[Federal Register: June 11, 2003 (Volume 68, Number 112)]
[Rules and Regulations]
[Page 35063-35113]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr11jn03-25]

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Part II

Department of Transportation

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Federal Motor Carrier Safety Administration

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49 CFR Parts 375 and 377

Transportation of Household Goods; Consumer Protection Regulations;
Interim Rule

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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

49 CFR Parts 375 and 377

[Docket No. FMCSA-97-2979]
RIN 2126-AA32; formerly RIN 2125-AE30

Transportation of Household Goods; Consumer Protection Regulations

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

ACTION: Interim final rule; request for comments.

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SUMMARY: FMCSA is amending its regulations governing the interstate transportation of personal effects or property used, or to be used, in a private residence (household goods). Our regulations specify how motor carriers who transport household goods by motor vehicle in interstate commerce (movers) must assist their individual customers who ship household goods. We are updating the regulations to make them easier to understand and have made several changes designed to assist consumers. We seek additional public comment on the information collection requirements for this interim final rule. We will not enforce the information collection requirements of this interim final rule until we obtain approval for them from the Office of Management and Budget (OMB).

DATES: Effective Date: This interim final rule is effective on September 9, 2003.

Compliance Date: Mandatory compliance with this interim final rule must begin on March 1, 2004.

Comment Date: You must submit comments concerning the information collection requirements of this interim final rule on or before August 11, 2003.

If you submit copies of your comments to the Office of Management and Budget (OMB) concerning the information collection requirements of this document, your comments to OMB will be most useful if received at OMB by July 11, 2003. The OMB prefers to receive them by July 11, 2003, but you can submit them to OMB until August 11, 2003.

ADDRESSES: You may submit comments identified by DOT DMS Docket Number FMCSA-1997-2979 by any of the following methods:

• Web Site: http://dms.dot.gov. Follow the instructions for submitting comments on the DOT electronic docket site.
• Fax: 1-202-493-2251.
• Mail: Docket Management Facility; U.S. Department of Transportation, 400 Seventh Street, SW., Nassif Building, Room PL-401, Washington, DC 20590-0001.
• Hand Delivery: Room PL-401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal Holidays.
• Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting comments.

Instructions: All submissions must include the agency name and docket number or Regulatory Identification Number (RIN) for this rulemaking. Note that all comments received will be posted without change to http://dms.dot.gov, including any personal information provided. Please see the Privacy Act heading for further information.

Docket: For access to the docket to read background documents or comments received, go to http://dms.dot.gov at any time or to Room PL- 401 on the plaza level of the Nassif Building, 400 Seventh Street, SW., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal Holidays.

Privacy Act: Anyone is able to search the electronic form of all comments received into any of DOT's dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review DOT's complete Privacy Act Statement in the Federal Register published on April 11, 2000 (Volume 65, Number 70; Pages 19477-78). This statement is also available at http://dms.dot.gov.

Comments to OMB: If you submit copies of comments to the OMB concerning the information collection requirements of this document, you should mail, hand deliver, or fax a copy of your comments to: Attention: Desk Officer for the Department of Transportation, Docket Library, Office of Information and Regulatory Affairs, Office of Management and Budget, Room 10102, 725 17th Street, NW., Washington, DC 20503, fax: (202) 395-6566.

FOR FURTHER INFORMATION CONTACT: Mr. Nathaniel Jackson, Household Goods Enforcement Team Leader, (202) 385-2423, Insurance Compliance Division (MC-ECI), FMCSA, Suite 600, 400 Virginia Avenue, SW., Washington, DC 20024.

SUPPLEMENTARY INFORMATION:

Background

In 1999 Congress authorized FMCSA to regulate household goods carriers engaged in interstate operations for individual shippers in the Motor Carrier Safety Improvement Act of 1999 (MCSIA) (Public Law 106-159, December 9, 1999, 113 Stat. 1749). The Interstate Commerce Commission (ICC) administered household goods regulations from 1940 to 1995. In the ICC Termination Act of 1995 (ICCTA) (Pub. L. 104-88), Congress terminated the ICC and transferred the household goods program to the Federal Highway Administration (FHWA) effective January 1, 1996. The FHWA administered the household goods program through its Office of Motor Carrier and Highway Safety. The regulations governing interstate household goods transportation are in 49 CFR part 375.

The FHWA published a notice of proposed rulemaking (NPRM) on May 15, 1998 (63 FR 27126) requesting comments on its proposal to update the household goods regulations. These regulations set forth regulatory requirements for moving companies who provide transportation for individual shippers. An individual shipper is generally a retired person or someone changing jobs. The individual shipper uses for-hire truck transportation services infrequently and may have little or no information about the regulations movers must follow and how they operate. This information may be essential in enabling a shipper to make informed decisions in selecting a mover and ensuring a satisfactory move.

On March 5, 2001, the General Accounting Office (GAO) released its report to Congressional Committees, "Consumer Protection: Federal Actions Are Needed to Improve Oversight of the Household Goods Moving Industry," No. GAO-01-318. Section 209 of the MCSIA directed that GAO study the effectiveness of DOT's consumer protection activities for the interstate household goods moving industry and identify alternative approaches for providing consumer protection in the industry. A copy of the report is in the docket. The GAO findings on the FMCSA's household goods program included the following: (1) The Department of Transportation has done little to oversee the Household Goods moving industry; (2) Consumer education activities have been minimal; (3) The Department does not know the extent to which it has examined carriers' compliance with Household Goods rules; and (4) The Department [[Page 35065]] has not determined whether its level of enforcement is appropriate. These regulations represent FMCSA's effort to provide a reasonable level of protection to consumers of household goods moves. Comments to the NPRM and FMCSA enforcement actions have established the need to address weaknesses in the system for movement of household goods. Given the volume and scope of household goods movements each year, FMCSA acknowledges that it cannot intervene in individual cases to assure consumers their desired result. With these regulations, FMCSA attempts to establish parameters of fair dealing for household goods movers and a reasonable level of protection for consumers. The agency seeks to equip consumers with information adequate to make informed decisions about moving their household goods.

Interim Final Rule: Request for Comments on Information Collection Requirements

When the FHWA published the NPRM on May 15, 1998 (63 FR 27126) requesting comments on its proposal to update the household goods regulations, it failed to send the package separately to OMB for its review of the information collection requirements. Because of this error, it is necessary to publish this document as an Interim Final Rule, rather than a Final Rule, to allow OMB time to complete its review and to allow the public additional time to submit comments on the information collection requirements. As described above under "DATES: Comment Date:" OMB allows 60 days for public comment, but the rule becomes effective September 9, 2003, allowing time for FMCSA and OMB to resolve any concerns about the information collection requirements in this Interim Final Rule. For more information on FMCSA's analysis of the paperwork impact, see "Paperwork Reduction Act" later in this preamble.

Docket Comments

In response to the NPRM, the agency received 53 letters from 48 different individuals or entities. Twenty-four (24) letters did not comment on any specific aspect of the NPRM. Each of these 24 letters told of alleged abuses the authors had suffered in past moves of their own household goods. Each supported in general terms the goals of the NPRM to protect individual shippers.

The docket received substantive responses from the following entities:

Action Scale & Weighing Systems, Inc. (Action) Air Weigh

The American Moving and Storage Association, Inc. (AMSA)

As a combined comment, the Attorneys General of Alabama, Arkansas, Arizona, Florida, Hawaii, Iowa, Idaho, Illinois, Indiana, Kansas, Massachusetts, Maryland, Missouri, New Jersey, Nevada, New York, Ohio, Oklahoma, Oregon, Pennsylvania, Rhode Island, Tennessee, Washington, Wisconsin, and West Virginia (25AG)

The Attorney General of Connecticut (AGCT)
Cat Scale Company (Cat)
The Commonwealth of Pennsylvania's Department of Agriculture
Deskin Scale Company, Inc. (Deskin)
The National Association of Consumer Agency Administrators (NACAA)
The Oklahoma Corporation Commission (OCC)
Sisson Scale and Equipment Co., Inc. (Sisson)
Starving Students
The State of California's Department of Agriculture
The State of Colorado's Department of Agriculture
The State of Idaho's Department of Agriculture
The State of Michigan's Department of Agriculture
The State of New Hampshire's Department of Agriculture
The State of Oregon's Department of Agriculture
The State of New York's Department of Transportation (NYDOT)
The University of Minnesota's Student Legal Services
Weighing Consultants, Inc. (WCI)

FMCSA will discuss each of the substantive comments in relation to the specific sections they addressed.

Section 375.101 Who Must Follow These Regulations?

