration becomes permanent--to 
display on each CMV in its fleet that is operated within the United 
States, a valid safety inspection decal. The safety inspection decal 
would only be valid for three months.
    Under proposed Sec.  385.705, a non-North America-domiciled motor 
carrier found in violation of the seven listed serious violations or 
infractions would be subject to expedited enforcement action. Such 
actions would include an expedited compliance review or, in the 
alternative, a demand that the carrier demonstrate in writing that it 
has taken immediate corrective action. The proposed infractions 
parallel those proposed for U.S. and Canada-domiciled motor carriers 
and those already applicable to Mexico-domiciled carriers. The section 
clarifies what constitutes a valid commercial driver's license. The 
type of action taken by FMCSA in response to any violations would 
depend upon the specific circumstances of the violations.
    Proposed Sec.  385.705(b) warns that failure to respond to a 
request for a written response demonstrating corrective action within 
30 days would result in suspension of new entrant registration until 
the required showing of corrective action is made.

[[Page 76739]]

    Proposed Sec.  385.705(c) emphasizes that a carrier that 
successfully responds to a demand for corrective action under this 
section still would need to undergo a compliance review during the 18-
month safety monitoring period if it had not already done so.
    Under proposed Sec.  385.707, FMCSA explains potential outcomes of 
the compliance review--a Satisfactory, Conditional, or Unsatisfactory 
rating--and FMCSA follow-up actions in response to each rating. The 
proposed section would require the compliance review to be conducted 
consistent with existing FMCSA safety fitness evaluation procedures 
under 49 CFR part 385, Appendix B. These are the same criteria in use 
for U.S., Canada and Mexico-domiciled carriers.
    FMCSA sets forth under proposed Sec.  385.709 the specific time 
frames for suspension and revocation of new entrant registration. We 
believe the proposed procedures strike an appropriate balance between 
the need to protect the public from potentially unsafe carriers and 
preservation of the carrier's due process rights.
    Proposed Sec.  385.711 sets forth procedures for requesting 
administrative review of the agency's safety rating or its decision to 
suspend or revoke new entrant registration. The request must explain 
the error it believes FMCSA committed and a list of all factual and 
procedural issues in dispute. In addition, the carrier must include any 
information or documents that support its argument. Following the 
administrative review, which would be conducted by the FMCSA Associate 
Administrator for Enforcement and Program Delivery, the agency would 
notify the carrier of its decision. This decision would constitute the 
agency's final action. Administrative review would be completed in no 
more than 10 days after the request is received.
    Under proposed Sec.  385.713, a non-North America-domiciled carrier 
whose registration has been revoked would be prohibited from re-
applying for new entrant registration for at least 30 days after the 
date of revocation. When reapplying, the non-North America-domiciled 
motor carrier again would be required to pass a pre-authorization 
safety audit. The carrier would need to demonstrate to the FMCSA's 
satisfaction that it has corrected the deficiencies that resulted in 
revocation of its registration and that it otherwise has effectively 
functioning basic safety management systems in place. If the 
application is approved, the carrier's USDOT Number--linked to its 
previous safety record--would be reactivated; a new USDOT Number would 
not be issued. In this way, the agency could maintain a complete safety 
record of the non-North America-domiciled motor carrier.
    Proposed Sec.  385.715 provides that the safety monitoring period 
for non-North America-domiciled motor carriers would last for at least 
18 months from the date it was issued a USDOT Number.\6\ If, at the 
conclusion of the 18-month safety monitoring period, the carrier has 
received a Satisfactory safety rating and is not currently under a 
notice from FMCSA to remedy deficiencies in its basic safety management 
practices, the carrier's registration would become permanent.
---------------------------------------------------------------------------

    \6\ If a carrier's USDOT Number was revoked and reinstated under 
the provisions of proposed Sec.  385.713, the 18-month period would 
run from the date of reinstatement.
---------------------------------------------------------------------------

    If the carrier is under a notice to remedy deficiencies in its 
basic safety management practices, the safety monitoring period would 
be extended--and its new entrant designation would continue--until 
FMCSA determines the carrier is complying with the Federal safety 
regulations or revokes its registration under Sec.  385.709.
    If FMCSA is unable to conduct a compliance review within the 18-
month period, proposed Sec.  385.715(c) would extend the safety 
monitoring period until such time as the agency completes and evaluates 
a review.
    Proposed Sec.  385.717 emphasizes that the non-North America-
domiciled motor carrier also would be subject to the same general 
safety fitness procedures in 49 CFR part 385, subpart A, and to 
compliance and enforcement procedures applicable to all carriers 
regulated by the FMCSA.
    Proposed Sec.  390.19 explains filing procedures for the MCS-150 in 
greater detail and would subject non-North America-domiciled motor 
carriers to the biennial update requirement. Additionally, Sec.  
390.19(h)(2) proposes a technical correction documenting the existing 
requirement for a Mexico-domiciled long-haul motor carrier to 
successfully complete a pre-authorization safety audit prior to being 
issued a USDOT Number.

Discussion of Comments

    FMCSA received 29 responses to the IFR from 19 commenters. The 
commenters were five trade associations, four safety consultants, two 
public interest groups, three private citizens, a State police 
department, a safety enforcement organization, an occupational health 
private practice, a union, and a professional association. Five 
commenters made multiple submissions.
    General Comments. In general, the comments were supportive of the 
new entrant requirements in the IFR. The American Trucking Associations 
(ATA), American Society of Safety Engineers (ASSE), Commercial Vehicle 
Safety Alliance (CVSA), Consolidated Safety Systems (CSS), Daecher 
Consulting Group, Inc. (Daecher), the Independent Truckers and Drivers 
Association (ITDA), the National Private Truck Council (NPTC), the 
Indiana State Police, Schroeder & Associates, the International 
Brotherhood of Teamsters (IBT) and Tran Services generally supported 
the IFR and offered comments to improve the rulemaking. The Canadian 
Trucking Alliance (CTA) supported the IFR to the extent it applies 
equally to Canada- and U.S.-domiciled carriers. CVSA stated the SA--if 
properly implemented and accompanied by CDL reforms, technology and 
increased traffic enforcement--will have a dramatic and measurable 
impact on safety. CVSA submitted a petition to delay the implementation 
of the New Entrant Safety Assurance Process until States receive 
adequate funding and after certain procedural issues relating to the 
process are resolved.
    Several commenters opposed the IFR for various reasons. Advocates 
for Highway and Automobile Safety (AHAS) and Public Citizen opposed the 
agency's decision to publish an IFR instead of a notice of proposed 
rulemaking. Both urged the agency to permit full public involvement in 
the New Entrant Safety Assurance Process rulemaking. AHAS indicated the 
quality of FMCSA regulatory drafting and publication would be improved 
by providing sufficient documentation of agency reasoning and decisions 
in its final regulations. Public Citizen stated the New Entrant Safety 
Assurance Process is rooted in self-reporting and devoid of meaningful 
oversight. According to Public Citizen, only an extremely negligent new 
entrant would be denied operating authority under this process. Public 
Citizen urged the agency to:
     Permit full public involvement in the New Entrant 
rulemaking.
     Eliminate from the process all requirements for 
uncorroborated self-reporting.
     Make a proficiency examination, and third-party, in-person 
verification of regulatory compliance and knowledge, prerequisites for 
granting operating authority.
     Develop a plan that assures the SA will be conducted 
within an 18-month time period.

[[Page 76740]]

     Establish stricter penalties for noncompliant motor 
carriers.
    The Transportation Lawyers Association (TLA) commented the IFR 
fails to meet the statutory requirement of ensuring a carrier is 
knowledgeable about its safety responsibilities prior to commencing 
operations. ``FMCSA proposes nothing in this proceeding that will 
reduce the `safety learning curve' before a new carrier begins 
operating.'' TLA contended that safety certifications and educational 
and technical assistance materials have been used by the agency for 
many years and have already proven inadequate.
    FMCSA Response: In a letter dated April 11, 2003, the agency denied 
the CVSA petition to delay implementation of the New Entrant Safety 
Assurance Process until January 2004 and addressed CVSA concerns, 
including those related to adequate State funding for implementing the 
new entrant process, adequate training for State and Federal personnel 
charged with conducting safety audits, and recognition of Canadian and 
current State new entrant programs. A copy of the letter is in the 
docket to this rule.
    In developing this proposal, FMCSA fully considered all comments to 
the May 2002 IFR and has adopted some of the recommendations. In 
response to complaints about self-certifications, this NPRM would 
eliminate the Form MCS-150A because safety audits have confirmed 
carrier certifications on the MCS-150A and findings at the carrier's 
place of business are not always consistent (See the ``Form MCS-150A'' 
subheading). Later in this section under applicable subject headings, 
the agency addresses specific concerns from AHAS, TLA and Public 
Citizen regarding the use of proficiency examinations (see the 
``Proficiency Examinations'' subheading) and plans to improve the 
educational and technical assistance (ETA) materials by including 
information on how to comply with the regulations (see the ``ETA 
Materials'' subheading). The rule provides additional details about the 
scoring methodology and how the agency intends to strengthen the New 
Entrant Safety Assurance Process under the previous section titled 
``Discussion of the Proposed Rule'' under the ``Strengthening the 
Safety Audit'' subheading.
    Timing of the SA and 18-month monitoring period. Several commenters 
took issue with the timing of the SA and the 18-month monitoring 
period. ASSE stated that the 18-month period is too long, Daecher 
contended that a 6-month period would be adequate, and Schroeder & 
Associates believed the best time to conduct an audit is within 6 to 9 
months of beginning operations. Only CSS agreed that an 18-month period 
may be necessary to effectively evaluate a carrier from a regulatory 
perspective because it affords the carrier an opportunity to execute 
certain requirements. The Indiana State Police recommended having a 
certified FMCSA representative conduct the SA within 30 days of 
issuance of the USDOT Number and CVSA advocated a face-to-face meeting 
with the new entrant at the time of the application.
    FMCSA Response: As noted above, 49 U.S.C. 31144(g)(1) requires 
FMCSA to establish an 18-month period within which new entrant safety 
reviews must be conducted. Furthermore, as a practical matter, FMCSA 
believes carriers will not have sufficient records to allow the agency 
to review and evaluate the adequacy of a carrier's basic safety 
management controls until the carrier has been operating for 
approximately 3 months.
    Scope of the Audit. Some commenters took issue with the SA itself 
and recommended broadening the scope of the audit to address more than 
just compliance issues. ATA recommended including such topics as 
employee hiring, bonus and incentive programs, employee training, 
quality control and safety meetings. CVSA recommended including a CVSA 
Level 1 or Level 5 inspection on as many of the carrier's vehicles as 
possible.
    FMCSA Response: FMCSA proposes broadening the scope of the audit to 
include additional areas over which it has jurisdiction, such as 
operating authority, and household goods and ADA regulatory compliance. 
However, as noted previously, only safety-related questions would count 
toward the pass/fail determination. The agency also proposes to 
strengthen the audit by making specific violations, such as operating 
without a required CDL, result in automatic failure of the audit. 
Currently, the SA involves a Level 1 or 5 inspection of a sample of the 
carrier's vehicles. If there are insufficient vehicles on site at the 
time of the audit, the auditor completes the audit and documents why 
he/she was unable to conduct the inspections.
    Safety Audit and Corrective Actions. Public Citizen opposed having 
a new entrant self-certify regarding corrective action for deficiencies 
revealed during the SA and asserted FMCSA should require in-person 
verification of corrective action. The Teamsters urged the agency to 
immediately suspend any new entrant found to be lacking basic safety 
management controls during the SA until it has demonstrated corrective 
action to the satisfaction of FMCSA. The Indiana State Police urged 
FMCSA to place both the vehicle and driver out-of-service until 
corrective action is taken if a carrier is found to be operating 
without USDOT new entrant registration.
    FMCSA Response: The current regulations under Sec.  385.319 provide 
that FMCSA must notify a carrier of any inadequacies found during an SA 
and advise the carrier what actions it must take to remedy the 
inadequacies to avoid having its registration revoked. The carrier must 
submit written evidence of corrections taken, and FMCSA reserves the 
right to determine whether they are adequate. FMCSA is required to 
provide the carrier with official notice of the deficiencies and the 
opportunity to correct them. The carrier must respond with more than a 
self-certifying statement. For example, acceptable demonstration of 
corrective action for a carrier found to not have a drug and alcohol 
testing program would be evidence documenting membership in a 
consortium. Under Sec.  385.325, if a carrier does not demonstrate 
corrective action acceptable to FMCSA, the agency would revoke its new 
entrant registration and issue an out-of-service order. If the carrier 
is found to be operating a CMV in violation of an out-of-service order, 
under Sec.  385.331, it might be fined up to $11,000 per violation in 
accordance with 49 U.S.C. 521(b)(2)(A) and 49 CFR part 386, Appendix B 
(a)(3).
    Form MCS-150A. Several commenters encouraged FMCSA to eliminate the 
MCS-150A. ATA contended that many of the certification statements on 
the form are already collected on the registration application and 
suggested we retain and incorporate certification statements 18 and 19 
into the MCS-150. ITDA urged FMCSA to require each new applicant to 
provide a written plan demonstrating the applicant's knowledge of motor 
carrier safety regulations and its ability to safely operate a trucking 
business. Public Citizen regarded the certifications on the MCS-150A as 
uncorroborated declarations by the applicant.
    FMCSA Response: FMCSA agrees the MCS-150A is not producing the 
intended results. FMCSA's review of the New Entrant Safety Assurance 
Process has verified many new entrants are falsely certifying to having 
safety management controls when they are not actually in place. The 
agency proposes to eliminate Form MCS-150A.
    Proficiency Examination. Several commenters opposed FMCSA's 
decision to not require a proficiency examination for new entrants. 
AHAS argued the IFR

