[Federal Register Volume 77, Number 81 (Thursday, April 26, 2012)]
[Rules and Regulations]
[Pages 24863-24872]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2012-10162]


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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

49 CFR Part 386

[Docket No. FMCSA-2011-0259]
RIN 2126-AB38


Amendment to Agency Rules of Practice

AGENCY: Federal Motor Carrier Safety Administration, DOT.

ACTION: Final rule.

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SUMMARY: The Federal Motor Carrier Safety Administration (FMCSA) amends 
its Rules of Practice for Motor Carrier, Intermodal Equipment Provider, 
Broker, Freight Forwarder, and Hazardous Materials proceedings. The 
Agency clarifies that paying the full proposed civil penalty in an 
enforcement proceeding, either in response to a Notice of Claim (NOC) 
or later in the proceeding, does not allow respondents to unilaterally 
avoid an admission of liability for the violations charged. 
Additionally, the Agency establishes procedures for issuing out-of-
service orders to motor carriers, intermodal equipment providers, 
brokers, and freight forwarders it determines are reincarnations of 
other entities with a history of failing to comply with statutory or 
regulatory requirements; these procedures will provide for an 
administrative review before the out-of-service order takes effect. 
Finally, the Agency establishes a process for consolidating Agency 
records of reincarnated companies with their predecessor entities.

DATES: This rule is effective May 29, 2012.

ADDRESSES: For access to the docket to read background documents, 
including those referenced in this document, or to read comments 
received, go to http://www.regulations.gov at any time and insert 
``FMCSA-2011-0259'' in the ``Keyword'' box, and then click ``Search.'' 
You may also view the docket online by visiting the Docket Management 
Facility in Room W12-140, DOT Building, 1200 New Jersey Avenue SE., 
Washington, DC, between 9 a.m. and 5 p.m., ET Monday through Friday, 
except Federal holidays.
    Anyone is able to search the electronic form for all comments 
received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review the 
U.S. Department of Transportation's (DOT) complete Privacy Act 
Statement in the Federal Register published on January 17, 2008 (73 FR 
3316), or you may visit http://edocket.acces.gpo.gov/2008/pdf/E8-785.pdf.

FOR FURTHER INFORMATION CONTACT: Sabrina Redd, Office of Chief Counsel, 
Federal Motor Carrier Safety Administration, 1200 New Jersey Avenue 
SE., Washington, DC 20590-0001, by telephone at (202) 366-6424 or via 
email at [email protected]. Office hours are from 9 a.m. to 5 p.m. 
ET, Monday through Friday, except Federal holidays. If you have 
questions on viewing or submitting material to the docket, contact 
Renee V. Wright, Program Manager, Docket Operations, telephone (202) 
366-9826.

SUPPLEMENTARY INFORMATION: 

Table of Contents for Preamble

I. Abbreviations
II. Legal Basis for the Rulemaking
III. Background
    A. Section 386.18
    B. Section 386.73
IV. Discussion of Comments
    A. Comments to Section 386.18
    B. Comments to Section 386.73
    C. Small Business Impact
V. Discussion of Rule
VI. Regulatory Analyses

I. Abbreviations

Advocates Advocates for Highway and Auto Safety
AMSA American Moving and Storage Association
ATA American Trucking Associations, Inc.
HMSP Hazardous Materials Safety Permit Program
IME Institute of Makers of Explosives
NATC North American Transportation Consultants, Inc.
OOIDA Owner-Operator Independent Drivers Association
TIA Transportation Intermediaries Association

II. Legal Basis for the Rulemaking

    Congress has delegated certain powers to regulate interstate 
commerce to DOT in numerous pieces of legislation, most notably in 
section 6 of the Department of Transportation Act (DOT Act) (Pub. L. 
89-670, 80 Stat. 931 (1966)). Section 6(e)(6)(C) of the DOT Act 
transferred to DOT the authority of the Interstate Commerce Commission 
(ICC) to regulate the qualifications and maximum hours of service of 
motor carrier employees, the safety of operations, and the equipment of 
motor carriers in interstate commerce. This authority, first granted to 
the ICC in the Motor Carrier Act of 1935 (Pub. L. 74-255, 49 Stat. 
543), now appears in chapter 315 of title 49 of the U.S. Code. The 
regulations issued under this authority became known as the Federal 
Motor Carrier Safety Regulations (FMCSRs), appearing generally at 49 
CFR parts 350-399. The administrative powers to enforce chapter 315 
were also transferred from the ICC to the DOT in 1966 and appear in 
chapter 5 of title 49 of the U.S. Code. The Secretary of DOT 
(Secretary) delegated oversight of these provisions

[[Page 24864]]

to the FHWA, the predecessor agency to FMCSA.
    Between 1984 and 1999, a number of statutes added to FHWA's 
authority. Various statutes authorize the enforcement of the FMCSRs, 
the Hazardous Materials Regulations (HMRs), and the Federal Motor 
Carrier Commercial Regulations (FMCCRs) and provide both civil and 
criminal penalties for violations. These statutes include the Motor 
Carrier Safety Act of 1984 (Pub. L. 98-554, 98 Stat. 2832), codified at 
49 U.S.C. Chapter 311, Subchapter III; the Commercial Motor Vehicle 
Safety Act of 1986 (Pub. L. 99-570, 100 Stat. 3207-170), codified at 49 
U.S.C. Chapter 313; the Hazardous Materials Transportation Uniform 
Safety Act of 1990 (Pub. L. 101-615, 104 Stat. 3244), codified at 49 
U.S.C. Chapter 51; and the ICC Termination Act of 1995 (Pub. L. 104-88, 
109 Stat. 803), codified at 49 U.S.C. Chapters 135-149. Specifically, 
the Secretary is authorized to prescribe regulations ensuring that 
commercial motor vehicles (CMVs) are operated safely under 49 U.S.C. 
31136 (a)(1), and to determine whether an owner or operator is fit to 
safely operate CMVs under 49 U.S.C 31144. In order to ensure that 
carriers are fit to safely operate, it is necessary to monitor the 
safety performance history of individual carriers. FMCSA needs to 
monitor the safety performance history of carriers who ``reincarnate'' 
as a new carrier when faced with enforcement action in order to focus 
Agency enforcement efforts. This rule will ensure that carriers who 
have a proven history of unsafe operations are not able to evade 
regulation by simply forming a new company or obtaining new 
registration.

III. Background

    On December 13, 2011, FMCSA published a notice of proposed 
rulemaking (76 FR 77458), with the intent to amend its rules of 
practice for motor carrier, intermodal equipment provider, broker, 
freight forwarder, and hazardous materials proceedings. FMCSA received 
seven public comment submissions regarding the NPRM. These comments are 
discussed in part IV, Discussion of Comments.

