FMCSA to implement operating authority exemption for providers of recreational activities
According to a June 2023 Notice of Proposed Rulemaking, The Federal Motor Carrier Safety Administration (FMCSA) intends to publish new rules to implement a statutory exemption from the interstate for-hire operating authority requirement for certain providers of "recreational activities." This proposal comes on the heels of the agency's recent efforts to clarify what types of passenger operations implicate other aspects of its regulations.
According to the agency, Section 23012 of Congress's Infrastructure Investment and Jobs Act (IIJA) created a new exemption from the requirement to obtain FMCSA operating authority for providers of recreational activities operating a motor vehicle designed or used to transport between 9 and 15 passengers (including the driver) whether operated alone or with a trailer attached to the transport vehicle if: (1) The motor vehicle is operated by a person that provides recreational activities; and (2) The transportation is provided within a 150 air-mile radius of the location at which passengers initially boarded the motor vehicle at the outset of the trip.
The FMCSA addressed the rationale for this exemption in its Notice:
Before the enactment of section 23012 of the IIJA, a provider of recreational activities operating as a motor carrier of passengers was required to maintain insurance at the minimum prescribed levels for the entire year—including the months during which the provider was not operating. As a result, some providers of recreational activities were voluntarily revoking their operating authority registrations during the off-season months by filing Form OCE-46 so that they did not need to maintain insurance at the minimum prescribed levels during those months. To resume operations, the providers were then required to obtain adequate financial responsibility, ensure evidence of financial responsibility is filed with FMCSA on Form BMC-91 or BMC-91X, and request to reinstate their operating authority registrations by submitting the “Motor Carrier Records Change” (MCSA-5889) either online or by paper during the months when they were operating, for an additional fee, currently $80.6.
To address this issue, the U.S. Congress enacted a statutory exemption from both the insurance filing and for-hire operating authority requirements for these providers.
Although this statutory exemption is already in place, the FMCSA is proposing new regulations to clarify the term "recreational activities." According to the FMCSA, the recreational activity industry is comprised of numerous companies, associations, and organizations that focus primarily on outdoor activities. Outdoor activities may include hunting, fishing, trapping, camping, exploring caves, nature study, bicycling, horseback riding, bird watching, motorcycling, ballooning, hang-gliding, hiking, tobogganing, sledding, sleigh riding, snowmobiling, skiing, skating, water sports, rock climbing, climbing observation towers, sport shooting, whitewater rafting, and other outdoor sport, game, or educational activities.
According to its Notice, FMCSA proposes to define recreational activities which qualify for the exemption as:
...activities consisting of an outdoor experience or excursion typically of a physical or athletic nature which require transportation for the sole purpose of moving customers to another location or locations where the experience or excursion will take place and collecting those customers to transport them back to the place of initial boarding or another outpost of the motor carrier.
Notably, FMCSA believes that, by including the language a person “that provides” recreational activities in the exemption, Congress intended to limit the exemption to only those persons that are actually providing recreational activities. Thus, the agency's proposal states that the exemption does not apply to persons performing transportation as their core business or providing transportation concurrently with an activity (where the transportation is no longer incidental to the activity itself). "These types of activities are distinct from those contemplated by Congress as exempt because the act of transporting passengers from one location to another is the central aspect of the service that the motor carriers are providing."
The agency goes on to note that "a bus company offering scheduled route service with multiple stops would not fall within the exemption, for example, merely because one of the scheduled stops was at or near a water park or a horseback riding stable. Likewise, motor carriers that advertise and provide alcohol, music, or other 'party' activities on board the vehicle as the principal activity or purpose of the transportation would not be eligible for the exemption."
Accordingly, the proposed definition in § 372.107 would explicitly exclude any activity for which: 1) the activity offered or sold is occurring simultaneously with the transportation; or 2) the transportation is the primary service offered for sale. The FMCSA is seeking public comments on whether these exclusions would increase clarity.
Importantly, and as addressed by FMCSA in its Notice, this exemption is limited in scope. It pertains only to the so-called "commercial regulations" that would have otherwise applied to these providers, namely the for-hire operating authority and insurance filing requirements. It does NOT exempt these providers from any safety regulations or even the requirement that these providers maintain certain levels of financial responsibility. They are simply exempt from filing proof of such responsibility with the FMCSA and obtaining operating authority.
According to the Notice, motor carriers that currently have operating authority as motor carriers of passengers and qualify for the exemption are able to voluntarily revoke their operating authority under 49 U.S.C. 13905(d). After doing so, these motor carriers are no longer required to obtain or reinstate operating authority and thus, no longer required to have their insurance coverage or process agent designation on file with FMCSA (49 CFR parts 365 and 366 and § 387.301T). If a motor carrier does not voluntarily revoke its operating authority registration and fails to maintain evidence of the required level of insurance coverage on file with FMCSA, its operating authority registration will be revoked involuntarily by FMCSA.
The FMCSA will be accepting comments to its proposal for 60 days (through mid-August 2023). Comments should be filed in docket FMCSA-2023-0007.
For more information about this guidance and its potential ramifications, please feel free to contact us.
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