[Federal Register Volume 85, Number 122 (Wednesday, June 24, 2020)]
[Rules and Regulations]
[Pages 37785-37805]
[FR Doc No: 2020-11464]

=======================================================================
-----------------------------------------------------------------------

DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

49 CFR Parts 350, 355, and 388

[Docket No. FMCSA-2017-0370]
RIN 2126-AC02

Motor Carrier Safety Assistance Program

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

ACTION: Final rule.

-----------------------------------------------------------------------

SUMMARY: FMCSA amends two of the Agency's financial assistance
programs. As required by the Fixing America's Surface Transportation
(FAST) Act, FMCSA adopts a new funding formula based on recommendations
from the Motor Carrier Safety Assistance Program (MCSAP) Formula
Working Group (working group), effective for fiscal year (FY) 2021
grant funds and beyond. This rule reorganizes the Agency's regulations
to create a standalone subpart for the High Priority Program. It also
includes other programmatic changes to reduce redundancies, require the
use of 3-year MCSAP commercial vehicle safety plans (CVSPs), and align
the financial assistance programs with FMCSA's current enforcement and
compliance programs.

DATES: This final rule is effective July 24, 2020.
    Petitions for Reconsideration of this final rule must be submitted
to the FMCSA Administrator no later than July 24, 2020.

FOR FURTHER INFORMATION CONTACT: Mr. Jack Kostelnik, State Programs
Division, at FMCSA, 1200 New Jersey Avenue SE, Washington, DC 20590-
0001;<PHONE_NUMBER><EMAIL_ADDRESS>If you have questions on
viewing or submitting material to the docket, contact Docket
Operations,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: FMCSA organizes this final rule as follows:

I. Rulemaking Documents
    A. Availability of Rulemaking Documents
    B. Privacy Act
II. Executive Summary
    A. Purpose of the Regulatory Action
    B. Summary of Major Provisions
    C. Costs and Benefits
III. Abbreviations, Acronyms, and Symbols
IV. Legal Basis for the Rulemaking
V. Background and Proposed Rule
    A. Regulatory History

    B. Summary of the Proposed Rule
VI. Discussion of Comments and Responses
VII. International Impacts
VIII. Section-by-Section Analysis
    A. Subpart A--General
    B. Subpart B--MCSAP Administration
    C. Subpart C--MCSAP Required Compatibility Review
    D. Subpart D--High Priority Program
    E. Subpart E--Miscellaneous
IX. Guidance
X. Regulatory Analyses
    A. Executive Order (E.O.) 12866 (Regulatory Planning and
Review), E.O. 13563 (Improving Regulation and Regulatory Review),
and DOT Regulations
    B. E.O. 13771 (Reducing Regulation and Controlling Regulatory
Costs)
    C. Congressional Review Act
    D. Regulatory Flexibility Act
    E. Assistance for Small Entities
    F. Unfunded Mandates Reform Act of 1995
    G. Paperwork Reduction Act
    H. E.O. 13132 (Federalism)
    I. Privacy
    J. E.O. 13175 (Indian Tribal Governments)
    K. National Environmental Policy Act of 1969

I. Rulemaking Documents

A. Availability of Rulemaking Documents

    For access to docket FMCSA-2017-0370 to read background documents
and comments received, go to https://www.regulations.gov at any time,
or to Docket Operations at U.S. Department of Transportation, Room W12-
140, West Building Ground Floor, 1200 New Jersey Avenue SE, Washington,
DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except
Federal holidays.

B. Privacy Act

    In accordance with 5 U.S.C. 553(c), DOT solicits comments from the
public to better inform its rulemaking process. DOT posts these
comments, without edit, including any personal information the
commenter provides, to https://www.regulations.gov, as described in the
system of records notice ``DOT/ALL 14--Federal Docket Management System
(FDMS),'' which can be reviewed at https://www.transportation.gov/privacy.

II. Executive Summary

A. Purpose of the Regulatory Action

    The purpose of this regulatory action is to amend and reorganize 49
CFR part 350, including adding relevant sections that are currently
located in part 355, and to address certain regulations that are no
longer necessary or are redundant. Moreover, the FAST Act requires
FMCSA to implement a multi-year CVSP with annual updates for States \1\
applying for MCSAP funds and to provide a new MCSAP allocation formula.
This rule implements the new MCSAP allocation formula, requires States
to adopt 3-year CVSPs, and reorganizes the Agency's regulations to
create a standalone subpart for the High Priority Program. FMCSA's
primary legal authority for this rulemaking is Title V, Subtitle A of
the FAST Act, Public Law 114-94, 129 Stat. 1312, 1514-34 (Dec. 4,
2015).
---------------------------------------------------------------------------

    \1\ Unless otherwise provided in this preamble, FMCSA uses the
term ``State'' as including the District of Columbia and the 5
Territories (American Samoa, the Commonwealth of the Northern
Mariana Islands, the Commonwealth of Puerto Rico, Guam, and the
Virgin Islands), consistent with 49 U.S.C. 31101(4).
---------------------------------------------------------------------------

B. Summary of Major Provisions

    This rule implements a new MCSAP allocation formula that is
effective for FY 2021 grant funds and beyond. The FAST Act required the
Secretary of Transportation (Secretary) to assemble a working group to
recommend a new MCSAP allocation formula. The Agency considered and
fully adopts the recommendations of the working group.
    The new MCSAP allocation formula includes three components: State,
Border, and Territory. The formula assigns each component a percentage
of MCSAP funds. The State Component allocates funds using five equally-
weighted factors and then applies minimum and maximum caps to the
allocated funding. The Border Component allocates funding based on the
number of United States ports of entry and the number of commercial
motor vehicle (CMV) crossings at those ports of entry, subject to
minimum and maximum funding levels. This Border Component accounts for
differences in the number of crossings per port of entry at the
Northern border compared to the Southern border of the United States.
Finally, the Territory Component ensures that each Territory, except
for the Commonwealth of Puerto Rico (which is allocated funding under
the State Component), receives a minimum funding amount of $350,000.
The formula adds any funds not allocated under the Border or Territory
Component to the State Component for allocation. The formula promotes
stability in funding and protects States from experiencing significant
and unpredicted changes by including a hold-harmless provision and a
funding cap.
    This rule requires States to use CVSPs in accordance with the FAST
Act, and provides direction to States on how and when to submit CVSPs
on 3-year cycles. For the first year of the CVSP, States submit
quantitative performance objectives, analysis of past performance, and
other documents traditionally provided in an annual CVSP, as well as a
budget for the initial year. For the second and third years of the
CVSP, States submit an annual update that includes changes to the CVSP
(including updates to performance objectives and adjustments to
activities), a budget for the applicable fiscal year, and other
documents required on an annual basis.
    FMCSA clarifies that it is a State's obligation to cooperate in the
enforcement of hazardous materials safety permits for interstate and
intrastate carriers issued under subpart E of 49 CFR part 385 by
verifying possession of the permit when required while conducting
vehicle inspections and investigations. This rule does not require
States to adopt part 385 as a condition of receiving MCSAP funds, but
States are strongly encouraged to do so to support a comprehensive CMV
safety program.
    The rule also revises and reorganizes part 350. Currently, part 350
intertwines the High Priority Program and MCSAP regulations, but some
regulations do not apply to both programs. To provide clarity for the
eligible recipients, this rule separates the two programs into
different subparts in part 350. In addition, FMCSA adds relevant
sections of part 355 to part 350. These changes address regulatory
compatibility, reduce redundancy, and make part 350 more clear and
concise.
    Finally, FMCSA removes part 388, titled ``Cooperative Agreements
with States.'' FMCSA does not rely on part 388 provisions to enter into
agreements with State partners because there is no specific funding for
that part.

C. Costs and Benefits

    This rule adopts a new MCSAP allocation formula to replace the
current formula that has been in use for more than a decade with little
modification. The new formula makes several improvements over the
current formula. The new formula will result in a reallocation of grant
funding, beginning with FY 2021, but will not change the total amount
of funds distributed.
    The rule requires States to use CVSPs in accordance with the FAST
Act. It also provides direction to States on how and when to submit
CVSPs on 3-year cycles. Under the current regulations, States submit
lengthy CVSP applications annually to receive MCSAP funding. However,
beginning in FY 2018, States began voluntarily submitting CVSPs on 3-
year cycles, as is now required by this rule. Following the
implementation of

this rule, States will no longer be able to submit annual CVSP
applications and must submit robust 3-year CVSP applications for the
first year, with annual updates for the second and third years. Based
on experience from voluntary implementation, FMCSA expects that 3-year
CVSPs will be less burdensome and time consuming for States than
submitting lengthy CVSP applications annually, which will result in
lower program administrative costs. All 55 current MCSAP participants
\2\ voluntarily transitioned to 3-year CVSPs, and thus, there is no
impact from this change.
---------------------------------------------------------------------------

    \2\ Currently, the 55 MCSAP participants consist of the States
minus Oregon.
---------------------------------------------------------------------------

