New Entrant Safety Assurance Process, 76472-76497 [E8-29253]

Agencies

• Federal Motor Carrier Safety Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 73, Number 242 (Tuesday, December 16, 2008)]
[Rules and Regulations]
[Pages 76472-76497]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: E8-29253]



[[Page 76471]]

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Part III





Department of Transportation





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Federal Motor Carrier Safety Administration



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49 CFR Parts 365, 385, 387, and 390



New Entrant Safety Assurance Process; Final Rule

Federal Register / Vol. 73, No. 242 / Tuesday, December 16, 2008 / 
Rules and Regulations

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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

49 CFR Parts 365, 385, 387, and 390

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


New Entrant Safety Assurance Process

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

ACTION: Final rule.

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SUMMARY: FMCSA amends the New Entrant Safety Assurance Program 
regulations to raise the standard of compliance for passing the new 
entrant safety audit. The Agency identifies 16 regulations that are 
essential elements of basic safety management controls necessary to 
operate in interstate commerce and makes a carrier's failure to comply 
with any one of the 16 regulations an automatic failure of the safety 
audit. Additionally, if certain violations are discovered during a 
roadside inspection, the new entrant now will be subject to expedited 
actions to correct these deficiencies. The Agency now will also check 
compliance with the Americans with Disabilities Act and certain 
household goods-related requirements in the new entrant safety audit, 
if they apply to the new entrant's operation. Failure to comply with 
either of these requirements will not affect the outcome of the safety 
audit; however, the Agency will take appropriate actions to improve 
compliance. FMCSA clarifies changes to some of the existing new entrant 
regulations and establishes a separate new entrant application 
procedure and safety oversight program for non-North America-domiciled 
motor carriers.
    Finally, the Agency has enhanced the quality and availability of 
its educational and technical assistance (ETA) materials to ensure 
applicants are knowledgeable about applicable Federal motor carrier 
safety standards. Because the Agency believes Form MCS-150A--Safety 
Certification for Application for USDOT Number is not an effective 
instrument for establishing knowledgeability, it is eliminating that 
form.
    FMCSA believes this rule will improve the Agency's ability to 
identify at-risk new entrant carriers and ensure deficiencies in basic 
safety management controls are corrected before the new entrant is 
granted permanent registration. These changes do not impose additional 
regulatory requirements on any new entrant carrier because these 
carriers are already required to comply with all applicable rules.

DATES: Effective: This rule is effective: February 17, 2009. 
Compliance: Compliance with this rule is required beginning December 
16, 2009.

FOR FURTHER INFORMATION CONTACT: Ms. Stephanie Haller, New Entrant 
Program Manager, Enforcement and Compliance Division. (202) 366-0178, 
Stephanie.Haller@dot.gov. Business hours are from 8 a.m. to 4:30 p.m., 
e.t., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Privacy Act

    Anyone is able to search the electronic form for all comments 
received into any of our dockets by the name of the individual 
submitting the comment (or signing a comment, if submitted on behalf of 
an association, business, labor union, etc.). You may review DOT's 
complete Privacy Act Statement in the Federal Register published on 
April 11, 2000 (Volume 65, Number 70; Page 19476).
    The preamble is organized as follows:

I. Legal Basis for the Rulemaking
II. Regulatory History
    A. Interim Final Rule
    B. Notice of Proposed Rulemaking
III. Discussion of Comments to the NPRM and Section-by-Section 
Analysis of the Final Rule
IV. Rulemaking Analyses

I. Legal Basis for the Rulemaking

    Title 49 U.S.C. 31144 authorizes the Secretary of Transportation 
(Secretary) to determine whether an owner or operator is fit to operate 
safely. Section 210(a) of the Motor Carrier Safety Improvement Act of 
1999 [Pub. L. 106-159, 113 Stat. 1764, December 9, 1999] (MCSIA) added 
section 31144(g) \1\ directing the Secretary to establish regulations 
to require each motor carrier owner and operator granted new operating 
authority to undergo a safety review within 18 months of starting 
operations. In issuing these regulations, the Secretary was required 
to: (1) Establish the elements of the safety review, including basic 
safety management controls; (2) consider their effects on small 
businesses; and (3) consider establishing alternate locations where 
such reviews may be conducted for the convenience of small businesses. 
The Secretary was also required to phase in the new entrant safety 
review requirements in a manner that takes into account the 
availability of certified motor carrier safety auditors. Congress 
mandated increased oversight of new entrants because studies indicated 
these operators had a much higher rate of non-compliance with basic 
safety management requirements and were subject to less oversight than 
established operators. The authority to establish such regulations has 
been delegated to the Federal Motor Carrier Safety Administration 
(FMCSA). 49 CFR 1.73(g).
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    \1\ MCSIA originally codified sec. 31144(g) as sec. 31144(c) and 
directed that it be added at the end of 49 U.S.C. 31144 following 
preexisting subsections (c), (d), and (e). Section 4114(c)(1) of the 
Safe, Accountable, Flexible, Efficient Transportation Equity Act: A 
Legacy for Users (Pub. L. 109-59, 119 Stat. 1144, August 10, 2005) 
(SAFETEA-LU) recodified this provision as sec. 31144(g).
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    Section 210(b) of MCSIA (codified as a note to 49 U.S.C. 31144) 
required the Secretary to initiate a rulemaking to establish minimum 
requirements for applicant motor carriers seeking Federal interstate 
operating authority to ensure such applicants are knowledgeable about 
applicable Federal motor carrier safety standards. The Secretary was 
directed to consider establishment of a proficiency examination, as 
well as other requirements, to ensure applicant knowledgeability.
    In addition to expanding the Secretary's authority under section 
31144, section 210 of MCSIA was a specific statutory directive 
consistent with the more general pre-existing legal authority provided 
by the Motor Carrier Safety Act of 1984 (the 1984 Act) [49 U.S.C. App. 
2505 (1988), recodified at 49 U.S.C. 31136(a)], which requires the 
Secretary to prescribe regulations on commercial motor vehicle safety. 
The regulations required by the 1984 Act must prescribe minimum safety 
standards for commercial motor vehicles (CMVs). At a minimum, the 
regulations shall ensure: (1) CMVs are maintained, equipped, loaded, 
and operated safely; (2) the responsibilities imposed on operators of 
CMVs do not impair their ability to operate the vehicles safely; (3) 
the physical condition of operators of CMVs is adequate to enable them 
to operate the vehicles safely; and (4) the operation of CMVs does not 
have a deleterious effect on the physical condition of the operators.
    The rule changes the New Entrant Safety Assurance Program to 
improve the Agency's ability to identify at-risk new entrant motor 
carriers and ensures deficiencies are corrected before granting them 
permanent registration. It also ensures that applicants will become 
knowledgeable about Federal safety regulations before they commence 
interstate operations. As such, it implements the section 31136(a)(1)

[[Page 76473]]

mandate that FMCSA regulations ensure CMVs are maintained and operated 
safely. It does not add any new operational responsibilities on drivers 
pursuant to sections 31136(a)(2)-(a)(4).

