Limited Service Exclusion for Household Goods Motor Carriers and Related Registration Requirements for Brokers, 19568-19570 [2013-07460]

Agencies

• Federal Motor Carrier Safety Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 78, Number 62 (Monday, April 1, 2013)]
[Notices]
[Pages 19568-19570]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-07460]


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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

[Docket No. FMCSA-2013-0087]


Limited Service Exclusion for Household Goods Motor Carriers and 
Related Registration Requirements for Brokers

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

ACTION: Notice; request for public comment.

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SUMMARY: FMCSA provides notice and requests comments on the Agency's 
process for determining the appropriate use of the Limited Service 
Exclusion (LSE), a statutory exception to the definition of Household 
Goods (HHG) motor carrier provided at 49 U.S.C. 13102(12)(C). In 
addition, this notice explains the registration requirements of brokers 
that arrange for the transportation of shipments that are eligible for 
the LSE.

DATES: You must submit comments on or before May 1, 2013.

ADDRESSES: You may submit comments identified by Federal Docket 
Management System Number FMCSA-2013-0087 by any one of the following 
methods:
     Federal eRulemaking Portal: Go to https://www.regulations.gov. Follow the online instructions for submitting 
comments.
     Fax: 1-202-493-2251.
     Mail: Docket Management Facility, (M-30), U.S. Department 
of Transportation (DOT), 1200 New Jersey Avenue SE., West Building 
Ground Floor, Room 12-140, Washington, DC 20590-0001.
     Hand Delivery: Same as mail address above, between 9 a.m. 
and 5 p.m., ET, Monday through Friday, except Federal holidays. The 
telephone number is 202-366-9329.
    To avoid duplication, please use only one of these four methods. 
All submissions must include the Agency name and docket number for this 
notice. See the ``Public Participation'' heading below for instructions 
on submitting comments and additional information.

FOR FURTHER INFORMATION CONTACT: Mr. Kenneth Rodgers, Commercial 
Enforcement and Investigations Division, U.S. Department of 
Transportation, Federal Motor Carrier Safety Administration, 1200 New 
Jersey Avenue SE., Washington, DC 20590-0001. Telephone (202)366-3031 
or CIE_mailbox@dot.gov. Office hours are from 8:00 a.m. to 4:30 p.m., 
e.t., Monday through Friday, except Federal holidays.

SUPPLEMENTARY INFORMATION:

Public Participation and Request for Comments

    FMCSA encourages you to participate by submitting comments and 
related materials. All comments received will be posted without change 
to https://www.regulations.gov and will include any personal and/or 
copyrighted information you provide.

Submitting Comments

    If you submit a comment, please include the docket number for this 
notice (FMCSA-2013-0087), indicate the specific section of this 
document to which each comment applies, and provide a reason for each 
suggestion or recommendation. You may submit your comments and material 
online or by fax, mail, or hand delivery, but please use only one of 
these means. FMCSA recommends that you include your name and a mailing 
address, an email address, or a phone number in the body of your 
document so the Agency can contact you if it has questions regarding 
your submission.
    To submit your comment online, go to https://www.regulations.gov and 
insert ``FMCSA-2013-0087'' in the ``Search'' box, and then click the 
``Search'' button to the right of the white box. Click on the top 
``Comment Now'' box which appears next to the notice. Fill in your 
contact information, as desired and your comment, uploading documents 
if appropriate. If you submit your comments by mail or hand delivery, 
submit them in an unbound format, no larger than 8[frac12] by 11 
inches, suitable for copying and electronic filing. If you submit 
comments by mail and would like to know that they reached the facility, 
please enclose a stamped, self-addressed postcard or envelope.
    FMCSA will consider all comments and material received during the 
comment period and may change this enforcement policy based on your 
comments.

