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(iii) For channels 534 to 550—the Among the factors relevant to a ‘‘good- www.regulations.gov at any time or to minimum median desired signal level faith’’ determination are: 1200 New Jersey Avenue, SE., shall increase linearly from ¥70 dBm to (1) Whether the party responsible for Washington, DC, between 9 a.m. and 5 ¥65 dBm. paying the cost of band reconfiguration p.m., Monday through Friday, except (4) Portable units operating in Puerto has made a bona fide offer to relocate Federal Holidays. Rico: the incumbent to comparable facilities; (2) The steps the parties have taken to Entities That Are Discussed in This (i) For channels 511 to 530—the Final Rule minimum median desired signal levels determine the actual cost of relocation specified in § 22.970(a)(1)(i) of this to comparable facilities; and This proceeding applies only to for- chapter and § 90.672(a)(1)(i) shall apply; (3) Whether either party has hire motor carriers and freight (ii) For channels 531 to 534—the unreasonably withheld information, forwarders as defined in 49 U.S.C. minimum median desired signal level essential to the accurate estimation of 13102. The term ‘‘motor carrier’’ means shall increase linearly from ¥80 dBm to relocation costs and procedures, a person providing motor vehicle ¥70 dBm; requested by the other party. The transportation for compensation. Transition Administrator may schedule (iii) For channels 534 to 550—the (§ 13102(14)). The term ‘‘freight mandatory settlement negotiations and minimum median desired signal level forwarder,’’ in § 13102(8) means a mediation sessions and the parties must shall increase linearly from ¥70 dBm to person holding itself out to the general conform to such schedules. ¥65 dBm. public (other than as a pipeline, rail, * * * * * motor, or water carrier) to provide ■ 3. Sections 90.677 is amended by [FR Doc. 2010–14995 Filed 6–21–10; 8:45 am] transportation of property for revising paragraphs (b) and (c) to read BILLING CODE 6712–01–P compensation and in the ordinary as follows: course of its business— § 90.677 Reconfiguration of the 806–824/ (A) Assembles and consolidates, or 851–869 band in order to separate cellular DEPARTMENT OF TRANSPORTATION provides for assembling and systems from non-cellular systems. consolidating, shipments and performs * * * * * Federal Motor Carrier Safety or provides for break-bulk and (b) Voluntary negotiations. Thirty Administration distribution operations of the days before the start date for each shipments; NPSPAC region other than Region 47, 49 CFR Parts 365 and 387 (B) assumes responsibility for the the Chief, Public Safety and Homeland [Docket No. FMCSA–2010–0189] transportation from the place of receipt Security Bureau will issue a public to the place of destination; and notice initiating a three-month RIN 2126–AB21 (C) uses for any part of the voluntary negotiation period. During Cargo Insurance for Property Loss or transportation a carrier subject to this voluntary negotiation period, Damage jurisdiction under 49 U.S.C. subtitle IV– Nextel and all incumbents may Interstate Transportation. negotiate any mutually agreeable AGENCY: Federal Motor Carrier Safety The term ‘‘freight forwarder’’ does not relocation agreement. Sprint Nextel and Administration (FMCSA), DOT. include a person using transportation of relocating incumbents may agree to ACTION: Final rule. an air carrier subject to part A of subtitle conduct face-to-face negotiations or VII of title 49, United States Code- either party may elect to communicate SUMMARY: The Federal Motor Carrier Aviation Programs. with the other party through the Safety Administration eliminates the Of the approximately 252,600 total Transition Administrator. requirement for most for-hire motor for-hire carriers and freight forwarders, (c) Mandatory negotiations. If no common carriers of property and freight there are about 166,700 for-hire motor agreement is reached by the end of the forwarders to maintain cargo insurance carriers and 1,600 freight forwarders voluntary period, a three-month in prescribed minimum amounts and registered with FMCSA to provide mandatory negotiation period will begin file evidence of this insurance with transportation or services that could be during which both Sprint Nextel and FMCSA. Household goods motor subject to cargo insurance requirements the incumbents must negotiate in ‘‘good carriers and household goods freight if FMCSA fully implemented its faith.’’ In Region 47, a 90-day mandatory forwarders will continue to be subject to authority to require motor carriers and negotiation period will begin 60 days this cargo insurance requirement. freight forwarders subject to 49 U.S.C. after the effective date of the Third DATES: Effective March 21, 2011. 13906(a)(4) and 13906(c)(2). See Table 1 Report and Order and Third Further FOR FURTHER INFORMATION CONTACT: Ms. below. Of these, about 154,700 entities Notice of Proposed Rulemaking in WT Dorothea Grymes, FMCSA Insurance (contract only and ‘‘exempt’’ type) have Docket 02–55. Sprint Nextel and Team, Commercial Enforcement not been subject to the cargo insurance relocating incumbents may agree to Division, telephone (202) 385–2400. requirements in the past. About 97,900 conduct face-to-face negotiations or SUPPLEMENTARY INFORMATION: of the 252,600 entities are currently either party may elect to communicate subject to the cargo insurance with the other party through the Availability of Rulemaking Documents requirements. About 4,000 entities have Transition Administrator. All parties are For access to the docket to read authority to transport household goods, charged with the obligation of utmost background documents or comments which are defined at 49 U.S.C. ‘‘good faith’’ in the negotiation process. received, go to http:// 13102(10).

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TABLE 1—FOR-HIRE CARRIERS AND FREIGHT FORWARDERS BY AUTHORITY AND TYPE [as of February 2009]

Cargo insurance Number Active Authority Type Total % of total required affected by Before After rule

Motor Common Only ...... Household Goods ...... 3,600 1.4% Yes ...... Yes. Carriers Non-Household Goods ...... 76,035 30.1% Yes ...... No ...... 76,035

Contract Only ...... 70,400 27.9% No ...... No. Both Common and Contract ...... 16,600 6.6% Yes ...... No ...... 16,600 ‘‘Exempt’’ ...... 84,300 33.4% No...... No.

Freight ...... Household Goods ...... 435 0.2% Yes ...... Yes. Forwarders Non-Household Goods ...... 1,200 0.5% Yes ...... No ...... 1,200

Source: FMCSA L&I Database Report 4284 ...... ~252,600 100% ...... 93,800

‘‘Exempt’’ for-hire carriers, are not subject to 49 U.S.C. Subtitle IV, Part B, and ...... % Affected by Rule 37.1% are not required to maintain cargo insurance.

FMCSA evaluated various minimum cargo insurance requirements transportation of household goods for combinations of these entity for freight forwarders in 1944 (9 FR individual shippers. populations along with the benefits, 14548, December 13, 1944). These Section 4303 of the Safe, Accountable, impacts, and potential registration and requirements are now codified at 49 Flexible, Efficient Transportation Equity enforcement issues arising for each CFR part 387, subpart D. Act: A Legacy for Users (SAFETEA–LU) combination of alternatives. After Section 103 of the ICC Termination (Pub. L. 109–59, August 10, 2005) consideration of all the comments to the Act of 1995 (Pub. L. 104–88, 109 Stat. mandated that the transition rule be docket, the Agency has decided to 803) (ICCTA) terminated the ICC and subject only household goods motor terminated by January 1, 2007. transferred jurisdiction over motor carriers and household goods freight Consequently, effective January 1, 2007, forwarders to the cargo insurance carrier and freight forwarder cargo all for-hire motor carriers subject to the requirements for the reasons given later insurance to the Secretary of Agency’s commercial jurisdiction under in this document. Transportation, who delegated this Title 49, United States Code, Subtitle IV, authority to the Federal Highway Part B, were required to be issued Motor Legal Basis for the Rulemaking Administration (FHWA). The ICCTA Carrier Certificates of Registration Cargo insurance requirements for eliminated the distinction between which no longer classified them as motor carriers were first authorized in common and contract carriers but, common or contract carriers. Section the Motor Carrier Act of 1935 (August under the transition rule of 49 U.S.C. 4303 also provided that all ‘‘exempt’’ for- 9, 1935, Pub. L. 74–255, 49 Stat. 543 13902(d), allowed the Agency to hire 1 and private motor carriers (1935)), which brought motor carriers continue to register motor carriers with registered with FMCSA on January 1, and brokers under the jurisdiction of the these distinctions pending 2005, under any section of title 49 Interstate Commerce Commission (ICC). implementation of a new unified U.S.C. (including FMCSA’s safety Section 215 of the 1935 Act Federal registration system required by registration requirements adopted under authorized—but did not mandate— 49 U.S.C. 13908. 49 U.S.C. 31136) would automatically cargo financial responsibility Jurisdiction over motor carrier and be considered registered ‘‘to provide requirements for common carriers freight forwarder cargo insurance was such transportation or service for subject to ICC jurisdiction. The ICC transferred to FMCSA following purposes of sections 13908 [Unified exercised its statutory authority by enactment of the Motor Carrier Safety Registration System] and 14504a establishing minimum cargo insurance [Unified Carrier Registration].’’ requirements for common carriers, Improvement Act of 1999 (MCSIA) (Pub. which are now codified at 49 CFR L. 106–159, 113 Stat. 1748, December 9, As a result of the termination of the 387.301 and 387.303. 1999). FMCSA continued to register transition rule, FMCSA’s cargo Cargo insurance requirements for carriers as either ‘‘common’’ or insurance regulations, which expressly freight forwarders were first authorized ‘‘contract’’ under the transition rule applied only to common carriers and by a 1942 statute amending the because the Agency had not yet freight forwarders, were no longer Interstate Commerce Act (ICA), which implemented the new unified consistent with the governing statute. brought freight forwarders under the registration system in accordance with Because of this inconsistency and the jurisdiction of the ICC (Pub. L. 77–558, the requirements of 49 U.S.C. 13908. In resulting confusion over the scope of the 56 Stat. 284, May 16, 1942). The 1942 the Notice of Proposed Rulemaking Agency’s cargo insurance requirements, Act added Section 403(c) to the ICA, (NPRM) designed to implement this FMCSA considers it necessary to issue which authorized—but did not new system (70 FR 28990, May 19, a final rule amending these mandate—the ICC to establish cargo 2005), FMCSA proposed to eliminate requirements prior to issuance of a final financial responsibility requirements for the cargo insurance requirement for all freight forwarders subject to ICC motor carriers and freight forwarders 1 For-hire carriers not subject to 49 U.S.C. subtitle jurisdiction. The ICC established except those involved in the IV, part B.