AMSA objected to the use of the term "motor common carrier engaged in the transportation of household goods" in this section and Appendix A. AMSA notes the ICCTA deleted reference to "common" carriers. It refers to section 13102(12) of the ICCTA. AMSA believes the part 375 regulations should reflect the terms used in the ICCTA and we should strike the word "common" wherever it appears in connection with "motor carrier(s)." Response to Comments

Although the ICCTA no longer includes a definition of "common carrier," FMCSA is still registering household goods carriers subject to these regulations as "common" carriers, under the transitional rule of 49 U.S.C. 13902(d). However, FMCSA, in implementing the Uniform Carrier Registration System required by 49 U.S.C. 13908 expects to eventually eliminate the distinction between common and contract carriers in registering motor carriers. Consequently, we are adopting AMSA's suggestion by applying the regulations to for-hire motor carriers engaged in the interstate transportation of household goods for individual shippers.

Section 375.103 What Are the Definitions of Terms Used in this Part?

AMSA comments that the term "advertisement" is defined as "any communication to the public in connection with an offer or sale of any interstate transportation service." It believes we should define this term more accurately in the context of part 375 by adding the words "household goods" before the word "transportation." The revised definition would read as follows:

"Advertisement" means any communication to the public in connection with an offer or sale of any interstate household goods transportation service.

The AGCT comments that the proposed definition of "transportation of household goods" should include handling of a shipper's goods by the carrier or his agent, while loading at the point of pickup, unloading at the point of delivery, and all handling in between, whether in storage or in transit.

AMSA believes that FMCSA should change the regulatory definition "Transportation of household goods" by eliminating subparagraph (2), reading "Another party arranges and pays for the transportation of household goods." AMSA believes this recommended change is also consistent with the clear intention of the original 49 CFR part 1056 (1995) regulations that restricted their application to transportation paid for by the householder, specifically referencing 49 CFR 1056.1(b)(1) (1995). AMSA comments that we should change the definition to read as follows:

"Transportation of household goods" means the householder (an individual shipper) arranges and pays for the transportation of household goods. This may include transportation from a factory or store when the individual shipper purchases the household goods with the intent to use the goods in his or her dwelling.

AMSA comments on the AGCT's comments, stating that it believes that such a change is not necessary. The definition of "Transportation" contained in 49 U.S.C. 13102(19) includes each of the services enumerated in the AGCT's recommendation and, for purposes of [[Page 35066]] these regulations, the statutory definition is controlling.

AMSA also comments about this section's definition of an "individual shipper or householder," contending that it does not correspond to the definition of an individual shipper contained in 49 U.S.C. 13102(10)(A). It provides, in addition to owning the goods being transported, the individual shipper is also the party paying for the move. This "arranged and paid for by the householder" provision serves to distinguish moves on behalf of individual shippers from those paid for by national accounts "corporations" for their employees as identified in 49 U.S.C. 13102(10)(B). AMSA states that national account shippers differ from individual shippers in that orders for service are not required (purchase orders or other similar documents are frequently issued in lieu of orders for service). National accounts also often have relocation policies that conflict with or supersede certain requirements of the existing regulations. Since this is an important distinction, AMSA believes, it suggests we change the wording of this provision to accurately define an individual shipper as follows:

"Individual shipper or householder" means any person who is the consignor or consignee of a household goods shipment identified as such in the bill of lading contract, who also owns the goods being transported and pays the moving charges.

AMSA believes the agency should modify the definition of "reasonable dispatch" to make it clear that shippers are liable for charges related to additional services they request or require, as follows:

For example, if you deliberately withhold any shipment from delivery after an individual shipper offers to pay the binding estimate or 110 percent of a non-binding estimate, plus the costs for additional services that were performed en route or at destination which were necessary to complete the transportation, you have not transported the goods with reasonable dispatch. Response to Comments

We agree with AMSA's suggestion to eliminate proposed subparagraph (2) from the definition of "transportation of household goods." In the interim final rule we have combined the definitions for "household goods" and "transportation of household goods." This is consistent with 49 U.S.C. 13102(10). We believe the AGCT recommendation regarding "transportation of household goods" could have an unintended consequence for many individual shippers. If the agency were to adopt its recommendation, a mover may be able to convince an individual shipper that a mover or its agents, and only a mover or its agents, could handle the shipper's goods for loading at the point of pickup, unloading at the point of delivery, and all handling in between whether in storage or in transit. Depending on how the individual shipper contracts for moving services, other companies or the shipper herself may perform the other services.

Movers and their agents perform many services, including what AMSA states on page 36 of its comments as "the precise requirements necessary to properly remove the contents of a residence, secure them in an over-the-road vehicle and effect delivery at the new residence" that "can result in additional services which, in turn, require the assessment of additional charges."

The individual shipper may determine he/she wants to perform the additional services or have another party do them. Adopting the AGCT's comments may have the unintended consequence of having a disreputable mover claim to be the only entity that can handle the shipper's goods. FMCSA does not question that reputable movers and their reputable agents perform these extra services with value to the shipper, but the shipper may be on a tight budget, and the shipper may choose not to have the mover perform those "precise requirements necessary to properly" effect delivery.

We do not agree with AMSA's suggested change to the definition of "reasonable dispatch" because the change would imply that carriers could demand payment for additional services before delivery. Under this interim final rule, the most that a carrier could demand before delivery is 100 percent of a binding estimate or 110 percent of a non- binding estimate.

The agency has adopted AMSA's comments regarding the definition of "advertisement" and "individual shipper." We also removed the exclusion of advertisements on radio and television from the definition and clarified that Yellow Pages advertising is included in the definition. FMCSA also has chosen to keep the definitions for "Commercial shipper" and "Government bill of lading shipper" the same as in the current rules. We are moving the definition of "Certified scale" from proposed Sec. 375.507 to this section. Finally, we are adding new definitions to explain the terms "Tariff" and "Surface Transportation Board."

Section 375.201 What Is My Normal Liability for Loss and Damage When I Accept Goods From an Individual Shipper?

The AGCT recommended the title of the section should be changed from "loss and damage" to "loss or damage" to clarify the differences between contractually agreed upon increases in the carrier's liability and the availability of insurance coverage. The AGCT believes we should require the carrier to disclose the limits of its liability in a clear, concise manner and preclude a carrier from characterizing contractually agreed upon increases in liability as "insurance." AGCT also believes the rules should provide that a carrier may have additional liability if it sells excess liability insurance. It is unclear to AGCT whether the proposed rule used the term "excess liability insurance" as it is normally used in the insurance industry or as a term of art meaning insurance in excess of the carrier's liability as limited by its released rates. If FMCSA intended to define insurance in excess of the carrier's liability as limited by its released rates, AGCT recommends we should simply refer to it as "liability insurance."

AMSA believes that the AGCT suggestion that we clarify language in Sec. 375.201 to explain the difference between carrier liability under released rates orders (RRO) and the availability of excess liability insurance is unnecessary. Section 375.201 is directed to movers and AMSA believes we intended to restate the mover's understanding of the parameters of liability. AMSA believes movers do not require additional explanations along these lines to understand their liability.

AMSA comments that paragraph (a) of this section, which states the mover is legally liable for loss or damage occurring during the transportation of household goods, should be modified to eliminate confusion as to the full extent of a mover's liability. Proposed paragraph (a) reads as follows:

(a) In general, you are legally liable for loss or damage if it happens during performance of any one of the following three services identified on your lawful bill of lading:

(1) Transportation of household goods.

(2) Storage-in-transit of household goods, including incidental pickup or delivery service.

(3) Servicing of an appliance or other article, if you or your agent performs the servicing.

AMSA proposes revising paragraph (a) to read as follows:

(a) In general, you are legally liable for loss or damage if it happens during [[Page 35067]] performance of any transportation of household goods and all related services identified on your lawful bill of lading.

AMSA comments that paragraph (c) of this section provides that the mover may incur additional liability if it sells excess liability insurance. AMSA states when a mover arranges for the purchase of insurance and a shipment is transported under separate liability insurance, the mover's liability is specifically limited to 60 cents per pound per article. AMSA believes the regulations provide for no additional coverage by the mover unless the mover fails to issue a copy of the insurance policy or other appropriate evidence of insurance as explained in proposed Sec. 375.303(h). Given these circumstances, AMSA recommends we delete this provision. Response to Comments

We do not agree with AGCT's suggestion to change "loss and damage" in the title of the section to "loss or damage" because we believe the words are interchangeable and essentially mean the same thing. We agree with AMSA's comments on paragraph (a). By using the phrase "and all related services" we can eliminate subparagraphs (a)(1)-(a)(3). This clarifies that the mover has liability for any services offered in the bill of lading.

We are also adopting the AGCT's comments to change "excess liability insurance" to "liability insurance." We agree with AGCT concerning the need for additional explanations regarding carrier liability in this section and have included appropriate language in Sec. 375.201(d). We do not agree with AMSA's comments concerning paragraph (c). Paragraph (c) builds upon proposed Sec. 375.303(h) by noting the full liability the carrier may be subject to if it fails to issue a copy of the insurance policy or other appropriate evidence of insurance as explained in proposed Sec. 375.303(h). Thus, we are keeping the provision, but have added clarifying language concerning Sec. 375.303(h) (Sec. 375.303(g) in this interim final rule).