II. Regulatory History

A. Interim Final Rule

    In response to the statutory mandate in MCSIA, FMCSA published an 
interim final rule (IFR) titled New Entrant Safety Assurance Process 
(67 FR 31978) on May 13, 2002, which became effective January 1, 2003. 
All domestic and Canada-domiciled new entrants are subject to the New 
Entrant Safety Assurance Process. Mexico-domiciled new entrants are 
covered under a separate application process and safety monitoring 
system (see 67 FR 12652, 67 FR 12701, and 67 FR 12757 published March 
19, 2002).
    Under the existing New Entrant Safety Assurance Program, a motor 
carrier seeking to register as a new entrant is directed to the FMCSA 
Internet Web site to either obtain an application by mail or complete 
the application package online. The application package includes: (1) 
Form MCS-150--The Motor Carrier Identification Report; (2) Form MCS-
150A--Safety Certification for Application for USDOT Number, and (3) 
application forms to obtain operating authority under 49 CFR part 365, 
if appropriate. See 49 CFR 385.305. Form MCS-150A requires the 
applicant to self-certify its knowledge of relevant regulations and to 
self-certify that basic safety management controls are in place. FMCSA 
also provides educational and technical assistance materials, upon 
request. If the application is approved, FMCSA grants new entrant 
registration through issuance of a United States Department of 
Transportation (USDOT) Number and an 18-month safety monitoring period 
for the new entrant begins.
    A for-hire motor carrier, unless providing transportation exempt 
from registration requirements in the ICC Termination Act of 1995 [Pub. 
L. 104-88, 109 Stat. 888, December 29, 1995], also is required to 
obtain FMCSA operating authority under 49 U.S.C. 13902, prior to 
commencing covered operations. Generally, for-hire motor carriers must: 
(1) Complete the appropriate OP-1 application form for operating 
authority; (2) file a process agent designation with the Agency using 
Form BOC-3--Designation of Agents, Motor Carriers, Brokers and Freight 
Forwarders; and (3) comply with certain insurance filing requirements 
prior to being granted operating authority.
    To maintain its new entrant registration, a carrier must 
demonstrate sufficient compliance with applicable Federal Motor Carrier 
Safety Regulations (FMCSRs) and Hazardous Materials Regulations (HMRs). 
Within the first 18 months of a new entrant's operation, FMCSA conducts 
a safety audit of the carrier's operations to educate the carrier on 
compliance with the FMCSRs and HMRs and to determine if the carrier is 
exercising basic safety management controls as defined in 49 CFR 385.3. 
The Agency schedules the safety audit after the carrier has been 
operating for at least 3 months to ensure sufficient data are on hand 
to adequately assess the carrier's operations. The Agency conducts the 
safety audit according to the scoring methodology set forth in Appendix 
A to part 385.
    If the new entrant passes the safety audit, it retains the new 
entrant registration and remains subject to the new entrant safety 
monitoring system for the remainder of the 18-month period. FMCSA will 
grant permanent registration only if the new entrant successfully 
completes the monitoring period. If the new entrant fails the safety 
audit, the new entrant must provide FMCSA evidence of corrective action 
within a specified time period. Carriers operating vehicles designed or 
used to transport 16 or more passengers and hazardous materials 
carriers must submit evidence within 45 days; passenger carriers 
operating vehicles designed or used to transport between 9 and 15 
passengers and non-hazardous materials property carriers must do so 
within 60 days. FMCSA may extend these compliance periods if it 
determines the new entrant is making a good faith effort to remedy the 
problems. If within 45 or 60 days, as applicable, the new entrant fails 
to respond to the notice or fails to correct the deficiencies, FMCSA 
issues an out-of-service order prohibiting further operations in 
interstate commerce and revokes the new entrant registration.
    A new entrant may appeal the Agency's determination by requesting 
an administrative review. The decision rendered by the administrative 
review process is final. A new entrant that fails to make corrections 
following the safety audit or whose new entrant registration is revoked 
for failure to submit to a safety audit must wait at least 30 days to 
reapply for new entrant registration.
    Section 210(b) of MCSIA directed that the implementing regulations 
ensure applicant carriers are knowledgeable about applicable Federal 
safety requirements before receiving new entrant registration. As part 
of this rulemaking, the Secretary was directed to consider a 
proficiency examination, as well as other requirements to ensure 
applicants understand applicable safety requirements before being 
granted new entrant registration.
    In developing the May 2002 IFR, the Agency considered, but decided 
against requiring a proficiency examination as the means of ensuring a 
new motor carrier applicant's knowledge about applicable safety 
regulations. Instead, the Agency established procedures in the IFR to: 
(1) Require the new entrant to certify to being knowledgeable about 
applicable requirements and to certify procedures are in place for 
basic safety management controls as a condition for receiving new 
entrant registration; (2) provide the applicant with materials 
explaining the Federal safety requirements to ensure that a 
knowledgeability foundation is available to all new entrants; (3) 
confirm the new entrant's knowledge of safety requirements during the 
safety audit; and (4) grant permanent registration only to new entrants 
that successfully complete the safety audit and 18-month safety 
monitoring system.

B. Notice of Proposed Rulemaking

    The Agency received numerous comments to the IFR from industry and 
public interest groups regarding the self-certification requirement and 
the effectiveness of the safety audit. These comments indicated that 
the safety audit is not effective in identifying new entrant motor 
carriers lacking basic safety management controls. FMCSA field staff 
also recommends enhancing the New Entrant Safety Assurance Program, 
based upon its experience in program implementation and administration. 
In response, the Agency convened a working group to review and improve 
the program. The Agency proposed enhancements to the New Entrant Safety 
Assurance Program in a notice of proposed rulemaking (NPRM) titled New 
Entrant Safety Assurance Process (71 FR 76730) on December 21, 2006.
    The Agency sought to enhance the new entrant program through the 
following regulatory proposals and certain non-regulatory actions 
described in the NPRM:
    Automatic failure of the safety audit. Discovery of any one of 11 
specific regulatory violations during the safety audit would result in 
automatic failure. The Agency proposed that these 11 regulatory 
requirements were essential to demonstrating that basic safety 
management controls are in place.
    Triggers for expedited action. Discovery of any one of seven 
triggering

