Rules of Practice for Motor Carrier Proceedings; Investigations; Disqualifications and Penalties

SUMMARY: The FHWA proposes to amend its rules of practice for motor

carrier safety, hazardous materials, and other enforcement proceedings,

motor carrier safety rating procedures, driver qualification

proceedings, and its schedule of penalties for violations of the

Federal Motor Carrier Safety Regulations and the Hazardous Materials

Regulations. The FHWA further proposes to add provisions on

investigative authority and procedures and general motor carrier

responsibilities. These rules would increase the efficiency of the

practices, consolidate existing administrative review procedures,

enhance due process and the awareness of the public and regulated

community, and accommodate recent programmatic changes. The rules would

apply to all motor carriers, other business entities, and individuals

involved in motor carrier safety and hazardous materials administrative

actions and proceedings with the FHWA after the effective date of the

final rule.

DATES: Comments must be received on or before July 29, 1996.

ADDRESSES: Submit written, signed comments to FHWA Docket No. MC-96-18,

FHWA, Office of the Chief Counsel, HCC-10, Room 4232, 400 Seventh

Street SW., Washington, DC 20590. All comments received will be

available for examination at the above address from 8:30 a.m. to 3:30

p.m., e.t., Monday through Friday, except Federal holidays. Those

desiring notification of receipt of comments must include a self-

addressed, stamped postcard/envelope.

FOR FURTHER INFORMATION CONTACT:

Paul Brennan, Office of the Chief Counsel, (202) 366-0834, Federal

Highway Administration, 400 Seventh Street SW., Washington, DC 20590.

Office hours are from 7:45 a.m. to 4:15 p.m., e.t., Monday through

Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Introduction

This rulemaking includes the first comprehensive rewrite of the

FHWA's rules of practice for motor carrier administrative proceedings

since 1985. It is the forerunner of a comprehensive revision of the

Federal Motor Carrier Safety Regulations (FMCSR) anticipated to follow

the completion of a zero-based review of those regulations presently

underway in the agency. These proposed regulations would appear in

previously unused chapters of that portion of the Code of Federal

Regulations reserved for the FMCSR, thus leaving ample room for the

future revisions. The current rules of practice for safety enforcement

and driver qualification proceedings, found in 49 CFR part 386 and in

Sec. 391.47, would be replaced by new part 363. New part 361 restates,

explains and expands upon statutory authority, administrative

enforcement powers, and general responsibilities. New part 364 is the

first general treatment of penalties for violations of safety rules

provided in regulatory form. The amendments embodied in these three

proposed parts are based on the FHWA's experience enforcing the motor

carrier safety regulations through part 386. It is intended that the

new procedures would make administrative actions and proceedings more

efficient while enhancing the guarantee of due process to carriers,

individuals, and other entities by substantially increasing awareness

of the consequences of noncompliance with commercial motor vehicle

safety and hazardous materials regulations.

New part 362 would replace current part 385, which provides

administrative review procedures within the safety ratings process.

Safety ratings continue to gain in relative importance in the entire

safety program in response to legislative mandate, as a part of agency

programmatic changes, and in the significance attached to the ratings

by the industry itself. Updated procedures will allow for better

accommodation of these interests. Parts 385 and 386 would be deleted

and reserved for future use.

This rulemaking preamble will first briefly discuss the current

statutory background. Each proposed part is then analyzed by describing

some of the antecedents of any corresponding current procedures,

followed by a section-by-section analysis of the proposed rules.

Finally, the proposed rules themselves appear.

Statutory Background

Congress has delegated certain powers to regulate interstate

commerce to the Department of Transportation in numerous pieces of

legislation, most notably in the Department of Transportation Act (DOT

Act), section 6, Pub. L. 85-670, 80 Stat. 931 (1966). Section 55 of the

DOT Act transferred the authority of the Interstate Commerce Commission

(ICC) to regulate the qualifications and maximum hours of service of

employees, the safety of operations, and the equipment of motor

carriers in interstate commerce to the Federal Highway Administration

(the agency), an operating administration of the DOT. 49 U.S.C. 104.

This authority, first granted to the ICC in the Motor Carrier Act of

1935, Pub. L. 74-255, 49 Stat. 543, now appears in 49 U.S.C. Chapter

315. The regulations issued under this authority became known as the

Federal Motor Carrier Safety Regulations (FMCSRs), appearing generally

at 49 CFR parts 390-399. The administrative powers to enforce Chapter

315 were also transferred from the ICC to the DOT in 1966, and appear

in 49 U.S.C. Chapter 5.

The Motor Carrier Safety Act of 1984 (1984 Act), Pub. L. 98-554, 98

Stat. 2832, restated, for the first time, the interstate safety

authority in terms of particular classes of commercial motor vehicles

(CMV). These statutory classes coincided identically with the

definition of CMV adopted by the agency in the existing FMCSRs issued

under the Motor Carrier Act of 1935. The 1984 Act is codified at 49

U.S.C. Chapter 311, Subchapter III. These two largely overlapping

statutes, i.e., Chapters 311 and 315, serve as parallel and

complementary authorities for issuance of safety regulations for motor

carriers and commercial motor vehicles operating in interstate

commerce.

It should be noted that both chapters define interstate commerce as

trade, traffic, or transportation in the United States which is between

a place in a state and a place outside of such state or is between two

places in the same state through another state or place outside the

state. The DOT and the ICC interpret as within this jurisdiction

transportation wholly within a state which is part of a continuing

through movement of property or passengers across state lines. This

``crossing state lines'' definition represents a delegation of less

than the full power possessed by Congress to regulate interstate

commerce. A more complete delegation is found in other laws in which

all trade, traffic, and transportation affecting interstate commerce is

deemed

[[Page 18867]]

interstate commerce regardless of its direct connection with a movement

of goods across state lines.

For example, the Commercial Motor Vehicle Safety Act of 1986

(CMVSA), Pub. L. 99-570, 100 Stat. 3 207-170, 49 U.S.C. chapter 313)

applies to trade, traffic, and transportation on public highways wholly

within a state as affecting interstate commerce because such trade,

traffic and transportation intermingles with cross-border movements and

therefore affects interstate commerce. The CMVSA established a national

commercial driver's license program (CDL) for all drivers of CMVs,

which were defined to exclude certain smaller vehicles covered under

the 1984 Act and longstanding FHWA regulations, unless the agency

determined that it was appropriate to include them. The FHWA did

restrict the CDL program to larger vehicles. At the same time, the

CMVSA extended jurisdictional coverage to drivers in commerce that had

previously been considered entirely intrastate and thus beyond the

jurisdictional reaches of the earlier acts. This was a major departure

from the traditional, ICC-inherited zone of jurisdiction based on the

origin and destination of the cargo being transported. The distinction

can be seen most readily in drug testing requirements, which were

initially issued by DOT 1989 under its parallel general safety

authority in sections 31502 and 31136. Congress enacted specific drug

and alcohol testing statutory requirements in 1991 by amending the

CMVSA (49 U.S.C. 31306). This action had the effect of expanding the

reach of testing from drivers of vehicles carrying interstate cargo to

drivers of any vehicles meeting the definition of ``commercial motor

vehicle'' provided in the CMVSA, which, by their very nature, affect

interstate commerce.

The Hazardous Materials Transportation Uniform Safety Act of 1990

(HMTUSA) Pub. L. 101-615, 104 Stat. 3244, replacing the Hazardous

Materials Transportation Act (HMTA), Pub. L. 93-633, 88 Stat. 2156

(1975) required the DOT to issue regulations for the safe

transportation of hazardous materials in inter- and intrastate

commerce. 49 U.S.C. Chapter 51. The Research and Special Programs

Administration (RSPA) of DOT issues the Hazardous Materials Regulations

(HMR), which provide standards on the classification, packaging,

handling, and registration of hazardous materials. The FHWA enforces

the HMR in relation to the transportation of hazardous materials by

highway.

The Motor Carrier Act of 1980, Pub. L. 96-296, 94 Stat. 793, and

the Bus Regulatory Reform Act of 1982, Pub. L. 97-261, 96 Stat. 1121,

established requirements for minimum levels of insurance for for-hire

interstate motor carriers and all carriers of certain hazardous

materials in inter- and intrastate commerce. 49 U.S.C. 31138-31139.

The Intermodal Safe Container Act of 1992, Pub.L. 102-548, 106

Stat. 3646, established weight certification requirements for tenderors

and carriers of intermodal containers. 49 U.S.C. Chapter 59.

The various acts authorize the enforcement of the FMCSRs and HMRs

and provide both civil and criminal penalties for violations. In

practice, when circumstances dictate that an enforcement action be

instituted, civil penalties are more commonly sought than criminal

sanctions. The administrative rules proposed in this rulemaking apply,

among other things, to the administrative adjudication of civil

penalties assessed for violations of the FMCSR and the HMR.

Analysis

Part 361: Administrative

As proposed, this part sets forth the authority granted to the

agency to enforce the commercial motor vehicle safety regulations--the

FMCSRs and HMRs. It also describes the practices followed by the agency

in exercising this authority and prescribes certain responsibilities

imposed by these authorities upon motor carriers and others subject to

these acts.

Background

Except for a somewhat obscure provision in appendix B to chapter

III, subchapter B of the CFR, the authority for the agency's inspection

and other administrative powers appears only in statute (see, e.g., 49

U.S.C. 501-525, 31133, and 5121). Standards and practices for the

agency's training materials, policy guidance, and internal manuals

which are available to the public, but only upon request. Including

these standards and practices in the regulations would provide one

convenient and authoritative reference source for all regulatees and

put them on notice of what may be expected from Federal enforcement

officials as well as what is expected of the regulated community.

Detailed intra-agency delegations of motor carrier safety-related

functions at one time appeared in 49 CFR 301.60, but were removed in

1988 following a significant reorganization of the motor carrier safety

functions and anticipated republication of the regulations under new

authority. 53 FR 2035 (January 26, 1988). Specific delegations of

authority from the Administrator to the Office of Motor Carriers now

appear only in FHWA organizational documents.

Section-by-Section Analysis

Section 361.101 Purpose

This part would spell out the authority and procedures used by the

FHWA to conduct investigations and other enforcement activities related

to commercial motor vehicle safety, and the corresponding obligations

of the regulated industry. Its purpose is to inform the public of the

agency's role, to increase awareness of and compliance with the safety

regulations, and to facilitate public contact with FHWA officials

enforcing the regulations.

361.102 Authority and Delegations

The first sentence of paragraph (a) would list the chapters of

title 49, U.S. Code, in which Congress has conferred on the Secretary

of Transportation the authority to regulate commercial motor vehicle

safety. Many sections of these chapters are cited throughout this

document. One statutory provision which is not mentioned again is 42

U.S.C. 4917, which gives the Secretary the authority to enforce

Environmental Protection Agency standards for the limitation of noise

emissions resulting from the operation of motor carriers engaged in

interstate commerce. The regulations implementing this provision appear

in part 325, and would not be amended in this rulemaking.

The second sentence of paragraph (a) would specify the

administrative powers the FHWA may employ in carrying out its

regulatory authority. The intention of this sentence would be to allow

application of all of these powers in the enforcement of each relevant

regulatory chapter (i.e., 49 U.S.C. chs. 51, 59, 311, 313, and 315).

The powers specified are virtually identical to those listed in title

49 U.S.C. 5121 and 31133, which are to be used in the enforcement of

chapters 51 and 311, respectively. The administrative powers to enforce

chapter 315 are provided in chapter 5 (see 49 U.S.C. 501(b)). Because

the jurisdiction of chapters 311 and 315 are identical as applied by

the FHWA, with 49 U.S.C. 31136 and 31502 routinely cited as parallel

authority for safety regulations, the administrative powers available

to enforce chapter 315 may also be said to be coextensive with those

under chapter 311.

[[Page 18868]]

The authority to investigate violations of chapter 313, the

commercial driver's license program, including drug and alcohol

testing, appears in 49 U.S.C. 322 and 31317. (See 12018(a) of the CMVSA

of 1986, in which the FHWA is granted the power to issue such

regulations as may be necessary to carry out the chapter). It is under

this authority that the administrative powers in 49 U.S.C. 31133 and

chapter 5 would be applied in this rule to enforcement of chapter 313.

Similar authority to enforce chapter 59 may be found in 49 U.S.C. 5907.

Paragraphs (b) and (c) would restate the delegation of these

authorities within the Department of Transportation from the Secretary

to FHWA officials in the field who routinely contact motor carriers.

The delegations are broad in order to allow flexibility. The term

``agency'' is used wherever possible when referring to FHWA officials.

The exact delegations from the Secretary of Transportation which have

been made to the Federal Highway Administration appear in 49 CFR 1.48.

Further delegations within the FHWA appear in FHWA organizational

documents (generally FHWA Order 1-1) available for review at FHWA

regional offices. See 49 CFR part 301. All of these subdelegations of

powers delegated to the Secretary of Transportation are within the

agency's discretion and are carefully designed to comport with

principles of fairness, due process, and efficiency.

Paragraph (d) would restate the delegation of authority to the

States which is provided in 49 U.S.C. 31134. Because States are

partners with the Federal Government in enforcing motor carrier safety

laws, it is important to reemphasize that nothing in this part would

preempt States from enforcing State law. Other parts of the regulations

do, however, provide standards for the preemption of State laws. See 49

CFR part 355; part 397, subpart E; and Sec. 382.109.

Section 361.103 Inspection and Investigation

With the exception of paragraph (e), this section would detail the

scope of the FHWA power to conduct on-site inspections or, as they are

more commonly called, compliance reviews, one of the administrative

powers listed in the previous section. It would be reemphasized in

paragraph (a) that this power applies in carrying out all of the listed

commercial motor vehicle safety chapters of the U.S. Code. The language

on the conduct of on-site inspection and copying of records and

equipment is taken from 49 U.S.C. 504(c) and 5121(c), with the added

proviso that such inspections take place at reasonable times, a

fundamental requirement of the law relating to administrative searches.

Reasonable times would be further explained in paragraph (c) as the

regular working hours of the carrier and certain other times in

particular circumstances.

Consistent with 49 U.S.C. 504, the on-site inspection powers would

apply only to motor carriers and other regulated entities, such as

hazardous materials shippers and tenderors of intermodal containers.

The term ``motor carrier'' is broadly defined in 49 CFR 390.5 as

including a carrier's agents, officers, and representatives. In

contrast, the other investigatory administrative powers, such as the

power to issue subpoenas, require production of records, and take

depositions, would apply to any entity so long as the administrative

action is related to an authorized safety investigation. Thus, an

entity perhaps not directly regulated by the FHWA, such as a trucking

service company, a non-hazardous materials shipper, or a medical

examiner, which possesses information related to an investigation of a

violation of the safety regulations by a motor carrier would be

required to produce records of that information upon request,

enforceable through administrative subpoena and subsequent court order.

No distinction among regulated and other entities in application of

any of the administrative powers, including on-site inspections,

appears in 49 U.S.C. 31133(a). The proposed regulatory approach,

however, is consistent with 49 U.S.C. 502 and 504 and the long-standing

practice of the FHWA.

Proposed paragraph (b) restates two general principles of

administrative law regarding the scope of investigations, questions

about which have arisen in the past during the course of inspections.

First, any records related to an investigation may be inspected,

regardless of whether or not the FHWA requires the records to be

maintained under its regulatory authority. Second, as part of an

inspection and investigation, FHWA officials may question carrier

officials and employees.

The last sentence of paragraph (b) would incorporate the carrier's

right of accompaniment during an inspection, as provided in 49 U.S.C.

31133(b). This means the carrier or its representative must be given

the opportunity to accompany the investigator during the inspection of

records and equipment. The invitation does not have to be accepted, but

it must be offered. Paragraph (d) is modeled on provisions in other

agencies' regulations. It is proposed that an employer's consent to

allow entry on its business premises of an agency official for purposes

of conducting an investigation may not be conditioned on the outcome of

the investigation or any resulting enforcement actions.