In addition, FMCSA is replacing the reference in paragraph (b) to the 1993 released rates order with a more generic reference. This order was recently amended, effective May 12, 2002. Because Surface Transportation Board released rates orders may change over time, the regulations should not be date-specific in referencing such orders.

Section 375.203 What Actions of an Individual Shipper May Limit or Reduce My Normal Liability?

AMSA comments that paragraph (a) provides that the inclusion of perishable household goods in a shipment without notice to the mover relieves the mover of liability. It suggests that to comport with generally applicable tariff provisions that allow the mover to limit liability when perishables are disclosed and accepted for transportation, this provision should be expanded to include reference to hazardous and dangerous articles, as follows:

If an individual shipper includes perishable, dangerous or hazardous articles in the shipment without your knowledge, you need not assume liability for those articles or for the loss or damage caused by their inclusion in the shipment. If the shipper requests that you accept such articles for transportation, you may elect to limit your liability for any loss or damage by appropriately published tariff provisions.

AMSA believes paragraph (b), by including reference to units of weight and measure in metric terms with the Imperial equivalent expressed parenthetically, will prove unduly confusing to both individual shippers and the moving industry. It recommends that until such time as the metric system is more commonly recognized in the United States, the terms should be reversed, with the metric equivalent shown in parenthesis. Response to Comments

We have adopted AMSA's comments concerning dangerous and hazardous articles. This change also comports with 49 CFR 175.25 concerning passengers transporting dangerous or hazardous materials in airline baggage and 18 U.S.C. 1716 and U.S. Postal publication number 52, July 1999 (available at http://www.usps.com/cpim/ftp/pubs/pub52.pdf and http://www.usps.com/cpim/ftp/pubs/pub52.htm) concerning hazardous, restricted, and perishable articles being proper for mailing. We have also placed a warning similar to Sec. 175.25(a)(1) in Appendix A to part 375--Your Rights and Responsibilities When You Move (YRRWYM), noting that the mover may limit its liability for the transportation of such materials in household goods.

The National Institute of Standards and Technology (NIST) has advised FMCSA that we should primarily use SI (metric) measurements. The Omnibus Trade and Competitiveness Act of 1988 cites metric units before inch-pound units where both units appear together and places separate sections containing requirements in metric units before corresponding sections containing requirements in inch-pound units. In some cases, however, trade practice is currently restricted to the use of inch-pound units; therefore, some NIST requirements continue to specify only inch-pound units until the National Conference of Weights and Measures achieves a broad consensus on the permitted metric units. In accord with NIST policy, FMCSA will use trade practice until the National Conference on Weights and Measures achieves a broad consensus on the permitted metric units.

Section 375.205 May I Have Agents?

The AGCT comments that we should require disclosure of any agency relationships to a shipper. AMSA does not object to such a requirement since it is normal industry practice to explain agency relationships. In fact, subpart B of YRRWYM contains an explicit explanation that alerts shippers to the existence of these relationships. Response to Comments

We note that requiring disclosure of any agency relationships to a shipper would subject us to additional information collection requirements of 5 CFR part 120 for that disclosure. We note the largest motor carriers have agents and transport the most household goods shipments. Since we explain in the YRRWYM that motor carriers may have agents and AMSA believes it is normal industry practice to make such disclosures, we believe it is not necessary to require a separate notice for shippers. We believe shippers have plenty of notice that agency relationships may exist and may ask about them. If a mover transports a shipment that used the services of an agent, and the agent acted upon, or omitted, items in its performance of such transportation, the shipper has the right to file a complaint with us against the motor carrier or the agent.

Section 375.209 How Must I Handle Complaints and Inquiries?

NACAA supports the requirement that movers maintain a procedure for handling complaints. The AGCT requested that FMCSA impose an explicit affirmative requirement upon a mover to respond promptly and appropriately to complaints by a shipper.

AMSA disagrees with the AGCT because:

* * * as the [AGCT] concedes, the proposed language contemplates that movers maintain internal systems that are responsive to shippers' complaints. The requirement that telephone numbers be furnished to shippers is sufficient to ensure ready access to the mover's system and, obviously, what may constitute an "appropriate" response is dependent upon the facts of each situation. This is not a matter that warrants a more explicit attempt to regulate.

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Response to Comments

We believe it is sufficient to ensure ready access to the carrier's system by requiring a telephone number. As AMSA points out, what may constitute an "appropriate" response, and even a prompt response, is dependent upon the facts of each situation. We do not believe explicit regulation is warranted. We believe shippers are knowledgeable enough, and should be responsible enough, to inquire with better business bureaus and us if they are dissatisfied with a mover's complaint handling. Better business bureaus also monitor the number of and types of complaints businesses receive.

Section 375.211 Must I Have an Arbitration Program?

A majority of household goods complaints we receive involve loss and damage claims. The 24 individual shippers who submitted docket comments generally complain about the handling of their loss and damage claims rather than commenting directly about any particular aspect of the proposed rule or solutions to correct such problems. The ICCTA imposes an arbitration requirement for the handling of most loss and damage claims against interstate movers. See 49 U.S.C. 14708. We proposed to amend the former "information for shippers" section of the regulations, formerly 49 CFR 375.2 (proposed Sec. 375.213), to replace the required summary of the carrier's dispute settlement program with a summary of its arbitration procedures and results.

As we discussed in the NPRM, Congress established the arbitration system in the ICCTA to afford consumers a forum for resolving loss and damage claims arising from transportation of household goods and to replace the informal dispute resolution functions previously handed by the ICC. The ICC conducted the informal dispute resolution functions under its general authority to regulate movers, but did not have a specific statutory requirement to perform that function. The Congress wanted "private, commercial disputes to be resolved the way all other commercial disputes are resolved--by the parties." See H.R. Rep. No. 104-311, at 87-88 (1995). See also pages 117 and 121. The MCSIA expanded the availability of arbitration by requiring that carriers provide arbitration, upon shipper request, for claims of up to $5,000 (as opposed to the $1,000 limit in the ICCTA). The GAO report also studied the roles of consumers in preventing and resolving disputes.

NACAA supports having movers maintain an arbitration program for loss and damage claims.

The Consumers Union recommends we require each mover give its arbitration information at the time an estimate is made rather than before executing an order for service.

The OCC believes arbitration should be expanded to include a format for alternative dispute resolution. Arbitration alone limits available dispute resolution means, and inasmuch as alternative dispute resolution enjoys widespread recognition, it would seem illogical to omit it.

The AGCT requests FMCSA require the mover to provide a fair and prompt process that is paid for by the mover. By requiring the mover to bear the cost of the arbitration, the mover has an incentive to resolve claims and arbitration proceedings in a timely manner.

The 25AG suggest modifying proposed Sec. 375.211(a)(2) to include a paragraph (iv) to require conspicuous disclosure of the right to the information contained in Sec. 375.211(a)(3). They believe that Sec. 375.211(a)(2) and (b) are inadequate as disclosure requirements because they provide no guidance as to either the timing or manner of disclosure.

The 25AG also believe consumers need to know of their right to forego arbitration and pursue court action under 49 U.S.C. 14704. They claim that many movers refuse to participate in their own program or do so in a dilatory fashion. They recommend that we require arbitration be provided at a reasonable cost and at a reasonable location, without undue delay before a neutral independent third party. The arbitrator should be empowered to grant whatever relief would be available in court under law or in equity.

In AMSA's view, a requirement that all household goods carriers file annual arbitration reports would likely not be useful to consumers, itself, and the moving industry. AMSA disagrees that such reports would assist us in meeting our statutory responsibility to report to Congress regarding arbitration, and in providing individual consumers with relevant claims information.

Details regarding arbitration and the relative success or failure of the single program that represents virtually all movers are readily available from AMSA, it asserts. To assist us in meeting our statutory reporting requirements, AMSA stated that it sent reports to FHWA containing the results of its arbitration program, both in advance of the June 1997 due date of the FHWA report to Congress and after June 1997.

AMSA believes that the information contained in the periodic AMSA reports is sufficient. It believes we can use its reports to monitor the moving industry under 49 U.S.C. 14708(g). From a consumer standpoint, AMSA is not convinced that the requested claims handling information would provide consumers with meaningful claims data. Furthermore, it also is not convinced that individual consumers are interested in claims data when it comes to their selection of a mover. Consumers are more interested, AMSA believes, in whether the mover is properly licensed, has insurance, has a good professional reputation, and complies with the regulations. AMSA reported the industry has a claims frequency ratio of roughly 21 percent, i.e., only one in every five shipments results in a claim. AMSA interprets this to mean that the proposed report would have no relevance to almost 80 percent of the consumer shippers whose shipments do not sustain loss or damage. It asserts that the incidence of arbitration is even less frequent. AMSA's experience is that less than one percent of all claims result in arbitration; thus more than 99 percent of the shipments transported will not become involved in the arbitration process.