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rule in the section 13908 rulemaking The insurance or surety company would Sections 29 and 30 of the Motor Carrier proceeding.2 then have the right to seek to recover the Act of 1980;’’ or amount of any policy deductibles from (2) A Form MCS–82 titled, ‘‘Motor Background the motor carrier. Carrier Public Liability Surety Bond Current Regulatory Requirements Prior to enactment of the ICCTA, a Under Sections 29 and 30 of the Motor Prior to enactment of the ICCTA, a ‘‘motor contract carrier’’ of property was Carrier Act of 1980.’’ defined as: ‘‘a person providing motor ‘‘motor common carrier’’ of property was Motor Carrier Liability for Cargo Loss or vehicle transportation of property for defined as ‘‘a person holding itself out Damage to the general public to provide motor compensation under continuing vehicle transportation for compensation agreements with one or more persons— The requirements for cargo insurance over regular or irregular routes, or [1] By assigning motor vehicles for a do not affect the statutory liability of both.’’ 3 Approximately 79,600 active continuing period of time for the carriers for loss or damage to cargo. common carriers were registered with exclusive use of each such person; or Congress addressed carrier liability in FMCSA at the end of February 2009. [2] designed to meet the distinct the 1906 Carmack Amendment to the Pursuant to 49 CFR 387.303(c), in order needs of each such person.’’ 4 Interstate Commerce Act. When motor to obtain operating authority, common Approximately 87,000 active carriers and freight forwarders were carriers were required to ensure that ‘‘contract’’ carriers were registered with brought under the ICC’s jurisdiction in their insurance provider or surety FMCSA in February 2009. About 70,400 1935 and 1942, respectively, they company file with FMCSA: of these 87,000 carriers had contract became subject to the Carmack liability (1) Evidence of bodily injury and authority only, while about 16,600 had requirements. The Carmack property damage liability in the both common and contract authorities Amendment, now codified at 49 U.S.C. minimum amount of $750,000 to $5 issued by FMCSA or its predecessors. 14706, provides ‘‘first dollar’’ coverage million depending on the nature of the Contract carriers are subject to the same to all shippers for cargo loss or damage. cargo being transported; and bodily injury and property damage Under 49 U.S.C. 14706(a)(1), a carrier (2) Evidence of cargo liability in the public liability requirements described providing transportation or service minimum amount of $5,000 per vehicle above for common carriers. However, subject to jurisdiction under subchapter and $10,000 per incident. FMCSA does not require contract I or III of chapter 135 5 must issue a In addition to the cargo insurance carriers to have cargo insurance or receipt or bill of lading for property it filing requirement, normally provide evidence of cargo insurance. receives for transportation, and is liable accomplished by filing Form BMC–34, Shippers who establish contracts with for the actual loss of or injury to the Motor Carrier Cargo Liability Certificate contract carriers generally require such property caused by the receiving carrier, of Insurance with FMCSA, insurance carriers to maintain cargo insurance in delivering carrier, or any other carrier companies must issue an endorsement specified minimum amounts. involved in the line-haul transportation. using Form BMC–32, Endorsement for For-hire motor carriers transporting Failure to issue a receipt or bill of lading Motor Common Carrier Policies of specific ‘‘exempt’’ commodities or does not affect a carrier’s liability. Insurance for Cargo Liability attached to providing other exempt transportation, Under 49 U.S.C. 14706(c), the carrier the cargo insurance policy. The name of as generally delineated in 49 U.S.C. and shipper may agree to limit the the insurer/surety and the policy 13502 through 13506, are exempt from carrier’s liability to a value established number is a matter of public record FMCSA’s commercial jurisdiction under by written or electronic agreement if available on FMCSA’s Web site. Under Title 49, subtitle IV, Part B and are not that value would be reasonable under 49 CFR 387.313(d), insurers and sureties required to obtain FMCSA operating the circumstances surrounding the may not cancel a carrier’s insurance authority or maintain cargo insurance. transportation. Carriers providing without notifying FMCSA in writing 30 Exempt for-hire carriers, however, contract carriage, as defined in 49 U.S.C. days prior to cancellation. have always been subject to FMCSA’s 13102(4), may enter into contracts with The cargo insurance and surety safety requirements under 49 U.S.C. shippers whereby the shipper waives its requirements have been relatively low, 31136 and 31502, including the public right to carrier liability for actual loss but they covered claims up to the $5,000 liability financial responsibility and damage (see 49 U.S.C. 14101(b)(1)). and $10,000 limits regardless of requirements under 49 U.S.C. 31138 and Such carriers, therefore, may establish deductibles or exclusions that the policy 31139 for any crashes that occur to their both liability and insurance levels in might have. Shippers normally file motor vehicles on the highways. These their contracts with their customers. claims for loss and damage with the for-hire exempt carriers must register With the elimination of the motor carrier(s) involved in the with FMCSA to obtain a USDOT distinction between common and transportation, which either pay, deny registration number. Approximately contract carriers for registration or settle the claims. However, if they are 84,300 active for-hire exempt carriers purposes, FMCSA had to determine dissatisfied with the motor carrier’s were registered with FMCSA in whether the requirement for cargo response or if the motor carrier is February 2009. In accordance with 49 insurance should be retained and insolvent, shippers have the option of CFR 387.7, such carriers must maintain extended to all carriers, including the filing a claim directly with the at their principal place of business one 70,400 contract carriers currently insurance or surety company to recover of the following forms, confirming exempt from the requirement, or actual losses to property up to the limits coverage in the minimum amount of eliminated for some or all 96,300 on the insurance policy or surety bond. $750,000 up to $5 million, depending common carriers and 1,600 freight on the type of cargo the carrier is forwarders. In its NPRM on the unified 2 Because certain SAFETEA–LU provisions impacted proposals made in the May 2005 NPRM transporting: registration system, FMCSA proposed implementing section 13908, a Supplemental (1) A Form MCS–90 titled, limiting the requirement for cargo Notice of Proposed Rulemaking will be published ‘‘Endorsement for Motor Carrier Policies in that proceeding revising the NPRM and soliciting of Insurance for Public Liability Under 5 The definition of ‘‘carrier’’ in 49 U.S.C. 13102(3) additional public comment, further delaying includes freight forwarders. Subchapter I applies to issuance of a final rule. motor carriers and subchapter III applies to freight 3 49 U.S.C. 10102(15) (1995). 4 49 U.S.C. 10102(16)(1995). forwarders.