[[Page 76741]]

does not adequately consider the use of a proficiency examination to 
measure new entrant safety. CSS supported the use of a proficiency 
examination as a component of the New Entrant Safety Assurance Process 
and offered to discuss its current program with the Department of 
Defense (DOD) and associated procedures with FMCSA. CVSA stated that in 
addition to using enhanced, comprehensive educational and technical 
assistance materials, FMCSA should administer a proficiency examination 
to measure a new entrant's knowledge of Federal motor carrier safety 
standards. According to CVSA, a new entrant's self-certification alone 
is insufficient proof of adequate systems to assure compliance with the 
FMCSRs.
    Daecher asserted that giving ETA materials to a carrier does not 
ensure the carrier will read and understand the information. It 
encouraged FMCSA to use a proficiency examination to ensure the carrier 
has knowledge of the regulations and related safety information. Public 
Citizen urged the agency to make a proficiency examination a 
prerequisite for receiving operating authority. According to Public 
Citizen, the examination would be a far more comprehensive evaluation 
of regulatory knowledge than certifications made on the MCS-150A.
    FMCSA Response: The agency believes the planned enhancements to the 
ETA materials, as discussed in greater detail below, would provide most 
carriers with sufficient understanding of applicable regulations and 
assistance on how to comply with the applicable FMCSRs and HMRs and 
that a proficiency examination is not necessary. However, the agency 
recognizes knowledge alone does not ensure a carrier is in satisfactory 
compliance with the regulations. Only a review of the carrier's records 
and systems could demonstrate such compliance.
    ETA Materials. Several commenters addressed the subject of 
educational and technical materials for new entrants. AHAS and ATA 
complained FMCSA has not provided an opportunity for public review and 
comment on those educational and technical assistance materials new 
entrant carriers will receive. They suggested the agency place the ETA 
materials in the rulemaking docket or direct readers to where on the 
agency web site they can be obtained. CTA recommended revising the ETA 
materials to generally and clearly acknowledge distinctions between 
U.S. and Canadian rules. According to CTA, this would warn new entrants 
that rules can, and do, vary depending on the jurisdiction in which one 
operates. ITDA urged FMCSA to establish a process that encourages a new 
entrant to seek information and guidance and makes that information and 
guidance easily accessible. A private citizen recommended classroom 
instruction for new entrants.
    FMCSA Response: FMCSA agrees the ETA materials need to be updated 
to better inform new entrants about regulatory requirements and how to 
comply fully with the requirements. The ETA materials are an integral 
component of the entire New Entrant Safety Assurance Process. One of 
the reasons stated in the March 2002 IFR for not initiating a 
proficiency exam was FMCSA's belief that the educational and technical 
assistance provided to new entrants would ensure they understood the 
applicable safety regulations. However, it is apparent many new 
entrants are not fully compliant and one of the reasons is because the 
ETA materials are not as comprehensive as they need to be. FMCSA plans 
to review all ETA materials provided to new entrants and improve the 
quality, content, and format of the material.
    The agency believes enhanced ETA materials, including a new entrant 
safety assurance compact disc, would substantially increase a new 
entrant's awareness of carrier responsibilities before beginning 
operations and would, to a great extent, make them proficient in those 
requirements. FMCSA further believes the anticipated benefits of the 
enhanced ETA materials more than justify associated agency costs. FMCSA 
has determined the contents of these materials are not subject to 
notice and comment because they do not establish standards or 
procedures, but will place a copy of the updated ETA materials in the 
docket to this rule for inspection upon completion.
    Safety Monitoring During the 18-month Period. ATA requested 
specific details about how the agency intends to monitor new entrants 
during the 18-month period. Section 385.307(a) states: ``[t]he new 
entrant's roadside safety performance will be closely monitored to 
ensure the new entrant has basic safety management controls that are 
operating effectively.'' ATA believed this is insufficient information 
concerning how the agency will monitor new entrants during the 18-month 
period. CSS and CVSA supported development of a unique registration and 
USDOT Number to identify new entrants that have not yet passed the SA.
    FMCSA Response: FMCSA would continue to monitor a new entrant's on-
road performance using agency information systems and roadside 
inspections. Although the agency does not identify a new entrant that 
has not yet passed an SA by assigning a unique USDOT Number, FMCSA is 
able to target such new entrants for an SA or roadside inspection using 
information systems such as SafeStat, the Inspection Selection System 
(ISS) and the Motor Carrier Management Information System (MCMIS).
    Safety Audit. Other commenters stated FMCSA should disclose the SA 
Evaluation Criteria, Forms, and Monitoring Procedures. Both ATA and 
AHAS requested the SA evaluation criteria be placed in the rulemaking 
docket for review and comment, and complained that FMCSA has not 
disclosed the criteria by which a new entrant will be evaluated.
    FMCSA Response: Appendix A to 49 CFR part 385 explains the SA 
evaluation criteria, including the source of the data and how FMCSA 
determines whether a new entrant has basic safety management controls.
    Reciprocity. CTA urged FMCSA to exempt from the SA audit 
requirement Canada-domiciled new entrant carriers that have undergone a 
provincial facility audit during the 18-month monitoring period.
    FMCSA Response: Although FMCSA is engaged in ongoing discussion 
with its Canadian partners concerning the New Entrant Safety Assurance 
Process, today's rulemaking is not proposing an exemption for a Canada-
domiciled new entrant carrier that has passed a provincial facility 
audit for several reasons. First, 49 U.S.C. 31144(g)(1) specifies the 
regulation must require each new entrant to undergo the safety review 
(audit) within the first 18 months of beginning operations. The 
statutory language provides no authority to exempt new entrants, 
including Canada-domiciled carriers that have successfully undergone a 
provincial facility audit, from the SA. Furthermore, the Canadian 
provincial facility audit fails to address all of the elements of the 
new entrant SA. For example, Canada does not require a carrier to have 
a controlled substance and alcohol testing program for its drivers. 
FMCSA could verify a Canada-domiciled carrier is aware of, and in 
compliance with, the agency's controlled substances and alcohol testing 
requirements only by conducting a new entrant SA under part 385. 
Moreover, Sec.  31148(b) requires the SA to be conducted by: (1) A 
motor carrier safety auditor certified under FMCSA regulations or (2) a 
Federal or State employee who on the date of the enactment of Sec.  
31148(b) was qualified to perform such an audit or review.

[[Page 76742]]

Canadian provincial officials may not meet these qualifications.
    Alternate Locations for Audits. The IFR also requested comments on 
the advisability of conducting some SAs at alternate locations. ATA 
agreed the use of locations other than the carrier's place of business 
for the SA may be beneficial, but recommended that alternate location 
scheduling remain optional and used at the discretion of the motor 
carrier scheduled for the audit. CVSA commented that the primary value 
of the SA is the personalized evaluation and education provided by the 
safety professional and did not believe an adequate audit could be 
conducted in a group setting. CVSA supported conducting the SA on-site 
at the new entrant's place of business. CSS also opposed the use of 
alternate locations for the SA. Although acknowledging there are 
obvious economies associated with this approach, CSS contended that the 
effectiveness and desired results would be significantly reduced, 
particularly if the primary focus of the SA is to assess the new 
entrant's safety management controls. Public Citizen acknowledged that 
conducting multiple audits simultaneously might expedite the number of 
audits conducted and ease agency backlog. However, Public Citizen 
contends a new entrant may be reluctant to fully participate in the 
process for fear of exposing potential vulnerabilities to its 
competitors. Another commenter stated that effective group audits are 
not possible because carrier operational types are so varied. Tran 
Services applauded the use of alternate locations to simultaneously 
provide educational and technical assistance to multiple new entrant 
carriers, but opposed conducting SAs in such a setting. The new entrant 
would need to bring along too many records, and FMCSA may be unable to 
provide an individual carrier the individual attention necessary to 
determine if the carrier is in compliance.
    FMCSA Response: FMCSA has carefully considered the feasibility of 
conducting group audits. The agency believes group audits may present 
an excellent opportunity to simultaneously provide many new entrants 
with educational and technical assistance in a classroom setting while 
auditing the systems and records of individual new entrants in a 
private, one-on-one setting. However, experience has shown group audits 
are only beneficial in select situations, depending on many factors 
including, but not limited to, the number of new entrants within the 
given geographical area. For this reason, FMCSA conducts group audits 
only in those areas where practicable.
    Currently, an SA provides education and technical assistance to a 
motor carrier that has recently begun operations. In addition, the SA 
provides FMCSA with the opportunity to ensure the carrier's compliance 
with applicable Federal safety regulations. Normally, an SA would take 
from 2 to 4 hours to complete. Unlike the in-depth compliance review 
for motor carriers that are not in the new entrant program, the SA 
focuses on education. By conducting these audits at the carrier's place 
of business rather than in a classroom setting, auditors gain a broader 
perspective of the company's structure and level of compliance with 
Federal safety regulations.
    Use of Private Contractors to Conduct Safety Audits. The IFR 
requested comments on whether private contractors certified by FMCSA 
should conduct SAs. AHAS, ASSE, ATA, CVSA, CSS, Daecher, The Indiana 
State Police, Public Citizen, Schroeder & Associates, and Tran Services 
supported the use of qualified, private contractors to conduct SAs. 
AHAS asserted that use of private contractors would ``provide an 
opportunity to boost the annual numbers and percentages of motor 
carriers that are inspected and audited for safety adequacy.'' AHAS 
acknowledged that substantial safeguards must be built in order to 
avoid the possibility of fraud and other abuses.
    According to ASSE, a certified safety professional (CSP) with 
appropriate transportation experience would be well qualified to 
perform the audits without further designation. ASSE recommended the 
final rule allow the use of private auditors who must be accredited by 
either the Council on Engineering and Scientific Specialties Board or 
the National Commission on Certifying Agency (NCCA), two nationally 
recognized independent accrediting bodies overseeing professional 
safety designations for safety, health and environmental professionals 
who are qualified to perform audits such as the new entrant SA.
    ATA recommended that private contractors receive the same training 
as Federal and State investigators and use identical audit and data 
collection techniques. ATA asserted that industry support of the use of 
private contractors is contingent upon strict oversight of their work. 
ATA urged FMCSA to address the use of private contractors for SAs in a 
notice outlining proposed contractor training, auditing procedures and 
software, and how the Government will measure program effectiveness.
    CSS believed that its own experiences in conducting inspections for 
DOD support its position that ``there are many well trained and 
qualified transportation safety professionals in the private sector.''
    Indiana State Police supported the use of FMCSA-certified private 
contractors to conduct abbreviated SAs before the carrier begins 
operations. Indiana asserted these contractors could provide the basic 
educational and technical guidance in a classroom setting when the 
USDOT Number would be granted. Indiana stated the private contractor 
could bill the new entrant for these services, resulting in a cost 
savings to FMCSA.
    Schroeder & Associates supported the use of private contractors and 
suggested adopting the expertise levels described in FMCSA's March 19, 
2002, IFR titled Certification of Safety Auditors, Safety 
Investigators, and Safety Inspectors (67 FR 12775) as the standard for 
such contractors. Schroeder suggested that FMCSA certify individuals, 
not companies, for conducting the SAs. They also suggested that the 
agency could model the certification for private contractors after the 
former Interstate Commerce Commission Practitioner certification 
process, including minimum education and employment standards and a 
comprehensive 8-hour essay examination. Schroeder further recommended 
that the FMCSA SA course be accessible to non-government personnel with 
a waiver for those who successfully test out of the course. Lastly, 
they recommended FMCSA require private contractors to conduct a minimum 
of 12 inspections annually to maintain certification.
    Tran Services asserted Federal, State and private contractors 
should be identically certified to ensure uniformity. Tran Services, 
and other private companies, already provide safety services, including 
``mock DOT audits'' to help companies achieve and maintain compliance. 
ITDA opposed the use of private contractor inspectors, and stated that 
only Federal and State inspectors should conduct the SA at this time. 
ITDA believes that only after the New Entrant Safety Assurance Process 
is fully implemented and there is sufficient experience with the 
process should FMCSA consider the use of private contractor inspectors.
    The IBT interpreted sec. 211 of MCSIA as prohibiting the use of a 
private contractor to grant operating authority to a carrier and that 
the SA falls within that prohibition. IBT stated the SA is an integral 
part of the

[[Page 76743]]

procedure for obtaining permanent operating authority, and is a 
precondition for such authority. IBT contended that SAs are so closely 
linked with the grant of permanent operating authority that allowing 
private contractors to conduct SAs would be a de facto impermissible 
delegation of authority.
    Due to the anticipated strain on Federal and State enforcement 
resources, CVSA recommended the agency use private contractors to 
conduct SAs. CVSA argued, given their limited resources, Federal and 
State officials should not weaken efforts to conduct compliance 
reviews, roadside inspections, and traffic enforcement to implement the 
New Entrant Safety Assurance Process. CVSA made the following specific 
recommendations regarding the use of private contractors:
     Use only properly trained and certified individuals;
     Exclude the results of private contractor audits when 
determining a carrier's safety rating or for enforcement purposes; and
     Prohibit private contractors from conducting roadside 
inspections.
    CVSA also recommended FMCSA conduct a multi-State, private 
contractor pilot program modeled after Canada's third-party auditor 
pilot program.
    Daecher believed FMCSA should exclusively use qualified private 
auditors to conduct the SAs because it is a more easily managed and 
cost effective option. According to Daecher, current FMCSA resources 
are insufficient to handle the anticipated number of new entrants; 
opting not to use private contractors would be detrimental to the New 
Entrant Safety Assurance Process and prohibit review of each new 
entrant within the 18-month monitoring period. Daecher recommended 
establishing a certification program for private contractors to conduct 
both safety audits and compliance reviews.
    FMCSA Response: Annually, approximately 48,000 motor carriers 
register with FMCSA to become new entrants. Federal and State 
compliance officers are able to conduct SAs on many of these carriers, 
but not all of them. To increase the number of new entrants inspected 
and monitored for safety compliance under the New Entrant Safety 
Assurance Process, FMCSA has been using private contractors to conduct 
safety audits since January 2004.
    FMCSA has built into its contracts with private contractors 
effective safeguards against fraud and other abuses. The contractors 
are required to follow the same policies and procedures followed by 
Federal and State safety auditors. In addition, FMCSA closely monitors 
the activities of private contractors by obtaining monthly activity 
reports and reviewing their internal administrative procedures.
    FMCSA is requiring all individuals performing a privately 
contracted safety audit to be certified following the same guidelines 
applicable to Federal and State safety auditors. They must meet the 
same minimum qualifications as Federal and State safety auditors, 
including certain education and experience requirements, as well as 
testing through the FMCSA International Training Division located in 
Arlington, VA. Private contractors must also pass the same proficiency 
exams given to Federal and State safety auditors and renew their 
certification annually. The maintenance of certification requirement 
currently includes performing a minimum of 24 SAs each year.
    Completed SAs performed by private contractors receive the same 
scrutiny as those performed by Federal and State auditors. Although 
private contractors perform SAs, the results of any audit are not final 
until reviewed by FMCSA, thus ensuring Federal oversight of the 
program.
    Since the SA does not result in a safety rating for the motor 
carrier being audited, private contractor SAs are not used to determine 
a carrier's safety rating. A safety rating is only issued upon 
completion of a compliance review. Compliance reviews are only 
conducted by Federal or State personnel and cannot be performed by a 
private contractor.
    FMCSA agrees that private industry offers many trained and 
qualified individuals who can be utilized to ensure public safety. The 
agency acknowledges the strain brought to bear upon Federal and State 
resources due to the large number of incoming new entrant motor 
carriers annually registering with FMCSA and hopes to mitigate the 
situation by continuing to use private contractors.