From a technical standpoint, AMSA believes the proposed report only requires the reporting of the total number of shipments transported and the number of claims less than and over the statutory maximum for mandatory arbitration. It believes the meaning of our ``total shipments'' (all household goods shipments; only COD shipments, excluding civilian government, military and national accounts) is unclear, as is the "number of claims" (claims filed; claims paid, and so on). AMSA presumes that it would be left to consumers to try to calculate a claims frequency ratio from the data provided and, if they get that far, to compare their particular mover's frequency with that of other movers or with industry average data. Complicating this situation is the fact that some carriers encourage the use of arbitration, while others do not. Therefore, individual carrier data may be entirely misleading, e.g., a high number of arbitration cases could be construed to mean the carrier has an unacceptable claims experience when precisely the opposite may be true since the number of arbitrations may bear no relation to the number of claims.

In addition, AMSA asserts that the language of the proposal makes it clear that FMCSA will be required to process and maintain over 2,000 carrier annual [[Page 35069]] reports in order to respond to consumer requests for information. Also, FMCSA would be required to allocate resources to answer consumer questions regarding the reports and compile aggregate statistics to be in a position to answer consumer questions regarding the importance and meaning of a given carrier's data. Consumers will be unable to make informed decisions regarding report data unless they know how specific carrier data compares to industry average data. All of this assumes that we have the necessary staff to collect, process, and disseminate more than 2,000 such reports each year to even a fraction of the 600,000 individual shippers who may choose to request a copy. Since experience has shown AMSA that considerably less than 1,000 shippers will request arbitration in any year, any benefits that may be derived from this system will be overshadowed by the time, effort, and money expended preparing, filing, copying, and disseminating such reports.

AMSA also comments that paragraph (a)(3) would require that, upon an individual shipper's request for arbitration, the mover must furnish forms and information necessary to initiate an action to resolve a dispute. It believes the requirement that specific forms be furnished will be unduly burdensome.

Section 14703 of the Code, it argues, requires that movers furnish shippers with written information explaining the availability of their dispute settlement programs. One of the benefits of these programs is that the process (at least the AMSA version of the process) is quite informal and easy to use. No forms are required. Instead, shippers need only submit a written request for arbitration by letter or facsimile. AMSA believes requiring the use of specific forms to initiate the procedure will only serve to unduly complicate a program that has been running effectively without such forms for more than two years. Accordingly, it recommends that the words "forms and" should be deleted from paragraph (a)(3).

The AGCT recommends that the cost of arbitration be borne entirely by movers to provide an incentive to resolve claims promptly.

AMSA believes that Congress has addressed this point. Shippers may not be assessed more than one-half the cost of arbitration and arbitrators' decisions may include cost assessments. See 49 U.S.C. 14708(b)(5). It argues that Congress no doubt viewed the payment by shippers of a portion of the expense of arbitration as a means to discourage the presentation of frivolous claims. Of course, movers may elect to bear a greater portion or all of these costs if they so elect.

The OCC recommends that arbitration be expanded to include "Alternative Dispute Resolution," arguing that arbitration alone is limiting. AMSA believes that Congress has also addressed this point. The applicable statute, 49 U.S.C. 14708, refers to "arbitration" as a means of settling disputes between movers and shippers. That aside, "Alternative Dispute Resolution" is a generic term that refers to a wide array of practices which are intended to resolve disagreements at lower cost than would be incurred in litigation and includes arbitration.

The 25AG recommend that the proposed arbitration section should be strengthened in several respects by the addition of requirements for prominent disclosure of consumers' rights at the outset of the transportation transaction and expeditious processing of requests for arbitration by impartial third parties.

AMSA is not opposed to an explicit recitation of mover responsibilities related to disclosure and other aspects of statutorily mandated arbitration programs. However, it argues that the predicate for the 25AG's argument is that if the regulations are not explicit, "* * * many movers will not participate in arbitration in good faith otherwise." Such a proposition is obviously inconsistent, it states.

If a mover is intent on violating the requirements of law, AMSA argues, explicit regulatory language will not act as a deterrent. This is a matter of enforcement. To the extent the 25AG have, as they assert, encountered movers that do not participate in an arbitration program, AMSA argues that those movers should be reported to FMCSA for enforcement action.

Moreover, AMSA notes that the proposed regulation contains no less than 14 explicit directives that will govern all aspects of mover arbitration programs. One of those requirements states that: "You must produce and distribute a concise, easy-to-read, accurate summary of your arbitration program, including the items in this section." Sec. 375.211(b). In addition, paragraph (a)(2) requires that "Before the household goods are tendered for transport, your arbitration program must provide notice to the individual shipper of the availability of neutral arbitration. * * *" Thus AMSA believes these and other provisions of the proposed regulations clearly address the 25AG's concerns.

Response to Comments

We agree with AMSA. We believe the annual arbitration report (proposed Sec. Sec. 375.901-375.907) will not be a benefit to shippers, the industry, or FMCSA. We also believe we should not retain the ICC's annual performance report elements for a combined annual report. Consumers will have to make informed decisions regarding movers' products and services without past performance reports that have been, and most likely would continue to be, inaccurate. FMCSA does not have the necessary staff to collect, process, verify, and disseminate such reports each year to all individual shippers, consumer advocacy organizations, and attorneys general who may choose to request a copy.

AMSA was correct that FMCSA would be required to process and maintain over 4,000 carrier annual reports in order to respond to consumer requests for information. (The NPRM used the figure 2,000 for the number of motor carriers, but we are using 4,000 in this Interim Final Rule, based on the FMCSA Motor Carrier Management Information System and Insurance Division's best estimate in March 2002 of the number of active household goods carriers authorized to operate in interstate commerce.) Also, the agency would have to allocate resources to answer consumer questions regarding the reports and compile aggregate statistics if we were to be in a position to answer consumer questions regarding the importance and meaning of a given carrier's data. Consumers would be unable to make informed decisions regarding report data unless they know how specific carrier data compares to industry average data. All of this would assume that FMCSA would have the necessary staff to collect, process, and disseminate more than 4,000 such reports each year to even a fraction of the 600,000 individual shippers who may choose to request a copy. Any benefits that may be derived from a reporting system would be outweighed by the time, effort, and money expended preparing, filing, copying, and disseminating such reports. FMCSA cannot justify the information collection costs in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). Therefore, FMCSA is withdrawing the proposal to require the filing of an annual arbitration report.

We congratulate AMSA for not needing forms to initiate its arbitration programs. As AMSA points out, however, it does not represent all interstate movers. FMCSA does not want to preclude a mover who finds it [[Page 35070]] necessary to have a form from requiring that form and we would require the mover provide it upon the individual shipper's request.

We note, in response to comments by NACAA and OCC, that consumers have numerous remedies available to them before entering the arbitration process or if carriers fail to establish and maintain arbitration processes. As the 25AG note, consumers, NACAA, and the OCC should know of the consumer's right to decline from participating in arbitration, and, instead, pursue court action under 49 U.S.C. 14704. We believe it is not necessary to inform movers of this right in part 375 since AMSA has shown through its comments that its members have a good understanding of the statute. FMCSA has added this information to the YRRWYM appendix, though, to be provided to shippers for their benefit.

NACAA should not be surprised about our position regarding our limited role in dispute resolution. The Congress, as the NPRM noted, provided a clear understandable directive against allocating scarce resources to resolve private disputes and indicated that our primary role was to oversee the regulations. The GAO report also noted this Congressional directive.

We are not adopting the NACAA recommendation that the regulations require that other Federal, State, and local agencies retain jurisdiction over movers' acts and practices. This can be accomplished only by statute, not through these regulations.

Section 375.213 What Information Must I Provide to a Prospective Individual Shipper?

NACAA supports requiring movers to provide all prospective customers with the YRRWYM booklet. NACAA further believes movers should be required to insert their prior two years arbitration reports in YRRWYM to enable consumers to examine the claims history of a prospective mover. It believes the expense to movers will be negligible. It also recommends that all movers post annual arbitration reports on the Internet with references to their web site in YRRWYM and that FMCSA audit these arbitration reports.

The AGCT suggests requiring movers to provide a prospective shipper with a copy of a blank uniform bill of lading used by the mover before loading the shipment, to give the shipper an opportunity to review and ask meaningful questions about the terms listed on the form. It also would require movers to provide copies of their tariffs to properly inform the consumer of possible charges that may be levied by the mover.

The Consumers Union recommends that the information required by this section be provided at the time an estimate is given rather than before an order for service is executed.

AMSA believes the AGCT's recommendation that movers be required to provide a blank bill of lading and their tariffs to prospective shippers is unrealistic and burdensome. AMSA alleges that industry data indicates that roughly three shipment surveys are performed for each shipment booked. AMSA did not provide the data for the docket. AMSA believes requiring the distribution of bills of lading and tariffs containing several hundred pages of technical matter to prospective shippers would burden shippers and movers alike. In any event, Congress has addressed this issue by requiring in 49 U.S.C. 13702(c)(1) that movers provide notice of the availability of their tariffs for shippers who would elect to examine tariff provisions related to their move.