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insurance to household goods motor America; James Middleton; important protection for the shipping carriers and household goods freight International Foodservice Distributors public with respect to loss and damage forwarders in order to protect individual Association; Daniel C. Sullivan; claims. They argued that the elimination shippers, who are relatively Advocates for Highway and Auto Safety; of cargo insurance requirements is unsophisticated consumers of Freight Transportation Consultants unjustified and contrary to the best transportation services.6 Association (FTCA); Transportation interests of the shipping public. Sixteen In its discussion of the proposal, the Intermediaries Association; National commenters noted that the BMC–32 Agency noted that motor carriers Conference of State Transportation endorsement is the only protection typically have cargo insurance well in Specialists; Third Party Logistics against deductibles and other exclusions excess of the regulatory requirements, in Providers; Certain Transportation from liability found in cargo liability part because many shippers require Factors; C.S. Henry Transfer, Inc.; policies. They noted that in many cases such insurance as a condition of doing Dahlonega Transport, Inc.; Milan the carriers’ deductibles can be very business. Some common carriers offer Express Co., Inc.; Silver Arrow, Inc.; high and the exclusions may eliminate shippers the opportunity to purchase National Association of Small Trucking most sources of loss or damage recovery. additional cargo insurance. Shippers Companies; Wisconsin Manufacturers & They also stated that the BMC–32 have always had the opportunity to Commerce; Corporate Transportation endorsement permits the shipper to purchase cargo or inland-marine Coalition; American Moving and proceed directly against the insurer, insurance directly from insurance Storage Association; National Private providing relief to shippers in the event providers rather than rely on motor Truck Council, Inc.; Exel Transportation the carrier becomes insolvent or carriers and freight forwarders to Services, Inc.; Owner-Operator bankrupt. provide coverage for loss and damage Independent Drivers Association, Inc.; FMCSA Response. As stated above risks. Contract carriers negotiate issues National Industrial Transportation under the heading ‘‘Legal Basis for the of insurance and liability when they League; Sysco Corporation; Wal-Mart Rulemaking,’’ the ICC had the statutory write contracts with shippers. Extending Transportation, LLC; American discretion under section 215 of the the coverage to the approximate 70,400 Trucking Associations, Inc. (ATA); TM Motor Carrier Act of 1935 to impose exclusive contract carriers would Claims Service, Inc.; and The Ooster cargo insurance requirements on motor impose a burden on these carriers while Brush Company. common carriers. The ICC chose to providing little or no benefit to their FMCSA considered all comments in require such insurance beginning in customers, who already had contractual developing this final rule. A summary of 1937 based on the conditions existing in agreements dealing with carrier liability and the Agency’s response to pertinent the marketplace during the mid-1930s and insurance. comments is provided here. (1 FR 1156, August 20, 1936, see also 1 M.C.C. 45 (1936)). The transportation The only shippers that FMCSA General Comments considered in need of the protection industry has changed significantly since provided by the cargo insurance Three commenters supported that time. For more than 40 years, the requirement are individuals who FMCSA’s proposition to eliminate the ICC granted operating authority to new arrange to move their own household cargo insurance requirement for most applicants only if they could goods. FMCSA concluded that such carriers and freight forwarders. The demonstrate that existing carriers were Property Casualty Insurers Association individuals are less knowledgeable not providing adequate service. of America stated that the insurance about carrier liability requirements and Moreover, the agency permitted contract marketplace is best qualified to need the protection afforded by the carriers to serve only a limited number determine appropriate insurance existing regulations. FMCSA, therefore, of shippers. As a result, the market was coverage. The Owner-Operator proposed limiting the requirement for dominated by common carriers facing Independent Drivers Association agreed obtaining and filing evidence of cargo little or no competition. Beginning with FMCSA that most shippers require insurance to household goods motor around 1980, the statutory standards for a higher amount of insurance coverage carriers and household goods freight obtaining operating authority were than the current federal minimums, so forwarders. changed to encourage competition and the current amount required serves little the ICC removed the prior restrictions Discussion of Comments to May 2005 purpose. on the number of shippers that could be NPRM ATA stated that given the statute served by contract carriers. Accordingly, Thirty-two commenters addressed the authorizes carriers registered as the number of new carriers entering the proposal to eliminate the cargo common carriers today to enter into market increased significantly, insurance requirements for motor contracts, and that the definitions of particularly those providing only common carriers and forwarders of ‘‘common carrier’’ and ‘‘contract carrier’’ contract carrier service. As a result of general freight. Commenters, included have been eliminated, the cargo this market shift, the ability of carriers, carrier associations, shippers, insurance requirement must apply to all commercial shippers to negotiate the insurance companies and associations, motor carriers or none. It wrote, ‘‘ATA terms of their transportation freight claims collection services, does not support extension of the cargo arrangements has been significantly brokers, traffic consultants, attorneys, insurance requirements to all motor enhanced. and individuals. FMCSA received carriers and thus believes FMCSA’s When Congress transferred the comments from Williams & Associates; proposal to eliminate the cargo remaining motor carrier provisions of Transportation and Logistics Council; insurance endorsement requirement is the Motor Carrier Act of 1935 from the T.D.L. Associates Commerce Consultant; the right approach.’’ ICC to the Department of Transportation Twenty-two commenters, mostly National Small Shipments Traffic in the ICCTA, the House of representing shippers, shippers’ freight Conference, Inc; Lowe’s Co.; Property Representatives’ report accompanying claims collection services, brokers, Casualty Insurers Association of the legislation specifically requested traffic consultants, and attorneys, stated that DOT refrain from allocating scarce 6 Approximately 3,600 household goods motor that FMCSA should retain broad resources to resolve private disputes carriers and 400 household goods freight forwarders mandatory cargo insurance and only provide general oversight in were registered with FMCSA as of February 2009. requirements because it is the most the areas of regulations governing

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commercial transactions between FMCSA believes most carriers will industry periodical, Overdrive, 8 businesses. Congress wanted ‘‘private, continue to carry cargo insurance estimated an owner-operator with a commercial disputes to be resolved the because their customers will require it. good safety record would likely pay way all other commercial disputes are In summary, FMCSA does not believe about $5,000 for primary liability ’’ resolved—by the parties. See H.R. Rep. it is necessary to mandate cargo insurance of $1 million to cover damage No. 104–311, at 87–88 (1995). See also insurance requirements for the benefit or injury done to others in case of a pages 117 and 121. crash; $2,400 for physical damage of most commercial shippers. Cargo insurance entails the transfer of insurance to cover damage done to the Commercial shippers should be able to financial risk from the purchaser to an owner-operator’s vehicles in case of a protect their own property loss and insurer and subsequent risk-sharing crash; $1,000 for cargo insurance to with other insureds. FMCSA does not damage interests in the marketplace cover damage to or theft of the load; and agree with those commenters who without continued FMCSA intervention. $450 for $1 million in non-trucking-use believe the BMC–32 endorsement is the In this respect, it should be noted that liability insurance. While the Overdrive only protection against deductibles and the current cargo insurance article did not state how much cargo other exclusions from liability found in requirements apply to, at most, 30 loss or damage protection the $1,000 cargo liability policies. The Carmack percent of for-hire motor carriers premium would cover, it did state that Amendment, 49 U.S.C. 14706, regulated by FMCSA.7 fleets typically buy $100,000 on the establishes ‘‘first dollar’’ liability FMCSA believes it is best to allow owner-operator’s behalf, which is the regardless of deductibles and other most motor carriers, insurance carriers, amount mandated by many shippers. exclusions from liability found in cargo and general non-household-goods Specialty haulers can carry far more, the liability policies. While the Form BMC– property shippers to conduct business Overdrive article said. 32 offers additional protection in the efficiently, allow fair and expeditious Fraud Prevention. Three commenters event of the motor carrier’s insolvency decisions, and allow the industry to stated that the shipping community or refusal to pay legitimate claims, a begin offering more variety in quality relies on the BMC–32 endorsement to carrier must compensate the shipper for and price options to meet changing protect against unscrupulous motor the actual loss or damage of its property market demands and the diverse carriers and freight forwarders seeking regardless of policy deductibles or requirements of the shipping to avoid their financial responsibilities. exclusions, unless the shipper has community. One commenter stated that filing agreed to limit or waive carrier liability. evidence of cargo insurance with Check on Financial Stability. Nine The Form BMC–32 endorsement does FMCSA is essential to prevent fraud. commenters stated that the mandatory not mean that the shipper is necessarily The commenter stated that many entitled to proceed directly against the cargo insurance requirement is one of instances of insurance fraud have been insurer without first filing a claim with the few remaining objective checks on thwarted by having an independent the carrier. Under the regulations the financial stability of new carriers government source for checking carrier established in 49 CFR part 370 entering the marketplace. Under the insurance. ‘‘Principles and Practices for the current system, FMCSA will prohibit a FMCSA Response. As stated above, it Investigation and Voluntary Disposition motor carrier applicant from obtaining may be true that the BMC–32 of Loss and Damage Claims and common carrier operating authority if it endorsement may permit the shipper to Processing Salvage,’’ shippers should be cannot obtain cargo insurance. These proceed directly against the insurer as a filing loss and damage claims directly commenters argue that elimination of last resort, possibly providing relief to with the appropriate motor carrier. the requirement for cargo insurance will shippers in the event the carrier FMCSA believes the cargo insurance encourage financially unstable new becomes insolvent or bankrupt. FMCSA requirement may have allowed entrants to enter the market. believes, however, that shippers should commercial shippers and for-hire motor FMCSA Response. For-hire motor assume greater responsibility in carriers to conduct business in carriers that have been subject to the assessing the risk of offering their economically inefficient ways. Shippers cargo insurance requirement will property to authorized motor carriers and motor carriers may have been taking continue to be subject to the financial and that the Agency should focus its transportation and business risks they responsibility requirements for public scarce resources on motor carrier probably would not have taken absent liability. The costs of complying with highway safety, rather than continuing the BMC–32 endorsement. Carriers also to mandate a system that regulates loss may not have been spending adequately the public liability requirements are far higher than the costs of purchasing exposure in connection with shipping on cargo anti-theft/anti-damage systems, commercial property. Commercial including training carrier personnel. cargo insurance at the current minimum shippers getting rate quotes from motor When this final rule becomes effective, levels and provide a more effective carriers can simply ask additional FMCSA believes the market will check on new carriers’ financial questions of motor carriers offering their improve itself. Shippers and motor stability. A November 2006 article in an services to ascertain whether the motor carriers will begin to better assess their 7 carriers maintain cargo insurance in the risks and provide better cargo theft and This figure is based on the fact that amount and with the features the loss prevention measures. FMCSA asked approximately 252,600 for-hire motor carriers had USDOT numbers at the end of February 2009. shipper desires. five insurers with the largest number of Approximately 76,000 of these carriers were Benefit to Brokers and Intermediaries. cargo policies on file with FMCSA what classified as motor common carriers potentially subject to the cargo insurance requirements (the Three commenters argued that the percentage of their clients carry more mandatory cargo insurance requirement than the $10,000 aggregate minimum, as actual number of carriers subject to the cargo insurance requirements may be smaller, because is important to carriers that interline required by FMCSA. All five insurers some common carriers haul only low value freight or use local cartage companies responded that most of the policies they commodities that are exempt from cargo insurance for pickup and delivery. Under the write for cargo liability are well above requirements). 76,000/252,600 = 30.1%. The 70,400 carriers holding only contract carrier authority and the FMCSA minimum. Most said their the 84,300 for-hire carriers exempt from commercial 8 Overdrive, November 2006, http:// policies are for $50,000 to $100,000 registration requirements are not required to have www.etrucker.com/apps/news/ liability. Based on our inquiries, cargo insurance. article.asp?id=56256.