Rulemaking Analyses and Notices

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

    FMCSA has preliminarily determined this proposed rule is a 
significant regulatory action within the meaning of Executive Order 
12866 and the U.S. Department of Transportation's regulatory policies 
and procedures (DOT Order 2100.5 dated May 22, 1980; 44 FR 11034, 
February 26, 1979). While the costs of this NPRM would not exceed the 
$100 million annual threshold as defined in Executive Order 12866, 
FMCSA believes the subject of new entrant motor carrier requirements 
generates considerable public interest and therefore is significant. 
FMCSA has analyzed the costs and benefits, as discussed below, and has 
preliminarily determined this proposed rule would not be economically 
significant. This NPRM has been reviewed by the Office of Management 
and Budget (OMB).
    A number of studies, some of which were sponsored by FMCSA or its 
predecessor agency, have evaluated the safety experience of new 
entrants. While the studies differ in emphasis and some particulars, 
they all demonstrate new entrants have higher crash rates than more 
established carriers and are less likely to comply with Federal 
regulations.
    As explained previously, this rulemaking makes a number of 
revisions to how the agency monitors and evaluates new entrant motor 
carriers operating in the United States, and how these carriers apply 
for authority. The rulemaking also establishes procedures for the 
oversight of non-North American motor carriers. Only a very small 
number of non-North American carriers are currently operating in the 
United States, and we do not expect this number to grow appreciably in 
the future.
    OMB guidance states that the agency's analyses should ``focus on 
benefits and costs that accrue to citizens and residents of the United 
States.'' \7\ The analysis of costs is based on the total number of new 
entrants registering with FMCSA. This rule would impose costs on a 
small number of Canada-domiciled and non-North America-domiciled motor 
carriers operating in the United States. The difference between 
including and excluding non-North America-domiciled carriers is 
imperceptible after rounding. To obtain cost estimates for the U.S.-
domiciled motor carriers, one should reduce the estimates presented by 
3.5 percent. Most of the foreign carriers involved are domiciled in 
Canada.
---------------------------------------------------------------------------

    \7\ OMB, Circular A-4, September 2003, page 15. Available online 
at http://www.whitehouse.gov/omb/circulars/a004/a-4.pdf.
---------------------------------------------------------------------------

    The costs associated with the FMCSRs, HMRs, or the New Entrant 
Safety Assurance Process IFR should not be counted as a cost of this 
NPRM because these costs were already counted when the various measures 
were first promulgated. Thus, there are no societal costs associated 
with the proposed changes. We are not proposing any substantive changes 
to the

[[Page 76744]]

operational regulatory requirements; motor carriers, including new 
entrants, are already required to comply with these regulations. 
Therefore, this proposal would not place any new substantive burdens 
upon new entrants or any other entity. Rather, as explained above, the 
proposed changes would make the enforcement of existing requirements 
more rigorous. Any motor carrier already complying with the FMCSRs and 
HMRs would not face any change in practices. This proposal would 
include modest administrative costs for carriers to become aware of the 
new consequences for failing to comply with existing requirements.
    Between 1995 and 2002, an average of 47,535 \8\ new entrants began 
operations annually. We assumed this number would remain constant. As 
noted above, this NPRM would not impose any new operational 
requirements on new entrants. The only truly new cost involved would be 
the cost to motor carriers of becoming aware of new requirements when 
this NPRM is promulgated as a final rule. We assumed it would take an 
extra hour for the appropriate motor carrier official of each new 
entrant to study the new requirements and discern how to best comply 
with them. Using Bureau of Labor Statistics \9\ (BLS) estimates for 
hourly wages for Transportation Managers of $33.50 and 31.5 percent 
employment benefits, we obtain an hourly compensation of $44.05. 
Assuming learning the new audit consequences takes an hour per firm, we 
estimate a cost of $2.1 million annually.
---------------------------------------------------------------------------

    \8\ These estimates were derived from data contained in the 
Motor Carrier Management Information System (MCMIS).
    \9\ See the Bureau of Labor Statistics Web site http://www.bls.gov/oes/2003/may/oes_11Ma.htm dated May 2003.
---------------------------------------------------------------------------

    As noted above, this NPRM proposes eliminating the Form MCS-150A 
because of its ineffectiveness in ensuring an understanding of required 
basic safety management controls. We assume the elimination of this 
form would save new entrants 10 minutes each. Using a clerical wage of 
$14 per hour, this provision would save new entrants $111,000 annually. 
The net administrative cost of this proposed rule to new entrants is 
thus $2.0 million per year.

Alternative Analysis

    We do not believe this proposed rule would impose significant costs 
or benefits other than those intended and counted in the IFR. As 
explained previously, this proposed rule would not introduce any new 
requirements. All carriers, including new entrants, already are 
required to comply with the FMCSRs and applicable HMRs, including all 
the standards that would be checked during the safety audit. Therefore, 
the costs and benefits of the audit should not be ascribed to this 
NPRM; these costs and benefits were included when these regulations 
were initially promulgated, so including them now would be double 
counting.
    However, we did attempt to measure these costs and benefits. While 
they are not properly part of this proposed rule, the information may 
prove useful for decision makers. This section therefore provides an 
alternate description of the impact of this proposal.
    We calculated the number of crashes that must be avoided to make 
this proposed rule cost beneficial, meaning the benefits would exceed 
the costs. We first converted crashes into dollar values to allow for 
comparison with the cost figures, based on work by Zaloshnja et al. 
They estimated the cost of an average police-reported crash involving 
trucks with a gross vehicle weight rating of more than 10,000 pounds 
was $59,153 in 2000 dollars.\10\ FMCSA adjusted this figure to 2004 
dollars based on the Gross Domestic Product Deflator, which yields a 
value of $65,183.
---------------------------------------------------------------------------

    \10\ Based on Revised Costs of Large Truck- and Bus-Involved 
Crashes, by Eduard Zaloshnja, Ted Miller, and Rebecca Spicer 
(National Technical Information Service, Springfield, VA), 2002.
---------------------------------------------------------------------------

    New entrant carriers are involved in more crashes than more 
experienced carriers. According to a 2000 Volpe study, new entrants 
(defined as motor carriers registered for less than 2 years) were more 
frequently assessed to have Safety Evaluation Area scores in the worst 
quartile.\11\ In fact, new entrants were about twice as likely to have 
an Accident SEA score of 75 or above. Therefore, Volpe concludes, 
SafeStat results show new entrants to have significantly lower levels 
of safety compliance and performance. The overall motor carrier crash 
rate from MCMIS is 0.75 crashes per million vehicle miles of travel 
(MVMT), while the new entrant crash rate is 25 percent higher, 0.94 per 
MVMT.
---------------------------------------------------------------------------

    \11\ Volpe Center, Analysis of New Entrant Motor Carriers Safety 
Performance and Compliance Using SafeStat, March 2000, pp. 3-2, 3-7, 
and 5-4.
---------------------------------------------------------------------------

    The net cost of this proposed rule is $2.0 million per year. For 
this proposed rule to be cost beneficial, it would have to deter 31 
crashes ($2.0 million/$65,183), or one fatal crash.\12\
---------------------------------------------------------------------------

    \12\ For economic evaluations in the Department of 
Transportation, the value of a statistical life is to be $3.0 
million. However, since there cannot be fractional fatal crashes, we 
round up to one.
---------------------------------------------------------------------------

Alternative Costs Associated With Proposed Changes to Safety Audit 
Scoring System

    As of October 2004, 33,787 new entrant SAs had been completed. Only 
253 of new entrants audited under the program failed the SA under the 
existing scoring criteria, which is only 0.75 percent of those 
receiving an SA.
    Had the list of proposed automatic failure criteria been 
incorporated into our regulations at the time these audits were 
conducted, 19,559 of the audited carriers would have failed, almost 58 
percent of those audited. Therefore, the proposed scoring change would 
have resulted in an additional 19,306 new entrant carriers failing the 
audit (19,559 - 253 = 19,306). On an annual basis, this translates to 
27,162 carriers failing the audit under the new criteria if there is no 
change in carrier behavior.\13\
---------------------------------------------------------------------------

    \13\ (19,559 - 253) * (47,535/33,787) = 27,162.
---------------------------------------------------------------------------

    However, it is unlikely the number of carriers that would fail the 
audit or whose new entrant authority would be revoked would be this 
large. The cost of not correcting violations of the 11 automatic 
failure provisions is currently low. New entrants cited for one of 
these violations are not placed out of service. In fact, it is possible 
for new entrants to continue operating for some time before remedying 
their violations. This proposal would dramatically raise the cost of 
failing to comply with these provisions, with violators possibly losing 
their authority and being placed out of business. Raising the cost of 
not correcting a violation, therefore, would encourage new entrants to 
comply with the regulatory requirements, either before they are audited 
or after they fail the audit.
    We believe new entrants would be sensitive to the increased cost of 
violations and would respond accordingly. We assume half of the new 
entrants that would otherwise be put out of service instead would 
adjust their practices and behavior to comply with the regulations. We 
assume of the 27,162 new entrants failing one or more of the automatic 
failure criteria, 13,581 would be placed out of service, and 13,581 
would make whatever changes are necessary to continue operations. These 
costs are now discussed in turn.

Alternative Cost of Replacing New Entrants \14\
---------------------------------------------------------------------------

    \14\ Not all non-compliant carriers will be replaced by other 
new entrants. It is possible that carriers already in operation will 
absorb freight or passengers previously transported by firms placed 
out of service. Although it is possible existing carriers may be 
able to operate more efficiently by increasing existing load 
factors, they may also have to divert vehicles and drivers from 
other loads or buy/hire new ones to provide the service. To provide 
a conservative estimate, we assume the cost of these resources will 
be mostly the same whether the loads are carried by existing 
carriers expanding or transferring capacity or by new entrants 
coming into the market to meet this demand. The only differences 
would be registration and licensing costs. We assume that there is 
no possibility that the replacing firm is the non-compliant firm 
repackaged as a new firm. Without this illegal practice, the 
replacing firm would either be a completely new motor carrier or an 
existing motor carrier expanding its operation. Since there is not a 
big difference, we choose to report the larger of the two cost 
possibilities.
---------------------------------------------------------------------------

    As discussed in footnote 14, we assume that non-compliant carriers 
will

[[Page 76745]]

be replaced by other new entrants. These replacement new entrants could 
purchase equipment from out-of-service carriers, so the cost of 
equipment and facilities is a transfer between entities. The absolute 
costs of starting these new firms would include fees for application, 
licensing, registration, surveying potential markets, advertisements, 
training, and transactions costs for transferring assets. Our all-
inclusive estimate for these costs is $4,000 per carrier replaced in 
this fashion. Therefore, replacing the 13,581 carriers that would be 
placed out of service would yield a total cost of $54.3 million 
annually.

Alternative Cost for New Entrants That Adjust

    As discussed above, the costs and benefits of complying with the 
FMCSRs and HMRs (if applicable) are not attributable to this proposal 
since we are not proposing to change existing operational requirements. 
However, this evaluation also includes an estimate of costs and 
benefits assuming these were new requirements. These estimates are 
presented to assist decision makers in considering the impacts of this 
proposal. While these estimates do not represent the real costs of this 
proposal, they illustrate possible impacts of this proposal.
    New entrants that change their practices and remain in service 
would also face some costs. The cost of coming into compliance would 
vary, depending on a number of factors, including the size of the new 
entrant and the specific regulation (or regulations) violated. We 
conservatively assume the average cost for carriers failing one of the 
11 automatic failure criteria but desiring to continue operations would 
be $1,000. Therefore, the total cost for these 13,581 new entrants 
would be approximately $13.6 million.
    The maximum cost of this proposed rule is estimated at 
approximately $67.9 million per year ($54.3 million + $13.6 million). 
The ten-year undiscounted cost would be almost $679 million, while the 
discounted cost would be $477 million.

