BEFORE THE DEPARTMENT OF PUBLIC SERVICE REGULATION
OF THE STATE OF MONTANA
In the matter of the adoption of NEW RULE I, the amendment of ARM 38.3.104, 38.3.116, 38.3.124, 38.3.201, 38.3.401, 38.3.402, 38.3.405, 38.3.601, 38.3.602, 38.3.701, 38.3.702, 38.3.705, 38.3.706, 38.3.707, 38.3.708, 38.3.805, 38.3.1503, 38.3.1504, 38.3.1505, 38.3.2001, 38.3.2014, 38.3.2015, 38.3.2016, 38.3.2101, 38.3.2404, and 38.3.2501, and the repeal of 38.3.501, 38.3.2406, 38.3.3304, and 38.3.3404 pertaining to motor carriers
NOTICE OF ADOPTION, AMENDMENT, AND REPEAL
TO: All Concerned Persons
1. On May 28, 2015 the Department of Public Service Regulation published MAR Notice No. 38-3-229 pertaining to the public hearing on the proposed adoption, amendment, and repeal of the above-stated rules at page 628 of the 2015 Montana Administrative Register, Issue Number 10.
2. The department has adopted New Rule I (38.3.406), amended ARM 38.3.104, 38.3.116, 38.3.124, 38.3.201, 38.3.401, 38.3.402, 38.3.405, 38.3.601, 38.3.602, 38.3.702, 38.3.705, 38.3.706, 38.3.707, 38.3.708, 38.3.805, 38.3.1503, 38.3.1504, 38.3.1505, 38.3.2001, 38.3.2014, 38.3.2015, 38.3.2016, 38.3.2101, 38.3.2404, and 38.3.2501, and repealed 38.3.501, 38.3.2406, 38.3.3304, and 38.3.3404 as proposed. The department has amended ARM 38.3.701 as proposed, but with the following changes from the original proposal, new matter underlined, deleted matter interlined:
38.3.701 EVIDENCE OF INSURANCE REQUIRED (1) and (2) remain as proposed.
(3) An applicant for a certificate of compliance must submit evidence of the appropriate insurance as part of the application for a certificate.
AUTH: 69-12-201, MCA
IMP: 69-12-402, MCA
3. The department has thoroughly considered the comments and testimony received. A summary of the comments received and the department's responses are as follows:
COMMENT #1: The commenter supports the proposed rules and has already filed comments regarding insurance forms. Additionally, the commenter said that it will carry insurance for all drivers it is partnered with and will work with commission staff regarding a complaint process and map of service coverage areas it intends to operate in.
RESPONSE #1: The commenter's proposed insurance forms, while welcome, are not a part of the proposed rules. The commission appreciates the commenter's cooperation.
COMMENT #2: Several commenters would like to see the rules clarified regarding Annual Reports involving Class E, Transportation Network Carriers (TNCs) and that there be greater transparency in the Annual Reports. TNCs do not pay taxes or file annual reports. The commenters felt that drivers should not be criminals, should keep insurance and books, and should be able to be audited. Also, commenters questioned the transparency in regards to Annual Reports, i.e. how many cars and drivers will there be in a city, as well as the amount of revenue? Several commenters stated that TNCs do not have to file for business licenses, annual reports, kinds of cars, types of charges, etc.
RESPONSE #2: SB 396 excludes TNCs from the annual reporting requirement. The commission has no role in the state's tax policies. SB 396 provides the commission with limited authority to conduct audits of TNCs to ensure safety with respect to TNC drivers.
COMMENT #3: Several commenters stated that most of the drivers are subcontract drivers and the rules and laws do not mesh regarding insurance. Commenters stated that they had concerns if an insurance company did not notify the company or the commission of a problem. Insurance should be in the driver's name, for liability and safety reasons. The commenters have concerns about insurance and state that there are gray areas. If TNC drivers turn off their cell phones is their insurance still in effect? Also, what happens when there is no cell phone coverage? Is there no insurance coverage? Also, most of the customers the commenters serve do not have cell phone coverage. There are a lot of places in Montana without cell phone coverage, what happens then? Commenters expressed concerns about unfairness issues between motor carrier classes. TNCs or their contracted drivers are insured when the app is on but the insurance is not activated when the app is off. Is the insurance level enough? What compensation for potential accident victims will there be? Shouldn't insurance be a 24/7 kind of thing instead of an "on or off" deal? There should be a rock solid set of guidelines and not an "on or off" policy.