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Carmack Amendment, the shipper may no direct contact with the carriers that FMCSA does not agree with the seek recovery from either the receiving move their freight. commenters who claim there is no or delivering carrier, and a carrier Other commenters disagreed with rationale for eliminating the paying a claim may seek FMCSA’s statement that there does not requirement based on the fact that indemnification from a connecting appear to be a need to require common common carriers typically carry cargo carrier that is responsible for the loss or carriers of property to maintain cargo insurance in excess of the minimum damage. These commenters believe the insurance because these carriers requirements. As stated above, five right of subrogation against the BMC–32 typically have cargo insurance well insurers informed FMCSA that most of endorsement is a valuable protection for above FMCSA limits ($5,000/$10,000). the policies they write for motor carrier such carriers when a connecting carrier Four commenters, including Wal-Mart cargo liability are for $50,000 to that is responsible for a loss goes out of and Sysco, stated that it is incorrect for $100,000 liability. By eliminating the business or files for bankruptcy. The FMCSA to assume that all motor carriers distinction between common and Transportation Intermediaries already carry more cargo insurance than contract carriers for registration Association (TIA) commented that its the regulations require. Four other purposes, the ICCTA and SAFETEA–LU members benefit from mandatory cargo commenters noted that while essentially mandated that we change insurance because brokers and other responsible, financially secure motor our cargo insurance requirements so third-party intermediaries are often carriers typically carry cargo insurance that carriers registered with the Agency caught in the middle when shippers for amounts that exceed the federal are treated uniformly. As mentioned cannot collect claims from the motor minimum, this is not a valid basis for above, only 30 percent of for-hire carrier or freight forwarder. TIA eliminating this requirement. The carriers operating in interstate commented that the BMC endorsement commenters noted that even when a commerce are subject to the current is often the only remedy available to a carrier has substantially greater requirements. Approximately 155,000 broker, and to its shipper customer, coverage, it may have deductibles and contract carriers and exempt for-hire when a carrier routinely refuses claims exclusions that make it difficult for the carriers are not required to maintain that are within its deductible or fall into shipper to recover losses; the first dollar cargo insurance. an exclusion from its insurance coverage provided by the Carmack FMCSA believes the individual coverage. One commenter also noted Amendment protects small shippers shippers using the 3,600 for-hire that consignees who did not arrange for who can recover from the insurance household-goods motor carriers and 435 household-goods freight forwarders the transportation and have no business company up to the limits of the policy. need the protection of cargo insurance, relationship with the delivering carrier The FTCA noted that although carriers but not commercial shippers who can often experience losses and file claims. usually have cargo insurance for FMCSA Response. Responsible assess cargo loss and damage risks and amounts that exceed the Federal transportation intermediaries generally cargo insurance requirements as a part minimum, this explanation screen potential carriers to ascertain of their normal business operations. demonstrates FMCSA’s lack of which carriers would provide the best The FTCA did not indicate how many understanding of the real value to the service to their clients. Cargo insurance of the under $5,000 claims filed against shipping public the BMC–32 has monitoring and inspection can and LTL motor carriers in the year 2000 provided. The FTCA also noted that should be part of the service were paid out of pocket and how many 97.87 percent of the claims filed against intermediaries provide for their clients. loss or damage claims they, in turn, Brokers and intermediaries should be less-than-truckload (LTL) motor carriers filed with their insurer under their cargo offering loads only to financially in the year 2000 were under $5,000. insurance policy. The survey data FTCA responsible authorized motor carriers. FMCSA Response. Shippers are like provided from the Transportation Loss Responsible brokers and intermediaries any other party in a transaction where and Prevention and Security should not be using motor carriers that one party will be providing services to Association (TLPSA) does not break are unable or unwilling to pay loss and another party. If the parties do not down this information. A cargo damage claims. The market should communicate the terms and conditions, insurance policy, like a homeowner’s encourage such carriers to leave the or read the terms and conditions in their insurance policy, is used generally for market sooner than they would have contracts (also known as bills of lading large claims, not claims the motor under the current system. Brokers and in transportation), the shipper assumes carrier, like the homeowner, believes it intermediaries also have the court the risk. Shippers should ask carriers for can handle out of its own treasury. In system to help them recover actual copies of their policies, including all fact, FMCSA believes this is probably damages for their shipper clients. endorsements, exclusions, and why many cargo insurance policies have FMCSA’s rationale for eliminating the declarations, to see whether the high deductibles; for-hire motor carriers cargo insurance requirements. Eight shippers’ property or interests will be and insurers contemplate that motor commenters argued that while the served by a particular motor carrier. carriers would handle all claims from market drives the shippers to generally While some small-freight shippers may the first dollar under their Carmack require cargo insurance as a condition of have no direct contact with the carriers liability up to the deductible, thus self- doing business, this is not an acceptable that actually move their freight, FMCSA insuring for the deductible amount. rationale for eliminating the cargo believes these shippers should hold the Flawed certificates of insurance. insurance requirements. Four service provider with whom they have Seven commenters stated that commenters stated that smaller, direct contact accountable for checking certificates of insurance are flawed occasional shippers rarely negotiate to ensure motor carriers transporting the documents because they do not contracts or related cargo protections or freight have adequate insurance. If the typically indicate the deductible and do ask carriers about their insurance small-freight shippers cannot ensure the not disclose exclusions in the policy; coverage, and large shippers may be motor carriers have adequate cargo and that there is no mechanism for unaware of the deductibles and insurance, the small-freight shippers’ insuring the validity of the certificate or exclusions in carriers’ cargo policies. service providers may acquire cargo whether the policy remains in place. Similarly, one commenter noted that insurance on behalf of the small-freight One commenter claimed that while a many small-freight shippers may have shippers. certificate of insurance may be useful in