A. Section 386.18

    FMCSA published a comprehensive revision of its Rules of Practice 
on May 18, 2005. This revision can be found in 49 CFR part 386 (70 FR 
28467). The revision was intended to increase the efficiency of Agency 
administrative enforcement procedures, enhance due process, improve 
public understanding of the Agency's procedures, and accommodate recent 
programmatic changes.
    Under Sec.  386.11(c) of the revised Rules of Practice, civil 
penalty enforcement proceedings are initiated through service of an 
NOC, which is usually issued by the FMCSA Division Administrator for 
the State in which the respondent maintains its principal place of 
business. The NOC, which is usually based on a compliance review or 
other type of investigation or enforcement intervention, sets forth the 
provisions of law allegedly violated by the respondent and the 
underlying facts pertinent to the alleged violations; proposes a civil 
penalty; and provides information regarding the time, form, and manner 
whereby the respondent could pay, contest, or otherwise seek resolution 
of the claim. Prior to 2005, the Rules of Practice were silent on 
whether payment of the proposed civil penalty in response to the NOC, 
or at a subsequent stage of the proceeding, constituted an admission of 
the violations alleged in the NOC.
    The 2005 revision of the Rules of Practice added a new Sec.  386.18 
titled ``Payment of the claim.'' That section provided that payment of 
the full amount claimed may be made at any time before issuance of a 
Final Agency Order. After the issuance of a Final Agency Order, claims 
are subject to interest, penalties, and administrative charges in 
accordance with 31 U.S.C. 3717; 49 CFR part 89; and 31 CFR 901.9. If 
respondent elects to pay the full amount as its response to the Notice 
of Claim, payment must be served upon the Field Administrator at the 
Service Center designated in the Notice of Claim within 30 days 
following service of the Notice of Claim. No written reply is necessary 
if respondent elects the payment option during the 30-day reply period. 
Failure to serve full payment within 30 days of service of the Notice 
of Claim when this option has been chosen may constitute a default and 
may result in the Notice of Claim, including the civil penalty assessed 
by the Notice of Claim, becoming the Final Agency Order in the 
proceeding pursuant to Sec.  386.14(c). Unless objected to in writing, 
submitted at the time of payment, payment of the full amount in 
response to the Notice of Claim constitutes an admission by the 
respondent of all facts alleged in the Notice of Claim. Payment waives 
respondent's opportunity to further contest the claim, and will result 
in the Notice of Claim becoming the Final Agency Order.
    In a small number of enforcement proceedings, respondents paid the 
full amount of the claim with written objection, either in their reply 
to the NOC or at a later stage of the proceeding. In such cases, the 
respondents argued that payment with written objection terminated the 
proceeding without an admission of liability. The FMCSA Field 
Administrators, who were responsible for prosecuting enforcement 
proceedings before the Agency, contended that respondents could not 
unilaterally terminate an enforcement proceeding by making full payment 
without an admission of liability.
    In a case decided on November 3, 2010, In the Matter of Homax Oil 
Sales, Inc., Docket No. FMCSA-2006-26000, Order Denying Petition for 
Reconsideration (Homax), FMCSA's Assistant Administrator reasoned that 
allowing respondents to unilaterally terminate proceedings by paying 
the proposed penalty in full and lodging an objection under Sec.  
386.18(c) was inconsistent with the Agency's enforcement policy and 
section 222 of the Motor Carrier Safety Improvement Act (MCSIA), which 
requires that the Agency assess the maximum statutory penalty for each 
violation of law by any person ``who is found to have committed a 
pattern of violations of critical or acute regulations issued to carry 
out such a law or to have previously committed the same or related 
violation of critical or acute regulations issued to carry out such a 
law.'' The Assistant Administrator concluded that if a carrier was 
allowed to unilaterally terminate an enforcement proceeding without an 
admission, the case could not count as prior history for future civil 
penalty calculations under section 222 of MCSIA or under 49 U.S.C. 
521(b)(2)(D), which requires the Agency to consider, among other 
things, a respondent's history of prior offenses. Allowing unilateral 
termination of a proceeding by a respondent without an admission would 
permit carriers with abundant financial resources to repeatedly violate 
the Agency's regulations without facing escalating civil penalties 
despite a history of noncompliance with the regulations. The Assistant 
Administrator acknowledged that the regulatory text of Sec.  386.18(c) 
was less than clear regarding the consequences of full payment with 
written objection and recommended that the meaning of the paragraph be 
clarified through rulemaking.
    As was noted in Homax, in an April 1996 Notice of Proposed 
Rulemaking (NPRM), FHWA proposed the following language with respect to 
the full payment issue: ``Unless otherwise provided in writing by 
mutual consent of the parties, payment and/or

[[Page 24865]]

compliance with the order constitutes an admission of all facts alleged 
in the notice of violation [called a Notice of Claim under the current 
Rules of Practice] and a waiver of the respondent's opportunity to 
contest the claim, and results in the notice of violation becoming the 
final agency order.'' (61 FR 18865, Apr. 29, 1996)
    FHWA's reasoning for this language was that ``future agency 
enforcement actions may be based on, and certain consequences may flow 
from, prior and continued violations of the safety regulations.'' (61 
FR 18875-76, Apr. 29, 1996)
    FMCSA revised this proposal, renumbered as Sec.  386.18(c), in an 
October 2004 Supplemental Notice of Proposed Rulemaking (SNPRM) (69 FR 
61628, Oct. 20, 2004) to read as follows: ``Unless objected to in 
writing, payment of the full amount in its reply constitutes an 
admission by the respondent of all facts alleged in the notice of 
claim. Payment waives respondent's opportunity to further contest the 
claim, and will result in the notice of claim becoming the final agency 
order.''
    This proposed change was intended to make ``it clear that, unless 
the parties otherwise agree in writing, respondent's payment of the 
full claim amount as its reply to the notice of claim constitutes an 
admission.'' (69 FR 61622)
    The final rule published on May 18, 2005 (70 FR 28467), adopted 
that provision with little change. In the 2010 Homax Order, the 
Assistant Administrator concluded that, notwithstanding the removal of 
the language requiring mutual consent of the parties from the 
regulatory text, the preamble of the rule showed that the Agency 
intended to adopt the mutual consent requirement originally proposed in 
1996.
    In a subsequent case, In the Matter of Associated Pipe Contractors, 
Inc., Docket No. FMCSA-2008-0159, Order Terminating Proceeding and 
Closing Docket, January 10, 2011, the Agency addressed the implications 
of full payment of the proposed civil penalty at any time before 
issuance of a Final Agency Order, in accordance with 49 CFR 386.18(a). 
In Associated Pipe Contractors, the carrier paid the full penalty with 
written objection several months after contesting the NOC and 
requesting administrative adjudication. Section 386.18(a), which 
applied to this situation rather than Section 386.18(c), was silent 
regarding whether a carrier could unilaterally terminate an enforcement 
proceeding without an admission of liability under those circumstances. 
The Agency concluded that the same concerns expressed in the Homax 
decision apply to such a payment and that Sec.  386.18(a) should be 
clarified to be consistent with that decision.
    To address these concerns, therefore, FMCSA proposed to revise its 
Rules of Practice by amending 49 CFR 386.18(a) and (c) to clarify that 
payment of the full amount of the proposed civil penalty constitutes an 
admission of all facts alleged in the NOC, unless otherwise agreed by 
the parties.