Consumers Union strongly urges FMCSA to redraft YRRWYM into even plainer language. As one example it states that subpart K should be at the front of the pamphlet.

AMSA disagrees with the Consumers Union. The proposed YRRWYM publication is a substantial revision of the former ICC publication. AMSA believes it significantly clarifies many points that are important to consumers in language that represents a major improvement over the former ICC language.

Response to Comments

FMCSA will adopt the specific recommendation provided by the Consumers Union by moving Subpart K to the front of the pamphlet.

In the interim final rule, FMCSA has added a paragraph (a)(3) requiring movers to provide notice of the availability of the applicable sections of their tariffs for shippers' examination or have copies sent to them upon request. FMCSA believes this addition provides shippers with adequate information to assist themselves in asking informed questions.

To require significant additional consumer information be provided by carriers, as recommended by some commenters (arbitration reports, blank bills of lading, complete copies of tariff) at the time an estimate is given, would add significant burdens on carriers beyond anything proposed in the NPRM. Since shippers frequently obtain more than one estimate, the additional burden on carriers could be multiplied several times. Also, because most tariffs are voluminous documents, FMCSA believes that it is beneficial to both shippers and carriers to limit the additional requirements in paragraph (a)(3) to the applicable sections of the tariff.

Section 375.215 How Must I Collect Charges?

The OCC recommends the option of pre-payment be made available at the shipper's election, especially for weight-based shipments. The mover would insure an accurate weight before shipping to protect its weight-based revenues. The shipper, in turn, would have more confidence in the weight and pre-payment of freight charges would eliminate unexpected destination or other charges.

AMSA questions whether OCC's recommendation would serve the interests of shippers. Section 375.401(a)(1) of the proposed regulations provides a mechanism for guaranteed charges. Shippers have the option of electing to tender their goods under a binding estimate and, in fact, many exercise that option. AMSA states that its data indicates that 47.2 percent of all COD consumer shipments were transported under binding estimate tariff provisions in 1996. (AMSA did not provide this data for the docket.) AMSA believes that authorizing payment of transportation charges in advance of the actual delivery of goods could provide unscrupulous movers with the opportunity to deceive shippers. As a case in point, it notes the experience of Ms. Josephine Meany, whose complaint is included in the NACAA comments.

Unfortunately, Ms. Meany paid thousands of dollars to an unlicensed mover for what amounted to essentially no service. Her son's goods were not transported to the intended destination and she was forced to hire and pay a second mover to transport the goods. AMSA urges that we reject the OCC recommendation. Response to Comments

FMCSA agrees with AMSA. The shipper may not know at the time he or she contracts for transportation whether circumstances related to the move may cause additional freight charges beyond those agreed upon at origin. The mover should not be held accountable for poor planning on the shipper's part. FMCSA, however, has added regulatory text to the interim final rule that specifies that all rates and charges for the transportation and services rendered must be in accordance with the mover's applicable tariff in effect, including the method of payment.

[[Page 35071]]

Section 375.217 How Must I Collect Charges Upon Delivery?

NACAA requests a modification stating that the mover "may specify two forms of payment acceptable, only one being cash or a cash equivalent."

The AGCT suggested FMCSA establish nondiscriminatory rules governing cash-on-delivery (COD) service and collection of COD funds rather than allowing movers to develop their own procedures in the tariff. It suggested modifying paragraph (b) to require movers to relinquish possession of a shipment upon payment by the consumer of an amount substantially less than the binding or non-binding estimate. This provides the consumer with some leverage over the mover in the event of a dispute. The mover would have to pursue a claim against the consumer rather than requiring full payment by the consumer and forcing the consumer to pursue the mover. Such a burden shift provides greater protection for the consumer.

AMSA comments that the NACAA proposal, if adopted, would limit the options available to movers and their customers to effect the payment of transportation charges. The generally applicable options for payment are cash, certified check, traveler's check, or bank check (drawn by a bank and signed by a bank officer). See HGB Tariff 400-M, Item 29. In addition, the existing credit regulations in Sec. 377.215, the household goods regulations in Sec. 375.19, and proposed Sec. 375.221, authorize the credit card option for payment and provide specific requirements related to the use of credit. Taken as a whole, AMSA believes these provisions adequately address the concerns expressed by NACAA.

AMSA believes the AGCT proposal for adopting nondiscriminatory rules for the collection of transportation charges in this proceeding is addressed in the preceding paragraph. Additionally, AMSA asserts that the AGCT has apparently neglected to consider the discussion at page 27128 of the NPRM that outlines the FHWA response to the moving industry's request for amendment of the existing credit regulations. AMSA states "obviously, household goods movers are not at liberty to fashion payment and/or extension of credit tariff provisions that would violate the existing or proposed FHWA regulations."

The 25AG argue that the form of payment issue is directly related to consumer overcharge complaints. The 25AG therefore propose that Sec. 375.221 require that, if a mover agrees to accept a credit card at the beginning of the shipment transaction, the credit card should be accepted at delivery. They also propose a related amendment to Sec. 375.503(b)(9) dealing with bill of lading contents, which would require disclosure of the form of payment required upon delivery if it is different from that agreed to at the outset of the transaction.

In a similar vein, the AGCT is opposed to permitting movers to treat the reversal of a credit card transaction as an involuntary extension of credit. It argues that consumers should be authorized to treat a mover's failure to pay a claim for delay or loss/damage as an "involuntary extension of the shipper's credit to the mover," thus subjecting the mover to the same financial penalties as the consumer bears under the credit regulations at Sec. 375.807.

AMSA asserts that each of these proposals is fraught with the potential for endless controversies between movers and shippers. More importantly, it believes, they reflect a misunderstanding of Congressional intent. Section 13707 provides that a motor carrier "* * * shall give up possession at the destination of the property transported by it only when payment for the transportation or service is made." Since the extension of credit by movers is permissive, it would be foolhardy to adopt regulations that would attempt to address these issues since they cannot adequately anticipate the many circumstances that occur when drivers and consumers settle accounts at the time of delivery. AMSA argues that accepting a credit card at origin, for example, provides the consumer with sufficient time to seek alternative means of payment should the charge amount be declined by the card issuer. If a driver delivers on weekends or after hours and the mover's credit/collection department is closed, the driver cannot call in the charges and the mover will not be in a position to make certain that the card issuer will accept the charge. Dealing with a credit card at delivery may also cause unnecessary delays. If the charge is declined, the consumer must seek alternative means of payment that could unnecessarily delay delivery. In the meantime, the mover must wait, which could result in additional charges, vehicle detention, or storage-in-transit. These proposals could have the unfortunate result of forcing movers to limit the payment alternatives that are presently offered to shippers.

AMSA strongly opposes the AGCT proposal that movers should be required to relinquish possession of a shipment upon payment of an amount "substantially less than the binding or non-binding estimate" in order to provide consumers with "leverage" in the event a dispute arises. AMSA believes it obviously ignores the requirements of 49 U.S.C. 13707 and the important requirement contained in 49 U.S.C. 13702(a)(2) that:

The mover may not charge or receive a different compensation for the transportation or service than the rate specified in the tariff, whether by returning a part of that rate to a person, giving a person a privilege, allowing the use of a facility that affects the value of that transportation or service, or another device.

AMSA believes the 25AG have approached this and a number of other issues as if the regulations to be promulgated should be treated in a vacuum with no consideration given to underlying statutory directives or restraints. They also ignore the fact that movers have a lien on the goods they transport and may refuse to deliver until their charges are paid or guaranteed. Illinois Steel Co. v. Baltimore & Ohio Railroad Co., 320 U.S. 508 (1944). Response to Comments

FMCSA appreciates the comments received regarding this section and has incorporated the recommendation that we require the mover to specify the form of payment when the mover prepares the estimate. The mover and its agents must honor the form of payment at delivery, except when a shipper agrees to a change. The mover must include the same information on the order for service and bill of lading. It is important to state in the rule that the carrier must accept the method of payment originally agreed in order to avoid unnecessarily burdening the shipper, who may not be prepared to make an alternative form of payment. For example, in a case where a cashier's check is the agreed payment and the carrier demands cash on a Saturday evening when the bank is closed, a serious problem would be created for the shipper, most likely resulting in the driver leaving without unloading the shipment.

FMCSA has also added another requirement to the interim final rule. If the mover or its agent agrees to accept a charge or credit card payment as the method to pay for receipt of goods at delivery, then the mover must arrange for delivery during the time the mover's credit/ collection department is open to seek approval of payment by card issuer, unless the vehicle is equipped to process credit card payments.

[[Page 35072]]

Section 375.221 May I Use a Charge or Credit Card Plan for Payments?

The OCC believes the term "cashier's check" should not supplant the term "money order." A loss of an open money order that does not denote a payee can result in a stop payment of the same. No stop payment is available for the loss of cash. A shipper may hesitate to carry a large sum of cash and may want to go to a convenience store and convert the cash into consecutive money orders. AMSA agrees that both terms should be used.