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determining that a policy has been by a cargo insurer. Three commenters demonstrate their value to the shipping issued with a face amount larger than argued that the BMC–32 endorsement community and thus justify their the $5,000 BMC–32 requirement, the allows smaller carriers to gain continued existence in the current certificate of insurance is not evidence credibility in the marketplace. regulatory environment. One that a particular loss will be covered Similarly, one commenter noted that the commenter said elimination of the cargo and is therefore of marginal utility. current minimum cargo insurance insurance requirements would be an Three commenters stated that it is requirement promotes competition and inadvertent endorsement of lower important to rely on the BMC–32 increases available capacity because industry performance standards. endorsement to confirm the existence of shippers are more willing to trust a new Another commenter stated that FMCSA cargo insurance and satisfy that there is entrant or ‘‘Mom and Pop Trucking,’’ should enforce the current regulations a policy that will offer true indemnity knowing that mandatory minimum rather than eliminate them, and FMCSA of claims. cargo coverage is available and can should be re-staffed and re-engineered FMCSA Response. FMCSA believes readily be accessed. to provide the essential services that all seven commenters were referring to FMCSA Response. The Agency does Congress intended for the protection of the ACORD (Association for Cooperative not believe that gaining credibility in the shipping public. Operations Research and the marketplace is an appropriate FMCSA Response. FMCSA disagrees Development) 9 certificate of insurance justification for maintaining existing that Congress intended the Agency to document, rather than the BMC–34 cargo insurance requirements. The preserve the cargo insurance Certificate of Insurance. The comments purpose of mandatory insurance requirement. Congress did not alter the from Certain Transportation Factors and minimums was to protect shippers, not existing statutory language, which the Third Party Logistics Providers to protect market share for carriers or permits — but does not mandate — the specifically name the ACORD certificate new entrants lacking credibility. Agency to require cargo insurance. of insurance used by cargo insurers. The FMCSA believes that credible and Congress continued to leave the FTCA provided a virtually blank copy of trustworthy carriers have better and decision about the need for cargo an ACORD certificate on the last page of more efficient means of establishing insurance to the Agency, as it had in the its submission. themselves in the marketplace and past. Because the level of required cargo FMCSA did not propose to modify the should not have to rely on government- insurance is already fairly low and ACORD certificate. ACORD documents mandated insurance. The Agency does many carriers maintain more than the are written by an insurance standards not believe it should use its regulatory required minimum, FMCSA does not organization and are not required to be authority to provide credibility to believe that elimination of the filed with FMCSA. Nothing FMCSA carriers or new entrants not otherwise requirements would be an inadvertent does in this rule will change the number equipped to establish themselves in the endorsement of lower industry of carriers obtaining ACORD certificates marketplace. performance standards. of insurance or correct any perceived FMCSA believes that the markets can Cargo insurance requirements should ‘‘flaws’’ in such forms. solve credibility issues without be expanded to include all motor The Agency recognizes that continued government intervention. As carriers. Nine commenters concluded elimination of the BMC–32 endorsement stated above, firms in the motor carrier that the mandatory cargo insurance will make it less convenient for industry, especially small carriers, requirement should not only be commercial shippers to confirm the choose combinations of insurance and maintained, but extended to all for-hire existence of cargo insurance. However, cargo security systems to ensure cargo motor carriers. One of these FMCSA believes that motor carriers, in safely gets to its destination. Some small commenters, Advocates for Highway order to effectively compete for motor carriers may prefer to obtain little and Auto Safety, did not limit its desirable traffic, will devise alternative cargo insurance but spend a lot on cargo recommendation to for-hire motor means of facilitating shipper verification anti-theft/anti-damage systems, while carriers, notwithstanding the fact that of their cargo insurance policies. other small motor carriers may choose private carriers transport their own Effect on small carriers/shippers/ to obtain more insurance but spend goods. brokers. Another commenter stated that little on such anti-theft/anti-damage FMCSA Response. FMCSA’s authority FMCSA, in proposing to eliminate the systems. FMCSA has been limiting all to impose cargo insurance, codified at cargo insurance requirements, did not possible combinations by imposing a 49 U.S.C. 13906(a)(4), is limited to recognize the extent to which obtaining minimum insurance amount. All motor carriers required to register with the adequate cargo insurance is a problem carriers will now be able to choose the Agency under Chapter 139 of Title 49 of for small carriers, as well as the ripple combination which best suits their the United States Code. Consequently, effect that abolition of the financial needs and abilities and those of their we lack the necessary statutory responsibility endorsement would have shippers and clients. The firms will authority to require ‘‘exempt’’ for-hire on small transportation service have a better choice on how to best carriers or private carriers to obtain providers and small shippers and allocate resources, be financially cargo insurance. brokers, as well. The commenter argued responsible, and protect their exposure FMCSA believes that extending the that security-adequate, reasonably to risk without unnecessary government requirement to all non-exempt for-hire comprehensive cargo insurance is a intervention. property carriers and passenger carriers particular problem for small carriers. Congressional intent. Two is unnecessary. Entities engaged in Shippers are reluctant to do business commenters stated that there has been contract carriage resolve cargo liability with small carriers because the shipper no indication of any intent by Congress issues through contracts negotiated with fears that small carriers will be unable to eliminate minimum mandatory cargo their customers. The financial to pay for any cargo claim not covered insurance coverage and, to the contrary, arrangements they elect to make with believe that Congress intended to shippers are not a concern for the 9 ACORD is a global, nonprofit insurance preserve the requirement. Three public, nor do they raise safety issues association whose mission is to facilitate the commenters noted that the survival of that might justify such Federal development and use of standards for the insurance, reinsurance and related financial these regulations throughout the intervention. Although passenger services industries. deregulation process should carriers transport a limited amount of

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cargo, the ICC declined, in its original Two commenters asserted that the and motor carriers will behave cargo insurance rule, to require such elimination of mandatory cargo differently as a result of this rule. carriers to have cargo insurance. See insurance will raise the transaction Updated Cost and Benefit Figures for 1 FR 1156, at 1158, August 20, 1936. costs for shippers and motor carriers. the Final Rule Minimum amounts of required cargo The commenters stated that shippers insurance should be increased. Six have learned to rely on the terms and Costs commenters strongly urged that, not conditions of the FMCSA endorsement FMCSA calculates the costs of this only should the cargo insurance instead of reviewing the carrier’s final rule to be small and indirect. requirements remain intact for all motor insurance policy. Therefore, if the Commercial shippers relying on motor carriers and freight forwarders, but the protections of the BMC–32 endorsement carrier cargo insurance to cover their minimum amounts established in 1976 are eliminated, shippers will be property against loss or damage will ($5,000/$10,000) should be increased required to review the terms and have to do some additional work because: (1) The cost of living and the conditions of the cargo insurance identifying for-hire motor carriers and price of virtually all transported goods policies of every motor carrier with freight forwarders who have adequate have increased, (2) modern trucks and whom they interact to identify cargo insurance (through phone calls, trailers have significantly greater loopholes and determine whether there e-mails, correspondence or other carrying capacity, and (3) new carriers is actual protection or whether the communications). The costs of this final entering the market and competition existence of insurance coverage is rule are negligible and result primarily among carriers have increased the rate illusory. of carrier business failures. The FTCA from shippers of shipments valued at FMCSA Response. FMCSA agrees that less than $5,000 now having to verify suggested doubling the minimum shippers have learned to rely on the amount of cargo insurance required for that their potential carrier has adequate terms and conditions of the FMCSA cargo insurance. FMCSA assumes that motor carriers and freight forwarders to endorsement instead of reviewing the $10,000/$20,000. Six commenters shippers of non-exempt cargo valued at carrier’s insurance policy. Shippers greater than $5,000 are already verifying suggested that the levels should be should be more proactive in increased to $25,000/$50,000 to whether their shipments would be determining what level of insurance adequately insured, because their adequately compensate a shipper for a protection they are actually receiving loss. Two commenters stated that shipments would not be fully protected and take necessary safeguards. under the existing minimum cargo insurers should be allowed, but not FMCSA agrees that many shippers required, to post BMC–32 endorsements insurance requirement. Inasmuch as now pay for insurance from the motor shippers of cargo valued at less than higher than the $5,000 regulatory carrier in the form of higher minimum. $5,000 already have to call or otherwise transportation charges. The motor FMCSA Response. FMCSA recognizes contact a carrier or broker to arrange for carrier is providing a service or product that the current minimum levels of transportation, the additional time required cargo insurance are relatively just like the shipper. The shipper, for necessary to verify the existence of low. As discussed above, the limits do example, may carry its own liability appropriate cargo insurance during this not affect the motor carrier’s liability for insurance in the event its products contact should, in most cases, be actual cargo loss or damage. Arguments injure consumers and passes such costs negligible. See the Regulatory for or against the proposal based on the along to consumers. Evaluation for the final rule in the observations that most shippers require Once this rule takes effect, some of docket for a detailed discussion of the an amount of insurance above the the additional costs predicted by cost estimates for this rule. opponents of the proposal could government-established minimum is Benefits largely irrelevant to the issue of whether develop due to the absence of a cargo the requirement should exist. insurance requirement. However, these Direct benefits of this final rule Increased cost. Four commenters costs are expected to be negligible. include time savings to: (1) Industry and stated that there is no explanation FMCSA has reevaluated the costs and FMCSA personnel resulting from offered for the FMCSA’s estimate that benefits of this final rule. The Agency streamlining the motor carrier the elimination of the insurance believes the market will react to the registration process; and (2) the requirements would save carriers $3.95 commenters’ concerns by developing industry’s insurance representatives by million over 10 years. They stated that better ways of addressing these eliminating cargo insurance filing the elimination of the requirements will problems than the current insurance requirements for most carriers formerly increase the cost to claimants. requirement. referred to as ‘‘common carriers’’ and Commenters stated that without the Elimination Will Cause a Litigation freight forwarders of non-household BMC–32 endorsement, claimants would Increase. Three commenters stated that goods. be forced to take settlement into their the proposed elimination of the The total annual savings from the rule own hands, file claims against bankrupt requirements would cause a significant are estimated to be about $452,000 in carriers in Bankruptcy Courts, and increase in litigation by encouraging the first year and $3.95 million over a recover little, if anything, for valid insurance companies to deny more ten-year period. The cost savings claims. They alleged the cost to shippers claims for more reasons. This increase increase in each subsequent year of the due to multiple exclusions, unpaid in litigation would also increase shipper analysis period because the entire cargo claims, and the need to purchase costs. carrier population increases by 3.71 their own cargo insurance would far FMCSA Response. These commenters percent annually.10 These future costs exceed the potential savings claimed in do not provide any support for this savings are discounted at seven percent. the preamble to the proposed rule. One proposition, which assumes that Thus, the total discounted cost saving commenter stated that only 70 claims a insurance companies and motor carriers year that are now covered by the terms are not now acting rationally (because 10 The eight-year (2000–08) average annual growth in motor carrier registrations with the of the BMC–32 endorsement need to be they are not denying as many claims as FMCSA (interstate hazmat and non-hazmat, and denied to offset the alleged savings to they could). There is no evidence intrastate hazmat only) is 3.71%. Source: MCMIS the motor carrier industry. suggesting that insurance companies Snapshot, 29–July–2009.