An agency official denied entry by an employer would not attempt to

force entry. The right of access for inspection of records and

equipment and administrative subpoenas are enforceable through a civil

action in U.S. District Court for an appropriate order and such other

relief as may be necessary and proper under the circumstances pursuant

to proposed Sec. 304.302 (derived from 49 U.S.C. 507).

Paragraph (e) would restate 49 U.S.C. 505(a) and would be included

because it is related to the scope of investigations. Given the fluid

nature of the motor carrier industry, reviewing lease arrangements may

be essential in determining legal responsibility for compliance with

the safety regulations. Paragraph (f) would detail the confidentiality

of investigatory reports.

Section 361.104 Definitions

To avoid repetition, the definitions provided in Sec. 390.5 are

also applicable to this rule. The few additional definitions necessary

for this rule are provided.

Section 361.105 Employer Obligations

Paragraph (a) would simply restate the responsibility of motor

carriers and other persons to comply with applicable safety

regulations. 49 U.S.C. 31135. Paragraph (b) would establish the duty of

persons to post notices of violations when required by the FHWA. See 49

U.S.C. 521(b)(3). In addition, reasonable standards for posting such

notices are proposed. Paragraph (c) would inform the public that safety

regulations published in the Federal Register are available for review

in FHWA offices.

Paragraph (c) also proposes to require that employers maintain a

copy of applicable safety regulations and make it available to

employees upon request. It has long been a requirement that employers

assure compliance by their employees of the safety regulations (see 49

CFR 390.11). This obligation could not be met without ready access to

the governing regulations. 49 U.S.C. 31502 authorizes the Secretary to

prescribe requirements for the ``safety of operation and the

equipment'' of motor carriers and the practical mandate to maintain an

accessible source of knowledge of the requirements is clearly within

this authority. The FHWA does not consider this an increased paperwork

burden because printed copies of the regulations are readily available

from a number of sources in addition to the

[[Page 18869]]

Government Printing Office at little or no cost.

Paragraphs (d) through (e) would reiterate the on-site inspection

process from the point of view of the person being investigated.

Section 361.106 Vehicle Inspection

Although the FHWA does not generally focus its enforcement efforts

on safety equipment inspections of CMVs on the roadside, this section

would mirror 49 U.S.C. 31142, which provides the authority to conduct

such inspections. Vehicles may also be inspected at a motor carrier's

terminal. See 49 U.S.C. 504(c).

Section 361.107 Complaints

Little in this proposed section goes beyond the statutory language.

Paragraphs (a) through (e) would be a mixture of 49 U.S.C. 506(b) and

31143(a), which set forth the FHWA's procedure and obligations in

responding to complaints of violations of the safety regulations lodged

by members of the public. The only addition to the statutes is the

second sentence of paragraph (b), which would clarify what constitutes

a nonfrivolous complaint. Proposed paragraphs (f) through (g) repeat

the prohibitions in 49 U.S.C. 31105(a) on retaliation against employees

who file complaints alleging violations of the safety regulations.

Because of the numerous questions which the FHWA regularly receives in

this area, paragraph (h) would inform the public that the prohibitions

are enforced by the Department of Labor and cites the relevant

regulations.

Section 361.108 Administrative Subpoenas

The administrative subpoena power would be elaborated, as

authorized in 49 U.S.C. 502(d).

Section 361.109 Depositions and Production of Records

Two more administrative powers would be elaborated, as authorized

in 49 U.S.C. 502 (e) and (f).

Part 362: Safety Ratings

This part would set forth the standards and procedures applicable

to the determination of a motor carrier's safety fitness and the

issuance of a safety rating by the FHWA.

Background

Section 215 of the 1984 Act, enacted on October 30, 1984 (now

codified at 49 U.S.C. 31144), required the Secretary of Transportation

to establish a procedure to determine the safety fitness of owners and

operators of commercial motor vehicles in interstate commerce. Even

before the statutory mandate, the FHWA had been providing safety

fitness information to the Interstate Commerce Commission since 1967,

and had developed a rating system for motor carriers. Following the

1984 Act, the FHWA published an NPRM on June 25, 1986 (51 FR 23088),

and issued a final rule on December 19, 1988, with an effective date of

January 18, 1989 (53 FR 50961). The regulations are codified at 49 CFR

part 385. The regulations were amended by the interim final rule

published on August 16, 1991 (56 FR 40801) to implement the provisions

of the Motor Carrier Safety Act of 1990 (MCSA of 1990) (section 15 of

the Sanitary Food Transportation Act of 1990, Pub. L. 101-500, 104

Stat. 1218) which prohibits a motor carrier that receives an

``unsatisfactory'' safety rating from operating commercial motor

vehicles to transport certain hazardous materials or more than 15

passengers.

The regulations established a ``safety fitness standard'' which the

FHWA uses for assigning motor carrier safety ratings of

``satisfactory,'' ``conditional,'' or ``unsatisfactory.'' The safety

ratings are used to prioritize motor carriers for review and focus

enforcement resources on carriers with the most serious compliance

problems. The safety ratings had routinely been made available to the

ICC for consideration of operating authority applications and self-

insurance, and have been available to the Department of Defense in the

selection of carriers to transport hazardous materials and passengers,

to other governmental and private industry shippers for carrier

selection purposes, to insurance companies to assist in risk

determinations and to the public upon request.

The current rule also prescribes procedures for administrative

review of the rating based on factual disputes, and for requested

changes in safety ratings based upon evidence that corrective actions

have been taken to bring the motor carrier into compliance with the

safety fitness standard.

Since the adoption of the safety rating regulations, the process

has been the subject of occasional dispute. To some, the method used in

determining a safety rating is abstract and confusing, especially when

determined at the same time as, but not necessarily in conjunction

with, the decision whether or not to initiate enforcement actions. The

existence of both ``unsatisfactory'' and ``conditional'' ratings,

moreover, has resulted in unintended significance being given to the

``conditional'' rating. Since it is less than a ``satisfactory''

rating, some shippers and others comparing the performance of various

carriers may give the ``conditional'' ratings an overlay negative

connotation not intended by the agency. Some motor carriers, on the

other hand, equate the satisfactory rating with a level of excellence

unintended by the agency and inconsistent with the general meaning of

the term ``satisfactory,'' i.e., adequate.

Other motor carriers have argued that a rating may be based on

alleged violations of the regulations discovered during on-site audits

but not fully documented. It may then become difficult to contest these

violations in an administrative proceeding challenging the rating. In

practice, the FHWA has addressed this concern by taking a second

investigative look at disputed violations.

Although the FHWA believes that current procedures satisfy the due

process provisions of the Administrative Procedure Act, 5 U.S.C. 551 et

seq., there is room for improvement and greater efficiency. The

situation took on added significance with the enactment of the Motor

Carrier Safety Act of 1990 and its requirement that motor carriers that

receive an ``unsatisfactory'' safety rating be prohibited from

operating commercial motor vehicles to transport hazardous materials

and passengers. This prohibition, which becomes effective 45 days after

receipt of an ``unsatisfactory'' safety rating, would clearly affect a

motor carrier's ability to stay in business. In light of these

concerns, and to improve the objectivity of the information on which

ratings are based, the FHWA has already made several adjustments to the

safety rating methodology and has heightened its responsiveness to

carriers exposed to serious consequences following ratings.

Full compliance with all of the safety and hazardous materials

regulations should certainly be the objective of all responsible motor

carriers. At a minimum, however, a motor carrier must have managerial

control over the critical functions of its operations that reflect on

safety, i.e., it must have an effective system to assure compliance

with the regulations. A negative rating is, of course avoided through

full compliance. It is also avoided by adopting reliable measures to

assure that the motor carrier's employees know what is required by the

regulations, have the opportunity to achieve full compliance, and do

not violate those regulations.

In reviewing a motor carrier's operations for rating purposes, the

FHWA places more emphasis on compliance with those regulations that

have the greatest immediate and direct

[[Page 18870]]

impact on safety. In evaluating the several factors that comprise the

rating, violations of those regulations will have a greater effect on

the overall rating. The FHWA has been using the concepts of ``acute''

and ``critical'' regulations to carry out this purpose. The term

``acute'' refers to regulatory requirements the violations of which

would create an immediate risk to persons or property, e.g., using a

driver after he has tested positive for alcohol. The term critical

refers to those regulatory requirements the violation of which, if

occurring in patterns, would indicate a breakdown in effective control

over essential safety functions, e.g., using drivers beyond their

allowable driving or duty hours. These concepts would now be codified

if this proposal becomes final.

It is also being proposed that the safety ratings be reduced to

only one category, eliminating both the ``satisfactory'' and

``conditional'' safety rating categories. Conditions may be attached to

the avoidance of an ``unsatisfactory'' rating, but they would not place

the motor carrier in a rating category from which negative assumptions

may be drawn. This raises some additional questions to be resolved in

the final rule, e.g., whether and how best to describe those carriers

which are not rated ``unsatisfactory'' and what should be done with the

ratings of those carriers currently rated ``conditional.''

The FHWA believes that Congress has expressed its will in the MCSA

of 1990 (49 U.S.C. 5113) and in subsequent oversight reports that

severe consequences should attach to an ``unsatisfactory'' rating.

Although the language in that provision employs the terms

``satisfactory'' and ``conditional,'' no particular significance is

attributed to those terms other than they are an improvement from the

``unsatisfactory'' classification. This proposal reflects the FHWA's

continuing intention to focus on the ``unsatisfactory'' category and

assure that before carriers are assigned such a rating, it is indeed a

reflection of demonstrably poor compliance or performance. If the

unsatisfactory safety rating is to be considered tantamount to a

determination that the carrier assigned such a rating should not to be

operating commercial motor vehicles in interstate commerce without

appropriate corrective measures, then such a carrier should be well

below average and the percentage of carriers earning such a rating

ought to be relatively small. The information used to assign such a

rating should be put to a more strenuous test before consequences

attach.

The FHWA is, therefore, also proposing to give motor carriers

advance notice of unsatisfactory ratings so that any challenges to the

ratings can be resolved before the rating takes effect. In addition,

expedited procedures for the review of unsatisfactory ratings are

proposed for carriers when their ability to stay in business might be

affected by such a rating. Finally, the FHWA is also proposing to

recognize a practice that has been evolving over the last few years by

affording some discretionary relief to motor carriers adversely

affected by ratings that are able to demonstrate a willingness to

comply and accept conditions designed to improve their safety

management systems and practices.

It must be recognized that the FHWA will never be able to complete

an individual on-premises compliance review of every motor carrier in

existence. More and more, the information obtained from State accident

reports and reports generated by the 2 million roadside inspections

conducted each year is being used to identify carriers that may be

experiencing safety or compliance problems and therefore pose potential

safety risks. (As prescribed in current regulations, this information

is also factored into a carrier's rating.) Complaints are also

indications of the possible existence of compliance problems, and there

is a statutory duty to investigate nonfrivolous complaints. As the

amount and reliability of external information grows, the absence of

negative indicators becomes a more reliable premise for refraining from

individual, on-site compliance reviews. Moreover, a ``satisfactory''

rating produced by a compliance review is only a current assessment of

a motor carrier's level of compliance, and its significance obviously

diminishes with time.

In a one-category rating system, therefore, an ``unsatisfactory''

rating is definitely a negative finding, which is likely to have

adverse impacts on the motor carrier's business opportunities. The

remaining group of carriers that are not rated ``unsatisfactory'' would

be comprised of those carriers with existing ``satisfactory'' or

``conditional'' ratings (which may be dated) and other carriers that

are not rated (this would be the largest group). The latter subgroup of

unrated carriers would be comprised both of carriers that survive

future compliance reviews without receiving an ``unsatisfactory''

rating and those that have not been subject to on-premises compliance

reviews. In this proposal, we would not use any terminology to describe

carriers that are not rated ``unsatisfactory,'' so that no connotation,

positive or negative, would attach. If readers are particularly opposed

to this approach, the FHWA is interested in receiving comments on the

use of categories and the proper terminology to be applied to them.

In this proposal, the FHWA would be prescribing the immediate

termination of ``satisfactory'' and ``conditional'' ratings. This would

have no impact on carriers presently holding such ratings as they would

not be grouped in the unsatisfactory category. The FHWA is also

particularly interested in comments on this issue.

In recent times, the FHWA has considered programs that would

provide incentives to those carriers that demonstrate exceptional

performance and compliance. Nothing in this proposal should be

interpreted to mean that we have abandoned such concepts. The agency

will continue to work with other organizations and associations, such

as the Commercial Vehicle Safety Alliance, to develop the potential of

using positive incentives to promote compliance.

Finally, the safety rating is only one means of promoting

compliance with the safety regulations. The FHWA will continue to

employ selective compliance and enforcement measures in the form of

inspections, investigations, civil penalty assessments and criminal

prosecutions. These will be driven, for the most part, by performance

indicators and complaints. We will also continue to rely heavily on the

partnership developed with State safety enforcement agencies through

the Motor Carrier Safety Assistance Program. Enforcement actions are

considered an effective tool to promote compliance and penalties will

be imposed for violations of the safety regulations when circumstances

warrant, regardless of the carrier's rating. This recognizes that many

otherwise satisfactory motor carriers will tolerate violations of the

regulations from time to time, or will get careless in their management

practices designed to detect and eliminate violations. Enforcement is

appropriate in such situations without necessarily affecting a

carrier's overall rating.

This following section-by-section analysis explains these changes

in more detail.

Section-by-Section Analysis

Section 362.101 Purpose

This section would identify the scope and purpose of the part. The

definitions section of part 385 would be removed as unnecessary.

[[Page 18871]]

Section 362.102 Motor Carrier Identification Report

This requirement is presently found at Sec. 385.21, and provides

that interstate and foreign carriers must file a Motor Carrier

Identification Report, Form MCS-150 (copy provided in the appendix),

within 90 days of beginning operations. This is essential to an

accurate motor carrier census and relates to the assignment of a DOT

identification number. It also assists the FHWA in scheduling reviews

of unrated motor carriers. Since this is a continuing requirement, the

provision in the current rule requiring the filing of the report within

90 days of the effective date of the rule has been eliminated.

Section 362.103 Safety Fitness--Standard and Factors

The safety fitness standard in the current Sec. 385.5 and the

factors in Sec. 385.7 would be clarified, simplified and combined into

one section. This proposal also elaborates on the factors used to

determine the rating and codifies the practice of placing special

emphasis on compliance with ``acute'' and ``critical'' regulations.

Section 362.104 Determination of Safety Fitness--Safety Ratings

The current 49 CFR 385.9 would be amended to define the one safety

rating that may be issued by the FHWA (``unsatisfactory''), and to

describe what constitutes such rating. For example, a carrier would be

issued an unsatisfactory rating if it is determined that the carrier

does not have adequate safety management controls in place to ensure

compliance with the safety fitness standards and factors prescribed in

proposed Sec. 362.103, and which has resulted in one or more of the

specific occurrences listed in Sec. 362.103(b)(1) (i) through (x). In

addition, this section provides that an ``unsatisfactory'' safety

rating may be avoided based on conditions, such as compliance with

specific provisions of the safety or hazardous materials regulations,

the requirements of a compliance order or settlement agreement, or

notices to abate, which may be imposed at the time the proposed safety

rating is issued.

This requirement is not intended to replace the current

``conditional'' safety rating. Rather, it is intended to provide the

agency with flexibility to promote compliance with the regulations by

obtaining the correction of deficiencies in specific areas of a

carrier's operations without calling the motor carrier's entire safety

fitness into question. The conditions upon which it would avoid

``unsatisfactory'' would be known by the motor carrier and the agency.

No separate status would attach to the rating, nor would the existence

or the nature of the conditions be routinely available to the public

under Sec. 362.110. The motor carrier could correct deficiencies

without having its ability to stay in business negatively affected, as

is generally the case with the current ``conditional'' safety rating.