III. Abbreviations, Acronyms, and Symbols

CE Categorical Exclusion
CFR Code of Federal Regulations
CHP Department of California Highway Patrol
CMV Commercial motor vehicle
CVSA Commercial Vehicle Safety Alliance
CVSP Commercial vehicle safety plan
DOT Department of Transportation
eCVSP Electronic commercial vehicle safety plan
E.O. Executive Order
FAST Act Fixing America's Surface Transportation Act
FHWA Federal Highway Administration
FMCSA Federal Motor Carrier Safety Administration
FMCSRs Federal Motor Carrier Safety Regulations
FR Federal Register
FY Fiscal year
HMRs Federal Hazardous Materials Regulations
MCSAP Motor Carrier Safety Assistance Program
MOE Maintenance of effort
NASI North American Standard Inspection
NOFO Notice of Funding Opportunity
NPRM Notice of proposed rulemaking
OMB Office of Management and Budget
PRISM Performance and Registration Information Systems Management
RFA Regulatory Flexibility Act
Sec.  Section
Secretary Secretary of Transportation
working group MCSAP Formula Working Group
U.S.C. United States Code
VMT Vehicle miles traveled

IV. Legal Basis for the Rulemaking

    FMCSA has and continues to issue the regulations found in 49 CFR
parts 350 and 355 under the authority of 49 U.S.C. 504, 13902, 31101,
31102, 31104, 31106, 31108, 31136, 31141, 31161, 31310, 31311, and
31502.
    The primary basis for this rule is Title V, Subtitle A of the FAST
Act, Public Law 114-94, 129 Stat. 1312, 1514-34 (Dec. 4, 2015), which
consolidated several of FMCSA's financial assistance programs and
authorized program funding levels through FY 2020. Key provisions,
effective FY 2017, include section 5101, which amended 49 U.S.C. 31102,
consolidating the former New Entrant, Performance and Registration
Information Systems Management (PRISM), Safety Data Improvement, and
Border Enforcement grant programs into the MCSAP formula grant. In
addition, it established the High Priority Program as a separate
discretionary financial assistance program for qualifying entities and
projects relating to motor carrier safety and Innovative Technology
Deployment. Section 5101 also amended 49 U.S.C. 31104, which
prescribes, among other things, authorized funding levels through FY
2020, the minimum Federal funding share applicable to these (and other)
FMCSA financial assistance programs, and the periods of time in which
awarded funds may be used.
    Section 5106 of the FAST Act (note following 49 U.S.C. 31102)
required the Secretary to appoint a working group, consisting of
prescribed stakeholder interests, to develop and recommend to the
Secretary a new MCSAP allocation formula reflecting specified factors
for the award of MCSAP funds. Following receipt of the working group's
recommendations, section 5106 required the Secretary to issue a notice
of proposed rulemaking (NPRM). The working group submitted its report
on April 7, 2017, and an addendum to the report on January 8, 2019. As
noted below, FMCSA issued its NPRM on August 22, 2019 (84 FR 44162).
    Section 5107 of the FAST Act (note following 49 U.S.C. 31102)
addresses the maintenance of effort calculations for FY 2017 and
subsequent fiscal years until the new MCSAP allocation formula is in
place. It also allows States to request a one-time permanent adjustment
to their maintenance of effort baselines in the first fiscal year of
the new MCSAP allocation formula.
    FMCSA has authority under Federal hazardous materials
transportation law, 49 U.S.C. 5101-5128, to require States to cooperate
in the enforcement of Federal hazardous materials safety permit
requirements as a condition to qualify for MCSAP funds. The purpose of
the hazardous materials transportation law is ``to protect against the
risks to life, property, and the environment that are inherent in the
transportation of hazardous material in intrastate, interstate, and
foreign commerce'' (49 U.S.C. 5101). Section 5109(a) provides that a
``motor carrier may transport or cause to be transported by motor
vehicle in commerce hazardous material only if the carrier holds a
safety permit'' issued by FMCSA. The Secretary has authority to
prescribe what hazardous materials require a safety permit (49 U.S.C.
5109(b)). In addition, the Secretary has authority to require States to
adopt provisions compatible with Federal provisions on hazardous
materials transportation safety to receive MCSAP funds (49 U.S.C.
31102(c)(1)). Exercising these authorities, this rule clarifies that
States are required to cooperate in ensuring carriers transporting
certain hazardous materials possess the required FMCSA hazardous
materials safety permit.
    Any clarifying or non-substantive changes made by this final rule
that are not explicitly attributed to the FAST Act or 49 U.S.C. 5101-
5128 are made under one or more of the statutory authorities listed at
the beginning of this section. FMCSA implements these statutory
provisions by delegation from the Secretary in 49 CFR 1.87.

V. Background and Proposed Rule

A. Regulatory History

    On August 22, 2019, FMCSA published an NPRM titled ``Motor Carrier
Safety Assistance Program'' in the Federal Register (84 FR 44162).
FMCSA received one comment requesting an extension of the comment
period. On October 9, 2019, FMCSA published a notice extending the
comment period to October 21, 2019 (84 FR 54093). FMCSA received three
additional comments on the NPRM. No public meeting was requested and
none was held.
    The NPRM included a detailed discussion of the background for this
regulatory action, including the history of MCSAP, the FAST Act changes
to MCSAP, a previous omnibus rule that implemented portions of the FAST
Act, the working group, and States' voluntary transition to 3-year
CVSPs. That discussion is not repeated here, but can be found in the
published NPRM (84 FR at 44165-7).

B. Summary of the Proposed Rule

    A detailed summary of the proposed rule can be found in the NPRM
(84 FR at 44167-72), which includes discussion of the separation of
MCSAP and the High Priority Program provisions, the proposed MCSAP
allocation formula, and the proposed 3-year CVSP requirements. It also
included discussions of the following topics: (1) The proposed changes
to fully implement the PRISM program; (2) the FMCSA Administrator's
discretion to distribute funding during an extension of the Agency's
authorization

or a period the Agency is operating under a continuing resolution; (3)
the relocation to 49 CFR part 350 of relevant requirements of part 355
relating to regulatory compatibility: (4) A State's obligation to
cooperate in the enforcement of hazardous materials safety permits for
interstate and intrastate carriers; and (5) the removal of 49 CFR part
388 for which there is no specific funding and therefore no reliance by
the Agency. Finally, FMCSA discussed changes to improve the
organization of part 350, update definitions, and clarify when a State
may retain an exemption for a particular segment of the motor carrier
industry from all or part of its laws or regulations that were in
effect before April 1988.

VI. Discussion of Comments and Responses

    FMCSA received four comments on the NPRM. The first comment
requested an extension to the comment period, which was granted (as
noted above in Regulatory History). The second comment was non-
responsive to the NPRM and, as such, is not discussed here. The
Department of California Highway Patrol (CHP) and the Commercial
Vehicle Safety Alliance (CVSA) submitted the remaining two comments.
Both comments responded to the five questions posed in the NPRM. The
Agency summarizes those comments below.
    Q.1. Are there other elements FMCSA should consider including in a
new MCSAP allocation formula and, if so, what are they? Why should such
elements be considered? How would they promote safety?
    Comments: Both the CHP and CVSA agreed with the MCSAP elements as
proposed. CVSA stated that the ``working group conducted a rigorous
review of the current formula components, as well as an extensive
review of alternative data points before arriving at the final
recommendation. The group used safety-based methodology and sought to
balance the needs of individual [State] programs with the overarching
goal of MCSAP. The final recommendations are designed to direct MCSAP
funds to where they can most benefit overall commercial motor vehicle
safety, while providing [S]tates with funding stability that enables
program managers to plan and adjust their programs accordingly.'' CVSA
also noted that any changes to the MCSAP elements should be subject to
the same evaluation methodology and be based on the same priorities as
those considered by the working group. The CHP commented that the
funding allocations resulting from the proposed elements appropriately
assist the CHP in promoting greater safety and compliance with
regulatory requirements within the framework of current CHP operations
that meet or exceed FMCSA grant program requirements.
    Response: FMCSA agrees with the commenters. As such, the Agency
does not make any changes to the proposed elements included in the
MCSAP allocation formula.
    Q.2. Should there be additional requirements in CVSPs to ensure
MCSAP funding is used efficiently to promote safety and, if so, what
are they? Why should such requirements be considered? How would they
promote safety?
    Comments: CVSA responded that no additional requirements should be
included and that additional requirements would not be effective. CVSA
suggested that FMCSA should look for ways to reduce the burden on
States by lessening current reporting requirements, particularly with
respect to information to which the Agency has direct access or
duplicative sections within the CVSP. The CHP suggested that there be a
requirement to use ``commercially trained'' personnel when MCSAP money
is used.
    Response: The Agency commits to look for ways to minimize burden by
reviewing reporting requirements as a part of its annual review of CVSP
design.
    Existing paragraph (p) of Sec.  350.211 provides a State must
certify that MSCAP-funding personnel (including sub-grantees) meet the
standards in 49 CFR part 385, subpart C, for performing inspections,
audits, and investigations. Rather than repeating all the
certifications that correspond to the conditions States must meet to
qualify for MCSAP funds, as in existing Sec.  350.211, new Sec. Sec.
350.211(i)(1)(i) and 350.213(e)(1)(i) provide that States must certify
they meet all the MCSAP conditions in proposed Sec.  350.207. The
relevant condition as proposed in Sec.  350.207(a)(6) required more
broadly that States must provide assurances they have the ``qualified
personnel necessary to enforce compatible safety laws, regulations,
standards, and orders.'' The Agency agrees with the CHP comment that
the added specificity in existing Sec.  350.211(p) provides clarity
regarding what ``qualified personnel'' includes. Accordingly, FMCSA
modifies Sec.  350.207(a)(6) to include language that clarifies
certified personnel are required.
    Q.3. Should the Incentive Fund be eliminated from a new MCSAP
allocation formula? Why should the Incentive Fund be kept or
eliminated? How would keeping or eliminating the Incentive Fund promote
safety?
    Comments: CVSA recommended elimination of the Incentive Fund. CVSA
commented that the ``Incentive Fund model does not fit within the
proposed structure, as it is not correlated with crash risk, nor does
it provide stable, reliable funding for the jurisdictions.'' It
continued, as noted by the working group, ``the factors used in the
incentive model are no longer relevant. Distributing funds through the
incentive model does not ensure that funds are being spent where they
can have the most direct impact on safety.''
    The CHP stated that the Incentive Fund does not account for
statistical anomalies over the 10-year crash average, allowing single
or multiple mass-casualty events in a given year (i.e., an outlier
event) to skew allocation of incentive funding. The CHP noted, if the
Incentive Fund is retained, it should be modified to allow the
exclusion of statistical outlier events.
    Response: As the working group and CVSA noted, the factors used in
the Incentive Fund are no longer relevant. Thus, as proposed by the
working group and in the NPRM, the Agency eliminates the Incentive
Fund.
    Q.4. Should a new MCSAP allocation formula include variables
connected with crash rates or risk? If so, what variables should be
considered and why? How would such variables promote safety?
    Comments: CVSA recommended basing allocations on crash risk
variables, as proposed by the working group. CVSA noted that the
working group considered a number of different variables and measures
before concluding that using crash risk, rather than crash rates or
other crash-related metrics, would most effectively allocate funds to
improve safety. CVSA stated ``[f]ocusing on crash rates may have the
unintentional effect of moving funds away from a jurisdiction that has
a higher risk of crashes but has been successful in reducing the
occurrence of those crashes through implementation of their enforcement
and outreach programs.''
    The CHP agreed with using crash rate variables, but noted the need
to adjust crash rates to ensure that outlier events weigh less heavily
than the overall number of crashes, to avoid results that present an
inaccurate crash picture. The CHP continued that ``crash trends
indicate a more accurate reflection of the true impacts of enforcement
effectiveness than the sheer number of fatalities in a single
[crash].''