RESPONSE #3: Providers of insurance for regulated motor carriers or the motor carrier itself must give the commission at least 30 days' notice of cancellation of a regulated motor carrier's insurance. SB 396 provides that either the TNC or the TNC driver, or a combination of both, may carry the required insurance. SB 396 and these rules require either the TNC or the TNC driver or both to comply with the commission's insurance requirements. Regarding the commenter's concern that lack of cell phone service may interrupt a TNC driver's logged-in status, the commission responds that the rules do not address every technical or legal question that may arise as TNC service becomes available in the state. SB 396 includes specific provisions regarding insurance requirements when the TNC driver is logged in to the TNC application and when the TNC driver is engaged in a prearranged ride. Consistent with commission practice, the commission expects that a TNC applicant's name will match the insured's name.
COMMENT #4: One commenter felt that there is a paperwork problem in regard to rate changes, as the current carriers have to prove any increase in rate. TNCs can change their rates and operating times at any time, which is not fair. How long do current carriers have to wait to do operating time or rate changes?
RESPONSE #4: SB 396 excludes TNCs from rate regulation and operating times.
COMMENT #5: Safety is an issue, as well as employee classification and criminal backgrounds of the drivers. The commenter felt that assaults and safety of drivers is a concern also. How can the commission put a plan in place to protect the public?
RESPONSE #5: These rules do not address every technical or legal question that may arise as TNC service becomes available in the state. However under current motor carrier regulation, the motor carriers themselves and their insurance companies are responsible for inquiring into the backgrounds of their drivers.
COMMENT #6: One commenter pointed out that Paragraph 10 of the Notice states that the changes in rules will significantly and directly impact small business. SB 396 is not a good bill but was bullied into Montana. The "red carpet" has been rolled out for them and there is not a level playing field. How can the commission change the rules? What about stranded costs that current license holders will have? The current license holders have financial obligations to their creditors and how will they now be able to meet their obligations, considering they now have stranded costs? The commenter suggested that any newcomers (Class E or other new) should pay the grandfathered recipients an amount per run (high, mid, and low) and there should be an increase in the cost of a permit for anyone new. Also, what is in place to fix the current license holder situation and public safety? The commission needs to reach out to the license holders to see how to help them or to ask questions.
RESPONSE #6: This rulemaking proceeding is not the appropriate venue for complaints about SB 396.
COMMENT #7: The commenter stated that the Freedom of Information Act is important.
RESPONSE #7: The commission agrees with this comment; however, SB 396 defines what information the commission can request from the TNCs. If the commission does not have information in its possession it cannot make it available to the public.
COMMENT #8: The commenter said that this meeting is unfair. His business, which had been thriving, will have less value as of July 1, 2015.
RESPONSE #8: This rulemaking proceeding is not the appropriate venue for complaints about SB 396.
COMMENT #9: A commenter expressed concerns in regard to lost revenue and taxes because of TNCs.
RESPONSE #9: This rulemaking proceeding is not the appropriate venue for complaints about SB 396.
COMMENT #10: Commenters complained about SB 396, the legislative process and questioned that it provides no rulemaking authority.
RESPONSE #10: This rulemaking proceeding is not the appropriate venue for complaints about SB 396. The definition of "motor carrier" was revised by SB 396 to add that, in addition to contract and common carriers, TNCs are motor carriers. There may be inconsistencies between SB 396 and other provisions of Title 69, Chapter 12; however, the commission must implement all provisions of Chapter 12, including those in SB 396, to the best of its ability. The commission's motor carrier rulemaking authority is found at 69-12-201(2), MCA.
COMMENT #11: A commenter questioned whether SB 396 violates the Montana Constitution including provisions involving property rights and impairing contracts.
RESPONSE #11: The rulemaking proceeding is not the appropriate venue for complaints about SB 396. In addition attorneys for the Montana Legislature review bills prior to introduction to verify they are constitutional.
COMMENT #12: Commenters expressed concerns about the impact of SB 396 on motor carrier revenues and future values of the motor carrier licenses.
RESPONSE #12: This rulemaking proceeding is not the appropriate venue for complaints about SB 396.
COMMENT #13: Several commenters responded to commission questions pertaining to whether new motor carriers could provide proof of insurance with the application to meet the rebuttable presumption of fitness. Several commenters questioned whether proof of insurance from the insurance carrier was going to be possible until an actual authority was issued by the commission. Some commenters stated that some type of documentation of insurance should be available from the insurance carrier.
RESPONSE #13: The commission appreciates the comments in response to commission questions. The commission is aware that insurance carriers may be unable to provide proof of insurance to a motor carrier applicant prior to an authority being issued. Therefore the commission clarifies ARM 38.3.701.
/s/ JUSTIN KRASKE /s/ BRAD JOHNSON
JUSTIN KRASKE BRAD JOHNSON
Rule Reviewer Chairman
Department of Public Service Regulation
Certified to the Secretary of State August 17, 2015.