Section 362.105 Unsatisfactory Rated Motor Carriers--Prohibition on

Transportation of Hazardous Materials and Passengers; Ineligibility for

Federal Contracts

This section would incorporate and clarify the existing

prohibitions and penalties listed in section 49 CFR 385.13 that are

applicable to motor carriers that receive a safety rating of

unsatisfactory. The listing of applicable penalty statutes would be

replaced with a reference to the penalty provisions listed in appendix

A to part 386 of this chapter (Part 364 in this proposal). Finally, the

references to the 45-day period during which a motor carrier must

improve the safety rating would be removed and incorporated into the

procedures for obtaining review of the rating (new Sec. 362.108, see

description below).

Section 362.106 Notification of a Safety Rating

This section would clarify and incorporate the rating notification

requirements of the current Sec. 385.11, and establish the concept of a

proposed safety rating of unsatisfactory. A proposed safety rating of

unsatisfactory would become the motor carrier's final safety rating 45

days after the date the notice of proposed safety rating is received by

the motor carrier, unless the carrier petitions for a review or obtains

relief pursuant to proposed Sec. 362.108 (see below). This proposed

rating incorporates the requirement in the MCSA of 1990 that a motor

carrier receiving an unsatisfactory safety rating be given 45 days to

improve its rating before the Act's prohibition of hazardous materials

and passengers transportation takes effect. It would also eliminate a

distinction between carriers based on type of operation by applying the

concept of the proposed rating to all unsatisfactory findings and would

afford all carriers the opportunity to be heard during that period and

to improve the rating before consequences attach. This section also

would provide that a proposed safety rating would not be made routinely

available to the public until it becomes final. This would ensure that

a proposed safety rating of unsatisfactory will not affect a motor

carrier's business before the carrier is given the opportunity to

improve or challenge its proposed rating.

The FHWA recognizes that the assignment of a negative safety rating

often has graver consequences for the rated motor carrier than any

civil penalties that might be sought for individual violations

considered in the compilation of the rating. Several prohibitions

attach to the assignment of an unsatisfactory rating and decisions are

made daily by shippers and insurers on the basis of safety ratings.

This is a primary purpose of the rating as conceived by Congress and

implemented by the agency. For this reason, the agency treats the

rating as a valuable compliance and enforcement measure and provides an

administrative proceeding to afford the ratee with the opportunity to

be heard before the rating is made known. The FHWA believes that

withholding information about a proposed rating from the public is

consistent with the Freedom of Information Act, which provides an

exemption from required release of information compiled for law

enforcement purposes (Exemption 7). The exemption applies because (a) a

law enforcement proceeding would be pending, i.e. the determination of

the motor carrier's safety fitness; and (b) the premature release of a

proposed rating could reasonably be expected to cause harm in that the

consequences would attach before a final decision was made. Since the

purpose of providing the administrative proceeding is to prevent

unintended consequences from inchoate determinations, release of

proposed ratings to shippers and insurers who may very well act on the

information could easily frustrate that purpose. It could also increase

demand for expedited adjudication which could adversely impact an

orderly consideration of all relevant issues. Moreover, the length of

time between a proposed rating and a final rating is finite and would

rarely exceed 45 days. The FHWA also recognizes that release of a

proposed rating may be unavoidable under some circumstances, but it

would be the agency's intent that routine release under Sec. 362.110

would not occur.

Section 362.107 Change to Safety Rating Based on Corrective Actions

This section would continue the remedy presently available in

Sec. 385.17 by allowing for a change in an unsatisfactory rating to be

requested both within the 45 days the rating remains in a proposed

status and at any time after the rating becomes final. The

[[Page 18872]]

filing of a petition for change of a proposed rating would not stay

this 45-day period, but if the FHWA cannot make a determination within

the 45-day period and the motor carrier has submitted evidence that

corrective actions have been taken, the period may be extended for up

to an additional 10 days. This would allow the agency to prioritize

requests based on the consequences a particular carrier may face from

an adverse rating. This section would also provide for a higher level

agency review of a denial of a request for a rating change. In cases

where the resulting unsatisfactory rating causes an out-of-service

order to be issued, an expedited review by the Associate Administrator

would also be available.

Section 362.108 Administrative Review

This section would consolidate, clarify, and revise the existing

procedures in Secs. 385.15 and 385.17 dealing with petitions for review

of safety ratings. The section would establish a single procedure

applicable to reviews of proposed safety ratings of unsatisfactory and

of denials of requests for changes in ratings under Sec. 362.106.

Petitions for reviews of safety ratings of unsatisfactory under this

section would be similar to the procedures in the present Sec. 385.15

applicable to reviews by the Director, Office of Motor Carrier Field

Operations, in cases where there are factual or procedural disputes to

be resolved. A motor carrier receiving notice of a proposed safety

rating of unsatisfactory would still have the option of requesting a

change in the rating based on corrective actions taken. This section

would provide a carrier selecting that action with the additional

opportunity to petition for review if it believes the rating or the

denial of a change was based on errors of procedure or fact.

The existing 90-day filing deadline for petitions under this

section would be reduced to 45 days for consistency and finality. When

the procedure applies to proposed safety ratings of unsatisfactory, the

request for review must be submitted during the 45-day period before

the proposed rating becomes final. This section would maintain the

current statutory requirement that the FHWA complete the review within

30 days in cases where the petition is filed by a motor carrier subject

to the hazardous materials and passenger prohibition in Sec. 362.105.

The petitioner would be required to submit with its petition all

arguments and information it desires to be considered on review. In

most cases, the Director, Office of Field Operations, will complete the

review and render a decision on the basis of the written submission.

The Director would have the discretion to request additional

information or to call a conference. If it is determined that the motor

carrier operations still fail to meet the safety fitness standard, the

motor carrier would be provided with written notification that its

petition has been denied and that the proposed safety rating of

unsatisfactory is final. Except as provided below, the decision of the

Director, Office of Motor Carrier Field Operations, would become the

final agency action. Because the unsatisfactory rating generates an

out-of-service order for a passenger or hazardous materials carrier,

such motor carrier would have the right to an expedited administrative

review of this decision by the Associate Administrator for Motor

Carriers in accordance with 5 U.S.C. 554 and corresponding procedures

are proposed in part 363. This is a new review procedure proposed to

better guarantee due process of law. The expedited review, if timely

requested, would be provided within 10 days from the date of the notice

of denial of the initial review petition. The Associate Administrator

may refer the petition for review for a hearing before an Administrator

Law Judge (ALJ). The Associate Administrator or ALJ may stay any safety

rating during the pendency of the expedited administrative review.

Section 362.109 Temporary Relief From Rating

This section would provide a means to grant temporary relief to a

motor carrier from dire consequences of an unsatisfactory rating upon a

showing of willingness to adopt necessary changes in safety management

polices and practices and to make good faith efforts to improve safety

performance. The temporary relief would be entirely discretionary on

the part of the Regional Director, in the case of a petition for change

in the rating, and the Director of the Office of Field Operations, in

the case of an initial administrative review. The exercise of

discretion by these officials is not reviewable as every carrier

affected by a proposed rating or final rating is provided with ample

opportunity for administrative review in this Part. This provision

merely institutionalizes a practice that has been growing in the recent

past whereby a rating is ``conditionally rescinded,'' to allow a motor

carrier to demonstrate its improved practices in order to earn a better

rating. If a motor carrier is forced to cease operating because of an

unsatisfactory rating, it presumably would be unable to gather any

experience with improved systems that would convince a reviewer that it

had indeed committed itself to safety compliance. The proposed

procedure would require the motor carrier to operate under a consent

order for a period not to exceed 60 days at the conclusion of which a

final rating would be assigned.

Section 362.110 Safety Fitness Information

This section would incorporate the requirements of the current

Sec. 385.19. The section has been clarified to make clear that the

information would also be made available to State agencies.

Part 363: Enforcement Proceedings

The goal of this proposal is to improve the current rules of

procedure for motor carrier enforcement proceedings. Mindful that this

must also have been the goal each of the numerous times the rules have

been amended since their inception in 1969, the task has been

approached deliberately. To open the process to new ideas, various

external sources have been consulted, notably the Model Adjudication

Rules of the Administrative Conference of the United States (December

1993) and various procedural rules of other Federal agencies. On the

other hand, in recognition of the importance of the historical context

of the rules, the predecessors of the current rules, and their

extensive amendments, were reviewed in hopes of identifying

shortcomings and determining the underlying rationale for certain

provisions which may now seem unnecessary, unclear, or unavailing.

This review reveals that even the first incarnation of motor

carrier procedural rules by the FHWA, spare though they may have been,

were not created in a vacuum, but were largely based on practices and

procedures of the Interstate Commerce Commission from whence the FHWA

inherited its motor carrier safety functions. Each subsequent amendment

was believed to be necessary to address programmatic or statutory

changes or to increase efficiency and fairness. And each amendment or

wholesale revision was built on the foundation of previous rules. This

effort is no different, notwithstanding the recourse to model rules.

Because of the importance of past practice in understanding both

the current system and needed changes, and because such a history has

not been compiled elsewhere, a fairly extensive examination of previous

rules is offered.

[[Page 18873]]

The proposed rules will then be explained in this context.

Background

The current rules are the legacy of two distinct strains of

administrative procedures of the ICC. Until 1966, the ICC had the sole

responsibility on the Federal level for regulating motor carrier

safety. In addition to its pervasive regulation of interstate routes,

rates and services through a comprehensive system of certificates of

authority to operate, the ICC also established standards for the safety

of operation of motor carriers. Interstate Commerce Act, sec. 104, 24

Stat. 379, (1887); added ch. 498, 49 Stat. 546 (1935). Most of the

safety standards were enforced through a rather onerous process

involving numerous formal steps--opening an investigation,

investigation, record production and depositions, proceedings before

the full Commission, compliance orders, and, if it came to that, the

withdrawal of operating authority.

In addition, the ICC had limited authority under section 222(h) of

the Interstate Commerce Act to levy civil, monetary penalties against

carriers for failure to keep records, file reports, or respond to

questions posed by the ICC, so-called recordkeeping violations. Acts of

fraud, misrepresentation, false statements, and intentional violations

of nonrecordkeeping requirements in the FMCSRs were punishable solely

as criminal offenses in Federal court, or through the formal process

relating to operating authority. The section 222(h) recordkeeping

violations subject to monetary penalties were enforced by the ICC in

civil actions in the United States District Courts in the event

informal administrative procedures to resolve such actions were

unsuccessful.

The two separate enforcement tracks were carried over to the FHWA

after the ICC's safety functions were transferred to DOT. In 1969, the

FHWA issued rules of practice for motor carrier proceedings which

crystallized the dichotomy. 34 FR 936 (January 22, 1969). Part 385 of

title 49 CFR was entitled ``Collection and Compromise of Claims for

Forfeiture under Section 222(h) of the Interstate Commerce Act.'' Part

386 provided ``The Rules of Practice for Motor Carrier Safety

Proceedings under section 204(c) of the Interstate Commerce Act.''

Part 385 was very brief, providing requirements for claim notices

and settlement agreements. Respondents were instructed that they should

respond to the claim and should state whether they wished to discuss

payment. A response was not mandatory. Section 222(h) claims that did

not result in a settlement or to which there was no response were

enforced through litigation in U.S. District Court. Mirroring the ICC

situation, no administrative procedure was provided to resolve the

claims.

As the FHWA's version of the ICC's formal process, part 386 was

considerably more involved than part 385 and established the framework

for the current rules of procedures.

All proceedings under part 386 alleging safety violations began

with issuance of a notice of investigation (NOI) to a motor carrier, a

procedural relic of the cumbersome ICC process. Under 49 U.S.C. 506, an

order to compel compliance could not be issued without an NOI and an

``opportunity for a proceeding.'' The Federal Highway Administrator

assigned to a hearing examiner all NOIs properly contested by the

carrier in the form provided in the rule. After a hearing, the hearing

examiner issued an order disposing of the proceedings, which was

reviewable by the Administrator on his/her own motion or that of a

party. The proceedings could also be disposed of by issuance of a

consent order pursuant to the agreement of the parties. Improperly

contested or unanswered NOIs could result in unilateral issuance of a

final order by the Administrator. For the most part, the orders

directed the carrier to comply with the safety regulations it was

already duty bound to follow.

For enforcement of orders against regulated carriers, the FHWA had

to petition the ICC to open its own investigation into the carrier's

operating authority, thus bringing the matter back to that cumbersome

process. Moreover, a revocation proceeding by the ICC would generally

not be commenced without a showing that an FHWA order had been

violated.

In 1977, the FHWA made the first extensive revisions to these

procedural rules. 42 FR 18076 (April 5, 1977). Part 385 was repealed

and its settlement procedures incorporated into part 386. The

respondent's statement of desire to discuss payment of the amount of

the claim became mandatory and an occasional source of confusion or, at

least, an excuse not to file a proper response. It is not difficult to

see that a statement expressing a willingness to settle could be seen

by the uninitiated as a quasi admission of culpability at odds with a

statement contesting the allegations of the claim. Some respondents

merely stated they wished to discuss settlement and failed to file a

reply consistent with the rules, thereby risking waiver of the right to

contest the claim, waiver of the right to a hearing, or worse, default.

This situation was exacerbated by regulatory changes in action taken by

the FHWA upon a failure to reply.

In the interest of uniformity, the scope of Part 386 was expanded

in 1977 to include monetary penalty actions arising under section

222(h) of the ICC Act (formerly processed under part 385) and the HMTA

and to include driver qualification determinations. Unfortunately for

uniformity, the standards for these proceedings varied in particulars.

For example, the commencement of proceedings was trifurcated into

issuances of claim letters for civil penalties, letters of

disqualification or determinations for driver qualifications, and NOIs

for violations of other safety rules. Significantly, monetary penalty

assessments were now, for the first time, subject to an extensive

administrative process.

In terms of procedures, no longer would all properly contested

matters result in a hearing. Instead, ``to expedite the decisionmaking

process and to reduce the number of unnecessary hearings,'' the

Associate Administrator (AA) for Safety, rather than the Federal

Highway Administrator, would only assign matters with material factual

issues in dispute to a hearing officer. If no hearing was requested in

the reply, the AA could simply issue a final order based on the

evidence and arguments submitted.

When no reply was received at all, the outcome varied by the type

of proceeding. If a driver failed to reply in accordance with the rules

to a letter or determination of disqualification in a driver

qualification proceeding, the letter or determination automatically

became the final order of the Associate Administrator 30 days later. In

contrast, no such automatic procedure existed when no reply at all was

made to claim letters or NOIs. The AA still had to issue a final order,

although it could be done sua sponte.

Also added to part 386 were pre-trial procedures on discovery and

motion practice designed to expedite the proceedings and clarify

procedural points which had arisen under the 1969 rules.

Minor revisions were made to the rules later in 1977, based on

comments received from the public and six months of practice. 42 FR

53965 (October 4, 1977). Most significant among the changes, a motion

by a party was required before the AA could issue a final order where

no reply was made to the NOI or claim letter. In addition, discovery

and amendment of pleadings were expanded to situations in which a

[[Page 18874]]

matter was not assigned for a hearing but decided by the AA based on

the pleadings. Finally, for matters under the HMTA only, an option was

added whereby a respondent could reply to a claim or NOI with a notice

to submit evidence, rather than request a hearing, and then submit the

evidence at a later date.

In 1985, the rules were again comprehensively amended. 50 FR 40304

(October 2, 1985). The precipitating factors were again statutory

changes and internal reorganization. Pursuant to the Motor Carrier

Safety Act of 1984 and amendments to the HMTA, the rule contained

provisions for the FHWA to seek to enjoin in U.S. District Court

carrier actions in violation of the FMCSRs and HMRs and to order out-

of-service all carrier operations constituting an imminent hazard to

safety.

A section on judicial appeal of final orders was also added to the

rule consistent with the 1984 Act. This became important because the

1984 Act authorized the FHWA, for the first time, to assess civil,

monetary penalties for non-recordkeeping violations of the FMCSRs.

Prior to the 1984 Act, monetary penalties could only be assessed for

violations of the HMRs and recordkeeping requirements in section 222(h)

of the ICC Act and the FMCSR. The 1984 Act expressly made all penalty

assessments subject to the notice and hearing requirements of the

Administrative Procedure Act. Thus, the reach and depth of the FHWA's

civil penalty authority was greatly expanded, and the procedural rules

were amended to reflect this new authority and responsibility.