Alternative Benefits

    The theoretical benefits accrue from removing the least safe 
carriers from the road and replacing them with safer carriers. This 
change would result in a difference in expected crashes. Using the 
Compliance Review Impact Assessment Model, we assumed each failing new 
entrant removed and replaced would have had a crash rate of 1.13 
crashes per million vehicle miles traveled (MVMT), which is 50 percent 
higher than the crash rate for established motor carriers. According to 
MCMIS, new entrants average 400,000 VMT per year. We assume freight 
that had been carried by closed carriers would be carried by 
replacement new entrants. According to MCMIS, new entrants have an 
overall crash rate of 0.94 crashes per MVMT. Therefore, closing unsafe 
carriers results in a 17 percent reduction in the per million mile 
crash rate ((1.13-0.94)/1.13).
    We estimate new entrants eventually placed out of service or 
required to modify their operations are currently involved in 
approximately 11,200 baseline crashes annually. This is the sum of two 
calculations. For carriers that would be placed out of service, the 
calculation is the sum of 13,581 new entrants times 400,000 miles per 
new entrant times 1.13 crashes per MVMT. The calculation is similar for 
new entrants that continue operations, except their crash rate is 0.94 
crashes per MVMT.
    Closing 13,581 carriers would result in almost 1,020 fewer crashes 
in the first year, 967 in the second year (since 5 percent of the 
closed carriers would have gone out of business in any case), and fewer 
each succeeding year. However, an additional 13,581 carriers would be 
closed in each succeeding year, so the total crashes deterred by 
closing carriers increases over the analysis period as the reduction 
caused by the 5 percent business failure rate would be more than offset 
by the additional carriers closed each year. Over 10 years, more than 
48,000 crashes would be deterred by placing unsafe carriers out of 
service.
    The SAs also would reduce crashes among those new entrants allowed 
to continue operations after coming into compliance. Over 10 years, 
almost 5,700 crashes would be deterred from carriers that take action 
to remedy violations. For both classes of carriers, the SAs would 
result in 54,000 fewer crashes over 10 years.
    As noted above, the average cost of a motor-carrier-involved crash 
is $65,183. By deterring 54,000 crashes, this proposed rule thus would 
yield a 10-year savings of $3.5 billion undiscounted. At a 7 percent 
discount rate, this would translate into a benefit of $2.3 billion. 
Most of these benefits would come from the crash reduction of closed 
carriers. This benefit would greatly exceed the costs described 
previously. The discounted ten-year net benefit of this NPRM would be 
$1.8 billion, and the benefit cost ratio would be 4.8 to 1.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. Sec.  
3501, et seq.), Federal agencies must obtain approval from OMB for each 
collection of information they conduct, sponsor, or require through 
regulations. FMCSA has determined there are three currently approved 
information collections that would be affected by this NPRM: (1) OMB 
Control No. 2126-0013 titled ``Motor Carrier Identification Report'' 
(FMCSA Forms MCS-150, MCS-150A, and MCS-150B), approved at 74,896 
burden hours through July 31, 2007; (2) OMB Control No. 2126-0015 
titled ``Designation of Agents, Motor Carriers, Brokers and Freight 
Forwarders (FMCSA Form BOC-3) approved at 5,000 burden hours through 
April 30, 2008; and (3) OMB Control No 2126-0016 titled ``Licensing 
Applications for Motor Carrier Operating Authority'' (FMCSA Forms OP-1, 
OP-1 (FF), OP-1 (MX) and OP-1 (P), approved at 55,738 burden hours 
through August 31, 2008. Table 1 depicts the current and proposed 
burden hours associated with the information collections.

[[Page 76746]]



                          Table 1.--Current and Proposed Information Collection Burdens
----------------------------------------------------------------------------------------------------------------
                                                                   Burden hours
                        OMB approval No.                             currently     Burden hours       Change
                                                                     approved        proposed
----------------------------------------------------------------------------------------------------------------
2126-0013.......................................................          74,896          66,977          -7,919
2126-0015.......................................................           5,000           5,002               2
2126-0016.......................................................          55,738          55,786              48
                                                                 -----------------------------------------------
    Net Change..................................................  ..............  ..............          -7,869
----------------------------------------------------------------------------------------------------------------

    The following is an explanation of how each of the information 
collections shown above would be affected by this proposal.
    OMB Control No. 2126-0013. This NPRM would eliminate the 
requirement for new entrants to complete the Form MCS-150A (Safety 
Certification for Applications for USDOT Number) because it does not 
provide the certification intended. Proposed amendments to 49 CFR part 
385, subpart E--Hazardous Materials Safety Permits would remove 
references to the MCS-150A and would not impact the MCS-150B in any 
way. The estimated annual paperwork burden for this information 
collection would be 66,977 hours [74,896 currently approved annual 
burden hours - 7,923 (47,535 new entrants x 10 minutes/60 minutes to 
complete the MCS-150A form) + 4 (12 non-America-domiciled motor 
carriers x 20 minutes/60 minutes to complete the Form MCS-150) = 
66,977].
    OMB Control No. 2126-0015. The non-North America-domiciled motor 
carriers would also be required to notify the agency regarding 
designation of process agents by either: (1) submission in the 
application package of Form BOC-3 (Designation of Agents, Motor 
Carriers, Brokers and Freight Forwarders), or (2) a letter stating that 
the applicant will use a process agent that will submit the Form BOC-3 
electronically. The estimated annual paperwork burden for this 
information collections would be 5,002 hours [5,000 currently approved 
annual burden hours + 2 hours (12 new entrant non-North America-
domiciled motor carriers x 10 minutes/60 minutes to complete Form BOC-
3) = 5,002 hours].
    OMB Control No. 2126-0016. The proposed rule would create a new 
Form OP-1(NNA) titled ``Application for U.S. Department of 
Transportation (USDOT) Registration by Non-North America-Domiciled 
Motor Carriers.'' A non-North America-domiciled motor carrier is one 
whose principal place of business is located in a country other than 
the United States, Canada or Mexico. These entities would use the OP-
1(NNA) when requesting either a USDOT new entrant registration as a 
private or exempt for-hire carrier or operating authority as a non-
exempt for-hire carrier. The estimated annual paperwork burden for this 
information collection would be 55,786 hours [55,738 currently approved 
annual burden hours + 48 hours (12 new entrant non-North America-
domiciled motor carriers x 4 hours to complete Form OP-1(NNA)) = 55,786 
hours].
    The proposals in this NPRM, affecting three currently-approved 
information collections, would result in a net decrease of 7,869 burden 
hours in the agency's information collection budget.
    FMCSA requests comments on: (1) whether the collection of 
information is necessary or useful for the agency to meet its goal of 
reducing truck crashes, (2) the accuracy of the estimated information 
collection burden; (3) ways to enhance the quality, utility, and 
clarity of the information collected; and (4) ways to minimize the 
information collection burden on respondents, including the use of 
automated collection techniques or other forms of information 
technology.

Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), as amended by the Small 
Business Regulatory Enforcement and Fairness Act (SBREFA), requires 
Federal agencies to analyze the impact of rulemakings on small 
entities, unless the agency certifies the proposed rule will not have a 
significant economic impact on a substantial number of small entities. 
FMCSA believes these proposals do not meet the threshold values for 
requiring a full-blown regulatory flexibility analysis. Nonetheless, 
because of the public interest in these proposals, we have prepared a 
regulatory analysis and placed a copy in the docket to this NPRM. The 
initial regulatory flexibility analysis (IRFA) for the proposed rule is 
set forth below.
    (1) A description of the reasons why action by the agency is being 
considered. FMCSA implemented the New Entrant Safety Assurance Process 
in January 2003. Under the program, a carrier receives new entrant 
registration and must undergo an 18-month monitoring period, including 
an SA. During the audit, FMCSA verifies the carrier has in place basic 
safety management controls and identifies any areas needing correction. 
A new entrant is granted permanent registration only after successfully 
completing the SA and the 18-month monitoring period.
    The agency received numerous comments to the May 2002 IFR 
announcing the New Entrant Safety Assurance Process, including 
recommendations for improvement and alternatives to the program. By 
late summer 2003, the agency and its State partners had collected 
sufficient data and had sufficient experience administering the program 
to assess its effectiveness. The Administrator formed a working group 
comprised of field and Headquarters staff to conduct a program review. 
This group identified several key improvements to clarify, strengthen 
and correct the new entrant regulations. Today's action proposes 
measures to make the New Entrant Safety Assurance Process better. It 
also proposes a separate new entrant application procedure and safety 
oversight program for non-North America-domiciled motor carriers.
    (2) A succinct statement of the objectives of, and legal basis for, 
the proposed rule. Section 210 of MCSIA required the Secretary of 
Transportation to establish regulations specifying minimum requirements 
for motor carriers seeking to operate in interstate commerce for the 
first time to ensure such carriers are knowledgeable about applicable 
Federal motor carrier safety standards. MCSIA also directed the 
Secretary to require, by regulation, that each motor carrier granted 
new operating authority undergo an SA within the first 18 months of 
operations. MCSIA also required the Secretary to establish the elements 
of the safety review, including basic safety management controls, to 
consider the effect the regulations would have on small businesses and 
to consider establishing alternate locations where the review may be 
conducted for the convenience of the small businesses.

[[Page 76747]]

    An IFR, with request for comments, was published May 13, 2002, and 
became effective January 1, 2003. The IFR established new minimum 
requirements for all applicant motor carriers domiciled in the United 
States and Canada seeking to operate in interstate commerce. Under the 
IFR, all new entrants, regardless of whether they need to register with 
FMCSA under 49 U.S.C. 13901, are required to complete a Form MCS-150A--
Safety Certification for Applications for USDOT Number. Additionally, 
during the initial 18-month period of operations, FMCSA would evaluate 
the new entrant's safety management practices through an SA and monitor 
its on-road performance prior to granting the new entrant permanent 
registration. The objective of this NPRM is to enhance the safety of 
new entrants and thereby reduce the number of crashes which involve 
these carriers.
    (3) A description of and, where feasible, an estimate of the number 
of small entities to which the proposed rule would apply. The trucking 
industry, and to a lesser extent the bus industry, is populated by 
several very large firms and many small firms. We believe most motor 
carriers start small. The proposed rule would cover all U.S. and 
Canada-domiciled carriers and a very small number of motor carriers 
domiciled outside of North America.
    FMCSA estimated in the regulatory evaluation accompanying this 
proposal that an average of 47,535 motor carriers entered the industry 
each year from 1995-2002 seeking interstate authority. Roughly 23,400 
of these new entrants are estimated to be non-exempt for-hire carriers 
that must register under 49 U.S.C. 13901, 20,300 are estimated to be 
exempt for-hire and private carriers not subject to Sec.  13901, and 
the roughly 3,800 remaining new registrants are of other types 
(including 1,922 brokers/freight forwarders, 1,200 Mexico-domiciled 
commercial zone carriers, and 664 other carriers). These estimates were 
derived from data contained in the Motor Carrier Management Information 
System (MCMIS).
    The Regulatory Flexibility Act requires Federal agencies to analyze 
the impact of proposed and final rules on small entities. Small 
Business Administration (SBA) regulations (13 CFR part 121) define a 
``small entity'' in the motor carrier industry by average annual 
receipts, which are currently set at $23.5 million per firm. FMCSA 
estimated based upon the 1997 Economic Census (U.S. Census Bureau), 
North American Industrial Classification System (NAICS) Code 484 
``Truck Transportation'' segments, the number of small trucking 
entities potentially affected by our proposed rules. There are 100,048 
for-hire trucking firms within NAICS Code 484. Of these, 75,491, or 
roughly 75 percent, had annual receipts of less than $21.5 million. 
While SBA has changed its size definitions, updated data is not yet 
available. Therefore, this analysis uses the old definition. The actual 
percent of small businesses is probably somewhat greater than our 
estimate, but the difference is not likely to be significant. Because 
FMCSA does not have annual sales data on private carriers, the agency 
assumed the revenue and operations characteristics of the private new 
entrant firms would be similar to those of new entrant for-hire 
carriers. Using these assumptions, the agency estimates almost 35,651 
of the total 47,535 new entrants (or 75 percent) are considered small 
entities. This assumption is generally consistent with an alternative, 
industry-based approach used to estimate the number of small trucking 
firms, where size is defined by the number of power units (i.e., 
tractors or single-unit trucks) owned or leased by motor carriers. 
Also, MCMIS data indicate 80 percent of new entrant motor carriers 
within the industry owned or leased six or fewer power units.
    (4) A description of the proposed reporting, recordkeeping and 
other compliance requirements of the proposed rule, including an 
estimate of the classes of small entities which would be subject to the 
requirements and the type of professional skills necessary for 
preparation of the report or record. Except for a small number of non-
North America-domiciled motor carriers, this proposed rule would impose 
no additional reporting, recordkeeping, or other compliance requirement 
beyond those currently required of all motor carriers. This proposed 
rule would change the consequences for violating certain existing 
safety rules. Indeed, this proposed rule eliminates one form, the MC-
150A, integrating a few of the data elements from the MC-150A into Form 
MC-150. Therefore, there will be one less form for motor carriers to 
complete.
    (5) An identification, to the extent practicable, of all Federal 
rules, which may duplicate, overlap, or conflict with the proposed 
rule. FMCSA is not aware of any areas where this proposed rule would 
duplicate, overlap, or conflict with any other Federal rules. However, 
under a separate rulemaking (a notice of proposed rulemaking titled 
Unified Registration System published in the May 19, 2005, Federal 
Register at 70 FR 28989), the agency is proposing to unify three of its 
information systems for motor carriers into a single, on-line 
replacement system. The ``replacement system'' NPRM proposes a more 
streamlined registration process. The USDOT Number registration process 
for new entrants would be included in the replacement system NPRM.
    The replacement system rulemaking is a very complex undertaking and 
would address the USDOT Number, financial responsibility and commercial 
aspects of registration; it only touches on ministerial aspects of the 
New Entrant Safety Assurance Process. Today's proposed rule covers the 
complete New Entrant Safety Assurance Process, not just registration. 
It is for these reasons the agency is pursuing these efforts in 
separate rulemakings. The agency would address any impacts to 
administrative elements of the New Entrant Safety Assurance Process 
when the proposed rule announcing the replacement system is promulgated 
as a final rule.
    Accordingly, FMCSA preliminarily determines the proposed action 
discussed in this document would not have a significant economic impact 
on a substantial number of small entities.

Privacy Impact Analysis

    FMCSA conducted a privacy impact assessment of this proposed rule 
as required by Section 522(a)(5) of the FY 2005 Omnibus Appropriations 
Act, Pub. L. 108-447, 118 Stat. 3268 (Dec. 8, 2004) [set out as a note 
to 5 U.S.C. Sec.  552a]. The assessment considers any impacts of the 
proposed rule on the privacy of information in an identifiable form and 
related matters. The entire privacy impact assessment is available in 
the docket for this proposal.

Unfunded Mandates Reform Act

    This proposed rule would not impose a Federal mandate resulting in 
the net expenditures by State, local, or tribal governments, in the 
aggregate, or by the private sector, of $120.7 million or more in any 
one year. 2 U.S.C. 1531, et seq.