    Response: FMCSA acknowledges the comments, which are in line with
the formula proposed by the working group and included in the NPRM that
bases allocations on crash risk variables. Because FMCSA eliminates the
Incentive Fund and the MCSAP formula factors do not use crash rate
data, the MCSAP allocation formula adopted in this rule should not
produce the unintentional effects identified by CVSA and the CHP.
Accordingly, the Agency does not change the proposed formula in this
rule.
    Q.5.\3\ Should a new MCSAP allocation formula be more sensitive to
changes in crash rates? If so, how could a new allocation formula be
more sensitive to changes in crash rates and why would it be more
sensitive to such changes? How would such a formula promote safety?
---------------------------------------------------------------------------

    \3\ As noted by the CHP, the NPRM lists two questions numbered
``4,'' instead of a question number 4 followed by a question number
5. Both the CHP and CVSA labelled their comments as responses to
question 5; therefore, FMCSA does the same in this final rule.
---------------------------------------------------------------------------

    Comments: CVSA responded that the proposed allocation formula
already balances a number of different factors, such as crash risk,
with States' need for reliability and continuity in funding. CVSA
recommended that FMCSA consider any suggested changes to the proposed
formula carefully, as changes will likely disrupt the balance and have
a negative impact on the overall performance of the new formula. While
relationship to crash risk is a critical factor, CVSA responded that it
is imperative that funds not shift too quickly or unpredictably. If
States are not confident in the timing and amount of grant funding,
they will be reluctant to fill positions, continue enforcement
programs, or engage in bold new initiatives. The CHP commented that a
formula that is more sensitive to changes in crash rates would harm
States with outlier events, causing a reduction in funding for
otherwise successful enforcement and education programs.
    Response: FMCSA agrees that an allocation formula that focuses on
crash rates can have unintended consequences and harm States when an
outlier event occurs. Basing the formula on crash risk, rather than
crash rates, most effectively allocates funds to improve safety. The
careful balance in the allocation formula of crash risk and
predictability in funding is integral to ensuring robust safety
programs and innovation. As such, the Agency makes no changes to the
proposed formula in this rule.

Additional Comments

    CVSA also provided several additional comments. Some were more
general in nature, and others were suggestions related to one or more
specific sections, as reflected in the below discussion of those
comments.
    CVSA supported FMCSA's efforts to revise part 350 to make necessary
updates and clean up irrelevant sections because clarity and uniformity
in the regulations are the cornerstones of an effective, consistent
enforcement program. CVSA supported separate subparts for the
requirements of MCSAP and the High Priority Program and the new
requirements for CVSPs, stating these changes bring additional clarity
to the regulations, improving States' ability to understand and comply
with the requirements in part 350. As discussed above, CVSA supported
the adoption of the recommendations set forth by the working group
included in this rule. CVSA encouraged FMCSA to continue working to
improve the existing data sets and identify potential new ones.
Section 350.103 When do the financial assistance program changes take
effect?
    Comment: CVSA noted FMCSA proposed to implement the changes
beginning with FY 2020; however, the comment period for the rulemaking
ended after the beginning of the fiscal year. CVSA stated that the
Agency should not move ahead with implementing the new allocation
formula until after the close of the comment period and the Agency
issues its final rule. Noting that States and FMCSA need time to
prepare for and adjust their programs, CVSA recommended that the Agency
implement the allocation formula and changes to part 350 beginning with
FY 2021.
    Response: FMCSA agrees that States need time to prepare for the
changes and adjust their programs accordingly. Therefore, FMCSA
modifies Sec.  350.103 to provide that the changes to part 350 take
effect for FY 2021 financial assistance funds and beyond.
Section 350.105 What definitions are used in this part?
    Comment: CVSA supported the definition changes FMCSA proposed with
one exception. It requested that the definition for the North American
Standard Inspection (NASI) include attribution to CVSA, as CVSA owns
all rights to non-regulatory elements created within the NASI.
    CVSA agreed with the proposed elimination of an exception for 49
CFR 171.15 and 171.16 in the definition of Hazardous Materials
Regulations (HMRs) and stated it would improve reporting and data
collection. However, CVSA noted the preamble discussion made it appear
the referenced sections apply only to investigations and not to
roadside inspections, but it found the discussion unclear. CVSA
requested that the Agency clarify how this change would impact roadside
inspections, or add language explaining it applies only to
investigations.
    Response: With respect to the request to acknowledge CVSA's role in
the development of the NASI, FMCSA revises the proposed definition to
continue use of the language in existing Sec.  350.105. The existing
definition states that FMCSA and CVSA developed the inspection
criteria.
    Sections 171.15 and 171.16 contain requirements to provide a
telephone or online report to the Pipeline and Hazardous Materials
Safety Administration (PHMSA) through the National Response Center
within 12 hours of a reportable incident (as defined by Sec.  171.15)
and a written report to PHMSA within 30 days of a reportable incident
(as defined by Sec.  171.16). Because the timing of these reports is
tied to specific incidents, they are not generated and enforced through
commercial vehicle inspections. This should provide the clarity CVSA
requested.
Sections 350.201 What is MCSAP? and 350.207(a)(2) What conditions must
a State meet to qualify for MCSAP funds?
    Comment: CVSA expressed concern that the proposed regulations were
ambiguous in terms of what States must do to qualify for MCSAP funding.
Specifically, proposed Sec.  350.201(b)(3) required States to ``[a]dopt
and enforce effective motor carrier, CMV, and driver safety regulations
and practices consistent with Federal requirements.'' Proposed Sec.
350.207(a)(2) provided that to qualify for MCSAP funds a State must
improve motor carrier safety ``by adopting and enforcing compatible
safety laws and regulations, standards, and orders.'' CVSA noted the
inconsistent language and that the proposed regulations no longer
spelled out precisely which Federal Motor Carrier Safety Regulations
(FMCSRs) and HMRs must be adopted by States to have compatible laws.
CVSA requested that FMCSA revise the language to specifically identify
which parts must be adopted.
    Response: With respect to Sec.  350.201(b)(3), CVSA points out an
unintended consequence of the proposed language. FMCSA intended Sec.
350.201 to be an overview of the goals