Viewing Comments and Documents

    To view comments, as well as documents mentioned in this notice as 
being available in the docket, go to https://www.regulations.gov and 
insert ``FMCSA-2013-0087'' in the ``Search'' box and and then click on 
``Search.'' Click on the ``Open Docket Folder'' link and all the 
information for the notice, and the list of comments will appear with a 
link to each one. Click on the comment you would like to read. If you 
do not have access to the Internet, you may view the docket online by 
visiting the Docket Management Facility in Room W12-140 on the ground 
floor of

[[Page 19569]]

the DOT West Building, 1200 New Jersey Avenue SE., Washington, DC 
20590, between 9 a.m. and 5 p.m., e.t., Monday through Friday, except 
Federal holidays.

Privacy Act

    All comments received will be posted with personal information you 
have provided to https://www.regulations.gov. Anyone may search the 
electronic form of all comments received into any of our dockets by the 
name of the individual submitting the comment (or of the person signing 
the comment, if submitted on behalf of an association, business, labor 
union, etc.). You may review DOT's Privacy Act Statement for the 
Federal Docket Management System published in the Federal Register on 
December 29, 2010 (75 FR 82132), or you may visit https://www.gpo.gov/fdsys/pkg/FR-2010-12-29/pdf/2010-32876.pdf.

Background

    The Limited Service Exclusion (LSE) is a statutory provision that 
pertains to the definition of ``household goods motor carrier'' at 49 
U.S.C. 13102(12)(C). Congress defined a HHG motor carrier in 49 U.S.C. 
13102(12)(A) as a ``motor carrier that, in the ordinary course of its 
business of providing transportation of household goods, offers some or 
all of the following additional services: (i) Binding and nonbinding 
estimates; (ii) Inventorying; (iii) Protective packing and unpacking of 
individual items at personal residences; and (iv) Loading and unloading 
at personal residences.''
    Through the LSE, Congress specifically excluded certain motor 
carriers from the definition of HHG motor carrier: ``[W]hen the motor 
carrier provides transportation of household goods in containers or 
trailers that are entirely loaded and unloaded by an individual (other 
than an employee or agent of the motor carrier) . . .'' the carrier is 
not considered a HHG motor carrier. 49 U.S.C. 13102(12)(C). 
Transportation falling under the LSE is not subject to the consumer 
protection regulations applicable to HHG shipments at 49 CFR Part 375, 
HHG motor carrier registration requirements at 49 CFR Part 365, or the 
cargo insurance requirements at 49 CFR Part 387.
    The FMCSA is issuing this notice to provide clarity on those 
transportation services which fall within the scope of the LSE. The 
Agency has examined the legislative history relating to this provision, 
which makes clear that Congress intended to distinguish traditional, 
full service moving companies that offer some or all of the 
``additional services'' noted above from ``a motor carrier solely 
providing transportation of household goods entirely packed in, or 
unpacked from, one or more containers[hellip].'' Safe, Accountable, 
Flexible, Efficient Transportation Equity Act: A Legacy for Users, 
Sec.  4202(b), Public Law 109-59, Conf. Rep. No. 109-203.
    The FMCSA understands that Congress thereby intended to create an 
economic opportunity for companies providing a lower cost, ``no 
frills'' moving option for shippers willing to pack their own 
belongings or to hire separate labor. Congress directed, however, that 
the loading and unloading may not be provided by an agent or employee 
of the company transporting the packed container.