National Environmental Policy Act

    FMCSA has analyzed this proposed rule for the purpose of the 
National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321, et 
seq.) and has determined under the agency's National Environmental 
Policy Act Implementing Procedures, FMCSA Order 5610.1C (published at 
69 FR 9680, March 1, 2004, with an effective date of March 30, 2004) 
this proposed action is categorically excluded under Appendix 2, 
paragraph 6.f of the Order from further environmental documentation. 
That categorical exclusion relates to

[[Page 76748]]

establishing regulations implementing the following activities, whether 
performed by FMCSA or by States pursuant to the Motor Carrier Safety 
Assistance Program (MCSAP), which provides financial assistance to 
States to reduce the number and severity of crashes and hazardous 
materials incidents involving commercial motor vehicles: (1) Driver/
vehicle inspections; (2) traffic enforcement; (3) safety audits; (4) 
compliance reviews; (5) public education and awareness; and (6) data 
collection; and provides reimbursement for the expenses listed under 
paragraphs 6.d(i) through 6.d(v). This action proposes amendments to 
the New Entrant Safety Assurance Process for carriers newly registering 
to operate in interstate commerce. The agency believes the proposed 
action would include no extraordinary circumstances having any effect 
on the quality of the environment.
    FMCSA has also analyzed this proposal under section 176(c) of the 
Clean Air Act (CAA), as amended (42 U.S.C. 7401 et seq.), and 
implementing regulations promulgated by the Environmental Protection 
Agency. We performed a conformity analysis of the CAA according to the 
procedures outlined in appendix 14 of FMCSA Order 5610.1C. This 
proposed rule would not result in any emissions increase, nor would it 
have any potential to result in emissions above the general conformity 
rule's de minimis emission threshold levels. Moreover, it is reasonably 
foreseeable the proposed rule change would not increase total CMV 
mileage, change the routing of CMVs, change how CMVs operate, or change 
the CMV fleet-mix of motor carriers. This proposed action would revise 
the program for assuring the safety of new entrant motor carriers.

Executive Order 12988 (Civil Justice Reform)

    This proposed 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 proposed rule under Executive Order 13045, 
``Protection of Children from Environmental Health Risks and Safety 
Risks.'' This proposed rule does not concern a risk to environmental 
health or safety that would disproportionately affect children.

Executive Order 12630 (Taking of Private Property)

    This proposed rule would not effect a taking of private property or 
otherwise have taking implications under Executive Order 12630, 
Governmental Actions and Interference with Constitutionally Protected 
Property Rights.

Executive Order 13132 (Federalism)

    This proposed action has been analyzed in accordance with the 
principles and criteria contained in Executive Order 13132 dated August 
4, 1999, and it has been preliminarily determined this proposed action 
would not have a substantial direct effect or sufficient federalism 
implications on States, limiting the policymaking discretion of the 
States. Nothing in this document would directly preempt any State law 
or regulation. It would not impose additional costs or burdens on the 
States. This proposed action would not have a significant effect on the 
States' ability to execute traditional State governmental functions. To 
the extent that States incur costs for conducting these SAs, they would 
be reimbursed 100 percent with Federal funds under MCSAP.

Executive Order 12372 (Intergovernmental Review)

    The regulations implementing Executive Order 12372 regarding 
intergovernmental consultation on Federal programs and activities do 
not apply to this program.

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

    This proposed action is not a significant energy action within the 
meaning of section 4(b) of the Executive Order because it is not 
economically significant and is not likely to have a significant 
adverse effect on the supply, distribution, or use of energy.

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 (Volume 65, Number 70; Pages 19477-78) or you may visit 
http://dms.dot.gov.

List of Subjects

49 CFR Part 365

    Administrative practice and procedure, Brokers, Buses, Freight 
forwarders, Motor carriers, Moving of household goods, Reporting and 
recordkeeping requirements.

49 CFR Part 385

    Administrative practice and procedure, Highway safety, Motor 
carriers, Motor vehicle safety, Reporting and recordkeeping 
requirements.

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.

49 CFR Part 390

    Highway safety, Intermodal transportation, Motor carriers, Motor 
vehicle safety, reporting and recordkeeping requirements.
    For the reasons stated in the preamble, the Federal Motor Carrier 
Safety Administration proposes to amend title 49, Code of Federal 
Regulations, chapter III, subchapter B as set forth below:

PART 365--RULES GOVERNING APPLICATIONS FOR OPERATING AUTHORITY

    1. The authority citation for part 365 continues to read as 
follows:

    Authority: 5 U.S.C. 553 and 559; 16 U.S.C. 1456; 49 U.S.C. 
13101, 13301, 13901-13906, 14708, 31138, and 31144; 49 CFR 1.73.

    2. Amend Sec.  365.101 by adding a new paragraph (i) to read as 
follows:


Sec.  365.101  Applications governed by these rules.

* * * * *
    (i) Applications for non-North America-domiciled motor carriers to 
operate in foreign commerce as for-hire motor carriers of property and 
passengers within the United States.
    3. Amend Sec.  365.105 by revising paragraph (a) to read as 
follows:


Sec.  365.105  Starting the application process: Form OP-1.

    (a) All applicants must file the appropriate form in the OP-1 
series, effective [effective date of final rule]. Form OP-1 for motor 
property carriers and brokers of general freight and household goods; 
Form OP-1(P) for motor passenger carriers; Form OP-1(FF) for freight 
forwarders of

[[Page 76749]]

household goods; Form OP-1(MX) for Mexico-domiciled motor property 
carriers, including household goods and motor passenger carriers; and 
Form OP-1(NNA) for non-North America-domiciled motor property and motor 
passenger carriers. A separate filing fee in the amount set forth at 49 
CFR 360.3(f)(1) is required for each type of authority sought in each 
transportation mode.
* * * * *

PART 385--SAFETY FITNESS PROCEDURES

    4. The authority citation continues to read as follows:

    Authority: 49 U.S.C. 113, 504, 521(b), 5105(e), 5109, 5113, 
13901-13905, 31136, 31144, 31148, and 31502; sec. 350 of Pub. L. 
107-87; and 49 CFR 1.73.


Sec.  385.305  [Amended]

    5. Amend Sec.  385.305 to remove paragraph (b)(3) and to 
redesignate paragraph (b)(4) as (b)(3).
    6. Add Sec.  385.306 to subpart D to read as follows:


Sec.  385.306  What are the consequences of furnishing misleading 
information or making a false statement in connection with the 
registration process?

    A carrier that furnishes false or misleading information, or 
conceals material information in connection with the registration 
process, is subject to the following actions:
    (a) Revocation of registration.
    (b) Assessment of the civil and/or criminal penalties prescribed in 
49 U.S.C. 521 and 49 U.S.C. chapter 149.
    7. Amend Sec.  385.307 to revise paragraph (a) to read as follows:


Sec.  385.307  What happens after a motor carrier begins operations as 
a new entrant?

* * * * *
    (a) The new entrant's roadside safety performance will be closely 
monitored to ensure the new entrant has basic safety management 
controls that are operating effectively.
* * * * *
    8. Add Sec.  385.308 to subpart D to read as follows:


Sec.  385.308  What will cause an expedited action?

    (a) A new entrant that commits any of the following actions, 
identified through roadside inspections or by any other means, may be 
subjected to an expedited safety audit or a compliance review or may be 
required to submit a written response demonstrating corrective action:
    (1) Using drivers to operate a commercial motor vehicle as defined 
under Sec.  383.5 without a valid commercial driver's license. An 
invalid commercial driver's license includes one that is falsified, 
revoked, expired, or missing a required endorsement.
    (2) Operating vehicles that have been placed out of service for 
violations of the Federal Motor Carrier Safety Regulations or 
compatible State laws and regulations without taking necessary 
corrective action.
    (3) Involvement in a hazardous materials incident, due to carrier 
act or omission, involving any of the following:
    (i) A highway route controlled quantity of a Class 7 (radioactive) 
material as defined in Sec.  173.403 of this title.
    (ii) Any quantity of a Class 1, Division 1.1, 1.2, or 1.3 explosive 
as defined in Sec.  173.50 of this title.
    (iii) Any quantity of a poison inhalation hazard Zone A or B 
material as defined in Sec. Sec.  173.115, 173.132, or 173.133 of this 
title.
    (4) Involvement in two or more hazardous materials incidents, due 
to carrier act or omission, involving any hazardous material not 
identified in paragraph (a)(3) of this section and defined in chapter I 
of this title.
    (5) Using a driver who tests positive for controlled substances or 
alcohol or who refuses to submit to required controlled substances or 
alcohol tests.
    (6) Operating a motor vehicle that is not insured as required by 
part 387 of this chapter.
    (7) Having a driver or vehicle out-of-service rate of 50 percent or 
more based upon at least three inspections occurring within a 
consecutive 90-day period.
    (b) If a new entrant that commits any of the actions listed in 
paragraph (a) of this section:
    (1) Has not had a safety audit or compliance review, FMCSA will 
schedule the new entrant for a safety audit as soon as practicable.
    (2) Has had a safety audit or compliance review, FMCSA will send 
the new entrant a notice advising it to submit evidence of corrective 
action within 30 days of the service date of the notice.
    (c) FMCSA may schedule a compliance review of a new entrant that 
commits any of the actions listed in paragraph (a) of this section at 
any time if it determines the violation warrants a thorough review of 
the new entrant's operation.
    (d) Failure to respond within 30 days of the notice to an agency 
demand for a written response demonstrating corrective action will 
result in the revocation of the new entrant's registration.
    9. Revise Sec.  385.319 to read as follows:


Sec.  385.319  What happens after completion of the safety audit?

    (a) Upon completion of the safety audit, the auditor will review 
the findings with the new entrant.
    (b) Pass. If FMCSA determines the safety audit discloses the new 
entrant has adequate basic safety management controls, the agency will 
provide the new entrant written notice as soon as practicable, but not 
later than 45 days after completion of the safety audit, that it has 
adequate basic safety management controls. The new entrant's safety 
performance will continue to be closely monitored for the remainder of 
the 18-month period of new entrant registration.
    (c) Fail. If FMCSA determines the safety audit discloses the new 
entrant's basic safety management controls are inadequate, the agency 
will provide the new entrant written notice, as soon as practicable, 
but not later than 45 days after the completion of the safety audit, 
that its USDOT new entrant registration will be revoked and its 
operations placed out-of-service unless it takes the actions specified 
in the notice to remedy its safety management practices.
    (1) 60-day corrective action requirement. All new entrants, except 
those specified in paragraph (c)(2) of this section, must take the 
specified actions to remedy inadequate safety management practices 
within 60 days of the date of the notice.
    (2) 45-day corrective action requirement. The new entrants listed 
below must take the specified actions to remedy inadequate safety 
management practices within 45 days of the date of the notice:
    (i) A new entrant that transports passengers in a CMV designed or 
used to transport between 9 and 15 passengers (including the driver) 
for direct compensation.
    (ii) A new entrant that transports passengers in a CMV designed or 
used to transport more than 15 passengers (including the driver).
    (iii) A new entrant that transports hazardous materials in a CMV as 
defined in paragraph (4) of the definition of a ``Commercial Motor 
Vehicle'' in Sec.  390.5 of this subchapter.
    10. Revise Sec.  385.321 to read as follows:

[[Page 76750]]

Sec.  385.321  What failures of safety management practices disclosed 
by the safety audit will result in a notice to a new entrant that its 
DOT new entrant registration will be revoked?

    (a) General. The failures of safety management practices consist of 
a lack of basic safety management controls as described in Appendix A 
of this part or failure to comply with one or more of the regulations 
set forth in paragraph (b) of this section and will result in a notice 
to a new entrant that its DOT new entrant registration will be revoked.
    (b) Automatic failure of the audit. A new entrant will 
automatically fail the safety audit if found in violation of any one of 
the following 11 regulations:
    (1) Sec.  382.115(a) or (b)--Failing to implement an alcohol and/or 
controlled substances testing program (domestic and foreign motor 
carriers, respectively).
    (2) Sec.  382.211--Using a driver who has refused to submit to an 
alcohol or controlled substances test required under part 382.
    (3) Sec.  382.215--Using a driver known to have tested positive for 
a controlled substance.
    (4) Sec.  383.37(a)--Knowingly allowing, requiring, permitting, or 
authorizing an employee with a commercial driver's license which is 
suspended, revoked, or canceled by a State or who is disqualified to 
operate a commercial motor vehicle.
    (5) Sec.  383.51(a)--Knowingly allowing, requiring, permitting, or 
authorizing a driver who is disqualified to drive a commercial motor 
vehicle.
    (6) Sec.  387.7(a)--Operating a motor vehicle without having in 
effect the required minimum levels of financial responsibility 
coverage.
    (7) Sec.  391.15(a)--Using a disqualified driver.
    (8) Sec.  391.11(b)(4)--Using a physically unqualified driver.
    (9) Sec.  395.8(a)--Failing to require a driver to make a record of 
duty status.
    (10) Sec.  396.9(c)(2)--Requiring or permitting the operation of a 
motor vehicle declared ``out-of-service'' before repairs are made.
    (11) Sec.  396.17(a)--Using a commercial motor vehicle not 
periodically inspected.
    11. Revise Sec.  385.323 to read as follows:


Sec.  385.323  May FMCSA extend the period under Sec.  385.319(c) for a 
new entrant to take corrective action to remedy its safety management 
practices?

    (a) FMCSA may extend the 60-day period in Sec.  385.319(c)(1) for 
up to an additional 60 days provided FMCSA determines the new entrant 
is making a good faith effort to remedy its safety management 
practices.
    (b) FMCSA may extend the 45-day period in Sec.  385.319(c)(2) for 
up to 10 days if the new entrant has submitted evidence that corrective 
actions have been taken pursuant to Sec.  385.319(c) and the agency 
needs additional time to determine the adequacy of the corrective 
action.
    12. Amend Sec.  385.325 to revise paragraph (b) to read as follows:


Sec.  385.325  What happens after a new entrant has been notified under 
Sec.  385.319(c) to take corrective action to remedy its safety 
management practices?

    (a) * * *
    (b) If a new entrant, after being notified that it is required to 
take corrective action to improve its safety management practices, 
fails to submit a written response demonstrating corrective action 
acceptable to FMCSA within the time specified in Sec.  385.319, 
including any extension of that period authorized under Sec.  385.323, 
FMCSA will revoke its new entrant registration and issue an out-of-
service order effective on:
    (1) Day 61 from the notice date for new entrants subject to Sec.  
385.319(c)(1).
    (2) Day 46 from the notice date for new entrants subject to Sec.  
385.319(c)(2).
    (3) If an extension has been granted under Sec.  385.323, the day 
following the expiration of the extension date.
* * * * *
    13. Revise Sec.  385.327 to read as follows:


Sec.  385.327  May a new entrant request an administrative review of a 
determination of a failed safety audit?