In terms of procedure, however, the basic trichotomy of the 1977

rules was continued--driver qualification, civil penalty, and NOI

proceedings. Despite the sudden predominance of civil penalties in

terms of the safety program generally, and, specifically, of the

relative number of administrative proceedings, the civil penalty

procedures were little changed from the 1977 rules, which, in turn,

were largely based on the old ICC NOI procedures. Although these

procedures met the requirement in the 1984 Act to comply with the

Administrative Procedure Act, they perhaps did not offer the clearest

and most efficient method of resolving the new influx of cases.

The civil penalty procedures were amended, however, in several

minor ways relevant to this discussion. First, similar to the earlier

provisions for driver qualification proceedings, the failure to reply

to a claim letter automatically resulted in the letter becoming the

final order of the Associate Administrator for the newly organized

Office of Motor Carriers (AA) without a separate order having to be

issued upon the motion of a party. Unlike the qualification section,

however, this seemingly applied only to a complete failure to reply,

and not merely a failure to reply in the form provided in the rule. For

NOIs, nothing changed in this regard. Final orders continued to be

issued by the AA only upon motion of a party. Second, the procedure for

notice of intent to submit evidence without a hearing was extended from

hazardous materials cases to all civil penalty proceedings. Third,

Administrative Law Judges formally replaced hearing officers as

arbiters, although this had been the practice for some time. Fourth,

the discovery and hearing procedure sections were made more detailed to

closer approximate the Federal Rules of Civil Procedure (title 28,

U.S.C.).

The important results of the 1985 amendments were the expansion of

civil penalty authority and the addition of out-of-service order

authority. These two developments further marginalized the venerable

NOI process. In practice, civil penalty proceedings came to greatly

overshadow the cumbersome NOI proceedings. Instead of having to endure

a long administrative process possibly resulting in an order to comply

with regulations with which a carrier was already bound to comply, and

which could only be enforced through intervention in ICC proceedings,

another long process, direct administrative action could be taken

against the carrier in the form of financial penalty. If a carrier

persisted in a state of noncompliance, it could now be directly ordered

out of service as an imminent hazard. An NOI-based order to comply with

the regulations paled in comparison with these new powers.

The next revision of the rules made only technical amendments. 53

FR 2035 (January 26, 1988). Added to the authorities and scope sections

in part 386 were references to the CMVSA of 1986 (49 U.S.C. Chapter

313), in order to implement the CMVSA-based civil and criminal

penalties added to 49 U.S.C. 521(b). The Administrative Law Judge's

power to dismiss matters referred by the AA for a hearing was made

explicit. And the rather detailed delegations of authority from the

Administrator to various positions within the Office of Motor Carriers

were removed from the regulations and placed in the FHWA Organization

Manual,\1\ consistent with an agency-wide trend to maximize

flexibility.

---------------------------------------------------------------------------

\1\ FHWA Orders 1-1, Part I, Chapter 7, Motor Carrier Safety, is

available for inspection and copying as provided at 49 CFR part 7,

appendix D.

---------------------------------------------------------------------------

A small change was made to the rules on December 19, 1988 (53 FR

50961). The FHWA clarified that an out-of-service order designed to

eliminate an imminent hazard applied immediately, pending an

opportunity for review within 10 days.

More extensive amendments were made in 1991. 56 FR 10183 (March 11,

1991); NPRM, 55 FR 11224 (March 27, 1990). A new subpart G spelled out

the statutory civil penalty assessment criteria and specified the four

types of FHWA orders the violation of which could lead to additional

penalties. The four types of orders were notice to abate, notice to

post, final order, and out-of-service order. New appendix A to part 386

established a penalty schedule ranging from $500 to $10,000 for

violations of such orders. These amendments implemented a provision of

the 1984 Act (49 U.S.C. 521(b)(7)).

Another 1991 amendment added a ``new'' order to the AA's

enforcement arsenal--the compliance order, last heard from in ICC

proceedings predating the formation of the DOT. See Sec. 386.21. The

compliance order attempted to give meaning to the largely moribund NOI

process, the procedures for which nevertheless remained in the

regulations. The compliance order became the name of the final order

issued by the AA in an NOI proceeding in which a consent order could

not be achieved. A compliance order could go beyond the NOI in that it

could direct a carrier to ``take reasonable measures beyond the

requirements of the regulations, in the time and manner specified, to

assure future compliance.'' The order warned that failure to take those

measures would constitute a violation of a final order of the AA,

subjecting the carrier to the additional penalties of appendix A and an

out-of-service order if the carrier's operations constituted an

imminent hazard to safety. In practice, it is not common for a

compliance order to be issued directing a carrier to take compliance

measures beyond those required in the safety regulations, but such

measures may be dictated by the circumstances. The rule allows

challenges to the reasonableness of these measures. In order to

expedite the use of NOIs, the NOI and civil penalty procedures were

merged into Sec. 386.14, though the differences in default standards,

discussed above, remained. The combination of NOIs and civil penalty

[[Page 18875]]

claims into a single administrative proceeding has been permitted since

the 1985 rules.

In practice, it is common for NOIs and notices of claims to be both

combined or issued separately at the same time in parallel proceedings,

on those occasions when NOIs are used. The primary use of the NOI is as

a warning that further violations of the same regulations could

constitute an imminent hazard and lead to an out-of-service order, as

provided in Sec. 386.21(c).

The 1991 rulemaking made two further amendments worth mentioning.

First, settlement agreements were amended to require a statement that

failure to pay in accordance with the agreement resulted in the

original claim amount becoming due and payable immediately. Second, a

provision was added to the out-of-service procedure allowing a vehicle

in transit at the time it is ordered out of service to proceed to its

immediate destination. Both of these concepts are incorporated in the

proposed rules.

Section-by-Section Analysis

Subpart A--Civil Penalty Proceedings

Section 363.101 Nature of Proceeding

Civil penalty proceedings would be defined broadly as

administrative proceedings in which the FHWA seeks payment of a fine or

orders a motor carrier, individual, or other regulated entity, the

``respondent,'' to take some action. Civil penalty proceedings are

based on violations of the FMCSRs or HMRs, which must be established

administratively by final order of the agency. Civil penalty

proceedings would include all motor carrier safety, hazardous materials

and intermodal container administrative enforcement proceedings by the

FHWA, other than those involving driver qualification and safety

ratings. For example, proceedings resulting from issuance of an out-of-

service order are civil penalty proceedings.

Driver qualification procedures are proposed in subpart B of this

part. Safety ratings are issued and may generally be contested in

accordance with proposed part 302. However, when the safety rating has

the effect of placing a carrier out of service, the carrier is offered

the same opportunity for an expedited hearing as is available to a

carrier subject to a direct out-of-service order.

The notice of investigation (NOI) procedure, the resurfaced, ICC-

originated process which allows for a finding of violations but

provides no penalties, would finally be laid to rest. Any orders,

findings, notices, or warnings the NOI procedure may have allowed would

be incorporated into the civil penalty process. The use of one set of

procedures for all claims arising from a single set of violations

should result in clearer standards and greater efficiency, and would

eliminate parallel proceedings arising from an NOI and a monetary claim

based on a single set of violations.

The procedures are designed to comport with the Administrative

Procedure Act and principles of due process. The proposed rules ensure

that persons are adequately notified of the violations they are alleged

to have committed and of their right to the opportunity to be heard by

the agency, and, in the appropriate circumstances, to a hearing before

an Administrative Law Judge.

Section 363.102 Notice of Violation (Complaint)

A Notice of Violation setting forth the allegations of the claim of

the agency against the respondent would begin a proceeding. Paragraphs

(a) and (b) propose the minimum information to be included in the

notice. The only item which is not a restatement of part 386 is the

reply form at paragraph (a)(5), which will be discussed below. To

ensure that respondents are notified of the agency's claim, paragraph

(c) would specify as the form of service to be used in issuing the

notice one which utilizes a return receipt. This requirement is

consistent with current practice.

Section 363.103 Form Reply to Notice of Violation

It is proposed to include with each notice of violation a reply

form on which the respondent is asked to check off its intended

response to the claim. The respondent may check only one option on the

reply form. The choices are to: (1) Pay the penalty, (2) discuss

settlement, and (3) contest the claim. If (2) is chosen, respondent

retains the right to contest the claim or pay the penalty at a later

date, as detailed below. For the first time, replies may be sent by

telefax, although respondent retains the burden to prove it has made a

timely reply. If no reply form (or payment or answer to the claim) is

served on the agency within 15 days, the notice of violation becomes

the final order, the violations are established as alleged, and the

respondent waives the right to contest the claim.

The intent of these provisions is to increase the efficiency of the

notice of claim process currently provided in part 386. Providing one

or two time periods in which to respond to claims and disqualification

determinations would be simpler than the 3 or 4 periods currently

provided in part 386. Though it adds a step, the reply form is designed

to provide a clear starting point to the process and to obtain a clear

and simple statement from the respondent of its intentions with regard

to the claim. Cases involving respondents that do not reply can be

processed expeditiously.

On the other hand, the reply form would add flexibility. The agency

can easily amend the claim to reflect any changed circumstances

discovered as a result of settlement negotiations. Respondents would

avoid generating perhaps lengthy and involved replies on the record,

only to resolve the matter later outside formal channels.

Because of the immediate severity of an out-of-service order, and

the consequent reduction in the time period to resolve contested

issues, no reply form is sent along with an out-of-service order. See

Sec. 363.110.

Section 363.104 Special Procedures for Out-of-Service Orders

This section is largely a restatement of what presently appears in

Sec. 386.72(b)(1), but would add a requirement for personal service, a

reference to the penalty for noncompliance, and a provision for

expedited adjudication under proposed Sec. 363.110. The authority

summarily to order a motor carrier to cease all or parts of its

operations because violations of the FMCS are creating an imminent

hazard is found at 49 U.S.C. 521(b)(5)(A).

Section 363.105 Payment of the Claim

This is the first, and obviously simplest, resolution to a notice

of violation assessing a monetary penalty. Because payment terminates

the proceeding, it may be made with or without filing the reply form.

However, if payment is chosen on the reply form, but is not made to the

agency within the time to reply, the notice becomes the final agency

order as if the respondent failed to reply. Paragraph (a) would provide

that payment may be made at any time in the course of the proceeding

before issuance of a final order. If it takes the form of a settlement

agreement, however, it must be done in accordance with Sec. 363.106. Of

course, payment of the monetary claim might not terminate the

proceeding if some other order is also being sought.

Paragraph (c) makes it clear that payment of the claim is

tantamount to a final order finding the facts of the violations as

alleged in the notice, unless the parties expressly agree in writing to

treat the violations otherwise. This is important because certain

future agency enforcement actions may be

[[Page 18876]]

based on, and certain consequences may flow from, prior and continued

violations of the safety regulations.

Section 363.106 Settlement of Civil Penalty Claims; Generally

Settlement may occur at any time in the process including after the

termination of negotiations under Sec. 363.107 and during a hearing.

Settlement procedures have been a key feature of the FHWA civil penalty

process since their inception in 1969. Settlement of alleged violations

before resort to a final formal adjudication is efficient and promotes

the partnership of the FHWA and its regulated entities directed toward

safer commercial motor vehicle transportation.

The content of settlement agreements would not be substantively

altered from that required in part 386. As civil penalty proceedings

are not limited in this proposed rule to monetary claims, so may

settlement agreements resolve the terms of other orders sought against

respondent by the agency. Thus, the consent order procedure in part

386, which provided for issuance by the agency of such other orders,

and which could include settlement agreements resolving monetary claims

anyway, is no longer necessary.

It should be noted that settlement agreements will contain a

finding that certain violations did, in fact, occur. Settlement

agreements should not be necessary in cases in which full payment of

the claim is made and no other orders are sought or terms placed on

respondent. Full payment automatically results in a finding of the

violations as alleged in the notice.

Paragraph (d) involves the situation in which partial payment is

made by a respondent, with or without an accompanying unilateral

expression of the respondent's intent in offering the payment. The

FHWA's acceptance of partial payment, as indicated by cashing a check,

for instance, in no way should be interpreted as settlement of the

claim or as forgiving the remainder of the claim. All settlement

agreements must be in the form provided in paragraph (b).

Paragraph (e) would allow execution of settlement agreement during

the course of administrative proceedings, upon the consent of parties

and without the approval of the AA.

Section 363.107 Settlement Negotiations

In contrast to the general requirements in the preceding section

applying in all instances of settlements, this section would establish

procedures when the settlement negotiations option is chosen by the

respondent on the form reply. Respondents would retain the opportunity

to convert the proceeding into a contested claim at any point in the

negotiation process. They could do this by requesting an administrative

adjudication and filing an answer to the notice of violation. For its

part, the agency could discontinue negotiations it feels are not

proving fruitful by sending the respondent a final notice of violation.

Paragraph (d) proposes a 90-day limit on this initial negotiation

process. If a settlement agreement is not reached within 90 days, the

agency may issue a final notice of violation to the respondent. The

purpose of this provision is to keep the administrative case moving

toward resolution. As justice delayed is justice denied, so does a

delayed penalty reduce its effectiveness. Under current practice, some

cases in which a respondent has indicated a willingness to settle have

a tendency to languish when agreement cannot be readily reached. This

provision should help to avoid consequent case backlogs and should

actually promote settlement as it pushes the case along the track

toward resolution. In accordance with Sec. 363.106, a settlement may be

reached at any point in the civil penalty process, including in

contested claims being administratively adjudicated.

Paragraph (e) would establish the procedures when a final notice of

violation is sent to a respondent after negotiations have been

expressly terminated by one of the parties or 90 days have passed

without settlement. For flexibility, the final notice may simply

incorporate the original notice of violation. For efficiency, if the

negotiations have revealed, for example, that one of the claimed

violations did not occur, the final notice may be amended deleting that

charge. The procedures for replying to the final notice similarly would

incorporate those for immediately contesting the original claim. At

this point, after negotiations have indicated that the parties cannot

agree on resolution of the claim and that it is indeed contested, the

respondent would have no choice but to answer the notice in writing.

Section 363.108 Request for an Administrative Adjudication

This section proposes procedures for contested claims. The

procedures would apply when the ``contest the claim'' option is chosen

on the reply form or when the settlement option is chosen but

settlement is not reached. A contested claim would be resolved in an

administrative proceeding adjudicated by a neutral third party provided

by the agency. Depending on the choice of the respondent and the

existence of material factual issues in dispute, the third party may be

the Associate Administrator (AA) or an Administrative Law Judge (ALJ).

The AA would decide whether or not a case will be referred to an ALJ.

Paragraph (a) would provide a respondent 28 days from receipt of

the notice of violation to serve a written answer on the agency

contesting the claim. If the answer is responding to an original notice

of violation this means that the respondent would be required to send

the agency the reply form in 15 days and the written answer within

another 13 days after that. Of course, respondent may choose to file an

answer within 15 days of the notice of violation, in which case a reply

form would be unnecessary. As with the reply form, the answer may be

served on the agency by telefax.

The content of the answer in paragraph (c) would be similar to that

currently required in replies under Part 386. Paragraph (c)(3) would

clarify that referral to an ALJ may not be available in all instances

where it is requested, but only where there are factual issues in

dispute. Part 386 presently states this concept in terms of an oral

hearing, i.e., an oral hearing is only available for cases with factual

issues. Questions sometimes arise when contested claims without factual

issues are decided by the AA without referral to an ALJ, much less an

oral hearing, even though a hearing was requested. Though

Sec. 386.16(b) clearly gives the AA this power, as provided by the 1977

amendments, the section on content of replies does not reflect it. The

proposed rule clearly states the agency's intent that the opportunity

for a hearing does not mean that all contested matters are referred to

an ALJ for a hearing. Finally, consistent with the standard in Part

386, failure to request referral to an ALJ would result in a waiver of

the right to opportunity for it.