B. Section 386.73

    FMCSA discovered that a number of motor carriers have submitted new 
applications for registration, often under a new name, in order to 
continue operating after having been placed out of service for safety-
related reasons; to avoid paying civil penalties; to circumvent denial 
of applications for operating authority based on a determination that 
they were not fit, willing, or able to comply with the applicable 
statutes or regulations; or to otherwise avoid a negative compliance 
history. Other motor carriers attempt to avoid enforcement or other 
consequences associated with a negative compliance history by creating 
or using an affiliated company under common operational control. They 
then shift customers, vehicles, drivers, and other operational 
activities to that affiliated company when FMCSA places one of the 
commonly controlled companies out of service. The practice of 
``reincarnating'' as a new carrier or of operating affiliated companies 
to circumvent Agency enforcement actions and avoid a negative 
compliance history or enforcement action has created an unacceptable 
risk of harm to the public because it results in the continued 
operation of at-risk carriers and thwarts FMCSA's ability to carry out 
its safety mission.
    The danger posed by ``reincarnation'' became evident following a 
fatal bus crash in Sherman, Texas in 2008. Investigation revealed that 
the motor carrier involved did not have operating authority from FMCSA. 
Instead, it had an application for authority pending with the Agency, 
but was a reincarnation of another bus company that FMCSA had recently 
placed out of service. Following the Sherman, Texas bus crash, FMCSA 
began a vetting process that involves a comprehensive review of 
applications for passenger carrier and household goods operating 
authority to determine whether the applicants are reincarnations or 
affiliates of other motor carriers with negative compliance histories 
or are otherwise not fit, willing, and able to comply with the 
applicable regulations. Although the vetting program is a significant 
improvement to the operating authority review process, it is not a 
complete solution to the reincarnation problem. Accordingly, in this 
rule FMCSA establishes new procedures to prohibit reincarnated or 
affiliated carriers from successfully evading accountability for their 
compliance history.
    FMCSA is authorized to suspend, amend, or revoke a motor carrier's 
registration for willful failure to comply with applicable safety 
regulations, an FMCSA order, or a condition of its registration 
pursuant to 49 U.S.C. 13905. Motor carriers that obtain registration by 
creating a new company or an affiliate company for the purpose of 
avoiding FMCSA orders, regulations, or enforcement actions procure the 
registration by fraud--by knowingly misrepresenting and/or withholding 
material information. FMCSA has authority to sanction these motor 
carriers, which have already demonstrated an unwillingness or inability 
to comply with applicable safety regulations, by suspending, amending, 
or revoking their registration and/or by imposing applicable civil 
penalties.
    To address these challenges, FMCSA proposed to revise its Rules of 
Practice by adding new section 386.73. This section authorizes FMCSA to 
issue out-of-service orders to motor carriers, intermodal equipment 
providers, brokers, and, freight forwarders determined to be 
reincarnated or operating as affiliates to avoid enforcement action or 
a negative compliance history, and it would provide a mechanism for 
administrative review of such orders. The rule would also establish 
procedures to consolidate the compliance records of reincarnated or 
affiliated entities. These procedures more fully implement the Agency's 
current authority to prohibit unsafe entities from operating while, at 
the same time, providing due process for companies that seek to 
challenge a finding that they are reincarnated.

IV. Discussion of Comments

    FMCSA received seven comments in response to the NPRM (76 FR 77458, 
Dec. 13, 2011). The commenters included a highway safety advocacy 
organization, a transportation consultant, and associations 
representing third party logistics professionals, moving and storage 
companies, explosives manufacturers and distributors, trucking 
companies, and independent owner operators.

[[Page 24866]]

    Overall, most commenters supported FMCSA's objectives for changing 
its rules of practice. Several commenters expressed concerns with the 
Agency's proposal regarding the payment of claims. A couple of 
commenters strongly supported the proposed provisions for 
``reincarnated carriers.'' These comments are discussed in greater 
detail below.

A. Comments to Section 386.18

Comments
    The Agency received three comments in response to its proposal to 
amend 49 CFR 386.18(a) and (c) to clarify that full payment of a 
proposed civil penalty at any stage of an enforcement proceeding will 
be considered an admission of liability, unless the parties otherwise 
agree in writing. The Owner-Operator Independent Drivers Association 
(OOIDA) supported this proposal, stating that ``[t]he proposed 
modification shifts the focus back to safety, and does so while 
affording full due process to those responding to claims.'' OOIDA 
noted, however, that the elimination of a ``nolo contendre plea option 
(payment without admitting guilt)'' would likely increase the number of 
negotiated or litigated claims and require additional Agency resources 
to handle this increase.
    The American Trucking Associations, Inc. (ATA) had reservations 
about, and the American Moving and Storage Association (AMSA) opposed, 
the proposed amendments to Sec.  386.18. Although ATA stated that it 
generally agrees with the safety objectives underlying the proposal, it 
believes that the proposal would result in a ``reversal of the 
increased efficiency in enforcement procedures that [the] Rules of 
Practice were intended to achieve'' and divert FMCSA enforcement 
resources from high-risk carriers. ATA also urges that FMCSA establish 
a clear and reasonable policy directing Agency officials to agree to 
settlements of enforcement claims without admissions of guilt in 
appropriate cases where there is not likely to be a significantly 
deleterious effect on public safety. AMSA believes that the proposal, 
by eliminating the nolo contendre plea option, is unfair to innocent 
carriers that make a business decision to pay the penalty in order to 
resolve a case in the most cost-efficient manner. AMSA also believes 
that the proposal may result in an increased burden on FMCSA resources 
because carriers are less likely to settle cases where an admission of 
liability could result in civil litigation or personal injury suits 
arising out of the admitted violations.
FMCSA Response
    The FMCSA is committed to the expeditious resolution of enforcement 
proceedings, and continues to believe that allowing unilateral 
termination of such proceedings without an admission of liability 
conflicts with important Agency policies and statutory mandates 
designed to hold carriers accountable for regulatory violations when 
calculating penalties in potential future enforcement cases. This is 
particularly important in the context of maximum civil penalty cases 
subject to section 222 of MCSIA. The Agency's policy statements 
regarding implementation of section 222 have stated that in order for 
maximum penalties to be assessed under that section based on previously 
closed enforcement cases, the violations in those cases must have been 
adjudicated or admitted.\1\
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    \1\ See 69 FR 77828, 77829, Dec. 24, 2004; 74 FR 14184, 14185, 
Mar. 30, 2009.
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    Thus, allowing a respondent to terminate a proceeding without 
either an adjudication or admission would permit a carrier with 
abundant financial resources to repeatedly violate the regulations 
without running the risk of being penalized as a repeat offender, 
either for purposes of applying section 222 of MCSIA or calculating the 
appropriate penalty under 49 U.S.C. 521(b)(2)(D), which requires the 
Agency to consider, among other things, the respondent's history of 
prior offenses. This not only impedes the Agency's ability to implement 
important statutory mandates, but also gives an unfair advantage to 
those carriers with greater financial resources, who may be tempted to 
treat civil penalties as merely a cost of doing business.
    In 2011, the year following the Homax decision, the number of cases 
resolved through payment of the penalty in full increased more than 85% 
over the previous year.\2\ In contrast, carriers have resisted 
admissions of liability by making full payment of the civil penalty 
with written objection in only a handful of cases. Consequently, we do 
not anticipate a significant increase in the number of contested cases 
coming before the Agency as a result of the modifications to Sec.  
386.18 and believe that ATA's and AMSA's concerns about diversion of 
agency resources from high-risk carriers are unwarranted. Even if these 
modifications result in a small increase in the Agency's enforcement 
case backlog, enhancing motor carrier safety by holding repeat 
offenders accountable is more important than maintaining a potentially 
slightly reduced docket of administrative adjudications.
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    \2\ Enforcement data show that 3,237 civil penalty cases were 
resolved by payment in full without a settlement agreement in 2011, 
compared to 1,741 such cases in 2010. Approximately 400 more Notices 
of Claim were issued in 2011 than in 2010.
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    The Agency disagrees with AMSA that the proposal adopts a ``bit of 
a guilty-until-proven innocent approach * * *.'' Innocent carriers will 
continue to have the opportunity to contest the allegations in the NOC 
in accordance with the procedures established in the Agency's Rules of 
Practice. The FMCSA enforcement program and counsel will continue to 
have the burden of proving any contested allegations. Although in some 
circumstances a motor carrier may decide it is less expensive to settle 
a case than to contest a NOC, that is a business decision, and the 
carrier's desire to avoid future consequences of the settlement should 
not take precedence over the need to protect the public against 
potentially unsafe carriers and to comply with statutory mandates.
    In response to ATA's request that FMCSA establish clear and 
reasonable policies governing the circumstances under which the Agency 
will settle enforcement claims without requiring an admission of guilt, 
FMCSA may establish internal policies that will identify appropriate 
cases that may be settled without including an admission of liability 
in the Settlement Agreement.