The 25AG believe the regulations should mandate that the mover's payment policy be the same at all stages of the transaction. If charge or credit cards are permitted at the order for service, the cards should be allowed at the time of delivery. They suggest that carriers should inform consumers of their payment policies.

The AGCT suggests the regulations should not allow carriers to treat reversal of credit card transactions as an involuntary extension of credit. This is not consumer protection, it believes. If carriers suffer financial loss due to actions of the consumer, carriers should be required to rely on the same avenues of dispute resolution that are available to the shipper. It further recommends that FMCSA should allow a consumer to treat a carrier's failure to pay a claim for untimely shipments or damage or loss as an involuntary extension of the shipper's credit to the carrier, subjecting the carrier to the same financial penalties as the consumer listed in Sec. 375.807. Response to Comments

FMCSA has added money orders as a form of acceptable payment in the interim final rule. If a mover accepts money orders as an acceptable form of payment, the mover must include the provision in its tariff.

FMCSA has also added language to Sec. 375.221(a) to make it clear that a carrier is bound by the payment provisions in its tariff from the time it gives an estimate until completion of any transaction that results from that estimate, unless otherwise agreed with a shipper under Sec. 375.217(a).

FMCSA has retained the rule language that allows a carrier to treat a reversal of a credit card transaction as an involuntary extension of credit because the use of a credit card is considered an alternative to payment in cash, certified check, money order, or cashiers check, which are payment methods that cannot be reversed.

However, FMCSA has not added a provision allowing a consumer to treat an unpaid claim against a carrier as an involuntary extension of credit. Adding such a provision would be beyond the scope of the NPRM. Resolution of a claim that may be in dispute is traditionally resolved in a State court.

Section 375.301 What Service Options May I Provide?

The AGCT recommends that the regulations should require carriers to have liability insurance covering casualty losses resulting from the actions of the carrier.

AMSA comments that the rationale underlying the AGCT recommendation is not clear. AMSA states that carriers are liable for cargo loss and damage under 49 U.S.C. 14706 and must provide evidence of insurance pursuant to 49 U.S.C. 13906(a)(3). As a general proposition, casualty insurance coverage contemplates personal injury losses, a subject that is not related to this proceeding. In any event, carriers are also required by statute to maintain liability insurance in amounts prescribed by the Secretary covering bodily injury, etc. See 49 U.S.C. 13906(a)(1).

Response to Comments

FMCSA agrees with AMSA. The AGCT's recommendation appears to contemplate requiring personal injury loss coverage in these regulations. This is not within the scope of this rulemaking and is already required by statute and regulation.

Section 375.303 If I Sell Liability Insurance Coverage, What Must I Do?

The 25AG recommend requiring clear and conspicuous disclosure to consumers of all limitations on liability coverage and any inventory requirements needed for valuation of their shipments, as well as requiring disclosure, at the time of delivery, of whether any agents were used during the move and whether the consumer's goods were stored during the shipment. They further recommend that upon the consumer's request, carriers should provide numerous pieces of information. Such information would include the agents or subcontractors used during the move, liability coverage for that move, identification of all storage facilities used, and liability coverage attendant to that storage. They also suggest development of regulations that will sharply limit the use of disreputable tactics by some carriers to avoid legitimate liability coverage obligations.

The AGCT suggested the regulations require carriers to procure insurance on behalf of the shipper. If a carrier sells or offers to sell liability insurance to the shipper, the carrier must comply with any applicable licensing requirements of a State insurance regulatory body. If the carrier sells or procures insurance on behalf of the consumer, the consumer must be the named insured on the policy and the carrier must provide the consumer with a copy of the policy and a certificate of insurance indicating the period of coverage.

AMSA comments that the language proposed in Sec. 375.303(a)(1) and (2) is unclear in establishing the conditions under which carriers may sell or procure insurance coverage for cargo loss or damage. As written, paragraph (a) provides that insurance may be procured only under the two conditions set out in paragraphs (a)(1) and (2). However, those paragraphs are not connected with the conjunctive "and" or the disjunctive "or." Moreover, AMSA believes the language in paragraph (a)(2) is confusing. It describes a situation where the shipper fails to declare a valuation of $1.25 per pound and pays or agrees to pay the carrier for assuming liability equal to "the declared value." This condition is at odds with itself.

AMSA points out that under the outstanding Surface Transportation Board released rates order (RRO), the failure to declare a lump sum value or valuation of $1.25 per pound will result in the shipment being deemed to have been released to a declared lump sum value of $1.25 per pound times the weight of the shipment. See 9 I.C.C. 2d 523.

In any event, AMSA believes paragraph (a)(2) can be eliminated as unnecessary. Historically, carriers were authorized to sell or procure excess insurance only when the shipment was released to a value not exceeding 60 cents per pound. Although current Sec. 375.11(a) contains the additional condition that "the shipper does not declare a valuation of $1.25 or more," it is clear that the latter condition is superfluous. Although stated as two conditions, they are actually the same. If a shipper releases a shipment at 60 cents per pound, he could not declare a valuation at $1.25 per pound or more. Conversely, if he declares a valuation at $1.25 or more, he could not release the shipment at 60 cents per pound. This mutual exclusivity is made clear in the RRO giving rise to this language. See RRO No. MC-505, Released Rates of Motor Common Carriers of Household Goods, June 7, 1966, and Released Rates Decision No. MC-999, 9 ICC. 2d 523 (1993). AMSA therefore recommends that paragraph (a)(2) be deleted.

[[Page 35073]]

AMSA further argues that paragraphs (b) and (c) are duplicative to some extent. Current Sec. 375.11(a) is limited to insurance for loss and damage just as appears in proposed paragraph (c). It therefore recommends that paragraph (b) be deleted, paragraph (c) be redesignated as (b), and the remaining paragraphs be redesignated accordingly.

With respect to the 25AG recommendation that more explicit language should be employed to preclude carrier avoidance of payment of loss or damage claims, AMSA believes that proposed Sec. 375.303 is not intended to deal with this issue. Carriers, it asserts, are required to process claims for loss or damage in accordance with the regulations contained in 49 CFR part 370. If, as the 25AG argue, they encounter situations in which they believe carriers have violated part 370, a complaint can be made to FMCSA.

AMSA believes that the AGCT recommendation that carriers be required to procure insurance on behalf of shippers and, if appropriate, comply with any applicable State licensing requirements, confuses the carrier's role in procuring insurance. Carriers do not sell insurance, but may procure insurance on behalf of a shipper from an insurance entity that is authorized to issue a policy under applicable State law. Response to Comments

In response to the 25AG, we believe that the carrier, its employees, and agents are essentially one and the same, in that the carrier is responsible for the acts of both the employees and agents. Therefore, the authorized carrier named in the bill of lading would be primarily responsible for any activity involving the move, including the selling of insurance and providing the shipper with a policy from the insurance carrier. If the authorized carrier used an owner-operator under lease agreement, the carrier would be fully liable for the move.

The Surface Transportation Board's revised RRO states that unless the shipper expressly releases the shipment to a value not exceeding 60 cents per pound per article, the carrier's maximum liability for loss and damage shall be either the lump sum value declared by the shipper or an amount equal to $4.00 times the actual weight of the shipment, whichever is greater. Additionally, the shipper may purchase additional liability insurance coverage from the carrier. The revised RRO provides that the $4.00 rate may be increased annually by the carrier based on the Department of Commerce's Cost of Living Adjustment.

As we noted in our response to Sec. 375.201, we have added regulatory text to Sec. 375.201 concerning the full liability to which the carrier may be subject if it fails to issue a copy of the insurance policy or other appropriate evidence of insurance. Also, we have adopted AMSA's recommendation to delete proposed paragraphs (a)(2) and (b) in Sec. 375.303.

Section 375.401 Must I Estimate Charges?

NACAA supports estimates being given in writing. The AGCT suggests changing "binding estimate" everywhere in the proposed regulations to "guaranteed delivery price." It believes that the term "estimate" implies approximation rather than a fixed price. It further suggests changing paragraph (b) to reflect the fact that the final charges will be based on the actual weight "or volume" because this is consistent with estimates to be given based on weight or volume.

Starving Students has a deep concern about requiring written estimates. It states that a written estimate requires a personal visit to the shipper's residence, which is costly. It estimates that requiring a prior written estimate would add $250 or more to the cost of the move and believes adding such costs would discourage many shippers from hiring a mover for small moves.

Starving Students also believes that there is not enough advance time to perform a visual inspection for a written estimate. Shippers often schedule moves with very short notice, which does not permit a prior visual inspection to be performed. The majority of Starving Students' bookings are booked within seven days of the scheduled move.

Starving Students also notes that numerous moves occur from locations where movers do not have a local office in the vicinity. A prior visual inspection will be impossible in these cases. The consumer would have to select a mover not based on price or service, but on the proximity of a field estimator. Small movers offer low cost, no frills alternatives to the large van lines. It argues that excluding small movers, like Starving Students, from interstate moves based on a lack of a national network of estimators is an unfair restraint of trade. In summary, Starving Students believes that shippers and carriers want the same thing, i.e., for the consumer to pay, and the carrier to receive, a reasonable price for the transportation of household goods across state lines.