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associated with this provision equals individual shippers. FMCSA believes it Regulatory Flexibility Act $452,000 in the first year and $3.95 is unreasonable to require the insurance In compliance with the Regulatory million over the ten-year period. See the companies to cancel the filings Flexibility Act (5 U.S.C. 601–612), Regulatory Evaluation for the final rule electronically or manually, as they may FMCSA considered the effects of this in the docket for a detailed discussion do under §§ 387.313(d) or 387.413(d). regulatory action on small entities, as of how FMCSA arrived at these figures. FMCSA will continue to maintain the defined by the U.S. Small Business previously filed data in its data systems The Final Rule Administration’s Office of Size until March 18, 2013, which is two Standards. The final rule limits the requirements years after the effective date of this final for cargo insurance filings during rule. Two years from notification of The final rule applies to both new registration (§ 365.109) to household disallowance of the claim is the entrant (filing) and existing (re-filing) goods motor carriers and household standard statute of limitations for filing motor carriers and freight forwarders. goods freight forwarders. Similarly, the a civil action based on a loss and Regarding new entrants, data from the requirement to maintain cargo insurance damage claim under a receipt or bill of FMCSA Licensing and Insurance as a condition of retaining active lading pursuant to 49 U.S.C. 14706(e). database indicate that the number of operating authority, as codified in new entrant for-hire motor common §§ 387.301(b), 387.303(c) and Finally, FMCSA removes from the carriers filing annually with FMCSA 387.403(a), is limited to household authority citation for 49 CFR part 365 averaged 18,442 in fiscal years 2007 and goods motor carriers and household the reference to 16 U.S.C. 1456, a 2008. Subtracting out new entrant goods freight forwarders. Furthermore, provision of the Coastal Zone passenger carriers (886) and household the list of commodities exempt from Management Act (CZMA) of 1972. The goods carriers (859) because they will cargo insurance requirements is being ICC added that reference in 1987 (52 FR not be affected by this final rule, while removed from § 387.301(b) as it is no 18365, May 15, 1987) because its adding in the average 183 new entrant longer needed. regulations governing operating freight forwarders estimated to have authority (49 CFR part 1160) required Forms BMC–32 and BMC–34 for Non- filed with FMCSA during the same water carriers subject to ICC jurisdiction fiscal years, results in an average of Household-Goods Motor Carriers and to comply with the CZMA. As a result Freight Forwarders 16,880 annual new entrant for-hire of the ICCTA, many ICC regulations carriers and freight forwarders whose All BMC–32 endorsements and BMC– were transferred to FMCSA; 49 CFR part insurance agents would not have to file 34 certificates of insurance that insurers 1160 was recodified as 49 CFR part 365. proof of cargo insurance with FMCSA have issued to motor carriers and freight In 2002, FMCSA rescinded the passage under this rule. forwarders, except household goods in part 365 dealing with water carriers Small Business Administration (SBA) motor carriers and household goods (49 CFR 365.101(c), 67 FR 61818, 61820, regulations (13 CFR part 121) define a freight forwarders, will expire on the October 2, 2002). We are now deleting ‘‘small entity’’ in the motor carrier effective date of this final rule, March the reference to the CZMA as well. industry by average annual receipts, 21, 2011. FMCSA will be amending the which is currently set at $25.5 million BMC–32 endorsement and BMC–34 Regulatory Analyses and Notices per firm for truck transportation and $7 certificate of insurance to reflect the Executive Order 12866 (Regulatory requirements of this final rule by million per firm for freight Planning and Review) and DOT transportation. Although general freight removing the references to common Regulatory Policies and Procedures carriers and amending other incorrect transportation arrangement firms fall references. FMCSA will be seeking FMCSA has determined that this under this $7 million threshold, there is ‘‘ Office of Management and Budget action is a significant regulatory action an exception for non-vessel owning (OMB) approval of the new forms before within the meaning of Executive Order common carriers and household goods ’’ the effective date of the final rule. 12866 due to public interest. The final forwarders. This exception stipulates Insurance companies will not need to rule has minimal costs. The Office of that, for this sub-set of freight cancel any previous FMCSA filings. Management and Budget (OMB) has forwarders, $25.5 million should be the FMCSA will not remove the names of reviewed this document. The Agency revenue threshold. Since this subset insurance companies and the has prepared a regulatory analysis of the appears to apply to freight forwarders in appropriate policy numbers from costs and benefits of this action. A copy the trucking industry, we use $25.5 FMCSA web sites and any other FMCSA of the analysis document is included in million as the revenue threshold for distribution methods until March 18, the docket referenced at the beginning freight forwarders as well. 2013, the second anniversary of the of this notice. The estimated ten-year Motor carriers and freight forwarders effective date of this final rule, to costs and benefits of the analysis are are not required to report revenue to the facilitate identification of insurance shown in Table 2. FMCSA, but are required to provide coverage for claims arising from FMCSA with the number of power units transportation occurring while the TABLE 2—ESTIMATED TEN-YEAR they operate when they apply for operating authority and to update this policies were in effect. COSTS, BENEFITS, AND NET BENEFITS The Agency has added a new figure biennially. Because FMCSA does [$ millions] paragraph (f) to both §§ 387.313 and not have direct revenue figures, power 387.413. These new paragraphs will units serve as a proxy to determine the 7% Discount Rate: serve as notice to the public that any carrier and forwarder size that would Costs ...... Negligible valid form BMC–32 endorsements and qualify as a small business given the Benefits ...... $3.95 BMC–34 certificates of insurance on the SBA’s revenue threshold. In order to Net Benefits ...... $3.95 day before the effective date will expire produce this estimate, it is necessary to 3% Discount Rate: determine the average revenue on the effective date of the final rule for Costs ...... Negligible those 70,000+ for-hire motor common generated by a power unit. The Agency Benefits ...... $4.67 determined in the 2003 Hours of Service carriers and freight forwarders that do Net Benefits ...... $4.67 not transport household goods for Rulemaking Regulatory Impact Analysis