B. Comments to Section 386.73 Carrier Intent

Comment
    Advocates for Highway and Auto Safety (Advocates) disagrees with 
proposed Sec.  386.73(c)(1), which requires FMCSA to consider whether 
the new or affiliated entity was created for the purpose of evading 
statutory, regulatory, or other legal requirements. Advocates propose 
that FMCSA consider only the results of the carrier's conduct without 
regard to the carrier's intent or motivation behind the conduct. 
Advocates believe that requiring consideration of motivation and intent 
could unreasonably burden the Agency's evaluation of the factors in 
Sec.  386.73(c) because proving intent is difficult and the same 
activity can be ambiguous if intent must be considered. Advocates 
suggests, therefore, that the agency eliminate the wording ``for the 
purpose of'' from the language proposed for Sec.  386.73(c)(1), and 
replace it with the phrase ``and has resulted in the evasion of'' in 
referencing the creation of an affiliate that was involved in evading 
the law.
    ATA, on the other hand, supports FMCSA's inclusion of a motor 
carrier's

[[Page 24867]]

intent or motivation as a factor for FMCSA to consider when determining 
whether a motor carrier attempted to avoid a statutory or regulatory 
requirement. ATA requests, however, that FMCSA weight the factors 
listed in Sec.  386.73(c), with the first factor concerning the motor 
carrier's intent being weighted the heaviest.
FMCSA Response
    A motor carrier's intent behind a particular course of conduct 
should be relevant if it shows an attempt to avoid compliance with 
applicable regulations or the consequences of past violations. A motor 
carrier would not, however, be able to avoid liability merely by 
asserting it had some legitimate business purpose for the corporate 
transaction or affiliate structure. Under the final rule, FMCSA will 
evaluate the motor carrier's stated purpose in light of all the 
available evidence and by considering each of the 13 factors identified 
in Sec.  386.73(c). If the totality of the available information 
demonstrates that the carrier's stated business purpose is consistent 
with the evidence, then the motor carrier would not be subject to an 
out-of-service order and/or record consolidation order. Conversely, if 
the totality of the available information demonstrates that the 
carrier's stated purpose is inconsistent with the evidence, then the 
motor carrier would be subject to an out-of-service order and/or record 
consolidation order.
    FMCSA does not take lightly its authority to place a motor 
carrier's operations out of service, and the Agency recognizes that 
such orders pose a significant penalty. Accordingly, FMCSA intends to 
apply Sec.  386.73 to those motor carriers that engage in egregious 
instances of noncompliance and evasion. Advocates' proposed 
modification (removing consideration of intent) is contrary to the 
intent of the rule, that is, to ensure that carriers that form a new 
company to purposely evade regulation are identified and put out of 
service. FMCSA is authorized to establish such a standard but declines 
to exert its regulatory authority in this manner. ATA's proposed 
modification (weighting the factors, with intent being weighted the 
heaviest) could result in a rigid application of the rule and require 
FMCSA to disregard relevant evidence that a motor carrier attempted to 
avoid a statutory or regulatory requirement. For these reasons, FMCSA 
declines to modify the Sec.  386.73 as proposed by either Advocates or 
ATA.
Comment
    IME expressed concerns over how the factors listed in Sec.  
386.73(c) and (d) will be applied. IME noted that some of its members 
operate multiple fleets that have common ownership, but are considered 
to be separate entities. IME further notes that these motor carriers 
may engage in one or even all of the activities described in Sec.  
386.73(c)(3) through (13). IME requests that FMCSA explain the 
circumstances under which the factors contained in Sec.  386.73(c) and 
(d) will be applied.
FMCSA Response
    A motor carrier would not be subject to an out-of-service order 
under Sec.  386.73 unless the motor carrier created or attempted to 
create a new identity or affiliate relationship for the purpose of 
avoiding a statutory or regulatory requirement or FMCSA enforcement 
action. Motor carriers who change their operational model for a 
legitimate business purpose and not to avoid FMCSA regulation or 
enforcement would not be affected by this rule. Section 386.73(c) 
describes the factors FMCSA will evaluate to determine whether a motor 
carrier created or attempted to create a new identity or affiliate 
relationship to avoid FMCSA regulation or enforcement. Section 
386.73(d) describes the potential sources of information FMCSA may use 
to make its determination. FMCSA's determination will be based on 
consideration of all relevant information, and one factor or potential 
source of evidence is not necessarily more significant than another. 
Where the greater weight of the evidence shows that a motor carrier 
created a new identity or shifted its operations to another, commonly 
owned and controlled, entity to avoid FMCSA authority or negative 
safety performance history, the motor carrier will be placed out of 
service and/or have its records consolidated with the records of the 
preexisting or affiliated entity.
    FMCSA modified Sec.  386.73(c)(13), now 386.73(c)(2), to clarify 
that the safety performance history FMCSA will consider to determine 
whether a motor carrier created a new identity or affiliate 
relationship to avoid FMCSA enforcement is the past safety performance 
history of the original motor carrier. FMCSA also modified Sec.  
386.73(d) to clarify that FMCSA will consider all information relevant 
to the motor carrier operations and the factors identified in Sec.  
386.73(c). The original rule text provided that FMCSA would consider 
information related to the motor carrier's operations, but did not 
reference information that might be relevant to the factors in Sec.  
386.73(c). FMCSA corrected this by clarifying that FMCSA will consider 
all information relevant to the motor carrier's operations and the 
factors in Sec.  386.73(c).
Comment
    The Transportation Intermediaries Association (TIA) supports 
FMCSA's efforts to target motor carriers who attempt to avoid statutory 
or regulatory requirements. TIA suggests, however, that FMCSA implement 
a timely administrative review process and place carriers in a 
probation status pending the administrative review.
FMCSA Response
    Section 386.73(g) describes the administrative review procedures 
available to motor carriers served with an operations-out-of service or 
record consolidation order. In reviewing TIA's comment, FMCSA 
determined that administrative review procedure should be clarified by 
adding language to explain when an out-of-service order or record 
consolidation order is effective. FMCSA modified the rule accordingly. 
The administrative review procedure is explained below.
    Under Sec.  386.73(g), an order is effective 21 days after it is 
served, unless the motor carrier requests administrative review within 
15 days of service of the order. If the motor carrier fails to request 
administrative review, or requests administrative review after the 15-
day period, the motor carrier must cease operations and its records may 
be consolidated. If the motor carrier requests administrative review 
within 15 days, however, the order is automatically stayed and the 
motor carrier may continue operating and its records will not be 
consolidated during the period of administrative review. The Agency 
Official may file a motion with the Assistant Administrator to vacate 
the automatic stay. The motion must be served on the motor carrier who 
may respond in opposition the motion within 15 days. The Assistant 
Administrator may grant the motion only if he or she finds good cause 
to vacate the stay.
    The administrative review procedures ensure motor carriers receive 
notice of FMCSA's intended action and have a fair opportunity to be 
heard. The procedures also ensure that FMCSA can efficiently and 
expeditiously address motor carriers that attempt to avoid FMCSA 
authority or enforcement action. Accordingly, FMCSA declines to 
establish a ``probation'' status for motor carriers who are permitted 
to operate