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incidents, generally determined during a roadside inspection, would 
result in FMCSA taking some form of expedited action against the new 
entrant. Expedited actions could include a written demand for 
corrective action, an expedited safety audit (if the new entrant had 
not yet received one) or an expedited compliance review.
    Elimination of Form MCS-150A. The Agency proposed to eliminate the 
self-certification of carrier knowledge about applicable Federal 
requirements. Many carriers were discovered to have falsely certified 
having such knowledge, and commenters urged the Agency to remove this 
requirement. The Agency concluded that enhanced educational and 
technical assistance materials would provide most carriers with 
sufficient knowledge of applicable regulations and of how to comply 
with such regulations, as required by section 210(b) of MCSIA.
    Americans with Disabilities Act (ADA) and household goods (HHG) 
compliance.
    The Agency proposed to review and include questions regarding a 
carrier's compliance with ADA and HHG compliance in the safety audit. 
While responses to these questions would not be a factor in determining 
the outcome of the safety audit, the Agency would refer violations of 
the ADA to the U.S. Department of Justice for further investigation and 
may take enforcement actions for violations of HHG regulations.
    Educational and Technical Assistance (ETA) materials. The Agency 
indicated that it intended to improve and update ETA materials and 
provide an interactive CD to enhance carrier knowledge of applicable 
Federal safety requirements. As discussed in the next section, the 
Agency has made enhancements to the ETA materials.
    Corrective action and administrative review processes. The Agency 
proposed regulatory changes to clarify procedures relating to the 
corrective action and administrative review processes.
    Non-North America-domiciled motor carriers. The Agency proposed a 
new application process and safety monitoring system for motor carriers 
domiciled outside of the United States, Canada and Mexico (NNA-
domiciled motor carriers). These carriers are currently not covered by 
a safety monitoring system.

III. Discussion of Comments to the NPRM and Section-by-Section Analysis 
of the Final Rule

    In response to the December 2006 NPRM, FMCSA received 17 comments 
from 21 entities. The commenters included nine State enforcement 
agencies; one individual commenter; one motor carrier--Greyhound Lines, 
Inc., seven motor carrier industry associations and consultants, 
including the American Trucking Associations (ATA), the Owner-Operator 
Independent Drivers Association (OOIDA), and the Canadian Trucking 
Alliance (CTA); one safety enforcement organization--the Commercial 
Vehicle Safety Alliance (CVSA), one union, the Amalgamated Transit 
Union and one safety advocacy group, Advocates for Highway and Auto 
Safety (Advocates).
    Based on public comments and the Agency's review of the December 
2006 proposal, FMCSA has made changes in the final rule to the proposed 
revisions to part 385.

A. ``Chameleon'' Carriers--Sec.  385.306

    FMCSA described the term ``chameleon carrier'' as a carrier that 
attempts to register as a new entrant and operate as a different entity 
under a new USDOT Number in an effort to evade enforcement action and/
or out-of-service orders issued against it by the Agency. FMCSA 
proposed under Sec.  385.305 that such carriers would be subject to 
revocation of registration and may be subject to civil and/or criminal 
penalties. All of the comments received on this issue supported FMCSA's 
efforts in identifying chameleon carriers. However, some stated that 
the Agency did not include details on how it will detect chameleon 
carriers. They recommended revising the new entrant application to 
request more ``related company'' information. CVSA recommended the 
Agency coordinate efforts regarding various information systems and 
projects--including the Creating Opportunities, Methods, Practices, and 
Securing Safety System (COMPASS), the Licensing & Insurance (L&I) 
System, the Comprehensive Safety Analysis 2010 (CSA 2010) Initiative, 
the Commercial Vehicle Information Systems and Networks (CVISN), 
Unified Carrier Registration (UCR) System, and the Commercial Driver's 
License Information System (CDLIS) modernization project--to better 
detect chameleon carriers. OOIDA urged the Agency to look at 
``chameleon'' freight brokers.
    FMCSA Response: 
    Actions regarding chameleon carriers. New Sec.  385.306 states that 
a carrier that provides false or misleading information, or that 
conceals material information in connection with the application 
process is subject to revocation of its new entrant registration and 
civil and/or criminal penalties. The Agency is committed to ensuring 
that only safe carriers are permitted to continue operating on our 
Nation's highway. FMCSA has the inherent authority to correct, modify, 
or revoke new entrant registration issued inadvertently, or obtained by 
fraud, misrepresentation or other wrongful means.
    If FMCSA determines the reapplying motor carrier is not subject to 
an outstanding order to cease operations under a previous USDOT Number, 
the Agency will link the history of the old and new companies by 
identifying the new USDOT Number as the primary active number. The old 
USDOT Number would be listed in the Agency database as one under which 
the carrier has also done business, and its safety history, including 
enforcement actions against the motor carrier, would be linked to 
records on the new entity.
    When a carrier applies for a USDOT Number, the system checks the 
application against existing motor carrier Census database records to 
identify possible duplicate records in an effort to prevent assignment 
of multiple USDOT Numbers to a single motor carrier. The Agency 
currently is reviewing its information systems to identify ways to 
enhance its ability to detect chameleon carriers during the application 
process. FMCSA also plans to address the chameleon carrier issue under 
a separate rulemaking in response to SAFETEA-LU section 4113 regarding 
patterns of safety violations by motor carrier management and will 
reassess the need for additional revisions to its information systems 
in support of that effort. Finally, under the Unified Registration 
System rulemaking, the Agency is streamlining its registration process 
so that we can more efficiently track all FMCSA regulated motor 
carriers, freight forwarders and brokers.

B. Triggers for Expedited Action--Sec.  385.308

    ATA asked the Agency to clarify what the term ``hazardous materials 
incident'' means and to identify which hazardous materials incidents 
could result in an expedited action. Advocates requested more 
information regarding the rationale for including the violation which 
involves driver or vehicle out-of-service rates (item 7 on the list 
under proposed Sec.  385.308). Another commenter asked if the wording 
of proposed Sec.  385.308 means the Agency will take expedited action 
whenever one of these violations or incidents is discovered.
    FMCSA Response:
    Clarification of the term ``hazardous materials incident.'' The 
Agency agrees that the description of a hazardous

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materials incident under Sec. Sec.  385.308(a) and (b) is unclear. In 
response, the Agency revises Sec.  385.308 (a)(3) to make a hazardous 
materials incident criteria consistent with the criteria for a 
reportable hazardous materials incident under 49 CFR 171.15 and 171.16 
of the HMRs with regard to a single incident involving: (1) A highway 
route-controlled quantity of certain radioactive materials (Class 7); 
(2) any quantity of certain explosives (Class 1, Division 1.1, 1.2, or 
1.3; or (3) any quantity of certain poison inhalation hazard materials 
(Zone A or B). The Agency revises 49 CFR 385.308(a)(4) to cross 
reference 49 CFR 171.15 and 171.16 for two or more hazardous materials 
incidents involving hazardous materials other than those listed in 
paragraph (a)(3) under Sec.  385.308.
    Driver or vehicle out-of-service rates. Under existing Sec.  
385.307(a), the Agency may take expedited action against a motor 
carrier if it were discovered to have an ``accident rate or driver or 
vehicle violation rate that is higher than the industry average for 
similar motor carrier operations.'' The Agency expands the list of 
actions that could trigger expedited actions and specifically replaces 
existing Sec.  385.307(a) with Sec.  385.308(a)(7), ``having a driver 
or vehicle out-of-service rate of 50 percent or more based upon at 
least three inspections occurring within a consecutive 90-day period.'' 
From an operational standpoint, the ``50 percent or more'' threshold 
will provide for more effective and efficient monitoring of new entrant 
performance because it is a non-subjective and easily measured rate.
    Requirement to take expedited action. The regulatory text of Sec.  
385.308 provides that the Agency may, but is not required to, initiate 
expedited action following discovery of a triggering action or 
violation. However, the section heading used the word ``will'' instead 
of ``may.'' The final rule changes the section heading so that it is 
consistent with the regulatory text.