and purposes of MCSAP. The Agency further intended paragraph (b) to be
a restatement of existing Sec.  350.103 regarding the purpose of part
350, which restates the goals of MCSAP in 49 U.S.C. 31102(b). By
replacing the introductory paragraph of existing Sec.  350.103 with the
phrase ``MCSAP requires States to'' in proposed Sec.  350.201(b) for
brevity, the Agency appeared to add new requirements for States that
were inconsistent with those stated in the conditions of participation
in proposed Sec.  350.207. This was not FMCSA's intent. To address this
issue, FMCSA replaces the phrase ``MCSAP requires States to'' with a
slightly modified version of the introductory paragraph in existing
Sec.  350.103. FMCSA also makes changes in Sec.  350.201(b)(3) to
maintain consistency in the use of the term ``compatible,'' as
discussed in the next paragraph.
    CVSA correctly points out that, except for the definition section,
the proposed regulations no longer spelled out precisely which FMCSRs
and HMRs States had to adopt to have compatible laws. One of the
Agency's goals for this rulemaking is to provide clarity for States
with respect to compatibility issues. Currently, there are duplicative
regulations addressing compatibility and inconsistent terminology is
used when discussing compatibility. This understandably confused
States. FMCSA addresses these issues by (1) integrating pertinent
provisions of part 355 into part 350 to improve the organization and
eliminate duplication of the compatibility regulations, and (2) using
clearly defined terms consistently throughout part 350. As such, the
Agency defines ``compatible'' and ``compatibility'' as terms of art in
Sec.  350.105 using the terms ``FMCSRs'' and ``HMRs.'' In turn, the
Agency defines the terms ``FMCSRs'' and ``HMRs'' in Sec.  350.105 by
stating the specific regulatory parts included in those definitions
that States must adopt. The intent is to simplify the regulatory text
and improve consistency by substituting defined terms of art instead of
lengthy repetitions of the parts of the regulations States must adopt
and enforce, which are prone to being stated inconsistently. Because
FMCSA's approach differs from what States are accustomed to, FMCSA
revises the proposed regulatory text in this final rule to include
cross-references to Sec.  350.105 the first time ``compatible'' or
``compatibility'' is used in a section to remind readers to consult the
specific regulatory definition.
    While reviewing the new terms in proposed Sec.  350.105 to respond
to CVSA's comment, the Agency noticed the proposed definition of
``compatible'' and proposed Sec.  350.303(d) conflicted with the
underlying statutory provision in 49 U.S.C. 31141(c). Paragraph (c)(4)
of that statutory section provides a State law or regulation on CMV
safety (a CMV is defined in 49 U.S.C. 31132 to mean, in part, a vehicle
used in interstate commerce) that is in addition to or more stringent
than the FMCSRs may be enforced unless the Secretary decides that (A)
the State provision has no safety benefit; (B) the State provision is
incompatible with the FMCSRs; or (C) enforcement of the State provision
would cause an unreasonable burden on interstate commerce (49 U.S.C.
31141(c)(4)). FMCSA included the criteria in proposed Sec.  350.303.
Proposed Sec.  350.303(d)(2)(iii) provided that, for such State
provisions to be compatible with the FMCSRs and enforceable, the State
had to demonstrate that (A) the State provisions had a safety benefit;
(B) the State provisions were compatible with the FMCSRs; and (C)
enforcement would not cause an unreasonable burden on interstate
commerce. In doing so, FMCSA inadvertently created a standard to
determine ``compatibility'' that uses the term ``compatible,'' which
would effectively nullify some of the standard. Thus, FMCSA must align
the regulations with the underlying statutory authority.
    The Agency corrects this regulatory conflict by changing Sec.
350.303(d)(2)(ii) to provide that the State must demonstrate, in part,
a law, regulation, standard, or order on CMV safety that is in addition
to or more stringent than the FMCSRs ``does not unreasonably frustrate
the Federal goal of uniformity.'' This change emphasizes the need for
uniformity while providing flexibility to States with innovative safety
requirements that are not identical to the national norm. Similarly,
the Agency modifies the definition of ``compatible or compatibility''
in Sec.  350.105 relating to interstate commerce to incorporate the
statutory standard (as set forth in Sec.  350.303(d)(2)(ii)) to ensure
there is no discrepancy between statute and regulation.
Section 350.207(a)(28) What conditions must a State meet to qualify for
MCSAP funds?
    Comment: CVSA expressed support for the addition in proposed Sec.
350.207(a)(28) that States document compliance with hazardous materials
safety permit requirements in the course of inspections they conduct.
It noted, however, that States would need additional time to adopt 49
CFR part 385.
    Response: FMCSA clarifies that the rule does not require States to
adopt part 385, but States are strongly encouraged to do so to support
a comprehensive CMV safety program. States must cooperate in the
enforcement of hazardous materials safety permit requirements under
part 385 by verifying possession of the permit when required while
conducting vehicle inspections and investigations. States are not
required, however, to investigate or enforce violations under part 385.
This change fosters communication between States and FMCSA by having
State enforcement personnel verify the presence of a hazardous
materials safety permit, when required, during vehicle inspections and
investigations that States conduct so FMCSA can take appropriate
enforcement action when warranted. FMCSA revises the proposed
regulatory text to clarify the requirement for States regarding
hazardous materials safety permits.
Section 350.211 What must a State include for the first year of the
CVSP?
    Comment: CVSA opposed removing the requirement that a State submit
a training plan as part of the CVSP process. It stated that training
for inspectors is critical to a uniform, effective national inspection
program and that currently inspectors do not receive enough training.
CVSA said that removing the requirement could result in a jurisdiction
putting less focus on training, impacting both the State's program and
the national program negatively.
    Response: FMCSA disagrees. While the existing regulations include a
requirement for States to include training plans, the electronic
commercial vehicle safety plan (eCVSP) does not include the training
plans, and has not since the eCVSP's implementation in 2013. At that
time, a direct reporting process between the States and the National
Training Center replaced the State training plans. FMCSA has not
observed adverse effects on inspector training because of the direct
reporting process. FMCSA will include information in the annual MCSAP
application announcement indicating how a State may report its training
plan to the National Training Center if the State wishes to do so.
Section 350.219 How are MCSAP funds awarded under a continuing
resolution or an extension of FMCSA's authorization?
    Comment: Section 350.219 clarifies the grant funding distribution
process the Administrator may use in the event

of an extension of FMCSA's authorization or a continuing resolution
impacting the Agency's budget. CVSA stated that it does not object to
the proposed approach, but requested that FMCSA add a specific
authority citation for clarity. CVSA also requested examples of when
and how FMCSA applied this authority in the past.
    Response: Adding a specific authority citation to Sec.  350.219
would not clarify the distribution process the Administrator may use in
the event of an extension of the Agency's authorization or during a
period the Agency operates under a continuing resolution. As stated in
the NPRM, the Administrator's discretion to distribute funds in such
situations is found generally in 49 U.S.C. 31102. Section 31102
authorizes the Secretary to administer MCSAP. The Secretary's authority
is delegated to FMCSA's Administrator in 49 CFR 1.87(f).

VII. International Impacts

    The FMCSRs, and any exceptions to the FMCSRs, apply only within the
United States (and, in some cases, United States Territories). Motor
carriers and drivers are subject to the laws and regulations of the
countries in which they operate, unless an international agreement
states otherwise. Drivers and carriers should be aware of the
regulatory differences among nations.

VIII. Section-by-Section Analysis

    Unless explicitly set forth below, FMCSA adopts the sections as
proposed in the August 22, 2019 NPRM. The Agency makes some revisions
in response to comments and to correct regulatory language not aligned
with its underlying statutory authority. Otherwise, the final rule
makes only minor editorial and grammatical changes to improve clarity
or readability, use consistent phrases, conform style, or correct
typographical errors.

A. Subpart A--General

    Subpart A provides a general overview and defines the terms used in
part 350, applicable to both MCSAP and the High Priority Program.
Sec.  350.101 What is the purpose of this part?
    FMCSA adopts Sec.  350.101 as proposed.
Sec.  350.103 When do the financial assistance program changes take
effect?
    The Agency revises Sec.  350.103 to provide that the changes to the
financial assistance programs take effect for FY 2021, which begins on
October 1, 2020, rather than for FY 2020 as proposed. This change
accounts for the timing of the issuance of this rule, which is too late
to allow for use of the new MCSAP formula in time for FY 2020 grants.
FMCSA removes the qualifier ``[u]nless otherwise provided'' because
there are now no effective dates other than October 1, 2020 provided in
part 350. FMCSA adds ``financial assistance funds and beyond'' at the
end of the section to clarify that the changes will continue in effect
for financial assistance funds awarded in subsequent fiscal years.
Sec.  350.105 What definitions are used in this part?
    The Agency adds a sentence in the introductory paragraph to remind
readers that terms used in part 350 but not defined in Sec.  350.105
are subject to the definitions in 49 CFR part 390.
    With the exceptions discussed below, FMCSA adopts the definitions
as proposed with only minor editorial changes.
    FMCSA revises the definition of ``compatible or compatibility'' to
align with and incorporate the standard in 49 U.S.C. 31141(c) regarding
when a State may enforce a law, regulation, standard, or order on CMV
safety that is in addition to or more stringent than the FMCSRs. In
paragraph (1) pertaining to interstate commerce not involving hazardous
materials, the standard of paragraph (1) of proposed Sec.  350.105
becomes subparagraph (i). New subparagraph (ii) addresses State
provisions that are in addition to or more stringent than the FMCSRs.
When read together, the definition defines these particular State
provisions as compatible with the FMCSRs when (1) they are identical to
or have the same effect as the FMCSRs, or (2) if in addition to or more
stringent than the FMCSRs, they have a safety benefit, do not
unreasonably frustrate the Federal goal of uniformity, and do not cause
an unreasonable burden on interstate commerce when enforced. In
paragraph (2)(ii) pertaining to intrastate commerce not involving
hazardous materials, FMCSA removes and replaces ``subpart C of this
part'' with ``Sec.  350.305 or Sec.  350.307'' to more specifically
identify the sections addressing intrastate variances. The Agency adds
language in paragraphs (1) and (2) to clarify that the standards apply
only to commerce ``not involving the movement of hazardous materials.''
Paragraph (3) remains as proposed.
    As explained above, the Agency changes the definition of ``North
American Standard Inspection'' to continue use of the definition in
existing Sec.  350.105. The definition reads: ``North American Standard
Inspection means the methodology used by State CMV safety inspectors to
conduct safety inspections of CMVs. This consists of various levels of
inspection of the vehicle or driver or both. The inspection criteria
are developed by FMCSA in conjunction with the Commercial Vehicle
Safety Alliance (CVSA), which is an association of States, Canadian
Provinces, and Mexico whose members agree to adopt these standards for
inspecting CMVs in their jurisdiction.''
    In the definition of ``State,'' FMCSA adds the phrase ``unless
otherwise specified in this part'' to emphasize that ``State'' is
defined differently in some sections.