[[Page 24868]]

during the administrative review process.

Operating Authority

Comment
    TIA recommends that every licensed company (broker, forwarder, and 
carrier) be required to re-register its operating authority annually 
and that failure to comply with this requirement should result in 
cancellation of the company's authority. The commenter asserts that 
Congress is considering legislation supported by TIA, ATA, and OOIDA 
that would tie continuation of authority to an existing requirement, 
either the Unified Carrier Registration Agreement or the Unified 
Registration System (URS).
FMCSA Response
    TIA's suggested annual registration recommendation is beyond the 
scope of this rulemaking, which does not involve the DOT registration 
process. The Agency has a rulemaking proceeding in progress regarding 
the DOT registration process, under Docket No. FMCSA-97-2349, which 
proposes to replace certain existing DOT registration systems with a 
new URS. TIA submitted comments in that proceeding on December 20, 
2011, in which it made similar recommendations. TIA's comments on this 
issue, therefore, will be addressed in the URS rulemaking proceeding.

Statutory Authority

Comment
    ATA recommends that the Agency wait for more specific statutory 
authority before finalizing Sec.  386.73.
FMCSA Response
    FMCSA does not require additional statutory authority to establish 
this new section. As stated in the ``Legal Basis for the Rulemaking'' 
section of the rule, FMCSA has statutory authority to prescribe 
regulations ensuring that CMVs are operated safely and to determine 
whether an owner or operator is fit to operate a CMV safely. Section 
386.73 of the Agency's Rules of Practice is issued under that 
rulemaking authority and lays out procedures for placing out of service 
and/or consolidating the safety records of carriers that avoid FMCSA's 
regulations.
Comment
    Advocates suggests that FMCSA impose criminal sanctions on 
reincarnated motor carriers engaging in fraud and evading regulation as 
part of this regulatory initiative.
FMCSA Response
    Advocates note that criminal sanctions against reincarnated 
carriers cannot be sought as part of an administrative proceeding. 
Because Part 386 applies only to administrative proceedings, this 
comment is outside the scope of this rulemaking. In any event, FMCSA 
does not currently have the statutory authority to independently seek 
criminal sanctions, but will continue to cooperate with both State and 
Federal law enforcement partners in seeking criminal penalties against 
unsafe carriers where appropriate.

Out of Scope

Comment
    OOIDA requested that a subsection (6) be added to the proposed 
Sec.  386.73(b), which describes when record consolidation is 
appropriate, to require consolidation when new or affiliated entities 
are registered primarily to ``[a]void paying liabilities owed to 
creditors, including but not limited to the parties actually providing 
transportation services.'' OOIDA requested that FMCSA add this 
subsection to protect its members from carriers that reincarnate to 
escape financial obligations to drivers. This change is outside the 
scope of the current rulemaking, which is focused on safety rather than 
financial regulation. Our current legal authority does not provide for 
determinations of the legal rights between third parties in payment 
disputes.
    TIA suggests that FMCSA should apply Sec.  386.73 to ``broker trust 
fund providers'' as well as motor carriers, intermodal equipment 
providers, brokers and freight forwarders. This comment is outside the 
scope of the current rulemaking, which is focused on safety rather than 
financial regulation. Moreover, FMCSA has no jurisdiction over broker 
trust fund providers.
    IME suggests that FMCSA focus its efforts on correcting problems in 
existing programs, rather than proceeding with this rule. IME suggests 
FMCSA address its petition regarding the Hazardous Materials Safety 
Permit Program (HMSP), which it states is directly affected by the 
proposed rulemaking. This comment is outside the scope of the current 
rulemaking. But FMCSA is planning to address the HMSP in a future 
rulemaking, as stated in FMCSA's response to IME's petition in that 
matter.
    OOIDA commented that FMCSA's DataQ dispute resolution process does 
not afford due process to carriers and drivers. DataQ's is the process 
by which carriers may challenge the accuracy of enforcement data 
uploaded into the Agency's information systems (e.g., does the report 
accurately identify the carrier, driver and vehicle and date and 
location of the intervention). OOIDA's comments regarding the DataQ 
dispute resolution process are outside the scope of this section of the 
rulemaking, which is limited to the notice of claim resolution process.

C. Small Business Impact

Comment
    North American Transportation Consultants, Inc. (NATC) believes the 
analysis presented in the NPRM concerning the impact that all aspects 
of the rule would have on small businesses did not take into 
consideration the difficulties small businesses encounter in being able 
to afford legal counsel to provide protection of their rights.
FMCSA Response
    First, as mentioned in the Regulatory Flexibility Act section, only 
six carriers paid a civil penalty with a written objection from 2008 
thru 2011, indicating a minimal economic impact that would arise from 
changes to Sec.  386.18 (a) and (c). Second, the regulatory changes 
adopted here do not significantly alter the position of small 
businesses. This is a procedural rule that would not affect entities 
already in compliance, or those that are out of compliance but do not 
attempt to avoid the consequences of non-compliance by reincarnating as 
a new or affiliated entity.
    Although small businesses are entitled to retain legal 
representation during enforcement proceedings initiated under 49 CFR 
part 386, in most cases they choose to represent themselves. The 
changes do not increase the burden on motor carriers with respect to 
their options concerning legal representation.

V. Discussion of Rule

    This rule amends regulations in 49 CFR part 386 pertaining to 
administrative practices and procedures and civil penalties. FMCSA 
adopts the language from the NPRM into the final rule with additional 
clarifying language to Sec.  386.73(c) and (d).
    FMCSA added language to Sec.  386.73 (g)(8) to clarify the 
administrative review procedure regarding the Assistant Administrator's 
authority to vacate the automatic stay of any order issued under Sec.  
386.73.

[[Page 24869]]

VI. Regulatory Analyses

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

    FMCSA has determined that this rule is not a significant regulatory 
action within the meaning of Executive Order (E.O.) 12866, as 
supplemented by E.O. 13563 (76 FR 3821, January 21, 2011), or within 
the meaning of DOT regulatory policies and procedures. The estimated 
cost of the rule is not expected to exceed the $100 million annual 
threshold for economic significance; any costs associated with the rule 
are expected to be minimal. Moreover, the Agency does not expect the 
rule to generate substantial congressional or public interest. The rule 
would not impose new requirements upon carriers and thus should result 
in minimal or no economic burdens. The revisions clarify existing rules 
and implement procedures that would not require a change in the 
business practices of already compliant motor carriers.