    (a) If a new entrant receives a notice under Sec.  385.319(c) that 
its new entrant registration will be revoked, it may request FMCSA to 
conduct an administrative review if it believes FMCSA has committed an 
error in determining that its basic safety management controls are 
inadequate. The request must:
    (1) Be made to the Field Administrator of the appropriate FMCSA 
Service Center.
    (2) Explain the error the new entrant believes FMCSA committed in 
its determination.
    (3) Include a list of all factual and procedural issues in dispute 
and any information or documents that support the new entrant's 
argument.
    (b) FMCSA may request that the new entrant submit additional data 
and attend a conference to discuss the issue(s) in dispute. If the new 
entrant does not attend the conference or does not submit the requested 
data, FMCSA may dismiss the new entrant's request for review.
    (c) A new entrant must submit a request for an administrative 
review within one of the following time periods:
    (1) If it does not submit evidence of corrective action under Sec.  
385.319(c), within 90 days after the date it is notified that its basic 
safety management controls are inadequate.
    (2) If it submits evidence of corrective action under Sec.  
385.319(c), within 90 days after the date it is notified that its 
corrective action is insufficient and its basic safety management 
controls remain inadequate.
    (d) If a new entrant wants to assure that FMCSA will be able to 
issue a final written decision before the prohibitions outlined in 
Sec.  385.325(c) take effect, the new entrant must submit its request 
no later than 15 days from the date of the notice that its basic safety 
management controls are inadequate. Failure to submit the request 
within this 15-day period may result in revocation of new entrant 
authority and issuance of an out-of-service order before completion of 
administrative review.
    (e) FMCSA will complete its review and notify the new entrant in 
writing of its decision within:
    (1) 45 days after receiving a request for review from a new entrant 
that is subject to Sec.  385.319(c)(1).
    (2) 30 days after receiving a request for review from a new entrant 
that is subject to Sec.  385.319(c)(2).
    (f) The Field Administrator's decision constitutes the final agency 
action.
    (g) Notwithstanding this subpart, a new entrant is subject to the 
suspension and revocation provisions of 49 U.S.C. 13905 for violations 
of DOT regulations governing motor carrier operations.
    14. Revise Sec.  385.329 to read as follows:


Sec.  385.329  May a new entrant that has had its DOT new entrant 
registration revoked and its operations placed out of service reapply?

    (a) A new entrant whose DOT new entrant registration has been 
revoked, and whose operations have been placed out of service by FMCSA, 
may reapply for new entrant authority no sooner than 30 days after the 
date of revocation.
    (b) If the DOT new entrant registration was revoked because of a 
failed safety audit, the new entrant must do all of the following:
    (1) Submit an updated MCS-150.
    (2) Submit evidence that it has corrected the deficiencies that 
resulted in revocation of its registration and will otherwise ensure 
that it will have basic safety management controls in effect.
    (3) Begin the 18-month new entrant monitoring cycle again as of the 
date the re-filed application is approved.

[[Page 76751]]

    (c) If the DOT new entrant registration was revoked because FMCSA 
found that the new entrant had failed to submit to a safety audit, it 
must do all of the following:
    (1) Submit an updated MCS-150.
    (2) Begin the 18-month new entrant monitoring cycle again as of the 
date the re-filed application is approved.
    (3) Submit to a safety audit upon request.
    (d) If the new entrant is a for-hire carrier subject to the 
registration provisions under 49 U.S.C. 13901 and also has had its 
operating authority revoked, it must re-apply for operating authority 
as set forth in part 365 of this title.
    15. Revise Sec.  385.331 to read as follows:


Sec.  385.331  What happens if a new entrant operates a CMV after 
having been issued an order placing its interstate operations out of 
service?

    A new entrant that operates a CMV in violation of an out-of-service 
order is subject to the penalty provisions in U.S.C. 521(b)(2)(A) for 
each offense as adjusted for inflation by 49 CFR part 386, Appendix B.
    16. Amend Sec.  385.337 to revise paragraph (a) to read as follows:


Sec.  385.337  What happens if a new entrant refuses to permit a safety 
audit to be performed on its operations?

    (a) If a new entrant refuses to permit a safety audit to be 
performed on its operations, FMCSA will provide the carrier with 
written notice that its registration will be revoked and its operations 
placed out of service unless the new entrant agrees in writing, within 
10 days from the service date of the notice, to permit the safety audit 
to be performed. The refusal to permit a safety audit to be performed 
may subject the new entrant to the penalty provisions of 49 U.S.C. 
521(b)(2)(A), as adjusted for inflation by 49 CFR part 386 Appendix B.
* * * * *
    17. Amend Sec.  385.405 to revise paragraph (a) to read as follows:


Sec.  385.405  How does a motor carrier apply for a safety permit?

    (a) Application form(s). (1) To apply for a new safety permit or 
renewal of the safety permit, a motor carrier must complete and submit 
Form MCS-150B, Combined Motor Carrier Identification Report and HM 
Permit Application.
    (2) The Form MCS-150B will also satisfy the requirements for 
obtaining and renewing a USDOT Number; there is no need to complete 
Form MCS-150, Motor Carrier Identification Report.
* * * * *
    18. Amend Sec.  385.421 by revising paragraph (a)(2) to read as 
follows:


Sec.  385.421  Under what circumstances will a safety permit be subject 
to revocation or suspension by FMCSA?

    (a) * * *
    (2) A motor carrier provides any false or misleading information on 
its application (Form MCS-150B) or as part of updated information it is 
providing on Form MCS-150B (see Sec.  385.405(d)).
* * * * *
    19. Amend part 385 by adding a new subpart H consisting of new 
Sec. Sec.  385.601 through 385.609 and an Appendix to subpart H to read 
as follows:
Subpart H--Special Rules for New Entrant Non-North America-Domiciled 
Carriers
Sec.
385.601 Scope of rules.
385.603 Application.
385.605 New entrant registration driver's license and drug and 
alcohol testing requirements.
385.607 FMCSA action on the application.
385.609 Requirement to notify FMCSA of change in applicant 
information.
Appendix to Subpart H of Part 385--Explanation of Pre-Authorization 
Safety Audit Evaluation Criteria for Non-North America-Domiciled 
Motor Carriers

Subpart H--Special Rules for New Entrant Non-North America-
Domiciled Carriers


Sec.  385.601  Scope of rules.

    The rules in this subpart govern the application by a non-North 
America-domiciled motor carrier to provide transportation of property 
and passengers in interstate commerce in the United States.


Sec.  385.603  Application.

    (a) Each applicant applying under this subpart must submit an 
application that consists of:
    (1) Form OP-1(NNA)--Application for U.S. Department of 
Transportation (USDOT) Registration by Non-North America-Domiciled 
Motor Carriers;
    (2) Form MCS-150--Motor Carrier Identification Report; and
    (3) A notification of the means used to designate process agents, 
either by submission in the application package of Form BOC-3--
Designation of Agents-Motor Carriers, Brokers and Freight Forwarders or 
a letter stating that the applicant will use a process agent service 
that will submit the Form BOC-3 electronically.
    (b) The Federal Motor Carrier Safety Administration (FMCSA) will 
only process an application if it meets the following conditions:
    (1) The application must be completed in English;
    (2) The information supplied must be accurate, complete, and 
include all required supporting documents and applicable certifications 
in accordance with the instructions to Form OP-1(NNA), Form MCS-150 and 
Form BOC-3; and
    (3) The application must be signed by the applicant.
    (c) An applicant must submit the application to the address 
provided in Form OP-1(NNA).
    (d) An applicant may obtain the application forms from any FMCSA 
Division Office or download them from the FMCSA Web site at: http://www.fmcsa.dot.gov/forms/forms.htm.


Sec.  385.605  New entrant registration driver's license and drug and 
alcohol testing requirements.

    (a) A non-North America-domiciled motor carrier must use only 
drivers who possess a valid commercial driver's license--a CDL, 
Canadian Commercial Driver's License, or Mexican Licencia de Federal de 
Conductor--to operate its vehicles in the United States.
    (b) A non-North America-domiciled motor carrier must subject each 
of the drivers described in paragraph (a) of this section to drug and 
alcohol testing as prescribed under part 382 of this subchapter.


Sec.  385.607  FMCSA action on the application.

    (a) FMCSA will review and act on each application submitted under 
this subpart in accordance with the procedures set out in this part.
    (b) FMCSA will validate the accuracy of information and 
certifications provided in the application by checking, to the extent 
available, data maintained in databases of the governments of the 
country where the carrier's principal place of business is located and 
the United States.
    (c) Pre-authorization safety audit. Every non-North America-
domiciled motor carrier that applies under this part must 
satisfactorily complete an FMCSA-administered safety audit before FMCSA 
will grant new entrant registration to operate in the United States. 
The safety audit is a review by FMCSA of the carrier's written 
procedures and records to validate the accuracy of information and 
certifications provided in the application and determine whether the 
carrier has established or exercises the basic safety management 
controls necessary to ensure safe operations. FMCSA will evaluate the 
results of the safety audit using the criteria in the Appendix to this 
subpart.
    (d) Applications of non-North America-domiciled motor carriers

[[Page 76752]]

requesting for-hire operating authority under part 365 of this chapter 
may be protested under Sec.  365.109(b). Such carriers will be granted 
new entrant registration after successful completion of the pre-
authorization safety audit and the expiration of the protest period, 
provided the application is not protested. If a protest to the 
application is filed with FMCSA, new entrant registration will be 
granted only if FMCSA denies or rejects the protest.
    (e) If FMCSA grants new entrant registration to the applicant, it 
will assign a distinctive USDOT Number that identifies the motor 
carrier as authorized to operate in the United States. In order to 
initiate operations in the United States, a non-North America-domiciled 
motor carrier with new entrant registration must:
    (1) Have its surety or insurance provider file proof of financial 
responsibility in the form of certificates of insurance, surety bonds, 
and endorsements, as required by Sec.  387.7(e)(2), Sec.  387.31(e)(2) 
and Sec.  387.301 of this subchapter, as applicable; and
    (2) File a hard copy of, or have its process agent(s) 
electronically submit, Form BOC-3--Designation of Agents--Motor 
Carriers, Brokers and Freight Forwarders, as required by part 366 of 
this subchapter.
    (f) A non-North America-domiciled motor carrier must comply with 
all provisions of the safety monitoring system in part 385, subpart I 
of this subchapter, including successfully passing North American 
Standard commercial motor vehicle inspections at least every 90 days 
and having safety decals affixed to each commercial motor vehicle 
operated in the United States as required by Sec.  385.703(c) of this 
subchapter.
    (g) FMCSA may remove a non-North America-domiciled carrier's new 
entrant designation no earlier than 18 months after the date its USDOT 
Number is issued and only after successful completion to the 
satisfaction of FMCSA of the safety monitoring system for non-North 
America-domiciled carriers set out in part 385, subpart I of this 
subchapter. Successful completion includes obtaining a Satisfactory 
safety rating as the result of a compliance review.


Sec.  385.609  Requirement to notify FMCSA of change in applicant 
information.

    (a)(1) A motor carrier subject to this subpart must notify FMCSA of 
any changes or corrections to the information the Form BOC-3--
Designation of Agents--Motor Carriers, Brokers and Freight Forwarders 
that occur during the application process or after having been granted 
new entrant registration.
    (2) A motor carrier subject to this subpart must notify FMCSA of 
any changes or corrections to the information in Sections I, IA or II 
of Form OP-1(NNA)--Application for U.S. Department of Transportation 
(USDOT) Registration by Non-North America-Domiciled Motor Carriers that 
occurs during the application process or after having been granted new 
entrant registration.
    (3) A motor carrier must notify FMCSA in writing within 45 days of 
the change or correction to information under subparagraphs (a)(1) or 
(a)(2) of this section.
    (b) If a motor carrier fails to comply with paragraph (a) of this 
section, FMCSA may suspend or revoke its new entrant registration until 
it meets those requirements.

Appendix to Subpart H of Part 385--Explanation of Pre-Authorization 
Safety Audit Evaluation Criteria for Non-North America-Domiciled Motor 
Carriers

I. General

    (a) FMCSA will perform a safety audit of each non-North America-
domiciled motor carrier before granting the carrier new entrant 
registration to operate within the United States.
    (b) FMCSA will conduct the safety audit at a location specified 
by the FMCSA. All records and documents must be made available for 
examination within 48 hours after a request is made. Saturdays, 
Sundays, and Federal holidays are excluded from the computation of 
the 48-hour period.
    (c) The safety audit will include:
    (1) Verification of available performance data and safety 
management programs;
    (2) Verification of a controlled substances and alcohol testing 
program consistent with part 40 of this title;
    (3) Verification of the carrier's system of compliance with 
hours-of-service rules in part 395 of this subchapter, including 
recordkeeping and retention;
    (4) Verification of proof of financial responsibility;
    (5) Review of available data concerning the carrier's safety 
history, and other information necessary to determine the carrier's 
preparedness to comply with the Federal Motor Carrier Safety 
Regulations, parts 382 through 399 of this subchapter, and the 
Federal Hazardous Material Regulations, parts 171 through 180 of 
this title;
    (6) Inspection of available commercial motor vehicles to be used 
under new entrant registration, if any of these vehicles have not 
received a decal required by Sec.  385.703(c) of this subchapter;
    (7) Evaluation of the carrier's safety inspection, maintenance, 
and repair facilities or management systems, including verification 
of records of periodic vehicle inspections;
    (8) Verification of drivers' qualifications, including 
confirmation of the validity of the CDL, Canadian Commercial 
Driver's License, or Mexican Licencia de Federal de Conductor, as 
applicable, of each driver the carrier intends to assign to operate 
under its new entrant registration; and
    (9) An interview of carrier officials to review safety 
management controls and evaluate any written safety oversight 
policies and practices.
    (d) To successfully complete the safety audit, a non-North 
America-domiciled motor carrier must demonstrate to FMCSA that it 
has the required elements in paragraphs (c)(2), (3), (4), (7), and 
(8) above and other basic safety management controls in place which 
function adequately to ensure minimum acceptable compliance with the 
applicable safety requirements. FMCSA developed ``safety audit 
evaluation criteria,'' which uses data from the safety audit and 
roadside inspections to determine that each applicant for new 
entrant registration has basic safety management controls in place.
    (e) The safety audit evaluation process developed by FMCSA is 
used to:
    (1) Evaluate basic safety management controls and determine if 
each non-North America-domiciled carrier and each driver is able to 
operate safely in the United States; and
    (2) Identify motor carriers and drivers who are having safety 
problems and need improvement in their compliance with the FMCSRs 
and the HMRs, before FMCSA issues new entrant registration to 
operate within the United States.