The provision in part 386 allowing the respondent to file a notice

of intent to submit evidence without an oral hearing, with its own

array of deadlines, would be eliminated as unnecessary. Paragraph

(c)(3) would simply give the respondent the option of requesting

referral to an ALJ or not. For tactical or efficiency reasons, a

respondent may very well wish the AA, instead of an ALJ, to resolve its

contested claim, even where factual issues are present. (See, however,

discussion under Sec. 363.109).

If the respondent fails to answer the claim, paragraph (d) would

provide that the notice of violation becomes the final agency order in

the same manner as

[[Page 18877]]

when the reply form was not served on the agency. Moreover, merely

choosing an administrative adjudication on the reply form without

filing an answer would also be deemed a failure to answer.

If the notice is answered, but not in the form provided in this

section, the respondent may be found in default in the discretion of

the AA or ALJ. Default would have the same effect as a failure to

answer. In both situations, the ALJ or AA would issue a final order

without inquiry as to the charged violations.

These provisions would clearly assign the power to determine the

adequacy of the answer in various situations. Findings of default and

failure to answer, and resulting Final Order finding of the violations

as alleged, would support any subsequent collection actions taken by

the agency.

Section 363.109 Procedures in Administrative Adjudications

All contested claims would be transmitted to the AA to either

decide or refer to an ALJ for decision. Only the AA could determine

whether or not there are factual issues in dispute and assign an ALJ to

resolve a contested claim, unless the AA expressly requests the ALJ to

make that determination. Assigning to an ALJ only those cases with

apparent or potential factual issues has been a feature of the rules

since 1977, and has been upheld in litigation on numerous occasions as

complying both with the Administrative Procedure Act and due process

principles. Issues of efficiency and adjudicative economy dictate that

this standard continue in effect.

The first sentence of subsection (b) proposes that if there are

facts in dispute and respondent has requested referral, the AA must

refer the matter to an ALJ. Subsection (c) proposes to provide the AA

with the discretion to decide the matter in two circumstances: (1)

Where referral is requested but there are no factual issues, and (2)

where referral is not requested.

There may be another situation between these two poles, however. If

respondent has not requested referral, but the AA nevertheless believes

referral would be beneficial to resolve a factual or other issue,

should the AA have such discretion? May respondents be required to

participate in possibly costly adjudication even though respondent is

comfortable with potentially ``lesser'' process? The second sentence of

subsection (b) would allow referral in those instances in the

discretion of the AA. The FHWA requests comments on this issue.

Subsections (d) and (e) would accomplish in two short statements

and one reference what the procedures have attempted over the years to

do by detail. The Federal Rules of Civil Procedure, the approximation

of which served as justification for the ever expanding standards in

part 386 on discovery and motion practice, are incorporated into the

civil penalty process, thereby eliminating the need for virtually all

of subpart D to part 386. The AA and ALJ may suspend or adapt the

Federal rules as appropriate, in conformance with the Administrative

Procedure Act.

Subsections (f) and (g) would authorize the ALJ to employ

appropriate process, including alternative dispute resolution.

Subsection (h) would set minimal standards for appearance of

representatives of respondents in administrative proceedings.

Subsection (i) would provide that the parties in an administrative

adjudication may withdraw the matter under certain circumstances.

Withdrawal by a party, or by the consent of the parties, would

terminate the jurisdiction of the ALJ.

Section 363.110 Expedited Review by Associate Administrator

This section proposes expedited procedures for administrative

review of out-of-service orders or unsatisfactory safety ratings after

review by the Director of the Office of Field Operations. Subsection

(c) would reduce the time to conduct an entire administrative

adjudication to 10 days because subsection (b) provides that the out-

of-service order shall remain in effect pending resolution of the

contested claim. This last provision has been a part of the regulations

since the 1985 amendments added the out-of-service procedure. The FHWA

believes that it complies with intent of Congress in the 1984 Act. The

rest of subsection (b) would restate the ``immediate destination''

exception which was added to part 386 in the 1991 amendments. In the

interest of uniformity, subsection (d) would incorporate the procedures

in Sec. 363.109.

Sections 363.111 Through 363.116

With few exceptions, these sections would incorporate the

provisions of subpart E of part 386, on decisions and appeals, into the

new rule without substantive change. Section 386.66, which set a one

year period before considering motions for modification of orders,

would not be carried over. There would be no minimum time for an order

to be in effect before it may be rescinded or modified by order of the

AA or ALJ. Any such motions may be made pursuant to Sec. 363.109(e).

For the sake of clarity, Sec. 363.114 would add a sentence to what

is now in Sec. 386.67, liberally interpreting 49 U.S.C. 521(b)(8) to

allow judicial review for contested claims resulting in a final agency

order, but not for those claims that are resolved through settlement

agreement or in which respondent failed to answer or defaulted. The

statute provides that judicial review is only available after a

hearing. The FHWA believes its interpretation is appropriate because

these proposed rules provide for resolution of contested claims in an

administrative adjudication without a formal reply. Of course,

ultimately the courts must interpret the statute to determine their

scope of review.

The grounds for review of an ALJ's decision by the Associate

Administrator would be explained in somewhat greater detail in 49 CFR

363.111(b) than current 49 CFR 386.62.

Subpart B--Driver Qualification Proceedings

Section 363.201 Nature of the Proceeding

Driver qualification (DQ) proceedings are the means by which the

agency adjudicates challenges to its determinations concerning a

driver's qualifications to operate a CMW.

Section 363.202 Commencement of Proceedings

DQ proceedings would begin with a notice of determination or letter

of disqualification, which may be sent to a driver unilaterally by the

agency, in resolution of a conflict of medical evaluations under

Sec. 363.204 (formerly Sec. 391.47), or to notify the driver of the

consequences of a conviction for certain driving offenses.

Section 363.203 Answer

The content of an answer is proposed. A failure to answer would

result in the notice of determination or letter of disqualification

becoming the final order of the agency automatically in the same manner

as a failure to answer a notice of violation in a civil penalty

proceeding. Thus, the three different standards for failure to reply

under Part 386 are condensed into one under this proposed rule.

Section 363.204 Special Proceeding for Resolution of Conflicts of

Medical Evaluation

This section, because it is entirely procedural in nature, would be

moved from its present location in Sec. 391.47 and remain relatively

unchanged. A change is proposed as to the status of drivers

[[Page 18878]]

during the pendency of this special proceeding and is discussed under

Sec. 363.205, below.

Section 363.205 Driver's Qualification Status Pending Proceedings

Two different statuses are possible under current provisions. A

driver is either physically qualified or unqualified. This section

would clarify the driver's status during proceedings based on the

circumstances that brought about the proceedings. It would also change

current Sec. 391.47, which requires that a driver be considered

unqualified while any conflict of medical opinion is being resolved.

Although the agency operated in the past on a presumption that, in the

interest of safety, the driver was unqualified, such a result is not

required in all cases. It is likely, moreover, that this presumption

inhibited drivers from seeking resolution through the FHWA, which has

primary authority to make qualification determinations for drivers in

interstate commerce.

After consultations with the Department of Labor and the Equal

Employment Opportunity Commission, which have responsibilities for

implementing the anti-discrimination provisions of the Rehabilitation

Act, 29 U.S.C. 701 et seq., and the Americans with Disabilities Act, 42

U.S.C. 12101 et seq., respectively, the change in status is being

proposed. The changes would allow the driver's status, supported by at

least one medical opinion, to remain qualified during the pendency of

driver qualification proceedings with respect to the driver's employer

if the conflict arose during the term of employment. However, if a

driver involved in a conflict is not currently employed, e.g., an

applicant, the driver, would be deemed unqualified with respect to a

potential employer with which the driver's status is in conflict.

Section 363.206 Administrative Adjudication

The procedures for agency action on answers to notices of

determination would track those for administrative adjudication of

contested civil penalty claims. The civil penalty administrative

procedures would be incorporated by reference.

Subpart C--General Provisions

Section 363.301 Applicability

These general provisions would apply to this part and part 362 on

safety ratings.

Section 363.302 Computation of Time

The time computation standards would be largely unchanged from

Sec. 386.32 (a) and (b). Those provisions in that section which

currently allow the addition of five days to specified time periods to

account for use of the U.S. Postal Service in serving documents,

Sec. 386.32(c) (1) and (3), would not be carried over to the proposed

rule. Instead, the proposed rule would provide that service is complete

upon mailing so that the date of the postmark would control.

Section 363.303 Service

A general definition of service would be added to the regulations.

A certificate of service would be required to accompany all documents

served in an administrative proceeding, except the agency's notice and

the respondent's form reply, which occur before a matter is contested.

A service list will be provided in the agency's notice, which will

establish the persons who must be served with documents. Whereas

Sec. 386.31 states these certificate and list requirements in terms of

pleadings and motions, this section would make it clear that service

requirements apply early in administrative proceedings, before any

assignment of an ALJ.

Section 363.304 Extension of Time

This section would be carried over from part 386, with the added

provision that an extension of time may be effected pursuant to mutual

consent of the parties.

Section 363.305 Administrative Law Judge

This section would enumerate the powers of the ALJs, as well as the

limitations on that power. It would also provide for the

disqualification of ALJs. The provisions on limitations and

disqualification are modeled after the procedural regulations of the

Federal Aviation Administration. See 14 CFR 13.205 (b) and (c).

Section 363.306 Certification of Documents

This section would provide good faith standards for the filing of

documents in administrative proceedings. Sanctions are also proposed

for the ALJ or AA to impose if the standards are not met. This section

is based on 14 CFR 13.207.

Section 363.307 Interlocutory Appeals

This section, based on 14 CFR 13.219, would provide standards and

procedures for interlocutory appeals to the AA of matters before the

ALJ.

Part 364: Violations, Penalties, and Collections

Background

Much of the penalty information in this part appears in the U.S.

Code and, until now, has not appeared in published regulations. One

exception is appendix A to part 386 on penalties for violations of

agency notices and orders, which was published in 1991. Other

exceptions are the driver disqualification periods in 49 CFR 383.51 and

391.15 and the special penalties for violations of out-of-service

orders in Sec. 383.53, all of which were required to be published by

the CMVSA of 1986 and subsequent amendments.

Section-by-Section Analysis

Subpart A--General

Section 364.101 Purpose

The purpose of this proposed subpart is to inform the public of the

standards for assessment and collection of penalties for violations of

the FMCSRs and HMRs.

Section 364.102 Policy

This section would serve as a general summary of the part.

Subsection (a) would state the general policy that penalties serve as a

tool to obtain compliance with the regulations. Generally, the

enforcement program is but a part, albeit significant, of the mission

of the Office of Motor Carriers to reduce highway accidents and

injuries by increasing compliance with safety regulations. Most

carriers, drivers, and other entities choose to comply with the

regulations willingly. Various educational and other compliance

programs are available to assist them. For those carriers who

intentionally refuse to comply with or carelessly ignore the

regulations, however, enforcement may become necessary.

Subsection (b) would list the statutory penalty criteria used by

the FHWA to assess penalty amounts. These factors would be explained in

depth in Sec. 364.104. The last sentence would inform respondents that

information developed in an administrative adjudication may affect the

amount of penalty ultimately ordered. Subsection (c) would express the

notion that good faith efforts to achieve compliance will be taken into

account in assessing penalties or settling claims. Subsection (e) would

apply concepts of comity and resource allocation in stating that it is

within the discretion of the agency not to act to enforce violations of

the safety regulations when another governmental entity has already

imposed appropriate penalties for the same violations.

[[Page 18879]]

Subpart B--Civil Penalties

Section 364.201 Types of Violation and Maximum Monetary Penalties

The penalty amounts in this section would be listed by the type of

violation and would track the structures of the relevant statues.

Subsection (a) would refer to violations of parts 382 and 390-399

of the FMCSRs and is based on the penalty structure in 49 U.S.C.

521(b)(2)(A), part of the 1984 Act. The penalty structure is

incorporated into the enforcement scheme for violations of Part 382

drug and alcohol testing requirements in 49 CFR 382.507, as authorized

by 49 U.S.C. 31306, 31317, and 322(a).

The statutory description of violation types would be augmented in

places by language from the legislative history of the 1984 Act,

especially the description in proposed Sec. 364.201(a)(2) of what

constitutes a serious pattern of violations. See S. Rep. No. 424, 98th

Cong., 2d Sess. 10-13 (1984). The definition of a serious pattern would

be further elucidated by the agency's interpretation. The

interpretation in Sec. 364.201(a)(1) of a ``knowing'' recordkeeping

violation as including violations occurring where the means to verify

the incorrect records existed is based on published decisions of ALJs

in civil penalty proceedings. See In the Matter of Trinity

Transportation, Inc., 55 FR 43291 (October 26, 1990); for other

decisions, see Federal Register notices beginning at 55 FR 43264; 55 FR

2924 (January 29, 1990); 57 FR 29710 (June 26, 1992); 58 FR 16916

(March 31, 1993); 58 FR 62450 (November 26, 1993). Various examples of

types of violations are also proposed in the section.

Subsection (b) would list violations and amounts pertaining to

commercial driver's licenses and is based on 49 U.S.C. 521(b)(2)(B).

Paragraph (1) of subsection (c), on the penalty amount for failing

to maintain minimum levels of financial responsibility, is based on 49

U.S.C. 31138-31139. Paragraph (2) would state the rebuttable

presumption that lack of proof of insurance indicates lack of

insurance. It also states the current enforcement practice which allows

rebuttal of that presumption upon presentation of proof within 10 days.

Though the statute makes no distinction in penalties, allowing a

$10,000 maximum for all violations, paragraph (3) would provide that

mere failure to present proof of insurance, where the insurance

actually exists, is a separate recordkeeping offense, subject to a much

smaller penalty than the failure to have the insurance.

Proposed subsection (d), on violations of the HMRs, is based on 49

U.S.C. 5123. Subsection (e) would represent the current appendix A to

part 386, on violations of notices and orders.

Section 364.202 Civil Penalty Assessment Factors

This section would further explain the penalty assessment criteria

listed in Sec. 364.102(b). The criteria are statutory and found in 49

U.S.C. 5123(c) and 521(b)(2)(C). The criteria would be categorized as

involving either the violation or the violator. The proposed

explanation of each factor is based on the agency's reasonable

interpretation of the statute in light of current agency practice.

Particular attention should be paid to the factor proposed in paragraph

(2) of subsection (b), history of prior offenses, which may be used by

the agency to determine if a carrier's operations constitute an

imminent hazard to safety subject to an out-of-service order. Proposed

subsection (c) is a reminder that the application of the factors in a

particular case may be used in a decision to pursue means of

enforcement other than monetary penalties.

Subpart C--Criminal Penalties and Other Sanctions

Section 364.301 Criminal Penalties

Criminal penalties are rarely pursued by the Federal government of

violations of commercial motor vehicle safety regulations. Since

passage of the 1984 Act, the object of the great majority of safety

enforcement cases has been compliance with the regulations through the

assessment of monetary penalties. Other civil penalties, such as out-

of-service orders, have also gained in importance since 1984. The

commercial motor vehicle safety program is administrative in the first

instance. Generally, commercial motor vehicle transportation is a

highly regulated industry, with safety as an important part of the

overall regulatory scheme. International Brotherhood of Teamsters v.

U.S. DOT, 932 F.2d 1292, 1300 (9th Cir. 1991). The FHWA's regulatory

program is not converted into a criminal law enforcement scheme merely

because the government also retains certain parallel criminal penalty

authority.

The advantage to this structure is that the agency can take direct

administrative action against violators, when necessary, supported by

the authority to enforce agency orders in court. Before the 1984 Act,

the agency had only limited civil and criminal penalty authority which

could not be enforced directly by the agency in Federal court. In

practice, these cases generally did not receive very high priority in

the hierarchy of demands placed upon many United States Attorneys and

the courts. This regrettable situation was largely ameliorated with the

expanded civil penalty authority of the 1984 Act. This section would

serve as notice, however, that the criminal penalty authority still

exists. In fact it was enhanced in the 1984 Act. Subsection (e) would

notify the public that willful violations may be referred to the

Department of Justice for possible criminal enforcement.