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and Small Business Analysis 11 that a this final rule and which use motor by the Unfunded Mandates Reform Act power unit produces about $172,000 in carriers and freight forwarders that will of 1995 (2 U.S.C. 1532, et seq.), that will revenue annually (adjusted for no longer be subject to cargo insurance result in the expenditure by State, local, inflation).12 According to the SBA, requirements, may incur minimal and tribal governments, in the aggregate, motor carriers and freight forwarders (indirect) costs to verify that carriers or by the private sector, of $140.3 with an annual revenue of $25.5 million have insurance for shipments worth less million or more in any one year. are considered a small business.13 This than the eliminated insurance floor of equates to 148 power units (25,500,000/ $5,000. Executive Order 12988 (Civil Justice 172,000). Thus, FMCSA considers motor This final rule will remove the Reform) carriers and freight forwarders with 148 Federal mandate to purchase and This action will meet applicable power units or less to be a small maintain a minimum level of cargo standards in sections 3(a) and 3(b)(2) of business for SBA purposes. insurance for most motor carriers and Executive Order 12988, Civil Justice FMCSA has used data on revenue freight forwarders using trucks and Reform, to minimize litigation, generated per power unit to determine trailers, including small entity motor eliminate ambiguity, and reduce that a motor carrier with approximately carriers and freight forwarders. It will burden. 148 power units would exceed the small also reduce the Federal mandate for business revenue level set by the SBA. most motor carriers and freight Executive Order 12630 (Taking of Ninety-nine percent of motor carriers forwarders to direct their insurance and Private Property) have fewer than 148 power units, and surety providers to prepare a BMC–32 This rulemaking does not effect a therefore could be expected to fall under Endorsement for Motor Common Carrier taking of private property or otherwise the SBA’s definition of a small business Policies of Insurance for Cargo Liability have taking implications under for this industry, with annual receipts of and to file with FMCSA a BMC–34 Executive Order 12630, Governmental less than $25.5 million. Examining all Motor Carrier Cargo Liability Certificate Actions and Interference with freight forwarders within NAICS Code of Insurance. The insurance or surety Constitutionally Protected Property 4885, using the 2002 Economic Census, provider must pay FMCSA a $10 fee to Rights. there are 12,266 freight transportation file each BMC–34 Motor Carrier Cargo Executive Order 13132 (Federalism) arrangement firms. Of these firms, Liability Certificate of Insurance. 10,640 operated for the entire year, and The Agency considered the FMCSA analyzed this rule in 111, or approximately 1 percent, had alternative of extending the cargo accordance with the principles and revenues exceeding $25 million. insurance requirements to all for-hire criteria contained in Executive Order Thus, assuming that roughly 99 carriers (both former common and 13132. FMCSA has determined that this percent of both for-hire trucking firms former contract carriers) in order to treat rulemaking will not have a substantial and freight forwarders benefiting from all regulated carriers uniformly. Rather direct effect on States, nor will it limit this proposal have annual receipts of than saving $452,000 as the elimination the policy-making discretion of the less than $25.5 million, FMCSA of the cargo insurance filing for common States. Nothing in this document will estimates that (93,800 times 0.99) 92,900 carriers would do, this alternative was preempt any State law or regulation. for-hire small entity motor carrier estimated to have a one-time first-year FMCSA has therefore determined this trucking firms formerly holding cost of $891,000 and annual costs of rule does not have federalism common carrier authority and 1,176 about $222,000 thereafter—with little implications. small entity freight forwarder 14 firms benefit to shippers that have contracts will benefit from this final rule. The with for-hire motor carriers formerly Executive Order 12372 average benefit per small entity will be known as contract carriers. (Intergovernmental Review) $10 in direct or indirect fees the small FMCSA has determined that the The regulations implementing motor carriers and freight forwarders impact on motor carrier and freight Executive Order 12372 regarding would not be charged by their insurance forwarder entities affected by this final intergovernmental consultation on carriers. rule will not be significant. The effect of Federal programs and activities do not In addition, FMCSA notes that the final rule will be to allow most apply to this program. commercial shippers and freight motor carriers and freight forwarders to Paperwork Reduction Act brokers, which are indirectly affected by choose the optimal level of cargo insurance protection without having to The Paperwork Reduction Act of 1995 11 Regulatory Analysis for: Hours of Service of notify or seek approval from FMCSA. (44 U.S.C. 3507(d)) requires that FMCSA Drivers; Driver Rest and Sleep for Safe Operations, FMCSA expects the impact of the final consider the impact of paperwork and Final Rule. Federal Motor Carrier Safety. Published other information collection burdens 4/23/2003. Docket FMCSA–1997–2350 item 23302. rule will be a reduction in the It may be accessed on the Internet at this URL— information collection burden for most imposed on the public. The changes in http://www.regulations.gov/search/Regs/ motor carriers and freight forwarders, this final rule affect OMB Control No. contentStreamer?objectId=090000648034dc9d& and their cargo insurance providers. 2126–0017 titled ‘‘Financial disposition=attachment&contentType=pdf. Responsibility, Trucking, and Freight 12 From the 2000 TTS Blue Book Of Trucking FMCSA asserts that the economic Companies, number adjusted to 2008 dollars for impact of the reduction in paperwork Forwarding.’’ The final rule requires that inflation. will be minimal and entirely beneficial cargo insurance filings be made only by 13 U.S. Small Business Associate Table of Small to small motor carriers and freight household goods motor carriers and Business Size Standards Match to North American forwarders. Accordingly, the household goods freight forwarders. Industry Classification Systems Codes (NAIC), OMB Control No. 2126–0017 has 10 effective August 22, 2008. See NAIC Subsector 484, Administrator of the FMCSA hereby Truck Transportation. certifies that this final rule will not have information collections (ICs) for 10 14 A MCMIS data query on 14 February 2009 a significant economic impact on a different forms covering all FMCSA showed the FMCSA Licensing and Insurance substantial number of small entities. insurance, surety bond, trust fund, and database had 1,188 freight forwarders subject to performance bond filings for for-hire FMCSA cargo-insurance regulations and 435 Unfunded Mandates Reform Act of 1995 household-goods freight forwarders: 99 percent of motor carriers of property and freight 1,188 equals about 1,176 small entity freight This rulemaking will not impose an forwarders. IC–3, within the information forwarder firms. unfunded Federal mandate, as defined collection request, is devoted to Form

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BMC–34 entitled ‘‘Motor Carrier Cargo Significantly Affect Energy Supply, motor carrier subject to subtitle IV, part Liability Certificate of Insurance.’’ IC–3 Distribution, or Use. We determined B, chapter 135 of title 49 of the U.S. will now be limited only to the 4,000 that it is not a ‘‘significant energy action’’ Code shall engage in interstate or motor carriers and freight forwarders under that Executive Order because it foreign commerce, nor shall any involved in authorized for-hire will not be economically significant and certificate be issued to such a household household goods carriage, but the other will not be likely to have a significant goods motor carrier or remain in force nine ICs in OMB Control No. 2126–0017 adverse effect on the supply, unless and until there shall have been will still be applicable to all for-hire distribution, or use of energy. filed with and accepted by the FMCSA, motor carriers of property and freight List of Subjects a surety bond, certificate of insurance, forwarders. The information collection proof of qualifications as a self-insurer, burden for IC–3 will decrease from 49 CFR Part 365 or other securities or agreements in the approximately 13,458 hours to about Administrative practice and amounts prescribed in § 387.303, 673 total hours, a decrease of almost procedure, Brokers, Buses, Freight conditioned upon such carrier making 12,800 hours. forwarders, Mexico, Motor carriers, compensation to individual shippers for FMCSA has submitted a revised Moving of household goods. all property belonging to individual information collection request to OMB shippers and coming into the possession for this reduced information collection 49 CFR Part 387 of such carrier in connection with its burden in IC–3. Buses, Freight, Freight forwarders, transportation service. The terms National Environmental Policy Act Hazardous materials transportation, ‘‘household goods motor carrier’’ and Highway safety, Insurance, ‘‘individual shipper’’ are defined in part FMCSA analyzed this final rule for Intergovernmental relations, Motor 375 of this subchapter. the purpose of the National carriers, Motor vehicle safety, Moving of * * * * * Environmental Policy Act of 1969 (42 household goods, Penalties, Reporting ■ 5. In § 387.303, revise paragraph (c) to U.S.C. 4321 et seq.) and determined and recordkeeping requirements, Surety read as follows: under our environmental procedures bonds. Order 5610.1, issued March 1, 2004 (69 ■ In consideration of the foregoing, § 387.303 Security for the protection of the FR 9680), that this action is public: Minimum limits. categorically excluded from further FMCSA amends title 49, Code of environmental documentation under Federal Regulations, chapter III, as * * * * * Appendix 2, paragraph 6.v. of the Order follows: (c) Household goods motor carriers: (regulations prescribing minimum levels Cargo liability. Security required to PART 365—RULES GOVERNING of financial responsibility). In addition, compensate individual shippers for loss APPLICATIONS FOR OPERATING or damage to property belonging to them the agency believes that this action AUTHORITY includes no extraordinary and coming into the possession of circumstances that will have any effect ■ 1. The authority citation for part 365 household goods motor carriers in on the quality of the environment. Thus, is revised to read as follows: connection with their transportation the action does not require an service; Authority: 5 U.S.C. 553 and 559; 49 U.S.C. (1) For loss of or damage to household environmental assessment or an 13101, 13301, 13901–13906, 14708, 31138, environmental impact statement. and 31144; 49 CFR 1.73. goods carried on any one motor FMCSA also analyzed this rule under vehicle—$5,000, ■ the Clean Air Act, as amended (CAA), 2. In § 365.109, revise paragraph (2) For loss of or damage to or section 176(c) (42 U.S.C. 7401 et seq.), (a)(5)(iii) to read as follows: aggregate of losses or damages of or to and implementing regulations § 365.109 FMCSA review of the household goods occurring at any one promulgated by the Environmental application. time and place—$10,000. Protection Agency. Approval of this (a) * * * ■ 6. In § 387.313, add a new paragraph action is exempt from the CAA’s general (5) * * * (f) to read as follows: conformity requirement since it (iii) Form BMC 34 or BMC 83 surety § 387.313 Forms and procedures. involves rulemaking action. (See 40 CFR bond—Cargo liability (household goods 93.153(c)(2)). It will not result in any motor carriers and household goods * * * * * emissions increase nor would it have freight forwarders). (f) Termination of Forms BMC–32 and any potential to result in emissions that * * * * * BMC–34 for motor carriers transporting are above the general conformity rule’s property other than household goods. de minimis emission threshold levels. PART 387—MINIMUM LEVELS OF Form BMC–32 endorsements and Form Moreover, it is reasonably foreseeable FINANCIAL RESPONSIBILITY FOR BMC–34 certificates of insurance issued that this final rule will not increase total MOTOR CARRIERS to motor carriers transporting property CMV mileage, or change the routing of other than household goods that have CMVs, how CMVs operate, or the CMV ■ 3. The authority citation for part 387 been accepted by the FMCSA under fleet-mix of motor carriers. By this continues to read as follows: these rules will expire on March 21, action, FMCSA merely removes a Authority: 49 U.S.C. 13101, 13301, 13906, 2011. requirement that certain motor carriers 14701, 31138, 31139, and 31144; and 49 CFR ■ 7. In § 387.403, revise paragraph (a) to purchase and maintain insurance for 1.73. read as follows: loss or damage to cargo and file ■ 4. In § 387.301, revise paragraph (b) to § 387.403 General requirements. evidence of such insurance with the read as follows. Agency. (a) Cargo. A household goods freight § 387.301 Surety bond, certificate of forwarder may not operate until it has Executive Order 13211 (Energy Effects) insurance, or other securities. filed with FMCSA an appropriate surety FMCSA analyzed this action under * * * * * bond, certificate of insurance, Executive Order 13211, Actions (b) Household goods motor carriers- qualifications as a self-insurer, or other Concerning Regulations That cargo insurance. No household goods securities or agreements, in the amounts