C. Corrective Action and Administrative Review Processes--Sec. Sec.  
385.319, 385.323, 385.325, and 385.327

    Several commenters supported reducing the timeframes for the 
corrective action and administrative review processes. Commenters also 
complained that a paper-based system is an inadequate means of ensuring 
corrective action for detected deficiencies. Other comments recommended 
verification be conducted on-site at the carrier's place of business.
    FMCSA Response:
    Corrective action and administrative review timeframes. FMCSA 
believes the existing timeframes for corrective action and 
administrative review should be retained because they reflect a 
balanced consideration of the due process rights of motor carriers as 
well as demands on the Agency related to processing corrective action 
submissions and administrative review requests. Comments on this issue 
did not provide compelling reasons for shortening the timeframes for 
the corrective action or administrative review processes.
    Depending on the nature and severity of identified violations, the 
Agency may take expeditious enforcement action against the new entrant 
without using the corrective action procedures. FMCSA has authority to 
immediately shut down operations of a motor carrier deemed to be an 
imminent hazard to highway safety. At all times during which a new 
entrant is subject to the safety monitoring system in 49 CFR part 385, 
subpart D, it is also subject to the general safety fitness procedures 
established in subpart A and to compliance and enforcement procedures 
applicable to all carriers regulated by FMCSA. Section 385.335, for 
example, expressly recognizes the Agency's authority to conduct a 
compliance review instead of a safety audit when circumstances warrant 
more intensive scrutiny of a new entrant's safety compliance.
    The final rule amends Sec.  385.319, which concerns a new entrant's 
responsibilities for correcting deficient safety management practices 
discovered during the safety audit, by adding passenger carriers 
operating vehicles designed or used to transport between 9 and 15 
passengers for compensation to the group of carriers that must remedy 
deficiencies within 45 days of notification by FMCSA. This change 
achieves consistency with 49 CFR 385.11, which provides a 45-day 
corrective action period for ``unfit'' motor carriers transporting 
passengers by CMV. The Agency also amends Sec.  385.319(c), as well as 
Sec. Sec.  385.323, 385.325, and 385.327, to make them consistent with 
timeframes relating to notification of motor carriers of passengers 
under Sec.  385.11. Section 385.319 is rewritten to cross reference the 
definition of CMV relating to hazardous materials carriers in 49 CFR 
390.5 for purposes of consistency.
    The administrative review provisions in Sec.  385.327 were 
ambiguous with respect to the time during which a carrier was allowed 
to file a request for administrative review and when it had to file a 
request for administrative review, if it wanted the review to be 
completed before its registration was revoked. Accordingly, FMCSA 
revises Sec.  385.327 to clarify timeframes for requesting 
administrative review of determinations regarding the safety audit. A 
new entrant must file the request within 90 days of the date of the 
notice of audit failure or within 90 days of the date of notice of 
insufficient corrective action. However, if a new entrant wants a 
decision before the revocation takes effect, the new entrant must file 
a request for review within 15 days of the date of the notice of audit 
failure. Requests filed after the 15th day will be considered, but it 
is possible the revocation would take effect before the administrative 
review process is completed, if the carrier waits until after the 15th 
day.
    On-site verification of corrective action. Regarding on-site 
verification of evidence of corrective action, in most instances 
written documentation is sufficient to substantiate correction of 
deficiencies, and an on-site visit is not required. The Agency believes 
its proposed corrective action process is adequate and is an efficient 
use of resources.

D. Automatic Failure of the Safety Audit--Sec.  385.321(b)

    Some commenters to the NPRM raised concerns regarding the list of 
regulatory violations that were proposed to result in automatic failure 
of the safety audit. Advocates stated that the proposed list is too 
short and should include more hours-of-service-based violations. ATA 
stated that regulatory violations which are based on a single driver or 
a single CMV would unfairly disadvantage larger carriers. Some asked 
why certain regulatory violations, if discovered during the safety 
audit, would cause an automatic failure but would not result in 
expedited action if discovered during a roadside inspection.
    FMCSA Response: Under Sec.  385.321(b), the Agency increases from 
11 to 16 the number of regulatory violations that will result in 
automatic failure of the safety audit. The Agency will develop 
appropriate enforcement guidelines regarding how the Agency will 
address egregious safety violations found during the safety audit if 
such violations are not part of the automatic failure violation list 
and do not result in failure of the safety audit under the evaluation 
guidelines in Appendix A to part 385. For example, the guidance will 
provide instructions to document all deficiencies regardless of whether 
they cause failure of the safety audit, and to include them in the 
Motor Carrier Management Information System (MCMIS).

[[Page 76476]]

    Automatic failure determination. Committing any one of the 
following 16 violations will result in automatic failure of the safety 
audit in accordance with guidelines in the table to Sec.  385.321(b).