II. Source of the Data for the Safety Audit Evaluation Criteria

    (a) The FMCSA's evaluation criteria are built upon the 
operational tool known as the safety audit. FMCSA developed this 
tool to assist auditors and investigators in assessing the adequacy 
of a non-North America-domiciled carrier's basic safety management 
controls.
    (b) The safety audit is a review of a non-North America-
domiciled motor carrier's operation and is used to:
    (1) Determine if a carrier has the basic safety management 
controls required by 49 U.S.C. 31144; and
    (2) In the event that a carrier is found not to be in compliance 
with applicable FMCSRs and HMRs, the safety audit can be used to 
educate the carrier on how to comply with U.S. safety rules.
    (c) Documents such as those contained in driver qualification 
files, records of duty status, vehicle maintenance records, and 
other records are reviewed for compliance with the FMCSRs and HMRs. 
Violations are cited on the safety audit. Performance-based 
information, when available, is utilized to evaluate the carrier's 
compliance with the vehicle regulations. Recordable accident 
information is also collected.

III. Overall Determination of the Carrier's Basic Safety Management 
Controls

    (a) The carrier will not receive new entrant registration if 
FMCSA cannot:
    (1) Verify a controlled substances and alcohol testing program 
consistent with part 40 of this title;

[[Page 76753]]

    (2) Verify a system of compliance with the hours-of-service 
rules of this subchapter, including recordkeeping and retention;
    (3) Verify proof of financial responsibility;
    (4) Verify records of periodic vehicle inspections; and
    (5) Verify the qualifications of each driver the carrier intends 
to assign to operate commercial motor vehicles in the United States, 
as required by parts 383 and 391 of this subchapter, including 
confirming the validity of each driver's CDL, Canadian Commercial 
Driver's License, or Mexican Licencia de Federal de Conductor, as 
appropriate.
    (b) If FMCSA confirms each item under III(a)(1) through (5) 
above, the carrier will receive new entrant registration, unless 
FMCSA finds the carrier has inadequate basic safety management 
controls in at least three separate factors described in part IV 
below. If FMCSA makes such a determination, the carrier's 
application for new entrant registration will be denied.

IV. Evaluation of Regulatory Compliance

    (a) During the safety audit, FMCSA gathers information by 
reviewing a motor carrier's compliance with ``acute'' and 
``critical'' regulations of the FMCSRs and HMRs.
    (b) Acute regulations are those where noncompliance is so severe 
as to require immediate corrective actions by a motor carrier 
regardless of the overall basic safety management controls of the 
motor carrier.
    (c) Critical regulations are those where noncompliance relates 
to management and/or operational controls. These are indicative of 
breakdowns in a carrier's management controls.
    (d) The list of the acute and critical regulations, which are 
used in determining if a carrier has basic safety management 
controls in place, is included in Appendix B, VII, List of Acute and 
Critical Regulations to part 385 of this subchapter.
    (e) Noncompliance with acute and critical regulations are 
indicators of inadequate safety management controls and usually 
higher than average accident rates.
    (f) Parts of the FMCSRs and the HMRs having similar 
characteristics are combined together into six regulatory areas 
called ``factors.'' The regulatory factors, evaluated on the 
adequacy of the carrier's safety management controls, are:
    (1) Factor 1--General: Parts 387 and 390;
    (2) Factor 2--Driver: Parts 382, 383 and 391;
    (3) Factor 3--Operational: Parts 392 and 395;
    (4) Factor 4--Vehicle: Parts 393, 396 and inspection data for 
the last 12 months;
    (5) Factor 5--Hazardous Materials: Parts 171, 177, 180 and 397; 
and
    (6) Factor 6--Accident: Recordable Accident Rate per Million 
Miles.
    (g) For each instance of noncompliance with an acute regulation, 
1.5 points will be assessed.
    (h) For each instance of noncompliance with a critical 
regulation, 1 point will be assessed.
    (i) Vehicle Factor. (1) When at least three vehicle inspections 
are recorded in the Motor Carrier Management Information System 
(MCMIS) during the twelve months before the safety audit or 
performed at the time of the review, the Vehicle Factor (part 396) 
will be evaluated on the basis of the Out-of-Service (OOS) rates and 
noncompliance with acute and critical regulations. The results of 
the review of the OOS rate will affect the Vehicle Factor as 
follows:
    (i) If the motor carrier has had at least three roadside 
inspections in the twelve months before the safety audit, and the 
vehicle OOS rate is 34 percent or higher, one point will be assessed 
against the carrier. That point will be added to any other points 
assessed for discovered noncompliance with acute and critical 
regulations of part 396 to determine the carrier's level of safety 
management control for that factor.
    (ii) If the motor carrier's vehicle OOS rate is less than 34 
percent, or if there are less than three inspections, the 
determination of the carrier's level of safety management controls 
will only be based on discovered noncompliance with the acute and 
critical regulations of part 396.
    (2) Over two million inspections occur on the roadside each year 
in the United States. This vehicle inspection information is 
retained in the MCMIS and is integral to evaluating motor carriers' 
ability to successfully maintain their vehicles, thus preventing 
them from being placed OOS during roadside inspections. Each safety 
audit will continue to have the requirements of part 396, 
Inspection, Repair, and Maintenance, reviewed as indicated by the 
above explanation.
    (j) Accident Factor. (1) In addition to the five regulatory 
factors, a sixth factor is included in the process to address the 
accident history of the motor carrier. This factor is the recordable 
accident rate, which the carrier has experienced during the past 12 
months. Recordable accident, as defined in 49 CFR 390.5, means an 
accident involving a commercial motor vehicle operating on a public 
road in interstate or intrastate commerce which results in a 
fatality; a bodily injury to a person who, as a result of the 
injury, immediately receives medical treatment away from the scene 
of the accident; or one or more motor vehicles incurring disabling 
damage as a result of the accident requiring the motor vehicle to be 
transported away from the scene by a tow truck or other motor 
vehicle.
    (2) Experience has shown that urban carriers, those motor 
carriers operating entirely within a radius of less than 100 air 
miles (normally urban areas), have a higher exposure to accident 
situations because of their environment and normally have higher 
accident rates.
    (3) The recordable accident rate will be used in determining the 
carrier's basic safety management controls in Factor 6, Accident. It 
will be used only when a carrier incurs two or more recordable 
accidents within the 12 months before the safety audit. An urban 
carrier (a carrier operating entirely within a radius of 100 air 
miles) with a recordable rate per million miles greater than 1.7 
will be deemed to have inadequate basic safety management controls 
for the accident factor. All other carriers with a recordable 
accident rate per million miles greater than 1.5 will be deemed to 
have inadequate basic safety management controls for the accident 
factor. The rates are the result of roughly doubling the United 
States national average accident rate in Fiscal Years 1994, 1995, 
and 1996.
    (4) FMCSA will continue to consider preventability when a new 
entrant contests the evaluation of the accident factor by presenting 
compelling evidence that the recordable rate is not a fair means of 
evaluating its accident factor. Preventability will be determined 
according to the following standard: ``If a driver, who exercises 
normal judgment and foresight, could have foreseen the possibility 
of the accident that in fact occurred, and avoided it by taking 
steps within his/her control which would not have risked causing 
another kind of mishap, the accident was preventable.''
    (k) Factor Ratings
    (1) The following table shows the five regulatory factors, parts 
of the FMCSRs and HMRs associated with each factor, and the accident 
factor. Each carrier's level of basic safety management controls 
with each factor is determined as follows:
    (i) Factor 1--General: Parts 390 and 387;
    (ii) Factor 2--Driver: Parts 382, 383, and 391;
    (iii) Factor 3--Operational: Parts 392 and 395;
    (iv) Factor 4--Vehicle: Parts 393, 396 and the Out of Service 
Rate;
    (v) Factor 5--Hazardous Materials: Part 171, 177, 180 and 397; 
and
    (vi) Factor 6--Accident: Recordable Accident Rate per Million 
Miles;
    (2) For paragraphs IV (k)(1)(i) through (v) (Factors 1 through 
5), if the combined violations of acute and or critical regulations 
for each factor is equal to three or more points, the carrier is 
determined not to have basic safety management controls for that 
individual factor.
    (3) For paragraphs IV (k)(1)(vi), if the recordable accident 
rate is greater than 1.7 recordable accidents per million miles for 
an urban carrier (1.5 for all other carriers), the carrier is 
determined to have inadequate basic safety management controls.
    (l) Notwithstanding FMCSA verification of the items listed in 
part III (a)(1) through (5) above, if the safety audit determines 
the carrier has inadequate basic safety management controls in at 
least three separate factors described in part III, the carrier's 
application for new entrant registration will be denied. For 
example, FMCSA evaluates a carrier finding:
    (1) One instance of noncompliance with a critical regulation in 
part 387 scoring one point for Factor 1;
    (2) Two instances of noncompliance with acute regulations in 
part 382 scoring three points for Factor 2;
    (3) Three instances of noncompliance with critical regulations 
in part 396 scoring three points for Factor 4; and
    (4) Three instances of noncompliance with acute regulations in 
parts 171 and 397 scoring four and one-half (4.5) points for Factor 
5.
    Under this example, the carrier will not receive new entrant 
registration because it scored three or more points for Factors 2, 
4, and 5 and FMCSA determined the carrier had

[[Page 76754]]

inadequate basic safety management controls in at least three 
separate factors.
    20. Amend part 385 by adding a new Subpart I consisting of new 
Sec. Sec.  385.701 through 385.717 to read as follows:
Subpart I--Safety Monitoring System for Non-North America-Domiciled 
Carriers
Sec.
385.701 Definitions.
385.703 Safety monitoring system.
385.705 Expedited action.
385.707 The compliance review.
385.709 Suspension and revocation of non-North America-domiciled 
carrier registration.
385.711 Administrative review.
385.713 Reapplying for new entrant registration.
385.715 Duration of safety monitoring system.
385.717 Applicability of safety fitness and enforcement procedures.

Subpart I--Safety Monitoring System for Non-North American Carriers


Sec.  385.701  Definitions.

    Compliance review means a compliance review as defined in Sec.  
385.3 of this part.
    New entrant registration means the provisional registration under 
part 385, subpart H of this subchapter that FMCSA grants to a non-North 
America-domiciled motor carrier to provide interstate transportation 
within the United States. It will be revoked if the registrant is not 
assigned a Satisfactory safety rating following a compliance review 
conducted during the safety monitoring period established in this 
subpart.
    Non-North America-domiciled motor carrier means a motor carrier of 
property or passengers whose principal place of business is located in 
a country other than the United States, Canada or Mexico.


Sec.  385.703  Safety monitoring system.

    (a) General. Each non-North America-domiciled carrier new entrant 
will be subject to an oversight program to monitor its compliance with 
applicable Federal Motor Carrier Safety Regulations (FMCSRs), Federal 
Motor Vehicle Safety Standards (FMVSSs), and Hazardous Materials 
Regulations (HMRs).
    (b) Roadside monitoring. Each non-North America-domiciled carrier 
new entrant will be subject to intensified monitoring through frequent 
roadside inspections.
    (c) Safety decal. Each non-North America-domiciled carrier must 
have on every commercial motor vehicle it operates in the United States 
a current decal attesting to a satisfactory North American Standard 
Commercial Vehicle inspection by a certified FMCSA or State inspector 
pursuant to 49 CFR Sec.  350.201(k). This requirement applies during 
the new entrant operating period and for three years after the 
carrier's registration becomes permanent following removal of its new 
entrant designation.
    (d) Compliance review. FMCSA will conduct a compliance review on a 
non-North America-domiciled carrier within 18 months after FMCSA issues 
the carrier a USDOT Number.


Sec.  385.705  Expedited action.

    (a) A non-North America-domiciled motor carrier committing any of 
the following actions identified through roadside inspections, or by 
any other means, may be subjected to an expedited compliance review, or 
may be required to submit a written response demonstrating corrective 
action:
    (1) Using drivers not possessing, or operating without, a valid 
CDL, Canadian Commercial Driver's License, or Mexican Licencia Federal 
de Conductor. An invalid commercial driver's license includes one that 
is falsified, revoked, expired, or missing a required endorsement.
    (2) Operating vehicles that have been placed out of service for 
violations of the Federal Motor Carrier safety regulations without 
taking the necessary corrective action.
    (3) Involvement in, due to carrier act or omission, a hazardous 
materials incident within the United States involving:
    (i) A highway route controlled quantity of a Class 7 (radioactive) 
material as defined in Sec.  173.403 of this title;
    (ii) Any quantity of a Class 1, Division 1.1, 1.2, or 1.3 explosive 
as defined in Sec.  173.50 of this title; or
    (iii) Any quantity of a poison inhalation hazard Zone A or B 
material as defined in Sec. Sec.  173.115, 173.132, or 173.133 of this 
title.
    (4) Involvement in, due to carrier act or omission, two or more 
hazardous material incidents occurring within the United States and 
involving any hazardous material not listed in paragraph (a)(3) of this 
section and defined in chapter I of this title.
    (5) Using a driver who tests positive for controlled substances or 
alcohol or who refuses to submit to required controlled substances or 
alcohol tests.
    (6) Operating within the United States a motor vehicle that is not 
insured as required by part 387 of this chapter.
    (7) Having a driver or vehicle out-of-service rate of 50 percent or 
more based upon at least three inspections occurring within a 
consecutive 90-day period.
    (b) Failure to respond to an agency demand for a written response 
demonstrating corrective action within 30 days will result in the 
suspension of the carrier's new entrant registration until the required 
showing of corrective action is submitted to the FMCSA.
    (c) A satisfactory response to a written demand for corrective 
action does not excuse a carrier from the requirement that it undergo a 
compliance review during the new entrant registration period.


Sec.  385.707  The compliance review.