AMSA believes this section provides that individual shippers must be given a written estimate before an order for service is executed and commends FMCSA for including these provisions in the proposed regulations. Providing as many written estimates as possible will certainly serve to reduce shipper complaints and misunderstandings over final charges. However, AMSA believes there are certain aspects of this requirement that should be considered further.

AMSA believes that most moves are booked at least two weeks in advance with the majority booked a month or more in advance. However, situations arise when moves are booked on much less than two weeks' notice or sudden last-minute changes make the preparation of a written estimate in advance of the move impossible. Situations brought about by unusual circumstances such as unexpected employment changes, domestic disputes, evictions, foreclosures, or emergency evacuations do not always permit much in the way of advance notice. AMSA believes that requiring a written estimate, which is, in turn, subject to the 110 percent rule, will cause some movers to refuse short notice shipments to avoid being held to the 110 percent payment provision because there is no opportunity to perform a visual inspection. Shippers will then be left with fewer options to accommodate their requirements, e.g., move on their own or use unlicensed movers who ignore FMCSA regulations.

AMSA recommends that an alternative procedure be adopted for short notice shipments. Shippers would be given the opportunity to waive the requirement for a written estimate (or to waive the 110 percent rule) in short notice situations. The shipper will nonetheless receive service from a licensed professional mover subject to all of the other protections provided by the proposed regulations, it believes. It suggests that paragraph (a)(2) should be amended by revising paragraph (a) and adding a new paragraph (e), as follows:

(a) Before you execute an order for service for a shipment of household goods for an individual shipper, you must estimate the total charges in writing, except as provided in paragraph (e) below. The written estimate must be in one of the following two types: * * * * *

(e) Waiver--Signatures Required. Subject to the shipper's agreement to waive the requirement for a written binding or non- binding estimate, pursuant to the provisions of Sec. 375.407, you may provide a price quotation which shall be your reasonably accurate estimate of the approximate costs the individual shipper can expect to pay. The [[Page 35074]] shipper's agreement to waive the written estimate requirement must also include collection or credit arrangements acceptable to the shipper for payment of the total charges. The waiver agreement must be in writing and signed by the shipper before the shipment is loaded, and a copy must be retained as an addendum to the bill of lading.

AMSA believes for situations other than short-notice shipments, the provisions of Sec. 375.407 that have been designed to deal with "hostage shipments" are a welcome addition to the proposed regulations. AMSA routinely receives complaints from desperate shippers whose shipments are being held by unscrupulous movers to be exchanged for the payment of charges in excess of the 110 percent maximum. If the government enforces these provisions, AMSA asserts, many complaints of this nature will be eliminated.

In response to AGCT's suggestion that the term "guaranteed delivery price" be used in this section and throughout in lieu of "binding estimate," AMSA notes the term "binding estimate" is rooted in the underlying statute, 49 U.S.C. 13704(a)(1). Response to Comments

We did not require that a personal visit had to be made to execute the written estimate when we proposed the section regarding written estimates. We believe a written estimate could be executed after any telephone interview with a prospective shipper. Whatever the estimator estimates the total to be and communicates it to the shipper, the estimator would follow it up in writing.

We believe that the requirement to provide a written non-binding estimate, subject to the 110 percent rule, would cause some movers to make more accurate estimates for short notice shipments. This is because the incentive to add charges for additional services should be less when a carrier would not have to be paid for at least 30 days after delivery, and when the additional charges could be disputed by the shipper. This should provide shippers with a more accurate estimate to compare to other movers. Shippers would then be in a better position to compare and pay a more realistic amount than what some movers have allowed their agents to estimate.

In the interim final rule, we have added a requirement that the mover provide each shipper with an explanation in writing of the formula used when an estimate is given in terms of volume and then converted to weight. We have added a requirement that the mover specify the final charges will be based on actual weight and services, subject to the 110 percent rule at delivery.

We have also added a requirement that the mover must determine charges for any accessorial services such as elevators, long carries, etc., before preparing the order for service and the bill of lading. If the mover fails to ask the shipper about such charges and fails to determine such charges before preparing the order for service and the bill of lading, the mover must deliver the goods and bill the shipper after 30 days for the additional charges.

In addition the interim final rule contains a new paragraph (b) specifying that, at the time the estimate is presented, the mover must specify the form of payment that it will accept at delivery.

To clarify the role of household goods brokers in the estimating process, FMCSA has added a new Sec. 375.409, discussed below.

Section 375.403 How Must I Provide a Binding Estimate?

The AGCT suggests requiring all carriers include a binding estimate provision in their tariffs and to provide a binding estimate if requested by the consumer. It suggests the rules should not allow carriers to unilaterally refuse to honor the binding estimate and carriers should be required to provide the service as originally agreed on. It recommends that carriers be permitted to negotiate with the consumer for any additional services requested at the time of pickup, either as a binding or non-binding estimate, and that the rules should affirmatively require carriers to inquire of site conditions at the destination or other matters which may result in the imposition of additional charges at the delivery point. If the carrier fails to ask whether there are any long flights of stairs, AGCT states, the carrier should "not be permitted to charge for any additional services at the destination which may have reasonably been anticipated and not listed as an additional charge in its estimate. This is reasonable, since the carrier has experience in this area, and knows such services often require additional charges."

The AGCT believes carriers should be required to relinquish possession and bill the consumer for such additional services rather than demand immediate payment at the time of delivery.

AMSA comments about paragraph (a)(5), which provides three options for the carrier if the shipper tenders additional household goods or requests additional services that were not included in the original binding estimate. While the first three options will cover most situations, AMSA writes, other circumstances may result in a failure between the mover and the shipper to agree to a price for the additional services. Therefore, AMSA believes it is appropriate to include a fourth option to address this situation as follows:

(iv) If an agreement cannot be reached as to the price and/or service requirements for the additional goods or services, you are not required to service the shipment.

Paragraph (a)(7) provides that the carrier may require full payment for additional services requested by the shipper or required to be performed at destination (such as stair carry, long carry, storage, etc.). AMSA notes that during a typical moving scenario, the shipper may also request additional services while a shipment is en-route, such as a diversion with an extra pick-up or delivery to a friend or relative at an intermediate point. AMSA believes that the proposed language should be clarified to accommodate such requests as follows:

(7) If the individual shipper adds or requires additional services en-route or at destination to complete the transportation, and the services fail to appear on your estimate, you may require full payment at the time of delivery for such added services.

AMSA states that AGCT's proposal that carriers be required to include a binding estimate provision in their tariffs conflicts with the permissive authority conferred by 49 U.S.C. 13704(a) (1) and 14104(b)(l), which provide that carriers "may" provide binding estimates of charges.

AMSA believes that the AGCT's suggestions reflect a failure to understand the operational conditions carriers often confront in order to properly service shipments. During a typical move, additional services may be required to complete the move or the shipper may request additional services while the shipment is en-route or before delivery. Since the transportation of household goods is a labor intensive process, the failure of the shipper to properly inform the carrier of the precise requirements necessary to properly remove the contents of a residence, secure them in an over-the-road vehicle and effect delivery at the new residence, can result in additional services which, in turn, require the assessment of additional charges.

AMSA asserts that owner-operators perform the majority of the labor services that are required to load, transport, and unload household goods shipments. These individuals cannot, nor should they be expected to, perform their services without compensation or [[Page 35075]] for compensation that is less than is necessary to attract their services. AMSA believes that it should be apparent that the fact that the costs and related charges incurred to perform a move may not agree with an estimate of charges is not the exclusive result of carrier misfeasance or deception as certain arguments suggest.

For example, AMSA notes, NACAA proposes that, by paying an additional 10 percent, the shipper is not admitting the legitimacy of the expense or waiving any rights to bring a private action under State or local law. NACAA also proposes that the regulations state that it is an unfair, misleading or deceptive act or practice for a mover to fail to deliver the goods after an offer to pay 110 percent is made.

In response to the AGCT's recommendation that consumers be allowed to reduce the amount they must pay for a carrier to relinquish a COD shipment to "substantially" less than 100 percent of the estimate, and that they be allowed to offset any damages from the balance of any remaining charges owed to the carrier, AMSA states that certain AMSA testimony in 1998 before the U.S. House of Representatives Subcommittee on Surface Transportation of the Committee on Transportation and Infrastructure warrants repeating:

The overwhelming majority of all movers are reputable, regulated businesses. They perform an essential public service by complying with the consumer and other regulations that govern our business and were put in place by the former ICC. * * *

In its evaluation of this situation, and in its consideration of possible legislative solutions, we urge Congress not to lose sight of the fact that the moving industry performs 1.3 million interstate moves each year, the vast majority of which are accomplished without incidence and to the customer's satisfaction. It is the exceptional, out of the norm "horror story" that attracts media attention and portrays the industry in a bad light. No attention is paid to the hundreds of thousands of incident-free moves that take place each year. [footnote omitted] This is somewhat understandable since the media concentrates on the exception rather than the rule in its attempt to alert the public to what it perceives to be potential problems. My industry understands that motivation. In fact, we also firmly believe the public should be encouraged to make certain they are selecting a licensed, reputable mover when they require moving services. My point is, given the existing, somewhat negative climate the moving industry is dealing with, Congress should not react in a manner that will unduly burden the industry by imposing regulatory obstacles that translate into less efficient, more costly service to the public. (Testimony of Joseph M, Harrison, President, AMSA, delivered August 5, 1998.)