Regulatory Flexibility Act

    The Regulatory Flexibility Act of 1980 (5 U.S.C. 601-612) requires 
Federal agencies to consider the effects of the regulatory action on 
small business and other small entities and to minimize any significant 
economic impact. The term ``small entities'' includes small businesses 
and not-for-profit organizations that are independently owned and 
operated and are not dominant in their fields, and governmental 
jurisdictions with populations of less than 50,000.\3\ Accordingly, the 
DOT policy titled, ``Proper Consideration of Small Entities in Agency 
Rulemaking'' requires an analysis of the impact of all regulations on 
small entities and mandates that agencies strive to lessen any adverse 
effects on these businesses.
---------------------------------------------------------------------------

    \3\ Regulatory Flexibility Act (5 U.S.C. 601 et seq.) see 
National Archives at http://www.archives.gov/federal-register/laws/regulatory-flexibility/601.html.
---------------------------------------------------------------------------

    Under the Regulatory Flexibility Act, as amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121, 
110 Stat. 857), this rule is not expected to have a significant 
economic impact on a substantial number of small entities. The rule's 
clarification of how payment of claims affects admissions of liability 
reflects current FMCSA policy, as discussed in the background section. 
Even before the current policy was enunciated through administrative 
adjudication, this portion of the rule did not have a significant 
impact. From 2008 through 2011, the Agency adjudicated only six cases 
in which the respondent motor carrier paid a civil penalty with written 
objection, which indicates the minimal impact the rule is expected to 
have.
    FMCSA estimates that fewer than 50 carriers annually will be 
affected and placed out of service by the rule as it pertains to 
reincarnated or affiliated carriers, from data provided by the U.S. 
General Accountability Office (GAO) Engagement Report (June 2008-July 
2011).\4\ Therefore, this rule would not disproportionately impact 
small entities. Consequently, I certify that a regulatory flexibility 
analysis is not necessary.
---------------------------------------------------------------------------

    \4\ FMCSA Eastern Service Center/Division Field Enforcement 
Action--Reincarnated Carrier Cases--GAO Engagement 541079 July 1, 
2011.
---------------------------------------------------------------------------

Assistance for Small Entities

    In accordance with section 213(a) of the Small Business Regulatory 
Enforcement Fairness Act of 1996, FMCSA wants to assist small entities 
in understanding this rule so that they can better evaluate its effects 
on them. If the rule affects your small business, organization, or 
governmental jurisdiction and you have questions concerning its 
provisions or options for compliance, please consult the FMCSA point of 
contact, Sabrina Redd, listed in the FOR FURTHER INFORMATION CONTACT 
section of this rule.
    Small businesses may send comments on the actions of Federal 
employees who enforce or otherwise determine compliance with Federal 
regulations to the Small Business Administration's Small Business and 
Agriculture Regulatory Enforcement Ombudsman and the Regional Small 
Business Regulatory Fairness Boards. The Ombudsman evaluates these 
actions annually and rates each agency's responsiveness to small 
business. If you wish to comment on actions by employees of FMCSA, call 
1-888-REG-FAIR (1-888-734-3247). FMCSA will not retaliate against small 
entities that question or complain about this rule or any policy or 
action of the Agency.

Unfunded Mandates Reform Act

    This rule will not impose an unfunded Federal mandate, as defined 
by the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532 et seq.), 
that would result in the expenditure by State, local, and tribal 
governments, in the aggregate, or by the private sector, of $141.3 
million (which is the value of $100 million in 2010 after adjusting for 
inflation) or more in any 1 year.

E.O. 13132 (Federalism)

    A rule has implications for Federalism under Section 1(a) of E.O. 
13132 if it has ``substantial direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.'' FMCSA has determined that this rule will not have 
substantial direct effects on States, nor would it limit the 
policymaking discretion of States. Nothing in this document preempts 
any State law or regulation.

Indian Tribal Governments

    This rule does not have tribal implications under E.O. 13175, 
Consultation and Coordination with Indian Tribal Governments, because 
it does not have a substantial direct effect on one or more Indian 
tribes, on the relationship between the Federal Government and Indian 
tribes, or on the distribution of power and responsibilities between 
the Federal Government and Indian tribes.

Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), 
Federal agencies must obtain approval from the Office of Management and 
Budget (OMB) for each collection of information they conduct, sponsor, 
or require through regulations. FMCSA has determined that there is no 
new information collection requirement associated with this rule.

National Environmental Policy Act

    FMCSA analyzed this rule for the purpose of the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and 
determined this action is categorically excluded from further analysis 
and documentation in an environmental assessment or environmental 
impact statement under FMCSA Order 5610.1 (69 FR 9680, March 1, 2004), 
Appendix 2, paragraphs (6)(u)(1), (6)(u)(2), and (6)(y)(7). The 
Categorical Exclusion (CE) in paragraph (6)(u)(1) addresses rules 
concerning compliance with regulations; the CE in paragraph (6)(u)(2) 
addresses regulations concerning civil penalties; and the CE in 
paragraph (6)(y)(7) addresses rules for record keeping. The various 
changes in this rule are covered by one or a combination of these three 
CEs. Therefore, this action does not have any effect on the quality of 
the environment. The Categorical Exclusion determination is available 
for inspection or copying in the Regulations.gov Web site listed under 
ADDRESSES.

[[Page 24870]]

    FMCSA also analyzed this rule under the Clean Air Act, as amended 
(CAA), section 176(c) (42 U.S.C. 7401 et seq.), and implementing 
regulations promulgated by the Environmental Protection Agency. 
Approval of this action is exempt from the CAA's general conformity 
requirement since it does not affect direct or indirect emissions of 
criteria pollutants.

E.O. 13211 (Energy Effects)

    FMCSA analyzed this rule under E.O. 13211, Actions Concerning 
Regulations That Significantly Affect Energy Supply, Distribution, or 
Use. The Agency has determined that it is not a ``significant energy 
action'' under that order because it is not a ``significant regulatory 
action'' under E.O. 12866 and is not likely to have a significant 
adverse effect on the supply, distribution, or use of energy. 
Therefore, no Statement of Energy Effects is required.

E.O. 13045 (Protection of Children)

    E.O. 13045, Protection of Children from Environmental Health Risks 
and Safety Risks (62 FR 19885, Apr. 23, 1997), requires agencies 
issuing ``economically significant'' rules, if the regulation also 
concerns an environmental health or safety risk that an agency has 
reason to believe may disproportionately affect children, to include an 
evaluation of the regulation's environmental health and safety effects 
on children. As discussed previously, this rule is not economically 
significant. Therefore, no analysis of the impacts on children is 
required. In any event, we do not anticipate that this regulatory 
action could in any respect present an environmental or safety risk 
that could disproportionately affect children.