B. Subpart B--MCSAP Administration

    Subpart B provides an overview of MCSAP only. FMCSA revises the
title to use the defined acronym for the Motor Carrier Safety
Assistance Program.
Sec.  350.201 What is MCSAP?
    In Sec.  350.201(b), the Agency changes the paragraph title to
``MCSAP purpose'' to reflect, as explained above, that this section is
a restatement of existing Sec.  350.103 about the purpose of part 350,
which restates the goals of MCSAP in 49 U.S.C. 31102(b). In addition,
FMCSA replaces the phrase ``MCSAP requires States to'' with a slightly
modified version of the introductory paragraph in current Sec.  350.103
regarding the purposes of part 350, to correct the unintentional
appearance of imposing new requirements on States to receive MCSAP
funds. The introductory language reads: ``The purpose of MCSAP is to
ensure FMCSA and States, local government agencies, other political
jurisdictions, Federally-recognized Indian Tribes, and other
organizations and persons work in partnership to establish programs to
improve motor carrier, CMV, and driver safety to support a safe and
efficient transportation system by--.'' The Agency also makes
conforming grammatical changes. Finally, FMCSA removes the phrases
``consistent with Federal requirements'' and ``regulations and
practices'' from proposed paragraph (b)(3) and uses the defined term
``compatible'' and the phrase ``laws, regulations, standards, and
orders'' to ensure consistent use of defined terms and phrases in part
350. Paragraph (b)(3) reads: ``Adopting and enforcing effective and
compatible (as defined in Sec.  350.105 of this part) motor carrier,
CMV, and driver safety laws, regulations, standards, and orders.''

Sec.  350.203 What are the national MCSAP elements?
    FMCSA adopts Sec.  350.203 as proposed.
Sec.  350.205 What entities are eligible for funding under MCSAP?
    FMCSA adopts Sec.  350.205 as proposed.
Sec.  350.207 What conditions must a State meet to qualify for MCSAP
funds?
    In Sec.  350.207(a)(2), the Agency adds a cross reference to Sec.
350.105 for the definition of ``compatible.'' In Sec.  350.207(a)(6),
FMCSA clarifies that the Lead State Agency must give satisfactory
assurances in the CVSP that the Lead State Agency ``and any
subrecipient of MCSAP funds'' has the legal authority, resources, and
qualified personnel necessary to enforce compatible laws, regulations,
standards, and orders on CMV safety, consistent with current MCSAP
requirements. As explained above, FMCSA also adds language in paragraph
(a)(6) to clarify that only MCSAP-funded personnel certified in
accordance with 49 CFR part 385, subpart C, may perform inspections,
audits, and investigations. In Sec.  350.207(a)(28), the Agency
clarifies that a State's requirement with respect to hazardous
materials safety permits is limited to verifying possession of the
permit when required while conducting vehicle inspections and
investigations, as applicable.
Sec.  350.209 How and when does a State apply for MCSAP funds using a
CVSP?
    FMCSA changes the words ``MCSAP application memorandum'' to ``MCSAP
application announcement'' in Sec.  350.209(b).
Sec.  350.211 What must a State include for the first year of the CVSP?
    FMCSA changes the beginning of several paragraphs from ``The first
year of the CVSP . . .'' to ``For the first year of the CVSP, . . .'',
with conforming changes to the sentences, for consistency across the
sections. In Sec.  350.211(a)(1) and (k), the Agency changes the words
``MCSAP application memorandum'' to ``MCSAP application announcement.''
In Sec.  350.211(i)(1)(ii), FMCSA changes the phrase ``the State
maintains required compatibility'' to ``State laws, regulations,
standards, and orders on CMV safety are compatible (as defined in Sec.
350.105 of this part)'' to have consistent terminology with Sec.
350.213(e)(1)(ii). Finally, in paragraph (j), the Agency changes the
phrase ``that was enacted by the State since the last CVSP or annual
update was submitted'' to ``that was enacted by the State since the
prior year's submission'' to use consistent terminology in the sections
and avoid confusion.
Sec.  350.213 What must a State include for the second and third years
of the CVSP?
    In Sec.  350.213(a), FMCSA changes ``a State must submit'' to ``a
Lead State Agency must submit'' to use consistent terminology in the
sections. In Sec.  350.213(a) and (g), the Agency changes the words
``MCSAP application memorandum'' to ``MCSAP application announcement.''
The Agency changes the words ``prior year's CVSP'' in paragraph (a) and
``last CVSP or annual update was submitted'' in paragraph (f) to
``prior year's submission'' to use consistent terminology in the
sections and avoid confusion. In Sec.  350.213(e)(1)(ii), FMCSA adds a
cross reference to Sec.  350.105 for the definition of ``compatible.''
Sec.  350.215 What response does a State receive to its CVSP?
    FMCSA changes the section title for clarity. In Sec.
350.215(a)(1)(ii)(B), the Agency adds a cross reference to Sec.
350.105 for the definition of ``compatible.'' Also, some of the
regulatory text detailing the Agency response to the annual update
submission was inadvertently left out of paragraph (b)(1). FMCSA adds
the phrase ``because the annual update'' as a lead-in to new paragraphs
(A) and (B) in Sec.  350.215(b)(1)(ii), which features the same
language as in Sec.  350.215(a)(1)(ii) related to the Agency response
for the first year of the CVSP.
Sec.  350.217 How are MCSAP funds allocated?
    In Sec.  350.217(e), the Agency makes minor edits to clarify how
the hold-harmless provision and funding cap are calculated. FMCSA adds
the quoted language to paragraph (1) to clarify that the dollar amounts
calculated under paragraphs (c)(6) and (d)(5) of Sec.  350.217 will be
totaled ``for each State'' and then divided by the total MCSAP funds
``available for allocation under paragraphs (c) and (d) of this
section'' to determine a State's percentage of the total MCSAP funds.
In paragraph (2), the Agency changes the location of the word ``total''
at the beginning of the paragraph so the text reads ``percentage of
total MCSAP funding.'' FMCSA also clarifies that the total MCSAP
funding in the prior year does not include amounts allocated to
American Samoa, the Commonwealth of the Northern Mariana Islands, Guam,
and the Virgin Islands. In paragraph (3), the Agency adds a cross
reference to clarify the State's percentage of MCSAP funds allocated
for the prior fiscal year is ``as calculated under paragraph (e)(2) of
this section.''
Sec.  350.219 How are MCSAP funds awarded under a continuing resolution
or an extension of FMCSA's authorization?
    In Sec.  350.219, FMCSA deletes the words ``appropriations act''
after ``continuing resolution'' in the title and introductory clause of
the section.
Sec.  350.221 How long are MCSAP funds available to a State?
    FMCSA adopts Sec.  350.221 as proposed.
Sec.  350.223 What are the Federal and State shares of costs incurred
under MCSAP?
    FMCSA changes the words ``FMCSA policy'' to ``the MCSAP application
announcement'' in Sec.  350.223(b)(1) and (2) to clarify where States
can find eligible costs. FMCSA also changes the words ``MCSAP
application memorandum'' to ``MCSAP application announcement'' in Sec.
350.223(c)(2)(i).
Sec.  350.225 What MOE must a State maintain to qualify for MCSAP
funds?
    In the introductory paragraph of Sec.  350.225(a), FMCSA deletes
the phrase ``equal to the average aggregate expenditure of the Lead
State Agency'' because it is redundant. Section 350.225 reflects, in
paragraphs (a)(2) and (e), that the grants issued for FY 2021 will be
the first year of grants using the new MCSAP allocation formula.
Paragraph (b)(5) now includes a cross reference to Sec.  350.223 to
further clarify that the MOE calculation excludes a State's matching
funds. Paragraph (c) now includes clarifying language regarding
eligible costs for the calculation of the MOE and expenditures under
the current MOE.
Sec.  350.227 What activities are eligible for reimbursement under
MCSAP?
    In Sec.  350.227(c), FMCSA separates the introductory paragraph
into paragraph (1) to provide the provisions for State traffic laws and
regulations relating to CMVs and a paragraph (2) for those provisions
relating to non-CMVs, to clarify that the qualifications for
reimbursement of traffic enforcement activities apply only to
enforcement of laws and regulations relating to non-CMVs. In doing so,
FMCSA moves the phrase ``when necessary to promote the safe operation
of CMVs'' to a new paragraph (c)(2)(i) to further clarify that it is a
qualification for reimbursement. The Agency redesignates the following
paragraphs accordingly. With the addition of the new paragraph
(c)(2)(i), FMCSA deletes the redundant phrase

``when necessary to promote the safe operation of CMVs'' in paragraph
(c)(2)(iii).
Sec.  350.229 What specific costs are eligible for reimbursement under
MCSAP?
    In Sec.  350.229(a), FMCSA deletes the words ``FMCSA policy,''
changes the words ``MCSAP application memorandum'' to ``MCSAP
application announcement,'' and clarifies where States can find
eligible costs. In paragraph (b), FMCSA changes the words ``MCSAP
application memorandum'' to ``MCSAP application announcement.''
Sec.  350.231 What are the consequences for failure to meet MCSAP
conditions?
    FMCSA adopts Sec.  350.231 as proposed.