                       Table to Sec.   385.321(b)
------------------------------------------------------------------------
   Violations that will result in automatic failure of the new entrant
                              safety audit
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                                                     Guidelines for
                                                 determining automatic
                  Violation                      failure of the safety
                                                         audit
------------------------------------------------------------------------
1. Sec.   382.115(a)/Sec.   382.115(b)--       Single occurrence.
 Failing to implement an alcohol and/or
 controlled substances testing program
 (domestic and foreign motor carriers,
 respectively).
2. Sec.   382.201--Using a driver known to     Single occurrence.
 have an alcohol content of 0.04 or greater
 to perform a safety-sensitive function.
3. Sec.   382.211--Using a driver who has      Single occurrence.
 refused to submit to an alcohol or
 controlled substances test required under
 part 382.
4. Sec.   382.215--Using a driver known to     Single occurrence.
 have tested positive for a controlled
 substance.
5. Sec.   382.305--Failing to implement a      Single occurrence.
 random controlled substances and/or alcohol
 testing program.
6. Sec.   383.3(a)/Sec.   383.23(a)--          Single occurrence.
 Knowingly using a driver who does not
 possess a valid CDL.
7. Sec.   383.37(a)--Knowingly allowing,       Single occurrence.
 requiring, permitting, or authorizing an
 employee with a commercial driver's license
 which is suspended, revoked, or canceled by
 a State or who is disqualified to operate a
 commercial motor vehicle.
8. Sec.   383.51(a)--Knowingly allowing,       Single occurrence.
 requiring, permitting, or authorizing a       This violation refers to
 driver to drive who is disqualified to drive   a driver operating a CMV
 a commercial motor vehicle.                    as defined under Sec.
                                                383.5.
9. Sec.   387.7(a)--Operating a motor vehicle  Single occurrence.
 without having in effect the required
 minimum levels of financial responsibility
 coverage.
10. Sec.   387.31(a)--Operating a passenger    Single occurrence.
 carrying vehicle without having in effect
 the required minimum levels of financial
 responsibility.
11. Sec.   391.15(a)--Knowingly using a        Single occurrence.
 disqualified driver.
12. Sec.   391.11(b)(4)--Knowingly using a     Single occurrence.
 physically unqualified driver.                This violation refers to
                                                a driver operating a CMV
                                                as defined under Sec.
                                                390.5.
13. Sec.   395.8(a)--Failing to require a      Requires a violation
 driver to make a record of duty status.        threshold (51% or more
                                                of examined records) to
                                                trigger automatic
                                                failure.
14. Sec.   396.9(c)(2)--Requiring or           Single occurrence.
 permitting the operation of a commercial
 motor vehicle declared ''out-of-service''
 before repairs are made.
15. Sec.   396.11(c)--Failing to correct out-  Single occurrence.
 of-service defects listed by driver in a
 driver vehicle inspection report before the
 vehicle is operated again.
16. Sec.   396.17(a)--Using a commercial       Requires a violation
 motor vehicle not periodically inspected.      threshold (51% or more
                                                of examined records) to
                                                trigger automatic
                                                failure.
------------------------------------------------------------------------

    In response to comments stating that violations based on a single 
driver or a single CMV unfairly disadvantage larger carriers, the 
Agency has made adjustments to its approach for the automatic failure 
determination. Although 14 of the 16 regulatory violations (numbers 1-
12, 14 and 15 in the table to Sec.  385.321(b)) would trigger automatic 
failure of the safety audit based on a single occurrence of the 
violation, two of the violations will include thresholds. FMCSA 
continues to believe the severity of 14 of these violations warrants 
the single-occurrence trigger. However, in the case of Sec. Sec.  
395.8(a) and 396.17(a), the Agency will require a violation threshold 
of 51% to cause automatic failure of the safety audit. (Both of the 
threshold violations were included in the December 2006 NPRM). FMCSA 
has determined that the appropriate standard is preponderance of the 
evidence, often called the ``51% rule.'' In other words, if the driver 
did not prepare a record of duty status in more than half of the trips 
examined, or the carrier failed to perform periodic inspections on more 
than half of the fleet vehicles examined during the safety audit, there 
exists a violation threshold indicative of breakdowns in the carrier's 
management controls which will result in automatic failure of the new 
entrant safety audit. Violation rates of 50% or less will be taken into 
consideration in the overall assessment of the carrier's compliance 
with applicable regulations, and the Agency may use other means to 
improve the carrier's performance, including assessment of civil 
penalties following a compliance review of the new entrant.
    Discussion of additional regulatory violations. Violation two 
(Sec.  382.201) corrects an inadvertent omission from the December 2006 
NPRM. While the Agency proposed that a violation of the prohibition 
against carriers using a driver who tests positive for controlled 
substances would result in automatic failure of the safety audit, it 
omitted the corresponding violation regarding the prohibition against 
carriers knowingly using a driver who has an alcohol concentration of 
0.04 or greater.
    Violation five (Sec.  382.305) involves failure to implement random 
controlled substances and/or alcohol testing, a crucial element of any 
effective drug and alcohol testing program. The Agency believes 
implementation of such random testing is essential to deterring use of 
controlled substances or abuse of alcohol by CMV drivers.
    Violation six (Sec. Sec.  383.3/383.23) is added to close a gap in 
the list of automatic failure regulatory violations relating to CDL 
drivers. The NPRM only addressed a carrier that uses a driver with a 
suspended, revoked or cancelled CDL or a driver who was disqualified to 
operate a CMV. Using a driver who does not obtain a CDL when one is 
required is an equally serious safety violation.
    Violation 10 (Sec.  387.31(a)) complements regulatory violation

[[Page 76477]]

number nine (Sec.  387.7) by including financial responsibility 
requirements for passenger-carrying motor carriers in addition to 
property carriers. The December 2006 NPRM inadvertently omitted 
financial responsibility requirements for passenger carriers.
    Violation 15 (Sec.  396.11(c)), failing to correct out-of-service 
defects listed by the driver, complements violation 14 (Sec.  
396.9(c)(2)), requiring or permitting the operation of a commercial 
motor vehicle declared out-of-service before repairs are made. Section 
396.9(c)(2) relates specifically to a vehicle declared out-of-service 
as the result of an inspection performed at roadside. Inclusion of 
Sec.  396.11(c) will ensure that all documented out-of-service defects 
are corrected before the vehicle is operated again, inasmuch as 
continued operation of the vehicle could present an imminent hazard to 
the public.
    Distinctions in the lists of regulatory violations (automatic 
failure vs. expedited actions). Generally, the regulatory violations 
that would trigger automatic failure of the safety audit are more 
readily discernible at the carrier's place of business. The regulatory 
violations that would trigger an expedited action are detectable at the 
roadside or away from the carrier's place of business. New entrant 
motor carriers discovered with these violations could be identified 
during a roadside inspection or by any other means even if the Agency 
had not yet conducted a safety audit.

E. Elimination of Form MCS--150A--Multiple Conforming Amendments 
(Sec. Sec.  385.305, 385.405 and 385.421)

    Conforming amendments are made throughout part 385 to eliminate the 
requirement to complete Form MCS-150A. The purpose of the MCS-150A was 
for an authorized official of the new entrant to certify to his/her 
familiarity with relevant regulations and to having a system in place 
to ensure compliance with the FMCSRs and applicable HMRs. However, 
based on the safety audits conducted to date, FMCSA has found that 
self-certification has not been an accurate indicator of 
knowledgeability. Therefore, FMCSA eliminates the self-certification 
registration requirement and corresponding Form MCS-150A.