Enforcement Policy and Process

    Regarding the applicability of the LSE to specific entities, given 
the varied nature of the moving industry, FMCSA has concluded that 
whether an individual motor carrier is or is not eligible for the LSE 
must be determined on a case-by-case basis, taking into account the 
entirety of the relationship between a motor carrier and the individual 
that loads and unloads the HHG.
    For enforcement purposes, the factors relevant to the determination 
of whether or not the LSE should apply are:
    (1) Web site statements and other advertising, including claims or 
statements implying that the container company will provide HHG packing 
or other specialized services, or, by contrast, disclaiming HHG motor 
carrier status and clarifying that the company does not provide such 
services;
    (2) The level of control by the motor carrier over the individual 
providing packing and loading services;
    (3) The organizational structure of the motor carrier and the 
relationship of that entity to the individual providing loading and 
unloading services;
    (4) Commonality of employees between the motor carrier and any 
entity providing loading and unloading services, including, but not 
limited to corporate officers;
    (5) The nature of referrals for loading and packing services;
    (6) The nature and extent of business income derived from the 
referral for packing and loading services;
    (7) Other factors that may be relevant to defining the relationship 
between the motor carrier and individual providing packing and loading 
services; or
    (8) Other factors relevant to a determination that a motor carrier 
holds itself out as providing ``full service'' HHG services.
    FMCSA believes that Congress did not intend the LSE as a mechanism 
for companies engaged in traditional household goods moving to evade 
regulatory oversight. Thus, the Agency will examine very closely any 
company statements on the Internet or in other advertising claiming to 
offer ``full service moving'' or similar comprehensive moving service 
packages. The Agency will generally deem companies holding themselves 
out as HHG movers through such statements to be, in fact, HHG movers 
and ineligible for the LSE.
    By statute, the LSE also does not apply where the relationship 
between a motor carrier and the individual that loads or unloads the 
HHG is determined to be that of an employer/employee or principal/
agent. Under these circumstances, FMCSA will consider the container 
company a HHG motor carrier if it meets the definition of HHG motor 
carrier under 49 U.S.C. 13102(12)(A).
    While no single factor is paramount in assessing the business 
relationships between a container company and loading/packing labor, 
the extent of a motor carrier's control over the individual performing 
the loading/packing service is highly significant. Generally, the 
closer the relationship between the motor carrier and the individual 
loading/unloading the HHG, the less likely the motor carrier will be to 
qualify for the LSE. FMCSA will take into account the totality of the 
circumstances in defining the relationship between the motor carrier 
and the individual loading and unloading. As noted, FMCSA determines 
eligibility for the LSE on a case by case basis, utilizing factors 
including those above.
    We are seeking comments on the Agency's factors for determining if 
the operation is eligible for the LSE.
    The following examples illustrate how FMCSA would determine if the 
LSE applies.

Example A

    Bach's Movers, a container company, advertises itself as ``The 
Lowest Cost Moving Option'' on its company Web site. The Web site has a 
link to ``XYZ Moving Helpers'' and recommends that Bach's customers 
contact XYZ directly for assistance with packing and unpacking. FMCSA 
investigation reveals that XYZ pays Bach's a 3 percent referral fee for 
every customer that contracts with XYZ after visiting Bach's Web site. 
Two of Bach's employees work part time for XYZ on weekends. The two 
companies have separate management, however, and FMCSA has

[[Page 19570]]

no information suggesting that Bach's owns or controls the operations 
of XYZ. Bach's is eligible for the LSE and is not a HHG mover.

Example B

    Q-Bic Crates Movers, Inc. claims on its Web site to be a ``Top 
Notch Moving Company'' and to provide ``the lowest cost, high quality 
moving services.'' Q-Bic Crates provides binding and nonbinding 
estimates and inventorying services. The company's Web site refers 
customers to Q-Bic Muscles, Inc. for assistance with packing and 
unpacking. FMCSA has received complaints that when Q-Bic Crates 
employees deliver containers to shippers' homes, they attempt to 
pressure shippers into signing agreements for labor from Q-Bic Muscles. 
Investigation reveals that Q-Bic Crates Movers and Q-Bic Muscles have 
owners and officers in common, are run out of the same location and 
pool their revenue to pay salaries to several of the same individuals. 
Approximately 95 percent of Q-Bic Muscles' revenue is from Q-Bic Crates 
customers. Q-Bic Crates is not eligible for the LSE and must comply 
with the consumer protection and other regulations applicable to HHG 
motor carriers.

Definition of the Term ``Agent''

    One determinant of whether or not a carrier is providing 
transportation that qualifies for the LSE is whether an ``agent'' of 
the carrier is performing loading and unloading services. The FMCSA 
defines the term ``agent'' by applying its commonly accepted meaning: 
``one who is authorized to act for or in place of another; a 
representative.'' Black's Law Dictionary, (8th ed. 2004). ``Agency is 
the fiduciary relationship that arises when one person (a `principal') 
manifests assent to another person (an `agent') that the agent shall 
act on the principal's behalf and subject to the principal's control 
and the agent manifests assent or otherwise so consents to act.'' 
Restatement (Third) of Agency Sec.  1.01. What does or does not 
constitute authorization to act for or in place of another will depend 
upon the details and circumstances of the parties' relationship.