E.O. 12988 (Civil Justice Reform)

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

E.O. 12630 (Taking of Private Property)

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

National Technology Transfer and Advancement Act (Technical Standards)

    The National Technology Transfer and Advancement Act (15 U.S.C. 272 
note) directs agencies to use voluntary consensus standards in their 
regulatory activities unless the agency provides Congress, through OMB, 
with an explanation of why using these standards would be inconsistent 
with applicable law or otherwise impractical. Voluntary consensus 
standards are technical standards (e.g., specifications of materials, 
performance, design, or operation; test methods; sampling procedures; 
and related management systems practices) that are developed or adopted 
by voluntary consensus standards bodies.
    FMCSA is not aware of any technical standards used to address 
Agency rules of practice by motor carriers, intermodal equipment 
providers, brokers, freight forwarders, and handlers of hazardous 
materials and therefore, did not consider any such standards.

Privacy Impact Assessment

    FMCSA conducted a privacy impact assessment of this rule as 
required by section 522(a)(5) of the FY 2005 Omnibus Appropriations 
Act, Public Law 108-447, 118 Stat. 3268 (Dec. 8, 2004) [set out as a 
note to 5 U.S.C. 552a]. The assessment considers any impacts of the 
rule on the privacy of information in an identifiable form and related 
matters. FMCSA has determined this rule would have no privacy impacts.

List of Subjects in 49 CFR Part 386

    Administrative practice and procedure, Brokers, Freight forwarders, 
Hazardous materials transportation, Highway safety, Motor carriers, 
Motor vehicle safety penalties.

    For the reasons discussed in the preamble, FMCSA amends 49 CFR part 
386 as follows:

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

0
1. The authority citation for part 386 continues to read as follows:

    Authority:  49 U.S.C. 113, chapters 5, 51, 59, 131-141, 145-149, 
311, 313, and 315; Sec. 204, Pub. L. 104-88, 109 Stat. 803, 941 (49 
U.S.C. 701 note); Sec. 217, Pub. L. 105-159, 113 Stat. 1748, 1767; 
Sec. 206, Pub. L. 106-159, 113 Stat. 1763; subtitle B, title IV of 
Pub. L. 109-59; and 49 CFR 1.45 and 1.73.


0
2. Amend Sec.  386.18 by revising paragraphs (a) and (c) to read as 
follows:


Sec.  386.18  Payment of the claim.

    (a) Payment of the full amount claimed may be made at any time 
before issuance of a Final Agency Order and will constitute an 
admission of liability by the respondent of all facts alleged in the 
Notice of Claim, unless the parties agree in writing that payment shall 
not be treated as an admission. After the issuance of a Final Agency 
Order, claims are subject to interest, penalties, and administrative 
charges, in accordance with 31 U.S.C. 3717; 49 CFR part 89; and 31 CFR 
901.9.
* * * * *
    (c) Unless otherwise agreed in writing by the parties, payment of 
the full amount in response to the Notice of Claim constitutes an 
admission of liability by the respondent of all facts alleged in the 
Notice of Claim. Payment waives respondent's opportunity to further 
contest the claim and will result in the Notice of Claim becoming the 
Final Agency Order.

0
3. Add Sec.  386.73 to subpart F to read as follows:


Sec.  386.73  Operations out of service and record consolidation 
proceedings (reincarnated carriers).

    (a) Out-of-service order. An FMCSA Field Administrator or the 
Director of FMCSA's Office of Enforcement and Compliance (Director) may 
issue an out-of-service order to prohibit a motor carrier, intermodal 
equipment provider, broker, or freight forwarder from conducting 
operations subject to FMCSA jurisdiction upon a determination by the 
Field Administrator or Director that the motor carrier, intermodal 
equipment provider, broker, or freight forwarder or an officer, 
employee, agent, or authorized representative of such an entity, 
operated or attempted to operate a motor carrier, intermodal equipment 
provider, broker, or freight forwarder under a new identity or as an 
affiliated entity to:
    (1) Avoid complying with an FMCSA order;
    (2) Avoid complying with a statutory or regulatory requirement;
    (3) Avoid paying a civil penalty;
    (4) Avoid responding to an enforcement action; or
    (5) Avoid being linked with a negative compliance history.
    (b) Record consolidation order. In addition to, or in lieu of, an 
out-of-service order issued under this section, the Field Administrator 
or Director may issue an order consolidating the records maintained by 
FMCSA concerning the current motor carrier, intermodal equipment 
provider, broker, and freight forwarder and its affiliated motor 
carrier, intermodal equipment provider, broker, or freight forwarder or 
its previous incarnation, for all purposes, upon a determination that 
the motor carrier, intermodal equipment provider, broker, and freight 
forwarder or officer,

[[Page 24871]]

employee, agent, or authorized representative of the same, operated or 
attempted to operate a motor carrier, intermodal equipment provider, 
broker, or freight forwarder under a new identity or as an affiliated 
entity to:
    (1) Avoid complying with an FMCSA order;
    (2) Avoid complying with a statutory or regulatory requirement;
    (3) Avoid paying a civil penalty;
    (4) Avoid responding to an enforcement action; or
    (5) Avoid being linked with a negative compliance history.
    (c) Standard. The Field Administrator or Director may determine 
that a motor carrier, intermodal equipment provider, broker, or freight 
forwarder is reincarnated if there is substantial continuity between 
the entities such that one is merely a continuation of the other. The 
Field Administrator or Director may determine that a motor carrier, 
intermodal equipment provider, broker, or freight forwarder is an 
affiliate if the business operations are under common ownership and/or 
common control. In making this determination, the Field Administrator 
or Director may consider, among other things, the following factors:
    (1) Whether the new or affiliated entity was created for the 
purpose of evading statutory or regulatory requirements, an FMCSA 
order, enforcement action, or negative compliance history. In weighing 
this factor, the Field Administrator or Director may consider the 
stated business purpose for the creation of the new or affiliated 
entity.
    (2) The previous entity's safety performance history, including, 
among other things, safety violations and enforcement actions of the 
Secretary, if any;
    (3) Consideration exchanged for assets purchased or transferred;
    (4) Dates of company creation and dissolution or cessation of 
operations;
    (5) Commonality of ownership between the current and former company 
or between current companies;
    (6) Commonality of officers and management personnel;
    (7) Identity of physical or mailing addresses, telephone, fax 
numbers, or email addresses;
    (8) Identity of motor vehicle equipment;
    (9) Continuity of liability insurance policies or commonality of 
coverage under such policies;
    (10) Commonality of drivers and other employees;
    (11) Continuation of carrier facilities and other physical assets;
    (12) Continuity or commonality of nature and scope of operations, 
including customers for whom transportation is provided;
    (13) Advertising, corporate name, or other acts through which the 
company holds itself out to the public;
    (d) Evaluating factors. The Field Administrator or Director may 
examine, among other things, the company management structures, 
financial records, corporate filing records, asset purchase or transfer 
and title history, employee records, insurance records, and any other 
information related to the general operations of the entities involved 
and factors in paragraph (c) of this section.
    (e) Effective dates. An order issued under this section becomes the 
Final Agency Order and is effective on the 21st day after it is served 
unless a request for administrative review is served and filed as set 
forth in paragraph (g) of this section. Any motor carrier, intermodal 
equipment provider, broker, or freight forwarder that fails to comply 
with any prohibition or requirement set forth in an order issued under 
this section is subject to the applicable penalty provisions for each 
instance of noncompliance.
    (f) Commencement of proceedings. The Field Administrator or 
Director may commence proceedings under this section by issuing an 
order that:
    (1) Provides notice of the factual and legal basis of the order;
    (2) In the case of an out-of-service order, identifies the 
operations prohibited by the order;
    (3) In the case of an order that consolidates records maintained by 
FMCSA, identifies the previous entity and current or affiliated motor 
carriers, intermodal equipment providers, brokers, or freight 
forwarders whose records will be consolidated;
    (4) Provides notice that the order is effective upon the 21st day 
after service;
    (5) Provides notice of the right to petition for administrative 
review of the order and that a timely petition will stay the effective 
date of the order unless the Assistant Administrator orders otherwise 
for good cause; and
    (6) Provides notice that failure to timely request administrative 
review of the order constitutes waiver of the right to contest the 
order and will result in the order becoming a Final Agency Order 21 
days after it is served.
    (g) Administrative review. A motor carrier, intermodal equipment 
provider, broker, or freight forwarder issued an order under this 
section may petition for administrative review of the order. A petition 
for administrative review is limited to contesting factual or 
procedural errors in the issuance of the order under review and may not 
be submitted to demonstrate corrective action. A petition for 
administrative review that does not identify factual or procedural 
errors in the issuance of the order under review will be dismissed. 
Petitioners seeking to demonstrate corrective action may do so by 
submitting a Petition for Rescission under paragraph (h) of this 
section.
    (1) A petition for administrative review must be in writing and 
served on the Assistant Administrator, Federal Motor Carrier Safety 
Administration, 1200 New Jersey Ave. SE., Washington, DC 20590-0001, 
Attention: Adjudications Counsel, or by electronic mail to 
[email protected]. A copy of the petition for administrative 
review must also be served on the Field Administrator or Director who 
issued the order, at the physical address or electronic mail account 
identified in the order.
    (2) A petition for administrative review must be served within 15 
days of the date the Field Administrator or Director served the order 
issued under this section. Failure to timely request administrative 
review waives the right to administrative review and constitutes an 
admission of the facts alleged in the order.
    (3) A petition for administrative review must include:
    (i) A copy of the order in dispute; and
    (ii) A statement of all factual and procedural issues in dispute.
    (4) If a petition for administrative review is timely served and 
filed, the petitioner may supplement the petition by serving 
documentary evidence and/or written argument that supports its position 
regarding the procedural or factual issues in dispute no later than 30 
days from the date the disputed order was served. The supplementary 
documentary evidence or written argument may not expand the issues on 
review and need not address every issue identified in the petition. 
Failure to timely serve supplementary documentary evidence and/or 
written argument constitutes a waiver of the right to do so.
    (5) The Field Administrator or Director must serve written argument 
and supporting documentary evidence, if any, in defense of the disputed 
order no later than 15 days following the period in which petitioner 
may serve supplemental documentary evidence and/or written argument in 
support of the petition for administrative review.
    (6) The Assistant Administrator may ask the parties to submit 
additional information or attend a conference to facilitate 
administrative review.
    (7) The Assistant Administrator will issue a written decision on 
the request