Attached to Mr. Harrison's testimony were copies of a small sampling of congratulatory letters AMSA members received from customers expressing their satisfaction with the carrier's service. AMSA noted those letters reflect the high level of service all reputable movers strive to achieve. AMSA also noted no publicity was paid to the customer's laudatory comments.

AMSA comments that in the context of estimates of charges versus actual lawful charges, changes in service requirements usually occur either because the shipper requested the changes or because the mover determined they were necessary to properly service a shipment. AMSA argues that one needs merely to review carrier tariffs to understand the many services carriers must perform that may result in changes in estimates of charges. These include vehicle detention, distance and stair carries, impracticable operations, pickup or delivery on Saturdays, Sundays or Holidays, stop-offs, appliance service, shuttle service, and storage-in-transit. Available industry statistics obtained from the AMSA Continuing Traffic Study for COD shipments transported in 1995 indicate the following:

11.7 percent of COD shipments required either an extra pick-up, an extra delivery, or both;
14.2 percent required long carry service or elevator service;
14.0 percent required stair carries; and
2.8 percent required shuttle service to complete pickup or delivery at inaccessible locations or waiting time to accommodate shippers' schedules when accomplishing delivery.

In the aggregate, 56.8 percent of the COD shipments required these or other additional services either at the shippers' specific request or because such service was required to accomplish delivery.

AMSA also believes it is appropriate to consider the former ICC's analysis of the difficulties associated with estimating. In concluding that 10 percent above estimated charges is the appropriate margin for collection by carriers at delivery, the Commission stated:

In doing so, we recognize that carriers should be permitted some leeway in estimating charges. Calculating approximately the weights of various items of household goods, arriving at an opinion of the total weight of a shipment, and working out the probable costs of accessorial services at origin and destination, all coupled with the element of human error, should not be the bases for establishing the amount beyond which the carrier should be required to extend credit to the shipper. We therefore conclude that a 10 percent margin should be allowed to the carrier in arriving at its reasoned judgment of total charges, and that such a variation will not be an unreasonable burden to the shipper. Practices of Motor Common Carriers of Household Goods, 111 M.C.C. 427, 468 (1970). See also Practices of Motor Common Carriers of Household Goods, 132 M.C.C. 599, 609 (1981).

Response to Comments

FMCSA agrees with the AGCT that, at the time of pickup, movers should inquire of site conditions at the destination or other circumstances which may result in the imposition of additional charges at the delivery point. If the mover fails to ask whether there are any long flights of stairs, for example, the mover would relinquish possession and bill the shipper for such additional services rather than demand immediate payment at the time of delivery. We have added appropriate language to the interim final rule to incorporate these comments.

In addition, FMCSA requires in Sec. 375.403(a)(8) in the interim final rule that if a shipper asks for additional services after the goods are in-transit, the mover must inform the shipper additional money must be paid. If a mover believes additional services are necessary to properly service a shipment after goods are in-transit, the mover must inform the shipper what the additional services are before performing those services. The mover must allow the shipper at least one hour to determine whether he/she wants the additional services performed. If the shipper agrees to pay for the additional services, the mover must execute a written attachment to the bill of lading and have the shipper sign the written attachment. This could be accomplished through faxes between the parties.

If the additional services are not acceptable by the shipper and the shipment is in transit, the carrier should deliver for the amount of the original estimate and bill for any remainder after 30 days.

FMCSA believes it is the carrier's responsibility to ask and determine at origin if the conditions at the destination require additional services (i.e., shuttle, long carry, elevator, stairs, and other accessorial services) to effect delivery, and to advise the shipper of the cost of such additional services, as well as method of payment for the services at the time of delivery. If the shipper refuses to pay for additional services at origin and before loading, the carrier has the option to accept or deny the shipment. See Sec. 375.403(a)(5) in the interim final rule. If the shipper refuses to pay for additional services at the [[Page 35076]] destination when the carrier arrives for delivery, then the carrier can attempt to negotiate different payment terms for the cost of additional services; however, the carrier must deliver the shipment.

We disagree with AMSA that when the individual shipper adds or requires additional services en-route or at destination to complete the transportation, and the services failed to appear on the mover's binding estimate, the mover may require full payment at the time of delivery for such added services. We believe the better approach is to allow the binding estimate to be paid on delivery and the additional charges be billed at least 30 days after delivery. By requiring the mover to determine the appropriate accessorial charges before loading the shipment and permitting the carrier to refuse servicing the shipment before loading, the problem of inaccurate estimates because of surprise charges and services at destination will be minimized. If new charges or services do occur, we will require the individual shipper to pay them, but only after a period when the individual shipper has had the opportunity to establish his or her financial relationships in the new community. Requiring an individual shipper to raise hundreds, if not thousands, of dollars at the destination in a very short time can cause a severe hardship.

Section 375.405 How Must I Provide a Non-Binding Estimate?

NACAA supports movers retaining shipping records, including written cost estimates, for a period of one year. The Consumers Union believes the rules should require that carriers give consumers a maximum price with a non-binding estimate. The Union suggests allowing a carrier to self-determine how it provides the maximum price, whether through a simplified tariff schedule handed to the consumer, or by calculating a maximum price above the estimate. It asserts that information about a maximum price enhances the consumer's ability to compare carriers.

AMSA believes consistency requires expanding proposed paragraph (b) to address the circumstances presented when changes occur in the services required to transport a shipment that moves on a non-binding estimate just as is provided by Sec. 375.403(a)(5), (6), and (7) for binding estimate shipments. AMSA recommends adding the following similarly worded paragraphs to paragraph (b):

(7) If it appears, before loading, that an individual shipper has tendered additional household goods or requires additional services not identified in the non-binding estimate, you are not required to honor that estimate. However, before loading the shipment, you must do one of the following three things:

(i) Reaffirm your initial non-binding estimate;

(ii) Negotiate a revised written non-binding estimate listing the additional household goods or services;

(iii) If an agreement cannot be reached as to price and/or service requirements for the additional goods or services, you are not required to service the shipment.

(8) Once you load a shipment, failure to execute a new non- binding estimate signifies you have reaffirmed the original non- binding estimate. You may not collect at delivery more than 110 percent of the amount of the original non-binding estimate, plus the full payment for additional services that were performed en-route or at destination that do not appear on your non-binding estimate.

AMSA believes the same additions should be made to the Your Rights and Responsibilities When You Move publication, under the explanation of Non-Binding Estimates.

AMSA also believes the words "best estimate" contained in paragraph (b) should be changed to "reasonably accurate estimate" because estimates are just that and accuracy is the goal, not best or worst or some other misnomer.

AMSA believes that the proposed requirement that movers retain records of all non-binding estimates of charges for at least one year from the date the estimate was prepared will be unnecessarily burdensome. As part of the normal course of arranging for a move, shippers are encouraged to obtain multiple estimates before their move. As a result, most movers perform many more estimates than moves. AMSA believes that the intent of paragraph (c) is to ensure that estimates are preserved only for the moves that are actually performed. Thus, AMSA suggests deleting paragraph (c) and adding the 1-year retention requirement paragraph (b)(4), as follows:

(4) You must retain a copy of the non-binding estimate for each move you perform for at least one year from the date you made the estimate as an addendum to the bill of lading.

AMSA also recommends that Sec. 375.403(c) and Sec. 375.407(d) should be amended to incorporate these recommended changes.

AMSA comments that the Consumers Union proposal to require carriers to give consumers a maximum price with a non-binding estimate has been addressed by Congress in 49 U.S.C. 14104(b), which does not mandate binding estimates. According to AMSA, a requirement that carriers furnish maximum prices would be tantamount to a mandated binding estimate and inconsistent with the statute. Response to Comments

FMCSA believes that whether a mover provides an estimate via telephone or a personal visit, the estimate must be in writing. The carrier should provide an estimate that is reasonably accurate and include all services to be provided. The estimate should also be based on the carrier's applicable tariff. This would not be a new burden, as the carriers are already required to do this. The estimate must clearly note the shipper is only required to pay 110 percent of the non-binding estimate at time of delivery. We have added the following provisions to the interim final rule to clarify how to handle changes to non-binding estimates: Any changes in a non-binding estimate must be mutually agreed to in a written attachment to the bill of lading. If a shipper asks for additional services after the goods are in-transit, the mover must inform the shipper additiona