Section 364.302 Injunctions

This proposed section is intended to notify the public of the

authority of the FHWA to bring civil actions in U.S. District Court to

enforce many of its safety regulations and orders, and, in the case of

the transportation of hazardous materials, to eliminate an imminent

hazard to safety. It is based on 49 U.S.C. 507 and 5122. In practice,

the form of relief sought is usually injunctive, typically an order to

a motor carrier to cease operations, although the statutes allow all

appropriate or necessary relief, including punitive damages.

It is important to note that the regulations and orders which may

be enforced in this way are somewhat limited, and do not include all of

the safety regulations which have been discussed in this document.

Hazardous materials regulations and orders may be enforced, and

imminent hazards eliminated, pursuant to 49 U.S.C. 5122. For most, but

not all, CMV safety violations not involving hazardous materials, 49

U.S.C. 507 authorizes enforcement actions. But 49 U.S.C. 507

specifically excepts violations of the financial responsibility

requirements for motor carriers, found in 49 U.S.C. 31138 and 31139,

from the authority to enforce directly through civil action. This is

unlike the statutory section authorizing the use of administrative

powers (49 U.S.C. 31133), which contains no such exclusion and thus

does apply to enforcement of financial responsibility requirements.

Neither chapter 313, on the CDL program, nor chapter 59, on

Intermodal Safe Container Transportation, contain any express

provisions for injunctive relief, nor are those chapters mentioned at

all in 49 U.S.C. 507. Therefore, those chapters are not included in

this section articulating the statutory authority for injunctive

relief.

Finally, the authority to seek an injunction directly in court (49

U.S.C. 507) should be distinguished from the

[[Page 18880]]

authority to administratively order a vehicle, employee, or employer to

cease operations which pose an imminent hazard to safety (49 U.S.C.

521(b)(5)(A)). The latter process contemplates an administrative

proceeding before any attempts at enforcement in court. This ``out-of-

service order'' procedure is discussed in subsections (c) and (d), and

may be used to enforce CDL and intermodal container violations.

Section 364.303 Driver Disqualifications

This section would be a restatement of disqualification periods

applicable to drivers who commit certain violations. These

disqualification sanctions also appear in Secs. 383.51 and 391.15.

Drivers are also unqualified for any period in which they fail to meet

the qualification requirements of part 391.

Subpart D--Monetary Penalty Collections

Section 364.401 Payment

Payment is demanded upon issuance of a final order imposing a

monetary penalty and generally due and payable within 30 days

thereafter. Unless judicial review is sought, the penalty amount is

subject to the accrual of interest after the date specified in the

final order.

Section 364.402 Collections

This section would provide that monies due and payable will be

collected pursuant to the Federal debt collection regulations. If

administrative actions fail to result in payment, the matter will be

referred to the Department of Justice for collection in a civil action

filed in U.S. District Court. 49 U.S.C. 521(b)(4), 5123(d),

31138(d)(4), 31139(f)(4).

Removal of Parts 385 and 386

Because this rulemaking is a comprehensive revision of safety

ratings and enforcement case procedures, it is proposed to remove and

reserve parts 385 and 386 from the Code of Federal Regulations.

Removal and Reservation of Section 391.47

Because the procedure for resolution of medical conflicts would be

revised and relocated in subpart B of part 303, it is proposed to

remove and reserve Sec. 391.47 of 49 CFR part 391.

Rulemaking Analyses and Notices

Executive Order 12866 (Federal Regulation) and DOT Regulatory Policies

and Procedures

FHWA has determined that this action is not a significant

regulatory action within the meaning of Executive Order 12866 or

significant within the meaning of Department of Transportation

regulatory policies and procedures. The proposals contained in this

document would not result in an annual effect on the economy of $100

million or more, or lead to a major increase in costs or prices, or

have significant adverse effects on the United States economy. This

proposal would augment, replace or amend existing procedures and

practices. Any economic consequences flowing from the procedures in the

proposal are primarily mandated by statute. A regulatory evaluation is

not required because of the ministerial nature of this action.

Regulatory Flexibility Act

In compliance with the Regulatory Flexibility Act (5 U.S.C. 601 et

seq.), the agency has evaluated the effects of this NPRM on small

entities. No economic impacts of this rulemaking are foreseen as the

rule would impose no additional substantive burdens that are not

already required by the regulations to which these procedural rules

would serve as the adjective law. Therefore, the FHWA certifies that

this proposed rule would not have a significant economic impact on a

substantial number of small entities.

Executive Order 12612 (Federalism Assessment)

This action has been analyzed in accordance with the principles and

criteria contained in Executive Order 12612. The rules proposed herein

in no way preempt State authority or jurisdiction, nor do they

establish any conflicts with existing State role in the regulation and

enforcement of commercial motor vehicle safety. It has therefore been

determined that the NPRM does not have sufficient federalism

implications to warrant the preparation of a federalism assessment.

Executive Order 12372 (Intergovernmental Review)

Catalog of Federal Domestic Assistance Program Number 20.217, Motor

Carrier Safety. The regulations implementing Executive Order 12372

regarding intergovernmental consultation of Federal programs and

activities apply to this program.

Paperwork Reduction Act

This proposed rule does not contain a collection of information

requirement for purposes of the Paperwork Reduction Act of 1980. 44

U.S.C. 3501 et seq.

National Environmental Policy Act

The agency has analyzed this action for purposes of the National

Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and has

determined that the proposed rule would not have any effect on the

quality of the environment.

Regulation Identification Number

A regulation identification number (RIN) is assigned to each

regulatory action listed in the Unified Agenda of Federal Regulations.

The Regulatory Information Service Center publishes the Unified Agenda

in April and October of each year. The RIN contained in the heading of

this document can be used to cross reference this action with the

Unified Agenda.

List of Subjects in 49 CFR Parts 361, 362, 363, 364, 385, 386, and 391

Administrative procedures, Commercial motor vehicle safety,

Highways and roads, Highway safety, Motor carriers.

Issued on: April 18, 1996.

Rodney E. Slater,

Federal Highway Administrator.

In consideration of the foregoing, the FHWA proposes to amend title

49, CFR, subtitle B, chapter III, by removing and reserving parts 385

and 386, and by adding parts 361, 362, 363, and 364 as set forth below:

1. Chapter III is amended by adding parts 361, 362, 363, and 364 to

read as follows:

PART 361--ADMINISTRATIVE ENFORCEMENT

Sec.

361.101 Purpose.

361.102 Authority and delegation.

361.103 Inspection and investigation.

361.104 Definitions.

361.105 Employer obligations.

361.106 Vehicle/driver inspection.

361.107 Complaints.

361.108 Administrative subpoenas.

361.109 Depositions and production of records.

Authority: 49 U.S.C. 104, 307, chapters 5, 51, 59, 311, 313, and

315.

Sec. 361.101 Purpose.

This part:

(a) Restates the authority of the Department of Transportation

(DOT) to regulate and investigate persons, property, equipment, and

records relating to commercial motor vehicle transportation, intermodal

safe container transportation, and the highway transportation of

hazardous materials;

[[Page 18881]]

(b) Describes certain obligations and rights of motor carriers and

other entities subject to DOT regulations; and

(c) Identifies the DOT officials authorized to enforce motor

carrier and hazardous materials regulations.

Sec. 361.102 Authority and delegation.

(a) The authority of the Secretary of Transportation to regulate

and investigate commercial motor vehicle safety, including motor

carriers, commercial motor vehicles and drivers, and the highway

transportation of hazardous materials, is codified in 49 U.S.C.

Chapters 5, 51, 59, 311, 313, and 315, and 42 U.S.C. 4917. In carrying

out the provisions of these chapters, the Secretary may conduct

inspections and investigations, compile statistics, make reports, issue

subpoenas, require the production of records and property, take

depositions, hold hearings, prescribe recordkeeping and reporting

requirements, conduct or make contracts for studies, development,

testing evaluation and training, and perform other acts the Secretary

considers appropriate.

(b) The authority of the Secretary listed in paragraph (a) of this

section has been delegated to the Federal Highway Administrator (49

U.S.C. 104(c); 49 CFR 1.48), and is codified in 49 CFR part 325 (Noise

Control), the Federal Motor Carrier Safety Regulations (FMCSRs) (49 CFR

Parts 350-399) and relevant portions of the Hazardous Materials

Regulations (HMRs) (primarily 49 CFR Parts 171-173, 177-178, and 180).

The Federal Highway Administrator has delegated the authority to

enforce the FMCSRs and the HMRs to the Associate Administrator for

Motor Carriers.

(c) The Associate Administrator for Motor Carriers has retained the

authority to approve operating procedures for investigations under this

part, including inspections, and has delegated to subordinate managers,

supervisors, and field personnel, hereinafter ``special agents,'' the

authority to perform such investigations.

(d) The Administrator may delegate to a State which is receiving a

grant under 49 U.S.C. 31102 such functions respecting the enforcement

(including investigations) of the provisions of this subchapter and

regulations issued herein as the Administrator determines appropriate.

Nothing in this part shall preempt the authority of any State to

conduct investigations, initiate enforcement proceedings, or otherwise

implement applicable provisions of State law with respect to motor

carrier safety.

Sec. 361.103 Inspection and investigation.

The FHWA may begin an investigation on its own initiative or on a

complaint.

(a) Upon a display of official DOT credentials, special agents may

enter without delay at reasonable times any place of business,

property, equipment, or commercial motor vehicle of a person subject to

the provisions of 49 U.S.C. Chapters 5, 51, 59, 311, 313, and 315, and

42 U.S.C. 4917. Special agents may take the following actions:

(1) Inspect the equipment and property of a motor carrier or other

person on the premises of the motor carrier, or the equipment of the

motor carrier at any other location, and inspect any commercial motor

vehicle of the motor carrier whether or not in operation; and

(2) Inspect and copy any record of--

(i) A carrier, lessor, association, or other person subject to the

provisions of 49 U.S.C. Chapters 5, 51, 59, 311, 313, and 315, and 42

U.S.C. 4917; and

(ii) A person controlling, controlled by, or under common control

with a carrier, if the agent considers inspection relevant to that

person's relation to, or transaction with, that carrier.

(3) Inspect and copy records, property, and equipment related to

manufacturing, fabricating, marking, maintaining, reconditioning,

repairing, testing, or distributing a package or a container for use by

a person transporting hazardous material by commercial motor vehicle,

and to the highway transportation of hazardous materials.

(b) Special agents may inspect and copy any record related to an

investigation, whether or not it is required to be maintained by

Federal Highway Administration (FHWA) regulations or orders. Special

agents may ask any employer, owner, operator, agent, employee, or other

person for information necessary to carry out their statutory and

regulatory functions. Special agents shall offer the employer or other

person subject to the investigation a right of accompaniment during an

inspection and shall notify the person of the general purpose for which

the information is sought.

(c) Reasonable times for inspections are the regular working hours

of the motor carrier or other person, or other times agreed to by the

carrier or other person, required by exigent circumstances, or

authorized by any court of the United States. If the person operates

twenty-four hours per day, reasonable time means whenever authorized

agents can obtain access to records necessary to conduct an inspection,

and a representative of the person can exercise the right of

accompaniment.

(d) The right of a special agent to enter upon the premises of any

person, inspect vehicles, examine records, or interview any person

shall not imply or be conditioned upon a waiver of any cause of action,

claim, order or penalty.

(e) The Associate Administrator may require a motor carrier to file

with the FHWA a copy of any lease agreement or other business

arrangement that is related to transportation safety.

(f) Information received in an investigation, including the

identity of the person investigated and any other person who provides

information during the investigation, may be kept confidential under

the investigatory file exception, or other appropriate exception, to

the public disclosure requirements of 5 U.S.C. 552.

Sec. 361.104 Definitions.

Words or phrases defined in 49 CFR 383.5 and 390.5 of this

subchapter apply in parts 361-364. In addition--

Abate or abatement means to discontinue regulatory violations by

refraining from or taking actions, identified in a notice, to correct

noncompliance.

Administrative law judge means an administrative law judge

appointed pursuant to the provisions of 5 U.S.C. 3105.

Associate Administrator means the Associate Administrator for Motor

Carriers or an authorized delegate of that official.

Federal Motor Carrier Safety Regulations (FMCSRs) means safety

regulations issued by the Federal Highway Administration under the

authority provided in 49 U.S.C. 104(c) or delegated by the Secretary of

Transportation in 49 CFR 1.48, and set forth in subchapter B of this

chapter.

Hazardous Materials Regulations (HMR) means safety regulations

issued by the Research and Special Programs Administration under

authority delegated by the Secretary of Transportation in 49 CFR 1.53,

and set forth in subchapter C of chapter I of this title.

Respondent means a party against whom relief is sought or claim is

made.

Special agent means an individual employed by the Federal Highway

Administration and empowered by the Secretary through delegations of

authority to perform the activities referred to in Sec. 361.103.

Sec. 361.105 Employer obligations.

(a) An employer, employee, and other person shall comply with

applicable commercial motor vehicle safety regulations.

[[Page 18882]]

(b) A violator shall post all notices of violation which have

become final, as required by any notice issued by a special agent. Such

notices shall be posted by the employer in each motor carrier's places

of employment in a conspicuous place or places where notices to

employees are customarily posted. Each employer shall insure that such

notices are not altered, defaced, or covered by other materials.

(c) All regulations on commercial motor vehicle safety and

hazardous materials safety are published in the Federal Register,

codified in the Code of Federal Regulations, and available for review

and copying at the Regional Offices of the Federal Highway

Administration. An employer shall maintain current copies of applicable

regulations, and shall make them available for inspection to any

employee upon request.

(d) After proper identification of a special agent through the

display of credentials, and an explanation of the purpose of the

investigation, a person shall, upon the request of the special agent,

provide access to:

(1) The records requested to be reviewed;

(2) Employees of the person to be interviewed; and

(3) Any equipment or property used in the transportation of persons

or property or to ensure compliance with the Federal Motor Carrier

Safety Regulations and the Hazardous Materials Regulations.

(e) The request for the production of records or access to

employees or equipment may be made at the initiation of the

investigation or at any time thereafter.

Sec. 361.106 Vehicle/driver inspection.

Upon the instruction of a duly authorized Federal, State or local

enforcement official, each commercial motor vehicle used in interstate

commerce shall be subject to an inspection of all safety equipment and

operating conditions required under the Federal Motor Carrier Safety

Regulations and Hazardous Materials Regulations. Each driver of such

vehicle shall also be subject to an inspection by such enforcement

officials of all documents required to be maintained by that driver

under those regulations.

Sec. 361.107 Complaints.

(a) A person, including a governmental authority, may file with the

Associate Administrator a complaint concerning an alleged violation of

this chapter. The complaint must state the facts that are alleged to

constitute a violation. Any office of the FHWA's Office of Motor

Carriers will accept a written complaint. For a listing of FHWA

Regional Offices see Sec. 390.27 of this subchapter. There are also

Office of Motor Carrier facilities located in each State and listed in

local telephone directories.

(b) The Associate Administrator shall timely investigate any

nonfrivolous written complaint alleging that a substantial violation of

any regulation issued under this chapter is occurring or has occurred

within the preceding 60 days. Nonfrivolous written complaints are

allegations of violations of applicable safety regulations containing

sufficient descriptive detail and knowledge of events to create a

reasonable suspicion that the violations occurred or are occurring.

Substantial violation in this context means the same as a pattern of

serious violations or a substantial health and safety violation, as

those terms are defined in part 364 of this subchapter, or patterns of

record falsification that evidences an intent to avoid detection of

such violations.

(c) The Associate Administrator may dismiss a complaint determined

not to state reasonable grounds for investigation and need not conduct

separate investigations of duplicative complaints.

(d) The complainant shall be timely notified of findings resulting

from an investigation or of dismissal of a complaint.

(e) The agency shall not disclose the identity of complainants

without their consent unless it is determined that such disclosure is

necessary to prosecute a violation. If disclosure becomes necessary,

the Associate Administrator shall take every practical measure within

his authority to assure that the complainant is not subject to

harassment, intimidation, disciplinary action, discrimination, or

financial loss as a result of such disclosure.