[[Page 24872]]

for administrative review within 30 days of the close of the time 
period for the Field Administrator or the Director to serve written 
argument and supporting documentary evidence in defense of the order, 
or the actual filing of such written argument and documentary evidence, 
whichever is earlier.
    (8) If a petition for administrative review is timely served in 
accordance with this subsection, the disputed order is stayed, pending 
the Assistant Administrator's review. The Assistant Administrator may 
enter an order vacating the automatic stay in accordance with the 
following procedures:
    (i) The Agency Official may file a motion to vacate the automatic 
stay demonstrating good cause why the order should not be stayed. The 
Agency Official's motion must be in writing, state the factual and 
legal basis for the motion, be accompanied by affidavits or other 
evidence relied on, and be served on the petitioner and Assistant 
Administrator.
    (ii) The petitioner may file an answer in opposition, accompanied 
by affidavits or other evidence relied on. The answer must be served 
within 10 days of service of the motion.
    (iii) The Assistant Administrator will issue a decision on the 
motion to vacate the automatic stay within 10 days of the close of the 
time period for serving the answer to the motion. The 30-day period for 
review of the petition for administrative review in paragraph (g)(5) of 
this section is tolled from the time the Agency Official's motion to 
lift a stay is served until the Assistant Administrator issues a 
decision on the motion.
    (9) The Assistant Administrator's decision on a petition for 
administrative review of an order issued under this section constitutes 
the Final Agency Order.
    (h) Petition for rescission. A motor carrier, intermodal equipment 
provider, broker, or freight forwarder may petition to rescind an order 
issued under this section if action has been taken to correct the 
deficiencies that resulted in the order.
    (1) A petition for rescission must be made in writing to the Field 
Administrator or Director who issued the order.
    (2) A petition for rescission must include a copy of the order 
requested to be rescinded, a factual statement identifying all 
corrective action taken, and copies of supporting documentation.
    (3) Upon request and for good cause shown, the Field Administrator 
or Director may grant the petitioner additional time, not to exceed 45 
days, to complete corrective action initiated at the time the petition 
for rescission was filed.
    (4) The Field Administrator or Director will issue a written 
decision on the petition for rescission within 60 days of service of 
the petition. The written decision will include the factual and legal 
basis for the determination.
    (5) If the Field Administrator or Director grants the request for 
rescission, the written decision is the Final Agency Order.
    (6) If the Field Administrator or Director denies the request for 
rescission, the petitioner may file a petition for administrative 
review of the denial with the Assistant Administrator, Federal Motor 
Carrier Safety Administration, 1200 New Jersey Ave. SE., Washington, DC 
20590-0001, Attention: Adjudication Counsel or by electronic mail to 
[email protected]. The petition for administrative review of 
the denial must be served and filed within 15 days of the service of 
the decision denying the request for recession. The petition for 
administrative review must identify the disputed factual or procedural 
issues with respect to the denial of the petition for rescission. The 
petition may not, however, challenge the underlying basis of the order 
for which rescission was sought.
    (7) The Assistant Administrator will issue a written decision on 
the petition for administrative review of the denial of the petition 
for rescission within 60 days. The Assistant Administrator's decision 
constitutes the Final Agency Order.
    (i) Other orders unaffected. If a motor carrier, intermodal 
equipment provider, broker, or freight forwarder subject to an order 
issued under this section is or becomes subject to any other order, 
prohibition, or requirement of the FMCSA, an order issued under this 
section is in addition to, and does not amend or supersede such other 
order, prohibition, or requirement. A motor carrier, intermodal 
equipment provider, broker, or freight forwarder subject to an order 
issued under this section remains subject to the suspension and 
revocation provisions of 49 U.S.C. 13905 for violations of regulations 
governing their operations.
    (j) Inapplicability of subparts. Subparts B, C, D, and E of this 
part, except Sec.  386.67, do not apply to this section.

0
4. Amend Appendix A to part 386, section IV, by redesignating paragraph 
h. as paragraph i. and adding a new paragraph h. to read as follows:

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

* * * * *
    IV. * * *
    h. Violation -- Operating in violation of an order issued under 
Sec.  386.73. Penalty--Up to $16,000 per day the operation continues 
after the effective date and time of the out-of-service order.
* * * * *

    Issued on: April 18, 2012.
Anne S. Ferro,
Administrator.
[FR Doc. 2012-10162 Filed 4-25-12; 8:45 am]
BILLING CODE P