F. Enhanced ETA Materials

    The Agency has updated, significantly enhanced and expanded 
accessibility of its ETA materials. The ETA materials pre-date the New 
Entrant Safety Assurance Program and were originally intended to help 
motor carriers prepare for a compliance review. In response to comments 
regarding the quality of the ETA materials, the Agency has incorporated 
new information helpful to new entrants seeking knowledge about how to 
comply with applicable Federal safety standards and preparing for the 
new entrant safety audit. The new document retains the title 
``Educational and Technical Assistance Program--A Motor Carrier's Guide 
to Improving Highway Safety'' and includes the following enhancements:
     Updated regulatory requirements. The regulatory 
information has been updated to include new requirements imposed since 
2001.
     Revamped Design. Regulatory information is presented in 
the same order in which it appears in the Federal Motor Carrier Safety 
Regulations (49 CFR parts 300-399). In addition to a table of contents, 
two Quick Reference Guides are added to the front of the document to 
help readers quickly identify all regulatory requirements relevant to 
drivers and employers, respectively. The reference guides are written 
in question-and-answer format with topical subheadings. The regulatory 
information is attractively presented and easy to understand. We 
believe these improvements will motivate new entrants to make more 
effective use of the materials to become familiar with applicable 
Federal safety standards.
    [cir] Expanded coverage of the New Entrant Safety Assurance 
Program. The section on Part 385--Safety Fitness Procedures--includes a 
clearer discussion of the New Entrant Safety Assurance Program and the 
Hazardous Materials Safety Permitting Program.
    Because the ETA enhancement project was completed in July 2008, 
prior to publication of this final rule, the section on part 385 
reflects new entrant program requirements in effect as of that date and 
not the new requirements set forth in this final rule; changes made by 
this final rule will be included in the next revision to the ETA 
materials.
     More Accessible. The ETA materials are available 
electronically on, and may be downloaded from, the FMCSA Web site. The 
electronic version includes links directly to desired content from the 
Driver or Employer Quick-Reference Guides.
    The Agency also will publish a separate notice soliciting public 
comment on other ways to improve carrier knowledgeability of applicable 
Federal safety standards.

G. The Application Process for Non-North America-Domiciled Motor 
Carriers--Part 385, Subpart H

    General. Subpart H to part 385 adopts without change proposals set 
forth in the December 2006 NPRM governing the new application process 
for non-North America-domiciled motor carriers seeking to operate 
within the United States beyond U.S. municipalities and commercial 
zones on the U.S.-Mexico international border.
    Acceptable licensing for CMV operators used by NNA-domiciled motor 
carriers. Advocates commented that only a U.S. or Canadian CDL should 
be acceptable.
    FMCSA Response: In November 1991 under the terms of an 
international agreement, the Administrator of the Federal Highway 
Administration (FMCSA's predecessor agency) determined that Mexican 
commercial driver's licenses (Licencias Federal de Conductor) are 
equivalent to U.S. CDLs. This determination was upheld on judicial 
review. For this reason, Sec.  385.605(a) continues to require an NNA-
domiciled motor carrier to use only drivers who possess a valid CMV 
driver's license. Included on the list of valid CMV driver's licenses 
are the CDL, Canadian Commercial Driver's License and Mexican Licencia 
de Federal de Conductor.

H. Form--OP-1(NNA) for Non-North America-Domiciled Motor Carriers 
Requesting New Entrant Registration

    Advocates strongly opposed reliance on narrative responses to 
Section V of the OP-1(NNA) and self-certification responses to proposed 
Sections VIII and IX.
    FMCSA Response: FMCSA does not adopt Advocates' recommendations for 
modifying the Form OP-1(NNA) because the Agency verifies applicant 
responses during the pre-authorization safety audit (PASA) and prior to 
granting new entrant registration to them. Instead, Form OP-1(NNA)--
Application for U.S. Department of Transportation (USDOT) Registration 
by Non-North America-Domiciled Motor Carriers, is adopted as proposed 
in the December 2006 NPRM. The Agency corrected the form's 
instructions: (1) To reflect the Agency's new Headquarters location; 
and (2) to conform to a technical correction to part 387 concerning the 
CMV weight threshold.

I. Proposed Safety Monitoring System for Non-North America-Domiciled 
Motor Carriers--Part 385, Subpart I

    The final rule adopts all provisions regarding the safety 
monitoring system for NNA-domiciled motor carriers as set forth in the 
December 2006 NPRM without change.

[[Page 76478]]

J. Modification of Safety Audit Guidelines Under Appendix A to Part 385

    ADA compliance. Commenters suggested that the new entrant program 
should include more of a focus on ensuring passenger carriers' 
compliance with the ADA by including compliance with ADA requirements 
in the pass/fail determination of the safety audit. Other commenters 
also claimed that the Agency's position on ADA enforcement is 
contradicted by case law [Peter Pan Bus Lines, Inc. v. Federal Motor 
Carrier Safety Administration (471 F. 3d 1350 (DC Cir. 2006)].
    Congress addressed the issues raised in the Peter Pan Bus Lines 
case by enacting the Over-the-Road Bus Accessibility Act of 2007 [Pub. 
L. 110-291, 122 Stat. 2915, July 30, 2008]. This law requires FMCSA to 
consider compliance with DOT's ADA regulations as an element of an 
over-the-road bus company's fitness for receiving new operating 
authority. It also authorizes the Agency to suspend, amend, or revoke a 
motor carrier's registration in the event of a willful failure to 
comply with DOT's ADA regulations.
    Inasmuch as ADA compliance is not indicative of a passenger 
carrier's ability to operate its vehicles safely, a finding of 
potential ADA noncompliance will not affect the results of the new 
entrant safety audit. However, to assist in ensuring ADA compliance, 
FMCSA will take the following additional steps:
     Begin training enforcement officials to detect ADA 
compliance violations. Such training will not be included as an auditor 
certification requirement under 49 CFR Part 385, subpart C.
     Include a question regarding ADA compliance in the safety 
audit.
     If ADA noncompliance is discovered in the course of a new 
entrant safety audit or compliance review, FMCSA will forward the 
information to the U.S. Department of Justice (DOJ), and appropriate 
action by DOJ and/or DOT will be taken, pursuant to the memorandum of 
understanding to be established between DOJ and DOT as directed by 
Public Law 110-291.
     Refer any non-compliant motor carrier that is also a 
recipient of DOT financial assistance to the Federal Transit 
Administration (FTA) for administrative enforcement action, as 
appropriate. FTA administers a program that provides financial 
assistance to some over-the-road bus carriers and, consistent with 
section 504 of the Rehabilitation Act of 1973 and DOT rules 
implementing it (49 CFR Part 27), cannot provide such assistance to 
carriers who are out of compliance with their ADA obligations.
     When appropriate, initiate action to amend, suspend, or 
revoke a carrier's new entrant registration based on willful 
noncompliance with DOT's ADA regulations (49 CFR Part 37, Subpart H).

K. Conforming Amendments to Part 387

    The Agency adopts the December 2006 NPRM proposal to amend part 387 
by requiring all non-North America-domiciled motor carriers to file 
evidence of financial responsibility with the Agency as a condition for 
registration. Sections 387.3(c)(1) and 387.9 are also revised to make a 
technical correction to the threshold weights pertaining to CMVs to 
read ``over 10,001 pounds'' and ``less than 10,001 pounds,'' as 
appropriate.