(f) No motor carrier or other employer subject to the regulations

in this chapter shall discharge, discipline, or in any manner

discriminate against any employee with respect to the employee's

compensation, terms, conditions, or privileges of employment because

such employee (or any person acting pursuant to a request of such

employee) has filed any complaint or instituted or caused to be

instituted any proceeding relating to a violation of a commercial motor

vehicle safety rule, regulation, standard, or order, or has testified

or is about to testify in any such proceeding.

(g) No motor carrier or other employer subject to the regulations

in this chapter shall discharge, discipline, or in any manner

discriminate against an employee with respect to the employee's

compensation, terms, conditions, or privileges of employment for

refusing to operate a vehicle when such operation constitutes a

violation of any Federal rules, regulations, standards, or orders

applicable to commercial motor vehicle safety or health, or because of

the employee's reasonable apprehension of serious injury to himself or

the public due to the unsafe condition of such equipment. The unsafe

conditions causing the employee's apprehension of injury must be of

such nature that a reasonable person, under the circumstances then

confronting the employee, would conclude that there is a bona fide

danger of an accident, injury, or serious impairment of health,

resulting from the unsafe condition. In order to qualify for protection

under this section, the employee must have sought from his employer,

and have been unable to obtain, correction of the unsafe condition.

(h) Violations of paragraphs (f) and (g) of this section are

subject to enforcement by the Occupational Safety and Health

Administration (OSHA) of the Department of Labor. The proper steps for

an employee to follow when pursuing their rights under these paragraphs

are found in 49 U.S.C. 31105(b) and 29 CFR part 1978.

Sec. 361.108 Administrative subpoenas.

(a) The Associate Administrator may subpoena witnesses and records

related to a proceeding or investigation from a place in the United

States to the designated place of the proceeding or investigation.

(b) If a person fails to comply with a subpoena, the Associate

Administrator may file a civil action in the district court of the

United States in which the proceeding or investigation is being

conducted to enforce the subpoena. The court may punish a refusal to

obey an order of the court to comply with a subpoena.

(c) A motor carrier not complying with a subpoena of the Associate

Administrator to appear, testify, or produce records is subject to a

fine of at least $100 but not more than $5,000, and imprisonment of not

more than one year.

Sec. 361.109 Depositions and production of records.

(a) In any proceeding, compliance review, or investigation, the

Associate Administrator may take testimony of a witness by deposition

and may order the witness to produce records. If a witness refuses to

be deposed or to produce records under this section, the

[[Page 18883]]

Associate Administrator may subpoena the witness to appear for a

deposition, produce the records, or both.

(b) A deposition may be taken before a judge of a court of the

United States, a United States magistrate, a clerk of a district court,

or a chancellor, justice, or judge of a supreme or superior court,

mayor or chief magistrate of a city, judge of a county court, or court

of common pleas of any State, or a notary public who is not counsel or

attorney of a party or interested in the proceeding or investigation.

(c) Notice must be given in writing to the person being deposed in

accordance with the Federal Rules of Civil Procedure. The notice shall

state the name of the witness and the time and place of taking the

deposition.

(d) The testimony of a person deposed under this section shall be

taken under oath. The person taking the deposition shall prepare, or

cause to be prepared, a transcript of the testimony taken. The

transcript shall be subscribed by the deponent, unless signature is

waived.

(e) The testimony of a witness who is in a foreign country may be

taken by deposition before an officer or person designated by the

Associate Administrator or agreed on by the parties by written

stipulation filed with the Associate Administrator. The deposition

shall be promptly filed with the Associate Administrator.

(f) Each witness summoned before the Associate Administrator or

whose deposition is taken under this section and the individual taking

the deposition are entitled to the same fees and mileage paid for those

services in the courts of the United States.

PART 362--SAFETY RATINGS

Sec.

362.101 Purpose.

362.102 Motor Carrier Identification Report.

362.103 Safety fitness--standards and factors.

362.104 Determination of safety fitness--safety ratings.

362.105 Unsatisfactory rated motor carrier--prohibition on

transportation of hazardous materials and passengers; ineligibility

for Federal contracts.

362.106 Notification of a safety rating.

362.107 Change to safety rating based on corrective actions.

362.108 Administrative review.

362.109 Temporary relief from rating.

362.110 Safety fitness information.

Appendix to Part 362--Form MCS-150, Motor Carrier Identification Report

Authority: 49 U.S.C. 104, 504, 521(b)(5)(A), 31144, and 31502;

49 CFR 1.48.

Sec. 362.101 Purpose.

(a) This part establishes standards and procedures applicable to

motor carrier identification, the determination of a motor carrier's

safety fitness and the issuance of a safety rating by the FHWA. This

part also notes the restrictions applicable to unsatisfactory rated

motor carriers, provides for availability of safety fitness

information, and includes procedures for administrative review of

safety ratings.

(b) The procedures set forth in 49 CFR part 363, subpart C also

apply to this part.

Sec. 362.102 Motor Carrier Identification Report.

(a) All motor carriers currently conducting operations in

interstate or foreign commerce shall file a Motor Carrier

Identification Report, Form MCS-150 (see appendix to this part), within

90 days after beginning operations.

(b) The Motor Carrier Identification Report, Form MCS-150, is

available from all FHWA region and division motor carrier safety

offices nationwide and from the FHWA Office of Motor Carrier

Information and Analysis, 400 Seventh Street, SW., Washington, DC

20590.

(c) The completed Motor Carrier Identification Report, Form MCS-

150, shall be filed with the FHWA, Office of Information and Analysis,

400 Seventh Street, SW., Washington, DC 20590.

Sec. 362.103 Safety fitness--standards and factors.

(a) To meet safety fitness standards, a motor carrier must

demonstrate through its performance that it has adequate safety

management controls in place to ensure compliance with applicable

safety and hazardous materials regulations and to facilitate the safe

movement of property and passengers by highway.

(b) The information obtained from reviews, investigations, roadside

inspections, and other available performance data is used to assess a

motor carrier's safety fitness in the context of the following factors:

(1) The adequacy of safety management controls. Safety management

controls are those systems, programs, practices and procedures

implemented by a motor carrier to ensure regulatory compliance and

reduce the safety risks associated with:

(i) Commercial driver's license violations (49 CFR part 383),

including controlled substances and alcohol testing violations (49 CFR

part 382):

(ii) Inadequate levels of financial responsibility (49 CFR part

387);

(iii) The failure to record and track accidents and incidents. (49

CFR part 390).

(iv) The use of unqualified drivers (49 CFR part 391);

(v) Improper use and driving of motor vehicles (49 CFR part 392);

(vi) Unsafe vehicles operating on the highways (49 CFR part 393);

(vii) The use of fatigued drivers (49 CFR part 395);

(viii) Inadequate inspection, repair, and maintenance of vehicles

(49 CFR part 396);

(ix) Transportation and routing of hazardous materials (49 CFR part

397); and

(x) Violations of hazardous materials regulations (49 CFR parts

107-177, 180).

(2) Frequency and severity of violations of applicable safety and

hazardous materials regulations and orders, including violations of

compatible state regulations and orders.

(3) Number and frequency of driver/vehicle violations resulting in

driver/vehicle being placed out of service.

(4) Frequency of accidents and hazardous materials incidents,

including: The recordable accident rate per million miles; the

recordable preventable accident rate per million miles; other accident

indicators; and whether these accident and incident indicators have

improved or deteriorated over time.

(c) In considering violations referred to in paragraph (b)(2) of

this section, particular attention is given to violations of

regulations that are critical or acute. These terms as used in this

paragraph to denote the seriousness of regulatory requirements are

defined as follows:

(1) Critical regulation--violations of which, if occurring in

patterns, reflect a breakdown of management control directly related to

essential safety functions. A pattern is evident when violations are

occurring at a rate in excess of 10 percent. Examples of violations of

critical regulations are using drivers to operate commercial motor

vehicles after they have exceeded the allowable driving time or on-duty

time.

(2) Acute regulation--violations of which are so severe as to

require immediate correction, and by themselves reflect negatively on

the motor carrier's ability to manage safety compliance, regardless of

its overall safety posture. An example of a violation of an acute

regulation is allowing a driver to operate after the drivers has tested

positive for alcohol have exceeded the allowable driving time or on-

duty time.

Sec. 362.104 Determination of safety fitness--safety ratings.

(a) Following a review of a motor carrier, the degree to which the

[[Page 18884]]

operations of the motor carrier are consistent with the safety fitness

standards and factors set forth in Sec. 362.103 determines whether the

following rating will be assigned:

(1) Unsatisfactory--an unsatisfactory safety rating means a failure

by a motor carrier to have adequate safety management controls in place

to prevent involvement in crashes by its vehicles and drivers,

evidenced by higher than normal accident rates, or to ensure compliance

with the applicable safety standards, regulations and orders, as

evidenced by inordinate ratios of violations detected in on-site

reviews or roadside inspections associated with the factors listed in

Sec. 362.103(b).

(2) [Reserved]

(b) An otherwise unsatisfactory safety rating may be deferred,

suspended or otherwise avoided if conditions imposed as a result of a

review of a motor carrier's operation and performance are met, which

would include compliance with specific provisions of the safety or

hazardous materials regulations, the requirements of an order or

notices to abate, or other commitments to improve compliance and

performance. The conditions may be imposed in lieu of an unsatisfactory

rating, and failure of the conditions may result in the immediate

assignment of an unsatisfactory rating.

Sec. 362.105 Unsatisfactory rated motor carriers--prohibition on

transportation of hazardous materials and passengers; ineligibility for

Federal contracts.

(a) A motor carrier rated unsatisfactory is prohibited from

operating a commercial motor vehicle to transport--

(1) Hazardous materials for which vehicle placarding is required

pursuant to part 172 of Chapter I of this title; or

(2) More than 15 passengers, including the driver.

(b) A motor carrier subject to the provisions of paragraph (a) of

this section is ineligible to contract or subcontract with any Federal

agency for transportation of the property or passengers referred to in

paragraphs (a)(1) and (a)(2) of this section.

(c) Penalties. When it is known that the carrier transports the

property or passengers referred to in paragraphs (a)(1) and (a)(2) of

this section, an order will be issued placing those operations out of

service. Any motor carrier that operates commercial motor vehicles in

violation of this section will be subject to the penalty provisions

listed in part 364 of this chapter.

Sec. 362.106 Notification of a safety rating.

(a) Written notification of the safety rating will be provided to a

motor carrier as soon as practicable after assignment of the rating.

(b) Before a safety rating of unsatisfactory is assigned to any

motor carrier, the FHWA will issue a notice of proposed safety rating.

The notice of proposed safety rating will list the deficiencies

discovered during the review of the motor carrier's operations, for

which corrective actions must be taken.

(c) A notice of a proposed safety rating of unsatisfactory will

indicate that, if the unsatisfactory rating becomes final, the motor

carrier will be subject to the provisions of Sec. 362.105, which

prohibit motor carriers rated unsatisfactory from transporting

hazardous materials or passengers, and other consequences that may

result from such rating.

(d) A proposed safety rating will not be made available to the

public under Sec. 362.110.

(e) Except as provided in Sec. 362.107, a proposed safety rating

issued pursuant to paragraph (b) of this section will become the motor

carrier's final safety rating 45 days after the date the notice of

proposed safety rating is received by the motor carrier.

Sec. 362.107 Change to safety rating based on corrective actions.

(a) Within the 45-day period specified in Sec. 362.106(e), or at

any time after a rating has become final, a motor carrier may request a

change to a proposed or final safety rating based on evidence that

corrective actions have been taken and that its operations currently

meet the safety standards and factors specified in Sec. 362.102.

(b) A request for a change to a safety rating must be made, in

writing, to the Regional Director, Office of Motor Carriers, for the

FHWA Region in which the carrier maintains its principal place of

business, and must include a written description of corrective actions

taken and other documentation that may be relied upon as a basis for

the requested change to the proposed rating.

(c) The final determination on the request for change will be based

upon the documentation submitted and any additional investigation

deemed necessary.

(d) The filing of a request for change to a proposed rating under

this section does not stay the 45-day period established in

Sec. 362.106(e), after which a proposed safety rating becomes final. If

the motor carrier has submitted evidence that corrective actions have

been taken pursuant to this section and a final determination cannot be

made within the 45-day period, the period of the proposed safety rating

may be extended for up to 10 days at the discretion of the Regional

Director.

(e) If it is determined that the motor carrier has taken the

corrective actions required and that its operations currently meet the

safety standards and factors specified in Sec. 362.103, the motor

carrier will be provided with written notification that the proposed

unsatisfactory rating will not be assigned, or, if already assigned,

rescinded.

(f) If it is determined that the motor carrier has not taken all

the corrective actions required or that its operations still fail to

meet the safety standards and factors specified in Sec. 362.103, the

motor carrier shall be provided with written notification that its

request has been denied and that the proposed safety rating of

unsatisfactory will become final pursuant to Sec. 362.106(e), or that

an unsatisfactory safety rating currently in effect will not be change.

(g) Any motor carrier whose request for change is denied pursuant

to paragraph (f) of this section may petition for administrative review

pursuant to Sec. 362.108 within 45 days of the denial of the request

for rating change. If the unsatisfactory rating has become final, it

shall remain in effect during the period of any administrative review

unless stayed by the reviewing official.

Sec. 362.108 Administrative review.

(a) Within the 45-day notice period provided in Sec. 362.106(e), or

within 45 days after denial of a request for a change in rating as

provided in Sec. 362.107(g), the motor carrier may petition the FHWA

for administrative review of a proposed or final safety rating by

submitting a written request to the Director, Office of Motor Carrier

Field Operations, 400 Seventh Street, SW., Washington, DC 20590.

(b) The petition must state why the proposed safety rating is

believed to be in error and list all factual and procedural issues in

dispute. The petition may be accompanied by any information or

documents the motor carrier is relying upon as the basis for its

petition.

(c) The Director, Office of Motor Carrier Field Operations, may

request the petitioner to submit additional data and attend a

conference to discuss the safety rating. Failure to provide the

information requested or attend the conference may result in dismissal

of the petition.

(d) The petitioner shall be notified in writing of the decision on

administrative review. The notification will occur within 30 days after

receipt

[[Page 18885]]

of a petition from a hazardous materials or passenger motor carrier.

(e) If the decision on administrative review results in a final

rating of unsatisfactory for a hazardous materials or passenger motor

carrier, the decision shall be accompanied by an appropriate out-of-

service order and provide for an expedited agency appeal of such

decision pursuant to Secs. 363.108 and 363.110 of this subchapter.

(f) All other decisions on administrative review of ratings

constitute final agency action. Thereafter, improvement in the rating

may be obtained under Sec. 362.107.

Sec. 362.109 Temporary relief from rating.

(a) Proposed rating. At any time before a proposed unsatisfactory

rating becomes final, the Regional Director in the region wherein the

motor carrier maintains its principal place of business for safety

purposes may temporarily suspend the proposed rating for a period up to

60 days; provided: the motor carrier consents in writing to an order

directing compliance with conditions designed to assure that the safety

fitness standard will be met and satisfactory performance will be

achieved. The temporary suspension is discretionary with the Regional

Director after consideration of circumstances satisfying that official

that a good faith effort by the motor carrier will be made and that

this effort is reasonably certain to bring about compliance. The

consent order must contain a provision that the temporary recision will

be withdrawn and the proposed unsatisfactory rating will become final

upon a failure of one or more of the conditions in the order. If a

satisfactory level of compliance is achieved after the period covered

by the consent order, the Regional Director may withdraw the proposed

unsatisfactory rating, which action may or may not be subject to

prescribed conditions.

(b) Final rating. The Director of the Office of Field Operations,

or other official designated by the Associate Administrator, may

temporarily suspend a final rating of unsatisfactory under the same

conditions set forth in paragraph (a) of this section.

Sec. 363.110 Safety fitness information.

(a) Final ratings will be made available to other Federal and State

agencies in writing, telephonically or by remote computer access.