    (a) The criteria used in a compliance review to determine whether a 
non-North America-domiciled new entrant exercises the necessary basic 
safety management controls are specified in Appendix B to this part.
    (b) Satisfactory Rating. If FMCSA assigns a non-North America-
domiciled carrier a Satisfactory rating following a compliance review 
conducted under this subpart, FMCSA will provide the carrier written 
notice as soon as practicable, but not later than 45 days after the 
completion of the compliance review. The carrier's registration will 
remain in provisional status and its on-highway performance will 
continue to be closely monitored for the remainder of the 18-month new 
entrant registration period.
    (c) Conditional Rating. If FMCSA assigns a non-North America-
domiciled carrier a Conditional rating following a compliance review 
conducted under this subpart, it will initiate a revocation proceeding 
in accordance with Sec.  385.709 of this subpart. The carrier's new 
entrant registration will not be suspended prior to the conclusion of 
the revocation proceeding.
    (d) Unsatisfactory Rating. If FMCSA assigns a non-North America-
domiciled carrier an Unsatisfactory rating following a compliance 
review conducted under this subpart, it will initiate a suspension and 
revocation proceeding in accordance with Sec.  385.709 of this subpart.


Sec.  385.709  Suspension and revocation of non-North America-domiciled 
carrier registration.

    (a) If a carrier is assigned an ``Unsatisfactory'' safety rating 
following a compliance review conducted under this subpart, FMCSA will 
provide the carrier written notice, as soon as practicable, that its 
registration will be suspended effective 15 days from the service date 
of the notice unless the carrier demonstrates, within 10 days of the 
service date of the notice, that the

[[Page 76755]]

compliance review contains material error.
    (b) For purposes of this section, material error is a mistake or 
series of mistakes that resulted in an erroneous safety rating.
    (c) If the carrier demonstrates that the compliance review 
contained material error, its new entrant registration will not be 
suspended. If the carrier fails to show a material error in the 
compliance review, FMCSA will issue an Order:
    (1) Suspending the carrier's new entrant registration and requiring 
it to immediately cease all further operations in the United States; 
and
    (2) Notifying the carrier that its new entrant registration will be 
revoked unless it presents evidence of necessary corrective action 
within 30 days from the service date of the Order.
    (d) If a carrier is assigned a ``Conditional'' rating following a 
compliance review conducted under this subpart, the provisions of 
paragraphs (a) through (c) of this section will apply, except that its 
new entrant registration will not be suspended under paragraph (c)(1) 
of this section.
    (e) If a carrier subject to this subpart fails to provide the 
necessary documents for a compliance review upon reasonable request, or 
fails to submit evidence of the necessary corrective action as required 
by Sec.  385.705 of this subpart, FMCSA will provide the carrier with 
written notice, as soon as practicable, that its new entrant 
registration will be suspended 15 days from the service date of the 
notice unless it provides all necessary documents or information. This 
suspension will remain in effect until the necessary documents or 
information are produced and:
    (1) The carrier is rated Satisfactory after a compliance review; or
    (2) FMCSA determines, following review of the carrier's response to 
a demand for corrective action under Sec.  385.705, that the carrier 
has taken the necessary corrective action.
    (f) If a carrier commits any of the actions specified in Sec.  
385.705(a) of this subpart after the removal of a suspension issued 
under this section, the suspension will be automatically reinstated. 
FMCSA will issue an Order requiring the carrier to cease further 
operations in the United States and demonstrate, within 15 days from 
the service date of the Order, that it did not commit the alleged 
action(s). If the carrier fails to demonstrate that it did not commit 
the action(s), FMCSA will issue an Order revoking its new entrant 
registration.
    (g) If FMCSA receives credible evidence that a carrier has operated 
in violation of a suspension order issued under this section, it will 
issue an Order requiring the carrier to show cause, within 10 days of 
the service date of the Order, why its new entrant registration should 
not be revoked. If the carrier fails to make the necessary showing, 
FMCSA will revoke its registration.
    (h) If a non-North America-domiciled motor carrier operates a 
commercial motor vehicle in violation of a suspension or out-of-service 
order, it is subject to the penalty provisions in 49 U.S.C. 
521(b)(2)(A), as adjusted by inflation, not to exceed amounts for each 
offense under part 386, Appendix B of this subchapter.
    (i) Notwithstanding any provision of this subpart, a carrier 
subject to this subpart is also subject to the suspension and 
revocation provisions of 49 U.S.C. 13905 for repeated violations of DOT 
regulations governing its motor carrier operations.


Sec.  385.711  Administrative review.

    (a) A non-North America-domiciled motor carrier may request FMCSA 
to conduct an administrative review if it believes FMCSA has committed 
an error in assigning a safety rating or suspending or revoking the 
carrier's new entrant registration under this subpart.
    (b) The carrier must submit its request in writing, in English, to 
the Associate Administrator for Enforcement and Program Delivery, 
Federal Motor Carrier Safety Administration, 400 Seventh Street, SW., 
Washington DC 20590.
    (c) The carrier's request must explain the error it believes FMCSA 
committed in assigning the safety rating or suspending or revoking the 
carrier's new entrant registration and include any information or 
documents that support its argument.
    (d) FMCSA will complete its administrative review no later than 10 
days after the carrier submits its request for review. The Associate 
Administrator's decision will constitute the final agency action.


Sec.  385.713  Reapplying for new entrant registration.

    (a) A non-North America-domiciled motor carrier whose provisional 
new entrant registration has been revoked may reapply for new entrant 
registration no sooner than 30 days after the date of revocation.
    (b) The non-North America-domiciled motor carrier will be required 
to initiate the application process from the beginning. The carrier 
will be required to demonstrate how it has corrected the deficiencies 
that resulted in revocation of its registration and how it will ensure 
that it will have adequate basic safety management controls. It will 
also have to undergo a pre-authorization safety audit.


Sec.  385.715  Duration of safety monitoring system.

    (a) Each non-North America-domiciled carrier subject to this 
subpart will remain in the safety monitoring system for at least 18 
months from the date FMCSA issues its new entrant registration, except 
as provided in paragraphs (c) and (d) of this section.
    (b) If, at the end of this 18-month period, the carrier's most 
recent safety rating was Satisfactory and no additional enforcement or 
safety improvement actions are pending under this subpart, the non-
North America-domiciled carrier's new entrant registration will become 
permanent.
    (c) If, at the end of this 18-month period, FMCSA has not been able 
to conduct a compliance review, the carrier will remain in the safety 
monitoring system until a compliance review is conducted. If the 
results of the compliance review are satisfactory, the carrier's new 
entrant registration will become permanent.
    (d) If, at the end of this 18-month period, the carrier's new 
entrant registration is suspended under Sec.  385.709(a) of this 
subpart, the carrier will remain in the safety monitoring system until 
FMCSA either:
    (1) Determines that the carrier has taken corrective action; or
    (2) Completes measures to revoke the carrier's new entrant 
registration under Sec.  385.709(c) of this subpart.


Sec.  385.717  Applicability of safety fitness and enforcement 
procedures.

    At all times during which a non-North America-domiciled motor 
carrier is subject to the safety monitoring system in this subpart, it 
is also subject to the general safety fitness procedures established in 
subpart A of this part and to compliance and enforcement procedures 
applicable to all carriers regulated by the FMCSA.
    21. Amend Appendix A to part 385, section III to add new paragraph 
(i) to read as follows:

Appendix A to Part 385--Explanation of Safety Audit Evaluation Criteria

* * * * *

III. Determining if the Carrier Has Basic Safety Management 
Controls

* * * * *
    (i) FMCSA also gathers information on compliance with applicable 
household goods and Americans with Disabilities Act of 1990 
requirements, but failure to comply with these requirements does not 
affect the

[[Page 76756]]

determination of the adequacy of basic safety management controls.
* * * * *

PART 387--MINIMUM LEVELS OF FINANCIAL RESPONSIBILITY FOR MOTOR 
CARRIERS

    22. The authority citation for part 387 continues to read as 
follows:

    Authority: 49 U.S.C. 13101, 13301, 13906, 14701, 31138, and 
31139; and 49 CFR 1.73.
    23. Amend Sec.  387.7 by revising paragraph (e) to read as follows:


Sec.  387.7  Financial responsibility required.

* * * * *
    (e)(1) The proof of minimum levels of financial responsibility 
required by this section shall be considered public information and be 
produced for review upon reasonable request by a member of the public.
    (2) In addition to maintaining proof of financial responsibility as 
required by subparagraph (d) of this section, non-North America-
domiciled private and for-hire motor carriers shall file evidence of 
financial responsibility with FMCSA in accordance with the requirements 
of subpart C of this part.
* * * * *
    24. Amend Sec.  387.31 by revising paragraph (e) to read as 
follows:


Sec.  387.31  Financial responsibility required.

* * * * *
    (e)(1) The proof of minimum levels of financial responsibility 
required by this section shall be considered public information and be 
produced for review upon reasonable request by a member of the public.
    (2) In addition to maintaining proof of financial responsibility as 
required by subparagraph (d) of this section, non-North America-
domiciled private and for-hire motor carriers shall file evidence of 
financial responsibility with FMCSA in accordance with the requirements 
of subpart C of this part.
* * * * *

PART 390--FEDERAL MOTOR CARRIER SAFETY REGULATIONS; GENERAL

    25. The authority citation for part 390 continues to read as 
follows:

    Authority: 49 U.S.C. 508, 13301, 13902, 31133, 31136, 31502, 
31504, and sec. 204, Pub. L. 104-88, 109 Stat. 803, 941 (49 U.S.C. 
701 note); sec. 114, Pub. L. 103-311, 108 Stat. 1673, 1677; sec. 
217, Pub. L. 106-159, 113 Stat. 1748, 1767; and 49 CFR 1.73.

    26. Revise Sec.  390.19 to read as follows:


Sec.  390.19  Motor carrier identification report.

    (a) Applicability. Each motor carrier must file the Form MCS-150 or 
Form MCS-150B with FMCSA as follows:
    (1) A U.S., Canada-, Mexico-, or non-North America-domiciled motor 
carrier conducting operations in interstate commerce must file a Motor 
Carrier Identification Report, Form MCS-150.
    (2) A motor carrier conducting operations in intrastate commerce 
and requiring a Safety Permit under 49 CFR part 385, subpart E of this 
chapter must file the Combined Motor Carrier Identification Report and 
HM Permit Application, Form MCS-150B.
    (b) Filing schedule. Each motor carrier must file the appropriate 
form under paragraph (a) of this section at the following times:
    (1) Before it begins operations; and
    (2) Every 24 months, according to the following schedule:

------------------------------------------------------------------------
          USDOT Number ending in               Must file by last day of
------------------------------------------------------------------------
1.........................................  January.
2.........................................  February.
3.........................................  March.
4.........................................  April.
5.........................................  May.
6.........................................  June.
7.........................................  July.
8.........................................  August.
9.........................................  September.
0.........................................  October.
------------------------------------------------------------------------

    (3) If the next-to-last digit of its USDOT Number is odd, the motor 
carrier shall file its update in every odd-numbered calendar year. If 
the next-to-last digit of the USDOT Number is even, the motor carrier 
shall file its update in every even-numbered calendar year.
    (c) Availability of forms. The forms described under paragraph (a) 
of this section and complete instructions are available from the FMCSA 
Web site at http://www.fmcsa.dot.gov for (Keyword ``MCS-150,'' or 
``MCS-150B'') from all FMCSA Service Centers and Division offices 
nationwide; or by calling 1-800-832-5660.
    (d) Where to file. The required form under paragraph (a) of this 
section must be filed with FMCSA Office of Information Management. The 
form may be filed electronically according to the instructions at the 
agency's web site, or it may be sent to Federal Motor Carrier Safety 
Administration, Office of Information Technology, MC-RIO, 400 Seventh 
Street, SW, Washington, DC 20590.
    (e) Special instructions for for-hire motor carriers. A for-hire 
motor carrier should submit the Form MCS-150, or Form MCS-150B, along 
with its application for operating authority (Form OP-1, OP-1(MX), OP-
1(NNA) or OP-2), to the appropriate address referenced on that form, or 
may submit it electronically or by mail separately to the address 
mentioned in paragraph (d) of this section.
    (f) Only the legal name or a single trade name of the motor carrier 
may be used on the forms under paragraph (a) of this section (Form MCS-
150 or MCS-150B).
    (g) A motor carrier that fails to file the form required under 
paragraph (a) of this section, or furnishes misleading information or 
makes false statements upon the form, is subject to the penalties 
prescribed in 49 U.S.C. 521(b)(2)(B).
    (h)(1) Upon receipt and processing of the form described in 
paragraph (a) of this section, FMCSA will issue the motor carrier an 
identification number (USDOT Number).
    (2) The following applicants must additionally pass a pre-
authorization safety audit as described below before being issued a 
USDOT Number:
    (i) A Mexico-domiciled motor carrier seeking to provide 
transportation of property or passengers in interstate commerce between 
Mexico and points in the United States beyond the municipalities and 
commercial zones along the United States-Mexico international border 
must pass the pre-authorization safety audit under Sec.  365.507 of 
this subchapter. The agency will not issue a USDOT Number until 
expiration of the protest period provided in Sec.  365.115 of this 
subchapter or--if a protest is received--after FMCSA denies or rejects 
the protest.
    (ii) A non-North America-domiciled motor carrier seeking to provide 
transportation of property or passengers in interstate commerce within 
the United States must pass the pre-authorization safety audit under 
Sec.  385.607(c) of this subchapter. If the carrier also requests 
operating authority under part 365 of this chapter, the agency will not 
issue a USDOT Number until expiration of the protest period or--if a 
protest is received--after FMCSA denies or rejects the protest.
    (3) The motor carrier must display the number on each self-
propelled CMV, as defined in Sec.  390.5, along with the additional 
information required by Sec.  390.21.
    (i) A motor carrier that registers its vehicles in a State that 
participates in the Performance and Registration Information Systems 
Management (PRISM) program (authorized under section 4004 of the 
Transportation Equity Act for the 21st Century [(Pub. L. 105-178, 112 
Stat. 107]) is exempt from the requirements of this section,

[[Page 76757]]

provided it files all the required information with the appropriate 
State office.

    Issued on: December 11, 2006.
John H. Hill,
Administrator.

    Note: The following form will not appear in the Code of Federal 
Regulations.

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[FR Doc. 06-9759 Filed 12-20-06; 8:45 am]
BILLING CODE 4910-EX-C