L. Discussion of Remaining Comments That Will Not Warrant a Regulatory 
Change

    1. Proficiency Examination. Three commenters urged the Agency to 
include a proficiency examination as part of the new entrant program to 
ensure applicants are knowledgeable about the applicable regulatory 
safety requirements.
    FMCSA Response: The Agency is sensitive to concerns expressed by 
commenters that there may be additional mechanisms of ensuring 
applicant knowledgeability. FMCSA will respond to these concerns by 
publishing a notice inviting the public to provide information to 
assist the Agency in evaluating the feasibility of alternative 
requirements or additional enhancements to the current process for 
ensuring applicant knowledgeability, including proficiency 
examinations. However, FMCSA believes this final rule fully complies 
with section 210(b) of MCSIA, which requires the Agency to consider a 
proficiency examination. The Agency has considered the option of 
requiring a proficiency examination and has decided not to impose such 
a requirement at this time. Commenters to the Agency's notice regarding 
the applicant knowledgeability issue will have the opportunity to 
address the feasibility of potential alternatives for improving 
applicant knowledgeability, including proficiency examinations.
    2. PASA and compliance review requirement for all new entrants. 
Advocates believe domestic and Canada-domiciled motor carriers, like 
NNA-domiciled motor carriers, should be subject to a PASA to obtain new 
entrant registration and a compliance review to receive permanent 
registration.
    Some comments recommended the Agency require a new entrant whose 
registration was revoked to successfully undergo a PASA before being 
re-issued new entrant registration.
    FMCSA Response: The Agency's limited resources are insufficient to 
provide for conducting a PASA and compliance review for the 40,000-
50,000 new entrants annually that obtain USDOT Numbers. Section 210 of 
MCSIA does not require PASAs or compliance reviews for new entrant 
carriers. FMCSA disagrees with the Advocates' and other commenters' 
statements about the necessity of conducting PASAs on all new motor 
carriers. The Agency continues to believe that its safety monitoring 
program and the safety audit, accompanied by expedited actions, will 
help to ensure safety given current resources.
    Today's final rule does not require reapplying new entrants to 
successfully complete a PASA as a condition of obtaining new entrant 
registration. If the carrier's new entrant registration was revoked 
because the carrier refused to submit to a safety audit, it would be 
re-prioritized for an expedited safety audit as soon as practicable 
upon reentering the new entrant program. A reapplying carrier is 
prohibited from operating in interstate commerce until its new 
application is approved. A new 18-month monitoring period would start 
upon approval of the new application.
    A carrier whose new entrant registration was revoked for failing 
the safety audit would have to submit an updated Form MCS-150 
application and provide evidence that it has corrected the deficiencies 
that resulted in revocation of its registration. The Agency will not 
grant new entrant registration, and a carrier may not conduct 
interstate operations, unless FMCSA approves the new application and 
corrective action plan. Additionally, the carrier will be subject to a 
new 18-month safety monitoring period.
    To retain historical information on a revoked new entrant's past 
performance, FMCSA will require the new entrant to retain the same 
USDOT Number when reapplying for registration. This is consistent with 
what FMCSA has done in the past and is currently doing whenever a 
carrier is placed out-of-service and subsequently remedies whatever 
deficiencies resulted in the out-of-service order.
    3. Impact of rule on Federal/State resources. Several State 
enforcement agencies requested that FMCSA disclose who would be 
responsible for handling the increased number of corrective

[[Page 76479]]

actions anticipated due to the higher failure rate likely to occur as a 
result of modifications to the new entrant program.
    FMCSA Response: States are not responsible for managing corrective 
action procedures and administrative review requests. FMCSA handles 
these actions, and the Agency will continue to manage these due process 
provisions in the new entrant program at this time.
    4. Implementation issues/questions. The Public Utilities Commission 
of Ohio (PUCO) requested that the Agency address its concerns regarding 
implementation of the new entrant program:
     Reclassified motor carriers and the new entrant safety 
monitoring system. According to PUCO, some motor carriers enter the new 
entrant program and later reclassify to an operational status not 
subject to new entrant program requirements (such as a PRISM registrant 
[an entity that is required by the State but not FMCSA to obtain a 
USDOT Number under the Performance and Registration Information System 
Management (PRISM) program] or intrastate motor carrier). If the 
carrier later reclassifies as a new entrant, PUCO believes the Agency 
should disregard time operating outside of the new entrant program when 
computing the new entrant's 18-month safety monitoring period.
     Treatment of relocated new entrant motor carriers. PUCO 
asks the Agency to ensure, in instances where a new entrant transfers 
its operations to a new State, there is sufficient time provided to the 
new jurisdiction to be able to schedule and conduct the safety audit 
prior to the end of the 18-month period.
     Treatment of new entrant motor carriers that change 
operational status to evade the safety audit. PUCO recommends the 
Agency track motor carriers that continually change their status in an 
effort to avoid a safety audit to ensure that they undergo a safety 
audit or compliance review within a specified time period.
     Implementation date for the new entrant rule. PUCO 
requests the Agency provide sufficient time for it to make staffing 
changes and conduct training when establishing the final rule 
compliance date.
    FMCSA Response:
    Reclassified motor carriers and the new entrant safety monitoring 
system. The Agency agrees that time spent operating as a motor carrier 
outside of FMCSA jurisdiction should not count toward completion of the 
18-month new entrant safety monitoring process. For example, if a motor 
carrier completes 6 months of the safety monitoring period before 
converting to a status that is not subject to the new entrant program 
then upon re-entering the new entrant program the clock would resume 
from 6 months onward. Time operating as a non-new entrant would not be 
credited toward the new entrant safety monitoring period.
    Treatment of relocated new entrant motor carriers. Existing 
regulations under Sec.  385.333(d) permit a carrier to continue 
operations as a new entrant if a safety audit or compliance review has 
not been performed by the end of the 18-month monitoring period through 
no fault of the motor carrier. The carrier may continue operating until 
FMCSA conducts a safety audit or compliance review and makes a final 
determination regarding the adequacy of its safety management controls. 
This provision gives FMCSA the flexibility to extend the safety 
monitoring period for any new entrant that relocates from one State to 
another before completion of the safety audit. A new entrant motor 
carrier that relocates would continue to be subject to the new entrant 
program. FMCSA information systems would continue to monitor the new 
entrant's status through completion of the safety audit and the 18-
month safety-monitoring period.
    Treatment of new entrant motor carriers that change operational 
status to evade the safety audit. A motor carrier may voluntarily 
revoke its new entrant registration at any time. Nonetheless, the 
Agency is aware that there may be instances in which a motor carrier 
may use this option to evade the new entrant safety audit. Because 
MCMIS reveals that an extremely small number of motor carriers may be 
manipulating operational status in this way, the Agency does not 
believe a regulatory change is warranted. The Agency analyzed data from 
MCMIS regarding changes in status for the period from January 2003 
through October 2007. MCMIS records the initial issuance of new entrant 
registration as the first change and subsequent changes are tracked as 
change 2, 3, etc. For example, a carrier that receives new entrant 
registration in May 2007, changes its operations solely to intrastate 
nonhazardous materials transportation in May 2008, and then resumes 
interstate operations and re-enters the new entrant program in August 
2008, is considered as having three changes. For purposes of the 
report, the Agency considered four or more changes as frequent and 
found that of 200,000 new entrants, only 130 indicated frequent 
changes. Instead of a regulatory change, the Agency will address this 
issue operationally by altering the audit prioritization formula.
    Besides the prioritization algorithm under the Safety Status 
Measurement System (SAFESTAT), several means exist to trigger a 
compliance review of a motor carrier. The Agency will consider the 
frequency of changes in operating status as a reason for conducting a 
compliance review on a motor carrier. There may be instances where a 
motor carrier may legitimately request frequent changes in operational 
status. However, the Agency believes it is appropriate to prioritize 
carriers for a compliance review if there are frequent changes in 
status. Existing Sec. Sec.  385.333 and 385.335 indicate that a new 
entrant may be subject to a compliance review during the 18-month 
safety-monitoring period and that the Agency may take such action at 
its discretion.
    Implementation date for the new entrant rule. In establishing a 1-
year compliance date for this final rule, the Agency has taken into 
consideration and provided time for staffing changes, information 
system modifications, and training.
    5. New entrant related notifications to other jurisdictions. 
Missouri DOT claimed that a more aggressive new entrant program will 
cause a dramatic increase in the failure rate of motor carriers. It 
recommended development of a real-time database for notification of 
State enforcement personnel. CVSA also recommended that the 
notification take place in several different media types and formats, 
both electronic and print. This issue was not directly addressed in the 
2002 IFR or the 2006 NPRM.
    FMCSA Response: The Agency already provides the States with Web-
based access to information about motor carriers, including new 
entrants. If an enforcement officer has Web access, the officer can 
check new entrant status in ``real-time'' through FMCSA's enforcement 
query system designed to dramatically increase access to motor carrier 
safety information for State and Federal law enforcement personnel.
    6. Reciprocity agreement with Canada concerning provincial audits. 
CTA requested FMCSA exempt Canada-domiciled new entrants that had 
undergone a provincial facility audit during the 18-month monitoring 
period from the requirement to pass a safety audit under the New 
Entrant Safety Assurance Process. CTA reiterated that provincial audits 
suffice for purposes of FMCSA's New Entrant Safety Assurance Process. 
CVSA recommended developing reciprocity agreements for safety audits 
with Canada and Mexico.
    FMCSA Response: The Agency acknowledges CTA's concerns but the