(b) The final safety rating assigned to a motor carrier will be

made available to the public upon request. Any person requesting the

assigned rating of a motor carrier shall provide the FHWA with the

motor carrier's name, principal office address, and, if known, the DOT

number or the ICC docket number, if any.

(c) Requests shall be addressed to the Office of Motor Carrier

Information Management and Analysis, HIA-1, Federal Highway

Administration, 400 Seventh Street, SW., Washington, DC 20590.

(d) Oral requests by telephone will be given an oral response.

Appendix to Part 362--Form MCS-150.Motor Carrier Identification Report

(Approved by OMB under control number 2125-0544)

BILLING CODE 4910-22-M

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BILLING CODE 4910-22-C

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Notice

The Form MCS-150, Motor Carrier Identification Report, must be

filed by all motor carriers operating in interstate or foreign

commerce. A new motor carrier must file Form MCS-150 within 90 days

after beginning operations. Exception: A motor carrier that has

received written notification of a safety rating from the Federal

Highway Administration (FHWA) need not file the report. To mail,

fold the completed report so that the self-addressed postage paid

panel is on the outside. This report is required by 49 CFR Part 385

and authorized by 49 U.S.C. 504 (1982 & Supp. III 1985).

The public reporting burden for this collection of information

on the Form MCS-150 is estimated by the FHWA to average 20 minutes.

If you wish to comment on the accuracy of the estimate or make

suggestions for reducing this burden, please direct your comments to

the Office of Management and Budget and the FHWA at the following

addresses:

Office of Management and Budget, Paperwork Reduction Project,

Washington, DC 20503

and

Federal Highway Administration, OMC Field Operations, HFO-10, 400

7th Street, SW., Washington, DC 20590

Instructions for Completing the Motor Carrier Identification Report

(MCS-150)

(Please Print or Type All Information)

1. Enter the legal name of the business entity (i.e.,

corporation, partnership, or individual) that owns/controls the

motor carrier/shipper operation.

2. If the business entity is operating under a name other than

that in Block 1, (i.e., ``trade name'') enter that name. Otherwise,

leave blank.

3. Enter the principal place of business street address (where

all safety records are maintained).

4. Enter mailing address if different from the physical address,

otherwise leave bank. Also, applies to #7, #8, #12-#14.

5. Enter the city where the principal place of business is

located.

6. If a Mexican motor carrier or shipper, enter the Mexican

neighborhood or barrio where the principal place of business is

located.

7. Enter the city corresponding with the mailing address.

8. If a Mexican motor carrier or shipper, enter the Mexican

neighborhood or barrio corresponding with the mailing address.

9. Enter the name of the county in which the principal place of

business is located.

10. Enter the two-letter postal abbreviation for the State, or

the name of the Canadian Province or Mexican State, in which the

principal place of business is located.

11. Enter the zip code number corresponding with the street

address.

12. Enter the name of the county corresponding with the mailing

address.

13. Enter the two-letter postal abbreviation for the State, or

the name of the Canadian Province or Mexican State, corresponding

with the mailing address.

14. Enter the ZIP code number corresponding with the mailing

address.

15. Enter the telephone number, including area code, of the

principal place of business.

16. Enter the identification number assigned to your motor

carrier operation by the U.S. Department of Transportation, if

known. Otherwise, enter ``N/A.''

17. Enter the motor carrier ``MC'' or ``MX'' number under which

the Interstate Commerce Commission (ICC) issued your operating

authority, if appropriate. Otherwise, enter ``N/A.''

18. Enter the employer identification number (EIN #) or social

security number (SSN #) assigned to your motor carrier operation by

the Internal Revenue Service.

19. Circle the appropriate type of carrier operation.

A. Interstate.

B. Intrastate, transporting hazardous materials (49 CFR 100-180).

C. Intrastate, NOT transporting hazardous materials.

Interstate--transportation of persons or property across State

lines, including international boundaries, or wholly within one

State as part of a through movement that originates or terminates in

another State or country.

Intrastate--transportation of persons or property wholly within

one State.

20. Circle the appropriate type of shipper operation.

A. Interstate

B. Intrastate

Interstate & Intrastate--See #19 above.

21. Enter the carrier's total mileage for the past calendar

year.

22. Circle appropriate classification. Circle all that apply. If

``L. Other'' is circled, enter the type of operation in the space

provided.

A. Authorized For Hire

B. Exempt For Hire

C. Private (Property)

D. Private Passengers (Business)

E. Private Passengers (Non-Business)

F. Migrant

G. U.S. Mail

H. Federal Government

I. State Government

J. Local Government

K. Indian Tribe

L. Other

Authorized For Hire--transportation for compensation as a common

or contract carrier of property, owned by others, or passengers

under the provisions of the ICC.

Exempt For Hire--transportation for compensation of property or

passengers exempt from the economic regulation by the ICC.

Private (Property)--means a person who provides transportation

of property by commercial motor vehicle and is not a for-hire motor

carrier.

Private Passengers (Business)--a private motor carrier engaged

in the interstate transportation of passengers which is provided in

the furtherance of a commercial enterprise and is not available to

the public at large (e.g., bands).

Private Passengers (Non-Business)--a private motor carrier

involved in the interstate transportation of passengers that does

not otherwise meet the definition of a private motor carrier of

passengers (business) (e.g., church buses).

Migrant--interstate transportation, including a contract

carrier, but not a common carrier of 3 or more migrant workers to or

from their employment by any motor vehicle other than a passenger

automobile or station wagon.

U.S. Mail--transportation of U.S. Mail under contract with the

U.S. Postal Service.

Federal Government--transportation of property or passengers by

a U.S. Federal Government agency.

State Government--transportation of property or passengers by a

U.S. State Government agency.

Local Government--transportation of property or passengers by a

local municipality.

Indian Tribe--transportation of property or passengers by a

Indian tribal government.

Other--transportation of property or passengers by some other

operation classification not described by any of the above.

23. Circle all the letters of the types of cargo you usually

transport. If ``Z. Other'' is circled, enter the name of the

commodity in the space provided.

24. Circle all the letters of the types of hazardous materials

(HM) you transport/ship. In the columns before the HM types, either

circle C for carrier of HM or S for a shipper of HM. In the columns

following the HM types, either circle T if the HM is transported in

cargo tanks or P if the HM is transported in other packages (49 CFR

173.2).

25. Enter the total number of vehicles owned, term leased and

trip leased, that are, or can be, operational the day this form is

completed.

Motorcoach--a vehicle designed for long distance transportation

of passengers, usually equipped with storage racks above the seats

and a baggage hold beneath the cabin.

School Bus--a vehicle designed and/or equipped mainly to carry

primary and secondary students to and from school, usually built on

a medium or large truck chassis.

Mini-bus/Van--a multi-purpose passenger vehicle with a capacity

of 10-24 people, typically built on a small truck chassis.

Limousine--a passenger vehicle usually built on a lengthened

automobile chassis.

26. Enter the number of interstate/intrastate drivers used on an

average work day. Part-time, casual, term leased, trip leased and

company drivers are to be included. Also, enter the total number of

drivers and the total number of drivers who have a Commercial

Drivers License (CDL).

Interstate--driver transports people or property across State

lines, including international boundaries, or wholly within one

State as part of a through movement that originates or terminates in

another State or country.

Intrastate--driver transports people or property wholly within

one State.

100-mile radius driver--driver operates only within a 100 air-

mile radius of the normal work reporting location.

27. Print or type the name, in the space provided, of the

individual authorized to sign

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documents on behalf of the entity listed in Block 1. That individual

must sign, date, and show his or her title in the spaces provided

(Certification Statement, see 49 CFR 385.21 and 385.23).

PART 363--ENFORCEMENT PROCEEDINGS

Subpart A--Civil Penalty Proceedings

Sec.

363.101 Nature of proceeding.

363.102 Notice of violation (complaint).

363.103 Form reply to notice of violation.

363.104 Special procedures for out-of-service orders.

363.105 Payment of the claim.

363.106 Settlement of civil penalty claims; generally.

363.107 Settlement negotiations.

363.108 Request for administrative adjudication.

363.109 Procedures in administrative adjudications.

363.110 Expedited review by the Associate Administrator.

363.111 Administrative Law Judge decision.

363.112 Review of Administrative Law Judge decision.

363.113 Decision on review.

363.114 Reconsideration.

363.115 Judicial review.

363.116 Failure to comply with final order.

Subpart B--Driver Qualification Proceedings

Sec.

363.201 Nature of Proceeding.

363.202 Commencement proceedings.

363.203 Answer to medical qualification determination or letter of

disqualification.

363.204 Special proceeding for resolution of conflicts of medical

evaluation.

363.205 Driver's qualification status pending determinations and

proceedings.

363.206 Administrative adjudication.

Subpart C--General Provisions

Sec.

363.301 Applicability.

363.302 Computation of time.

363.303 Service.

363.304 Extension of time.

363.305 Administrative Law Judge.

363.306 Certification of documents.

363.307 Interlocutory appeals.

Subpart A--Civil Penalty Proceedings

Sec. 363.101 Nature of proceeding.

Civil penalty proceedings are proceedings pursuant to 5 U.S.C. 554

in which the agency makes a monetary claim or seeks an order against

the respondent, based on violation of the FMCSRs or HMRs. Final agency

orders that may result from civil penalty proceedings include one or

more of the following:

(a) Monetary penalty;

(b) Settlement agreement;

(c) Out-of-service order;

(d) Notice to post;

(e) Notice of abate; and

(f) Any other order within the authority of the agency.

Sec. 363.102 Notice of violation (complaint).

(a) Civil penalty proceedings are commenced by the issuance of a

notice of violation, which serves as the complaint in subsequent

proceedings and represents the claim of the agency against respondent.

Each notice shall contain the following:

(1) The provisions of law and regulation alleged to have been

violated;

(2) A recitation, separately stated and numbered, of each alleged

violation, including a brief statement of the material facts

constituting each violation.

(3) The amount being claimed and the maximum amount authorized to

be claimed under the statute, and the contents of any order sought to

be imposed;

(4) A statement that failure to answer the notice within the

prescribed time will constitute a waiver of the opportunity to contest

the claim;

(5) A reply form to be completed and returned to the agency, except

in the case of an out-of-service order; and

(6) The address and telefax number to which the reply form and/or

full payment of the amount claimed may be sent, and the telephone

number to call to discuss settlement.

(b) A notice may contain such other matters as the FHWA deems

appropriate, including a notice to abate.

(c) A notice of violation is transmitted by the agency to the

respondent using a method of delivery with a return receipt, such as,

but not limited to, certified mail and personal delivery evidenced by a

certificate of service.

Sec. 363.103 Form reply to notice of violation.

(a) Time for reply. The reply form included in the notice of

violation must be served on the agency by the respondent within 15 days

of respondent's receipt of the notice. The form reply may be sent to

the agency by mail, personal delivery, or telefax. Although a return

receipt is not required, the burden is on the respondent to prove it

has made a timely answer.

(b) Contents of reply form. The respondent must provide the

information requested on the reply form, and indicate, by checking the

appropriate box, its response to the Notice of Violation. Respondent

may select only one option on the reply form. The response options are:

(1) Pay the full amount claimed in the Notice of Violation (check

included), and/or agree to comply with the order by signing where

indicated;

(2) Enter into settlement negotiations (while preserving the right

to contest the claim at a later date); and

(3) Contest the claim immediately through the institution of

administrative adjudication.

(c) Failure to reply. If a completed reply on the form provided, or

in a form containing the same information, is not served on the agency

within 15 days of the respondent's receipt of the notice of violation,

the notice of violation becomes the final agency order in the

proceeding. Respondent's failure to reply constitutes an admission of

all facts alleged in the notice of violation and a waiver of the

respondent's opportunity to contest the claim.

Sec. 363.104 Special procedures for out-of-service orders.

(a) Whenever it is determined that a violation of the FMCSRs poses

an imminent hazard to safety, the agency may order a vehicle or

employee operating such vehicle out of service, or order a motor

carrier to cease all or part of the employer's commercial motor vehicle

operations. In making any such order, no restrictions shall be imposed

on any employee or motor carrier beyond that required to abate the

hazard.

(b) An out-of-service order must be personally served on the driver

when a driver or vehicle is being placed out of service, and on a

responsible representative of the motor carrier at its principal place

of business or other location to which the order applies when all or

part of a motor carrier's commercial motor vehicle operations are being

placed out of service.

(c) A motor carrier or employee shall comply with the out-of-

service order immediately upon its issuance. The penalty for violating

an out-of-service order shall be specifically noted in the order. An

out-of-service order shall not prevent vehicles of the motor carrier in

transit at the time the order is served from proceeding to their

immediate destinations, unless any such vehicles or drivers are

specifically ordered out of service effective immediately. Vehicles and

drivers proceeding to their immediate destination shall be subject to

compliance with the order upon arrival.

(d) If the out-of-service order is contested, an administrative

adjudication shall be made available on an expedited basis under

procedures provided in Sec. 363.110.

(e) For purposes of this section, the term immediate destination

means the next scheduled stop of the vehicle

[[Page 18889]]

already in transit where the cargo on board can be safely secured, and

the term imminent hazard means any condition of vehicle, employee, or

commercial motor vehicle operations which is likely to result in

serious injury of death if not discontinued immediately.

Sec. 363.105 Payment of the claim.

(a) Payment of the full amount claimed may be made at any time

before issuance of a final order, with or without the reply form. After

the issuance of a final order, claims are subject to interest,

penalties, and administrative charges in accordance with 4 CFR part

103.

(b) If the full payment option is selected by the respondent on the

reply form, but payment is not made on the agency within 15 days of the

respondent's receipt of the notice of violation, the notice of

violation becomes the final agency order in the proceeding.

(c) Unless otherwise provided in writing by the mutual consent of

the parties, payment and/or compliance with the order constitutes an

admission of all facts alleged in the notice of violation and a waiver

of the respondent's opportunity to contest the claim, and results in

the notice of violation becoming the final agency order.

Sec. 363.106 Settlement of civil penalty claims; generally.

(a) Settlement of disputed civil penalty claims may occur at any

time before the issuance of a final order.

(b) Content of settlement agreements. When agreement is reached to

resolve the claim, a settlement agreement constituting the final

disposition of the proceeding shall be signed by the parties. The

settlement agreement shall contain the following:

(1) The legal basis of the claim, including an admission of all

jurisdictional facts;

(2) Unless otherwise provided, a finding of the facts constituting

the violations committed;

(3) The amount due the FHWA and the terms of payment, and/or the

terms of the order;

(4) An express waiver of the right to further procedural steps and

of all rights to judicial review;

(5) A statement that the agreement is not binding on the agency

until executed by the agency's authorized representative; and

(6) A statement that failure to pay other otherwise perform in

accordance with the terms of the agreement will result in the notice of

violation becoming the final agency order, and the amount claimed in

the notice of violation becoming due and payable immediately.

(c) An executed settlement agreement is binding on the parties

according to its terms. The respondent's signed, written consent to a

settlement agreement may only be withdrawn, in writing, if the agency

has not executed the agreement within 28 days after execution by

respondent.

(d) The agency's acceptance of partial payment of a claim tendered

unilaterally by a respondent does not constitute a settlement

agreement. All settlement agreements must be in the form specified in

paragraph (b) of this section.

(e) Settlement agreements reached during the course of an

administrative adjudication need not be approved by the Administrative

Law Judge or Associated Administrator unless specifically directed by

those officials.

Sec. 363.107 Settlement negotiations.

This section establishes procedures when the settlement

negotiations option is selected on the reply form.

(a) The parties should enter into negotiations expeditiously and in

good faith, using all reasonable means.

(b) Opportunity for an administrative adjudication. Respondents

electing on the reply form to engage in settlement negotiations retain

the opportunity to contest the claim through an administrative

adjudication if the negotiations do not result in a settlement

agreement.

(c) Discontinuance of negotiations within 90 days. The agency may

discontinue negotiations within 90 days of the notice of violation by

sending the respondent a final notice of violation. The respondent may

discontinue negotiations within the same period by requesting an

administrative adjudication and sending the agency a written answer to

the notice of violation.

(d) Failu

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