C. Subpart C--MCSAP-Required Compatibility Review

    Subpart C includes information related to the MCSAP-required
compatibility review and variances for intrastate commerce available to
States participating in MCSAP.
Sec.  350.301 What is the purpose of this subpart?
    In the introductory paragraph, FMCSA adds a cross reference to
Sec.  350.105 for the definition of ``compatibility.''
Sec.  350.303 How does a State ensure compatibility?
    In Sec.  350.303(a), FMCSA adds a cross reference to Sec.  350.105
for the definition of ``compatibility.'' FMCSA revises paragraph (d) to
conform to that definition in substance and organization by setting
forth the standards applicable to each type of commerce in separate
paragraphs, and to use the terms ``compatible'' and ``compatibility''
consistently. FMCSA moves proposed paragraph (d)(2)(i) to paragraph
(d)(1) with minor edits. The Agency specifies that the State must
determine whether its laws, regulations, standards, and orders are
identical to or have the same effect as, are in addition to or more
stringent than, or are less stringent than the FMCSRs, or are identical
to the HMRs. FMCSA removes the words ``corresponding provision of'' and
``provisions of,'' as they are unnecessary.
    In paragraph (d)(2), FMCSA adds an introductory clause providing
that the paragraph applies to interstate commerce not involving the
movement of hazardous materials. To align the regulations with the
underlying statutory authority as mentioned above, the Agency revises
and renumbers proposed paragraphs (d)(2)(ii) through (d)(2)(iv) as
paragraphs (d)(2)(i) through (d)(2)(iii) to address the enforceability
of State provisions that are identical to or have the same effect as,
are in addition to or more stringent than, and are less stringent than
the FMCSRs, each in its own separate paragraph. In paragraph (d)(2)(ii)
(relating to State provisions that are in addition to or more stringent
than the FMCSRs), FMCSA changes the language from ``[i]t is compatible
with the FMCSRs'' to ``does not unreasonably frustrate the Federal goal
of uniformity.'' In paragraph (d)(2)(iii) (relating to State provisions
that are less stringent than the FMCSRs), the Agency removes the
proposed language providing ``unless it falls within the provisions of
Sec. Sec.  350.305 or 350.307'' and moves it to paragraph (d)(3)(ii)
because it is only applicable to intrastate commerce not involving the
movement of hazardous materials.
    The Agency adds paragraph (d)(3) to create a separate paragraph
that addresses State provisions applicable to intrastate commerce not
involving hazardous materials to conform to the definition and
organization of ``compatible'' in Sec.  350.105. In the new paragraph,
FMCSA separates into paragraphs (d)(3)(i) and (d)(3)(ii) the standard
for State provisions that are identical to or have the same effect as
the FMCSRs and the standard for those that differ from the FMCSRs,
respectively. The Agency redesignates the following subparagraphs in
paragraph (d) accordingly.
    Paragraph (d)(4) provides the standard applicable to interstate and
intrastate commerce involving the movement of hazardous materials.
    Finally, in paragraph (g)(3), the Agency changes the words ``State
or person'' to ``petitioner'' for clarity.
Sec.  350.305 What specific variances from the FMCSRs are allowed for
State laws and regulations applicable to intrastate commerce and are
not subject to Federal jurisdiction?
    FMCSA revises the title of this section to improve readability and
emphasize that variances are only available for State provisions
applicable to intrastate commerce. Otherwise, FMCSA adopts Sec.
350.305 as proposed with only minor editorial changes.
Sec.  350.307 How may a State obtain a new exemption for State laws or
regulations for a specific industry involved in intrastate commerce?
    FMCSA revises the title of this section to improve readability.
Otherwise, FMCSA adopts Sec.  350.307 as proposed with only minor
editorial changes.
Sec.  350.309 What are the consequences if a State has provisions that
are not compatible?
    In Sec.  350.309(a), FMCSA adds a cross reference to Sec.  350.105
for the definition of ``compatible.''

D. Subpart D--High Priority Program

    Subpart D describes the High Priority Program.
Sec.  350.401 What is the High Priority Program and what entities are
eligible for funding under the High Priority Program?
    FMCSA adds to the section title ``and what entities are eligible
for funding under the High Priority Program'' to indicate the section
also identifies the eligible entities. Otherwise, FMCSA adopts Sec.
350.401 as proposed with only a minor editorial change.
Sec.  350.403 What are the High Priority Program objectives?
    In Sec.  350.403(e) and (f), FMCSA deletes the phrase ``safety data
improvement projects'' to align with the authorizing statute. Section
350.403(g) already includes ``safety data improvement projects;''
accordingly, inclusion of the phrase in Sec.  350.403(e) and (f) is
duplicative and confusing for the reader.
    In Sec.  350.403(h), FMCSA adds the phrase ``by States'' to clarify
that Innovative Technology Deployment funds only may be given to
States, in accordance with the authorizing statute. In paragraph (i),
FMCSA changes the conjunction ``and'' to ``or'' to clarify a High
Priority Program project only needs to include one, not all, of the
objectives.
Sec.  350.405 What conditions must an applicant meet to qualify for
High Priority Program funds?
    FMCSA reorganizes Sec.  350.405 so the High Priority Program
eligibility requirements for funds related to motor carrier safety
activities for States are in paragraph (a)(1) and applicants other than
States are in paragraph (a)(2). Conforming changes are made to the
numbering of the paragraphs. In paragraph (b), FMCSA adds the
eligibility requirements States must satisfy to qualify for High
Priority Program funds for Innovative Technology Deployment activities
set forth at 49 U.S.C. 31102(l)(3)(C). FMCSA believes it will be more
convenient for applicants to have all the eligibility requirements for
High Priority Program funds in one location and to know them prior to
the availability of the NOFO.

Sec.  350.407 How and when does an eligible entity apply for High
Priority Program funds?
    FMCSA adds a sentence to clarify when an entity must apply for High
Priority Program funds.
Sec.  350.409 What response will an applicant receive under the High
Priority Program?
    FMCSA adopts Sec.  350.409 as proposed.
Sec.  350.411 How long are High Priority Program funds available to a
recipient?
    FMCSA revises the paragraph titles to correspond to Sec.  350.405.
Otherwise, FMCSA adopts Sec.  350.411 as proposed with only minor
editorial changes.
Sec.  350.413 What are the Federal and recipient shares of costs
incurred under the High Priority Program?
    In Sec.  350.413(b), FMCSA removes the word ``policy'' and replaces
it with the words ``in the NOFO'' to clarify where entities can find
eligible costs.
Sec.  350.415 What types of activities and projects are eligible for
reimbursement under the High Priority Program?
    FMCSA adopts Sec.  350.415 as proposed.
Sec.  350.417 What specific costs are eligible for reimbursement under
the High Priority Program?
    FMCSA adopts Sec.  350.417 as proposed.

E. Miscellaneous

    FMCSA removes and reserves part 355 of title 49 of the CFR
(Compatibility of State Laws and Regulations Affecting Interstate Motor
Carrier Operations) as proposed. FMCSA also removes and reserves part
388 (Cooperative Agreements with States) as proposed.