[[Page 76480]]

Agency cannot exempt Canada-based carriers from the new entrant program 
required by 49 U.S.C. 31144(g)(1). Section 31144(g)(1) does not provide 
FMCSA authority to exempt new entrants from the safety audit 
requirement. FMCSA is currently working with Canadian officials to 
examine the feasibility of establishing a reciprocity agreement 
concerning compliance reviews conducted on motor carriers in their 
respective country of domicile. The Agency will consider working with 
Canadian officials on reciprocity of new entrant safety audits.
    7. Group audits and audits conducted at alternate locations. In 
comments to the NPRM, CVSA questioned whether group audits provide a 
proper environment for the safety audits.
    FMCSA Response: The Agency will continue conducting group audits 
and conducting audits at alternate locations, as appropriate. Congress 
directed the Agency under section 210(a) of MCSIA to consider alternate 
locations where safety audits may be conducted for the convenience of 
small businesses. We believe conducting audits at alternate locations 
can be beneficial for both motor carriers and the Agency. Group audits 
can be an efficient means of simultaneously educating and auditing 
larger groups of motor carriers than are covered during single-carrier 
audits. Typically, Federal or State enforcement personnel determine a 
date to convene the group audit and contact several new entrants by 
telephone to schedule them to attend. After all carriers are scheduled 
by phone, the enforcement official sends a confirmation letter with the 
appointment date, time and location and instructions on specific 
records and information to bring to the audit.
    Group audits take place away from the respective carriers' 
principal places of business, generally in a large conference room 
either at the State agency or at a local hotel. The audit commences 
with an educational presentation for the entire group, including a 
question-and-answer period and educational materials. After the 
presentation, several individual safety audits are conducted 
simultaneously throughout the room. The room is configured with tables 
spaced sufficiently to provide adequate privacy for the carrier 
official and safety auditor. A safety auditor conducts a one-on-one 
interview with the carrier official and examines the carrier's safety 
records. In some instances, enforcement personnel have been able to 
conduct multiple sessions, auditing as many as 48 carriers in a single 
day. At the conclusion of the audit, the carrier is provided with a 
written notice of determination and information on corrective actions 
for any detected deficiencies. A carrier that fails the safety audit is 
subject to revocation of registration if corrective action is not 
completed.
    Nonetheless, we recognize that group audits only are beneficial in 
select situations, depending on many factors including, but not limited 
to, the number of new entrants within the given geographical area. For 
this reason, the Agency conducts group audits only in those areas where 
practicable. Safety auditors are also careful to judiciously separate 
the educational and auditing functions in such a way as to maintain 
carrier privacy.
    8. Program assessment. CVSA recommends that FMCSA conduct a 
thorough program assessment to examine the impact of the safety audit.
    FMCSA Response: We agree, but will defer until the enhancements 
made by this final rule have been fully implemented and sufficient time 
has elapsed to enable evaluation of program changes.
    9. Comments beyond the scope of the rule. Advocates criticized the 
Agency for what it calls use of SafeStat and the roster of acute and 
critical regulations as the guideposts for determining which carriers 
pose increased safety risks. OOIDA stated it believes the report titled 
``Analysis of New Entrant Motor Carrier Safety Performance and 
Compliance Using SafeStat'' is ``scientifically challenged'' and should 
not be the basis for FMCSA to impute an increase in the safety risks 
associated with new entrant motor carriers. The report is in the docket 
for this rule.
    FMCSA Response: Discussions of SafeStat for identifying at-risk 
carriers and prioritizing them for compliance reviews are beyond the 
scope of the New Entrant Safety Assurance Process final rule. Moreover, 
SafeStat itself has no bearing on the implementation of the new entrant 
program since Congress has mandated that all new entrants submit to the 
safety audit before receiving permanent registration, nor does it have 
any bearing on the analysis of its effectiveness.

IV. Rulemaking Analyses

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

    FMCSA has determined that this final rule is a significant 
regulatory action within the meaning of Executive Order 12866 and the 
U.S. Department of Transportation's regulatory policies and procedures 
(DOT Order 2100.5 dated May 22, 1980; 44 FR 11034, February 26, 1979). 
FMCSA has analyzed the costs and benefits, as discussed below, and has 
determined this rule will be economically significant. The