Whether an Entity Is Operating as a HHG Broker

    The FMCSA defines a ``household goods broker,'' in part, as a 
person that arranges ``for transportation of household goods by motor 
carrier for compensation.'' 49 CFR 371.103. Therefore, whether or not a 
broker is a ``household goods broker'' is based upon whether 
``transportation of household goods'' is taking place. The FMCSA and 
its predecessor, the Interstate Commerce Commission (ICC), have long 
focused on the nature of the service, as opposed to the physical goods 
being transported, to determine whether HHG transportation is taking 
place. See e.g., American Intermodal Services, Inc., Extension--
Nationwide Contract Carrier Service, 1987 WL 100149, at *2 (ICC decided 
Dec. 22, 1987) (``[T]he mere transportation of containerized household 
goods without the provision of the specialized service or equipment 
normally required for such commodities is not within the definition of 
household goods transportation and may be performed under `general 
commodities (except household goods)' authority.''). In June 2001, 
FMCSA issued an opinion that was in agreement with the underlying 
rationale of the ICC decisions--that the HHG regulatory requirements 
are directed at a discrete segment of the transportation industry that 
provides specialized services in specialized equipment. Therefore, 
arranging for shipments that are transported subject to the LSE will 
not convert a property broker into a ``household goods broker,'' as 
FMCSA does not consider the underlying transportation to be the 
``transportation of household goods.''
    Moreover, 49 CFR 371.105 states that ``[y]ou may only act as a 
household goods broker for a motor carrier that has a valid, active 
U.S. DOT number and valid operating authority issued by FMCSA to 
transport household goods in interstate or foreign commerce.'' In other 
words, HHG brokers may not act as property brokers (``You may only act 
as a household goods broker * * *''). Unless HHG brokers have separate 
property broker authority, they are not permitted to perform brokerage 
of regular freight loads or for carriers that do not have valid HHG 
operating authority. Thus, a HHG broker is an entity that brokers 
transportation for a HHG motor carrier. However, as defined in 49 
U.S.C. 13102(12)(C), a motor carrier operating subject to the LSE is 
not considered a HHG motor carrier. Accordingly, the entity that 
brokers such transportation is not a HHG broker.
    However, as with a container company that engages in activities 
associated with HHG movements, if a broker makes claims on its Web site 
or elsewhere about ``full service moving'' or other specialized 
services, FMCSA may investigate whether the broker meets the definition 
of HHG broker, i.e., ``holds itself out by solicitation, advertisement, 
or otherwise as selling, providing, or arranging for, transportation of 
household goods by motor carrier for compensation.'' 49 CFR 371.103. If 
FMCSA makes such a finding, the broker would be subject to the consumer 
protection regulations at 49 CFR part 371, subpart B ``Special Rules 
for Household Goods Brokers.'' In analyzing a broker's regulatory 
status, FMCSA will look at whether the broker is making claims that it 
arranges services for HHG motor carriers as defined at 49 U.S.C. Sec.  
13102(12)(A). Those carriers offer some or all of the following 
services: Binding and nonbinding estimates, inventorying, protective 
packing and unpacking of individual items at personal residences and 
loading and unloading at personal residences.
    In sum, only property broker authority is required when arranging 
for the transportation of shipments eligible for the LSE. However, if a 
broker also performs activities constituting the arrangement of 
``transportation of household goods by motor carrier for compensation'' 
(49 CFR 371.103), it needs HHG brokerage authority as well.

    Issued on: March 25, 2013.
Anne S. Ferro,
Administrator.
[FR Doc. 2013-07460 Filed 3-29-13; 8:45 am]
BILLING CODE 4910-EX-P