X. Regulatory Analyses

A. Executive Order (E.O.) 12866 (Regulatory Planning and Review), E.O.
13563 (Improving Regulation and Regulatory Review), and DOT Regulations

    The Office of Information and Regulatory Affairs determined that
this final rule is not a significant regulatory action under section
3(f) of E.O. 12866, Regulatory Planning and Review (58 FR 51735, Oct.
4, 1993), as supplemented by E.O. 13563, Improving Regulation and
Regulatory Review (76 FR 3821, Jan. 21, 2011), and does not require an
assessment of potential costs and benefits under section 6(a)(3) of
E.O. 12866. Accordingly, the Office of Management and Budget (OMB) has
not reviewed it under that Order. In addition, this rule is not
significant within the meaning of DOT regulations (84 FR 71714, Dec.
27, 2019).
    The purpose of the rule is to amend and reorganize 49 CFR part 350,
including adding relevant sections that are currently located in part
355. Certain regulations are no longer necessary or are redundant.
Moreover, the FAST Act requires FMCSA to implement a multi-year CVSP
with annual updates for States applying for MCSAP funds and to provide
a new MCSAP allocation formula. The new MCSAP formula helps the Federal
Government operate more efficiently by establishing a reallocation of
grant funds based on changes in safety factors. The new formula
reallocates FY 2021 grant funding, but does not change the total amount
of funds distributed. States are the only affected entities of this
rule.
    The new MCSAP allocation formula replaces the current formula that
has been in use for more than a decade with little modification and
makes several improvements over the current formula. The basis of the
new formula is a careful statistical analysis of the relationship
between numerous highway safety variables, crashes, and fatalities.
While this analysis revealed that several of the existing formula
factors (e.g., special fuel consumption and population) remain highly
correlated with crashes, newer data are available to more closely link
the allocation of funding to safety risk.
    The formula discontinues the use of Incentive Funds. Instead, the
formula allocates funds primarily based on the calculation of the
applicable highway and safety factors. Mitigation measures ensure that
State funding levels do not fluctuate substantially from year to year.
Specifically, subject to the availability of funding, a State would not
have a decrease of more than 3 percent, or an increase of more than 5
percent, compared to its share of the formula grant calculation in the
previous year.\4\ This provides the State a degree of predictability to
aid in budget planning, while still allowing for fair allocation of
funds based on changes in safety factors.
---------------------------------------------------------------------------

    \4\ In this respect, the States, the District of Columbia, and
the Commonwealth of Puerto Rico are treated differently than the
remaining Territories. The U.S. Census Bureau does not provide
annual population estimates for Territories other than the
Commonwealth of Puerto Rico. Thus, these percentage limitations
governing funding levels do not apply to these Territories.
---------------------------------------------------------------------------

    The new MCSAP formula results in a reallocation of grant funding
but will not change the total amount of funds distributed and will not
impose or reduce any costs associated with the program.
    FMCSA clarifies that it is a State's obligation to cooperate in the
enforcement of hazardous materials safety permits for interstate and
intrastate carriers as required under subpart E of 49 CFR part 385. The
rule requires States to verify possession of the permit when required
while conducting vehicle inspections and investigations. State
officials already receive training on subpart E of part 385; therefore,
FMCSA estimates that no new costs or benefits result from this
clarification.
    The rule requires States to use CVSPs in accordance with the FAST
Act. The rule provides direction to States on how and when to submit
CVSPs, which are on 3-year cycles. Under the current regulations,
States must submit lengthy annual CVSP applications to receive MCSAP
funding. This rule requires States to submit robust 3-year CVSP
applications for the first year, with annual updates for the second and
third years, resulting in a decrease in costs, or a cost savings, for
States and FMCSA. Specifically, for the first year of the CVSP, States
submit information regarding performance goals, past performance, and
other documents traditionally provided in an annual CVSP. For the
second and third years of the CVSP, States submit an annual update that
includes a budget for the applicable fiscal year, changes to the CVSP,
and other documents required on an annual basis. In response to
comments from CVSA, these changes are implemented for FY 2021 and not
FY 2020 grant funds, as proposed. This adjustment is to account for the
timing of this final rule.
    The rule eliminates the exception to adopt Sec. Sec.  171.15 and
171.16 in the HMRs by States participating in MCSAP. These provisions
require reporting of certain hazardous materials incidents. This rule
allows States to ensure compliance with these provisions during the
course of investigations, but does not require States to conduct
investigations. Additionally, eliminating the exception does not expand
the incident reporting burden. State officials already receive
investigation training, which includes training on enforcement of
Sec. Sec.  171.15 and 171.16. Therefore, FMCSA estimates that no new
costs or benefits result from this exception elimination.

B. E.O. 13771 (Reducing Regulation and Controlling Regulatory Costs)

    E.O. 13771, Reducing Regulation and Controlling Regulatory Costs,
does not apply to this action because it is a nonsignificant regulatory
action, as defined in section 3(f) of E.O. 12866, and has zero costs;
therefore, it is not

subject to the ``2 for 1'' and budgeting requirements.\5\
---------------------------------------------------------------------------

    \5\ Executive Office of the President. Executive Order 13771 of
January 30, 2017. Reducing Regulation and Controlling Regulatory
Costs. 82 FR 9339-9341. February 3, 2017.
---------------------------------------------------------------------------

C. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.),
the Office of Information and Regulatory Affairs designated this rule
as not a ``major rule,'' as defined by 5 U.S.C. 804(2).\6\
---------------------------------------------------------------------------

    \6\ A ``major rule'' means any rule that the Administrator of
the Office of Information and Regulatory Affairs at OMB finds has
resulted in or is likely to result in (a) an annual effect on the
economy of $100 million or more; (b) a major increase in costs or
prices for consumers, individual industries, Federal agencies, State
agencies, local government agencies, or geographic regions; or (c)
significant adverse effects on competition, employment, investment,
productivity, innovation, or the ability of United States-based
enterprises to compete with foreign-based enterprises in domestic
and export markets (5 U.S.C. 804(2)).
---------------------------------------------------------------------------

D. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) of 1980 (5 U.S.C. 601 et
seq.), as amended by the Small Business Regulatory Enforcement Fairness
Act of 1996 (Pub. L. 104-121, 110 Stat. 857 (Mar. 29, 1996), note
following 5 U.S.C. 601), requires Federal agencies to consider the
impact of their regulatory proposals on small entities, analyze
effective alternatives that minimize small entity impacts, and make
their analyses available for public comment. The term ``small
entities'' means small businesses and not-for-profit organizations that
are independently owned and operated and are not dominant in their
fields, and governmental jurisdictions with populations under 50,000 (5
U.S.C. 601(6)). Section 605 of the RFA allows an agency to certify a
rule, in lieu of preparing an analysis, if the rulemaking is not
expected to have a significant economic impact on a substantial number
of small entities.
    This rule primarily affects States applying for MCSAP funds due to
the new MCSAP allocation formula governing distribution of MCSAP funds
and the requirement to submit CVSPs on a 3-year cycle. States are not
small entities because they do not meet the definition of a small
entity in section 601 of the RFA. Specifically, States are not small
governmental jurisdictions under section 601(5) of the RFA, both
because State government is not among the various levels of government
listed in section 601(5), and because, even if this were the case, no
State, including the District of Columbia and the 5 Territories, has a
population of less than 50,000, which is the criterion to be a small
governmental jurisdiction under section 601(5) of the RFA.
    Although States would not be small entities, there is a possibility
that other entities that may be grant program applicants could be small
entities. These other entities include local governments, Federally-
recognized Indian Tribes, other political jurisdictions, universities,
non-profit organizations, and other persons who, although not eligible
for MCSAP funds, which are designated for States, would be eligible for
funding under the High Priority Program. However, the impact of the
rule results from changes to MCSAP, which do not affect the High
Priority Program applicants. As such, FMCSA has determined that these
non-State entities would not experience economic impacts as a result of
the rule.
    In summary, this rule only impacts States, including the District
of Columbia and the 5 Territories, which are not small entities. The
rule thus does not have a significant economic impact on the regulated
entities, and does not significantly impact a substantial number of
small entities. Accordingly, I certify that the action does not have a
significant economic impact on a substantial number of small entities.

E. Assistance for Small Entities

    In accordance with section 213(a) of the Small Business Regulatory
Enforcement Fairness Act of 1996, FMCSA wants to assist small entities
in understanding this final rule so that they can better evaluate its
effects on themselves and participate in the rulemaking initiative. If
the final rule will affect your small business, organization, or
governmental jurisdiction and you have questions concerning its
provisions or options for compliance, please consult the FMCSA point of
contact, Mr. Jack Kostelnik, listed in the FOR FURTHER INFORMATION
CONTACT section of this final rule.
    Small businesses may send comments on the actions of Federal
employees who enforce or otherwise determine compliance with Federal
regulations to the Small Business Administration's Small Business and
Agriculture Regulatory Enforcement Ombudsman and the Regional Small
Business Regulatory Fairness Boards. The Ombudsman evaluates these
actions annually and rates each agency's responsiveness to small
business. If you wish to comment on actions by employees of FMCSA, call
1-888-REG-FAIR (1-888-734-3247). DOT has a policy regarding the rights
of small entities to regulatory enforcement fairness and an explicit
policy against retaliation for exercising these rights.

F. Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538)
requires Federal agencies to assess the effects of their discretionary
regulatory actions. In particular, the Act addresses actions that may
result in the expenditure by a State, local, or Tribal government, in
the aggregate, or by the private sector of $165 million (which is the
value equivalent of $100 million in 1995, adjusted for inflation to
2018 levels) or more in any 1 year. Though this final rule will not
result in such an expenditure, the Agency does discuss the effects of
this rule elsewhere in this preamble.

G. Paperwork Reduction Act

    This rule would call for no new collection of information under the
Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). The Agency notes
that MCSAP applications are not subject to OMB's standard application
requirements pursuant to 2 CFR 1201.206. Entities apply for the
Agency's other financial assistance programs using standardized forms
found in grants.gov, which account for any information collection
burden and are not impacted by this rule.