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prescribed in § 387.405, for loss of or site on regulations at http:// receive reports of the following: ‘‘Any damage to household goods. www.regulations.gov. event in which an operator, when * * * * * FOR FURTHER INFORMATION CONTACT: operating an airplane as an air carrier at ■ 8. In § 387.413, add a new paragraph Deepak Joshi, Aerospace Engineer a public-use airport on land: (i) Lands (f) to read as follows: (Structures), Office of Aviation Safety, or departs on a taxiway, incorrect (202) 314–6348. runway, or other area not designed as a § 387.413 Forms and procedures. SUPPLEMENTARY INFORMATION: runway; or (ii) Experiences a runway * * * * * incursion that requires the operator or (f) Termination of Forms BMC–32 and Regulatory History the crew of another aircraft or vehicle to BMC–34 for freight forwarders of On October 7, 2008, the NTSB take immediate corrective action to property other than household goods. published an NPRM titled ‘‘Notification avoid a collision.’’ Form BMC–32 endorsements and Form and Reporting of Aircraft Accidents or In interpreting this subsection, the BMC–34 certificates of insurance issued Incidents and Overdue Aircraft, and NTSB plans to use the definition of to freight forwarders of property other Preservation of Aircraft Wreckage, Mail, ‘‘airplane’’ found in 14 CFR 1.1, which than household goods that have been Cargo, and Records’’ in 73 FR 58520, indicates that ‘‘[a]irplane means an accepted by the FMCSA under these and, on January 7, 2010, the NTSB rules will expire on March 21, 2011. published a final rule under the same engine-driven fixed-wing aircraft heavier than air, that is supported in Issued on: June 15, 2010. title in 75 FR 922. The final rule codified the addition of five reportable flight by the dynamic reaction of the air Anne S. Ferro, against its wings.’’ Regarding the Administrator. incidents, including the following requirement concerning the reporting of definition of ‘‘public-use airport,’’ the [FR Doc. 2010–14866 Filed 6–21–10; 8:45 am] runway incursions: ‘‘Any event in which NTSB plans to use the definition in 49 BILLING CODE 4910–EX–P an aircraft operated by an air carrier: (i) U.S.C. 47102(21), which indicates that Lands or departs on a taxiway, incorrect ‘‘ ‘public-use airport’ means— (A) a runway, or other area not designed as a public airport; or (B) a privately-owned NATIONAL TRANSPORTATION runway; or (ii) Experiences a runway airport used or intended to be used for SAFETY BOARD incursion that requires the operator or public purposes that is—(i) a reliever the crew of another aircraft or vehicle to airport; or (ii) determined by the 49 CFR Part 830 take immediate corrective action to Secretary to have at least 2,500 avoid a collision.’’ passenger boardings each year and to Notification and Reporting of Aircraft After the publication of this final rule, receive scheduled passenger aircraft Accidents or Incidents and Overdue several organizations advised the NTSB service.’’ The NTSB believes the Aircraft, and Preservation of Aircraft that the regulatory language may qualification of ‘‘on land’’ of ‘‘public-use Wreckage, Mail, Cargo, and Records inadvertently require that aircraft taking airport’’ is self-explanatory; the NTSB off or landing at sites outside an airport AGENCY: National Transportation Safety does not seek reports of operations on submit a report each time they take off water. Board (NTSB). or land. Representatives of these ACTION: Correcting amendments. organizations were concerned that they This new language functions to would be required to report every narrow the reporting requirement. Given SUMMARY: The NTSB is correcting a takeoff or landing of a helicopter that that it does not impose any new regulatory subsection that became occurs on a ‘‘taxiway’’ or ‘‘other area not requirements but instead narrows the effective on March 8, 2010. The NTSB designed as a runway.’’ While the new current requirement to include only determined that a final rule which rule literally states this, the preamble of reports of incidents in which airplanes requires reports of certain runway the NPRM stated that it is not the at public-use airports on land are incursions, failed to specify that on NTSB’s intent to be notified of normal involved in runway incursions, the paragraph applies only to fixed-wing taxiway and off-airport rotorcraft NTSB has concluded that it is legally aircraft operating at public-use airports takeoffs and landings (see 73 FR 58520). permissible to publish this correction to on land. These amendments function to The NTSB does not seek to require considerably narrow the reporting the rule rather than engage in a new reports of off-airport or taxiway takeoffs rulemaking procedure under the requirement to include only the specific and landings that occur during normal set of incidents for which the NTSB Administrative Procedure Act. The helicopter operations, including corrected language is clearly a logical seeks reports. In addition, the NTSB is helicopter operations at heliports, correcting a footnote because the NTSB outgrowth of the language that became helidecks, hospital rooftops, highway effective on March 8, 2010, and applies no longer has a regional office in berms, or any other area normally Parsippany, New Jersey. to fewer scenarios than the original utilized to transport patients, language. DATES: The correction is effective June passengers, or crews. The NTSB also 22, 2010. does not seek to require reports of other List of Subjects in 49 CFR Part 830 ADDRESSES: Copies of the notice of off-airport or taxiway takeoffs and proposed rulemaking (NPRM) and the landings that occur during normal Aircraft accidents, Aircraft incidents, final rule, published in the Federal operations, such as those involving Aviation safety, Overdue aircraft Register (FR), are available for seaplanes, hot-air balloons, unmanned notification and reporting, Reporting inspection and copying in the NTSB’s aircraft systems, and aircraft designed and recordkeeping requirements. public reading room, located at 490 specifically for takeoffs and landings ■ For the reasons discussed in the L’Enfant Plaza, SW., Washington, DC that do not occur at land airports. The preamble, the NTSB amends 49 CFR 20594–2000. Alternatively, copies of the NTSB’s correction to its inadvertent part 830 as follows: documents and comments that the error in drafting overly broad regulatory NTSB received from the public are language in 49 CFR 830.5(a)(12) available on the government-wide Web contains the requirement that the NTSB

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