H. E.O. 13132 (Federalism)

    A rule has implications for federalism under section 1(a) of E.O.
13132 if it has ``substantial direct effects on the States, on the
relationship between the national government and the States, or on the
distribution of power and responsibilities among the various levels of
government.'' FMCSA determined that this rule does not have substantial
direct costs on or for States, nor would it limit the policymaking
discretion of States. Nothing in this document preempts any State law
or regulation. Therefore, this rule does not have sufficient federalism
implications to warrant the preparation of a Federalism Impact
Statement.

I. Privacy

    Section 522 of title I of division H of the Consolidated
Appropriations Act, 2005 (Pub. L. 108-447, 118 Stat. 2809, 3268 (Dec.
8, 2004), note following 5 U.S.C. 552a), requires the Agency to conduct
a privacy impact assessment of a regulation that will affect the
privacy of individuals. The assessment considers impacts of the rule on
the privacy of information in an identifiable form and related matters.
The FMCSA Privacy Officer has evaluated the risks

and effects the rulemaking might have on collecting, storing, and
sharing personally identifiable information and has evaluated
protections and alternative information handling processes in
developing the rule to mitigate potential privacy risks. FMCSA
determined that this rule does not require the collection of individual
personally identifiable information.
    Additionally, the Agency submitted a Privacy Threshold Assessment
analyzing the rulemaking to the DOT, Office of the Secretary's Privacy
Office. The DOT Privacy Office has determined that this rulemaking does
not create privacy risk.
    The E-Government Act of 2002 (Pub. L. 107-347, 208, 116 Stat. 2899,
2921 (Dec. 17, 2002)), requires Federal agencies to conduct a privacy
impact assessment for new or substantially changed technology that
collects, maintains, or disseminates information in an identifiable
form. No new or substantially changed technology would collect,
maintain, or disseminate information because of this rule.

J. E.O. 13175 (Indian Tribal Governments)

    This rule does not have Tribal implications under E.O. 13175,
Consultation and Coordination with Indian Tribal Governments, because
it does not have a substantial direct effect on one or more Indian
Tribes, on the relationship between the Federal Government and Indian
Tribes, or on the distribution of power and responsibilities between
the Federal Government and Indian Tribes.

K. National Environmental Policy Act of 1969

    FMCSA analyzed this rule for the purpose of the National
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and
determined this action is categorically excluded from further analysis
and documentation in an environmental assessment or environmental
impact statement under FMCSA Order 5610.1 (69 FR 9680, Mar. 1, 2004),
Appendix 2, paragraphs 6.f. and 6.g. The Categorical Exclusions (CEs)
in paragraphs 6.f. and 6.g. cover regulations implementing activities,
whether performed by FMCSA or by States pursuant to MCSAP, and
procedures to promote adoption and enforcement of State laws and
regulations pertaining to CMV safety that are compatible with the
FMCSRs and HMRs, and procedures to provide guidelines for a continuous
regulatory review of State laws and regulations. These CEs cover the
requirements in this rule and the rule does not have any effect on the
quality of the environment.

List of Subjects

49 CFR 350

    Grant programs-transportation, Highway safety, Motor carriers,
Motor vehicle safety, Reporting and recordkeeping requirements

49 CFR 355

    Highway safety, Intergovernmental relations, Motor carriers, Motor
vehicle safety, Reporting and recordkeeping requirements

49 CFR 388

    Administrative practice and procedure, Highway safety, Motor
carriers, Motor vehicle safety

    In consideration of the foregoing, FMCSA amends 49 CFR chapter III
as follows:

0
1. Revise part 350 to read as follows:

PART 350--MOTOR CARRIER SAFETY ASSISTANCE PROGRAM (MCSAP) AND HIGH
PRIORITY PROGRAM

Subpart A--General
Sec.
350.101 What is the purpose of this part?
350.103 When do the financial assistance program changes take
effect?
350.105 What definitions are used in this part?
Subpart B--MCSAP Administration
350.201 What is MCSAP?
350.203 What are the national MCSAP elements?
350.205 What entities are eligible for funding under MCSAP?
350.207 What conditions must a State meet to qualify for MCSAP
funds?
350.209 How and when does a State apply for MCSAP funds using a
CVSP?
350.211 What must a State include for the first year of the CVSP?
350.213 What must a State include for the second and third years of
the CVSP?
350.215 What response does a State receive to its CVSP?
350.217 How are MCSAP funds allocated?
350.219 How are MCSAP funds awarded under a continuing resolution or
an extension of FMCSA's authorization?
350.221 How long are MCSAP funds available to a State?
350.223 What are the Federal and State shares of costs incurred
under MCSAP?
350.225 What MOE must a State maintain to qualify for MCSAP funds?
350.227 What activities are eligible for reimbursement under MCSAP?
350.229 What specific costs are eligible for reimbursement under
MCSAP?
350.231 What are the consequences for failure to meet MCSAP
conditions?
Subpart C--MCSAP-Required Compatibility Review
350.301 What is the purpose of this subpart?
350.303 How does a State ensure compatibility?
350.305 What specific variances from the FMCSRs are allowed for
State laws and regulations applicable to intrastate commerce and are
not subject to Federal jurisdiction?
350.307 How may a State obtain a new exemption for State laws or
regulations for a specific industry involved in intrastate commerce?
350.309 What are the consequences if a State has provisions that are
not compatible?
Subpart D--High Priority Program
350.401 What is the High Priority Program and what entities are
eligible for funding under the High Priority Program?
350.403 What are the High Priority Program objectives?
350.405 What conditions must an applicant meet to qualify for High
Priority Program funds?
350.407 How and when does an eligible entity apply for High Priority
Program funds?
350.409 What response will an applicant receive under the High
Priority Program?
350.411 How long are High Priority Program funds available to a
recipient?
350.413 What are the Federal and recipient shares of costs incurred
under the High Priority Program?
350.415 What types of activities and projects are eligible for
reimbursement under the High Priority Program?
350.417 What specific costs are eligible for reimbursement under the
High Priority Program?

    Authority: 49 U.S.C. 504, 13902, 31101, 31102, 31104, 31106,
31108, 31136, 31141, 31161, 31310, 31311, 31502; secs. 5106 and
5107, Pub. L. 114-94, 129 Stat. 1312, 1530; and 49 CFR 1.87.

Subpart A--General

Sec.  350.101  What is the purpose of this part?

    The purpose of this part is to provide direction for entities
seeking MCSAP or High Priority Program funding to improve motor
carrier, CMV, and driver safety.

Sec.  350.103  When do the financial assistance program changes take
effect?

    The changes to the FMCSA financial assistance programs under this
part take effect for fiscal year 2021 (beginning October 1, 2020)
financial assistance funds and beyond.

Sec.  350.105  What definitions are used in this part?

    Unless specifically defined in this section, terms used in this
part are subject to the definitions in 49 CFR part 390. As used in this
part:

    Administrative takedown funds means funds FMCSA deducts each fiscal
year from the amounts made available for MCSAP and the High Priority
Program for expenses incurred by FMCSA for training State and local
government employees and for the administration of the programs.
    Administrator means the administrator of FMCSA.
    Border State means a State that shares a land border with Canada or
Mexico.
    Commercial motor vehicle (CMV) means a motor vehicle that has any
of the following characteristics:
    (1) A gross vehicle weight (GVW), gross vehicle weight rating
(GVWR), gross combination weight (GCW), or gross combination weight
rating (GCWR) of 4,537 kilograms (10,001 pounds) or more.
    (2) Regardless of weight, is designed or used to transport 16 or
more passengers, including the driver.
    (3) Regardless of weight, is used in the transportation of
hazardous materials and is required to be placarded pursuant to 49 CFR
part 172, subpart F.
    Commercial vehicle safety plan (CVSP) means a State's CMV safety
objectives, strategies, activities, and performance measures that cover
a 3-year period, including the submission of the CVSP for the first
year and annual updates thereto for the second and third years.
    Compatible or compatibility means State laws, regulations,
standards, and orders on CMV safety that:
    (1) As applicable to interstate commerce not involving the movement
of hazardous materials:
    (i) Are identical to or have the same effect as the FMCSRs; or
    (ii) If in addition to or more stringent than the FMCSRs, have a
safety benefit, do not unreasonably frustrate the Federal goal of
uniformity, and do not cause an unreasonable burden on interstate
commerce when enforced;
    (2) As applicable to intrastate commerce not involving the movement
of hazardous materials:
    (i) Are identical to or have the same effect as the FMCSRs; or
    (ii) Fall within the limited variances from the FMCSRs allowed
under Sec.  350.305 or Sec.  350.307; and
    (3) As applicable to interstate and intrastate commerce involving
the movement of hazardous materials, are identical to the HMRs.
    FMCSA means the Federal Motor Carrier Safety Administration of the
United States Department of Transportation.
    FMCSRs means:
    (1) The Federal Motor Carrier Safety Regulations under parts 390,
391, 392, 393, 395, 396, and 397 of this subchapter; and
    (2) Applicable standards and orders issued under these provisions.
    HMRs means:
    (1) The Federal Hazardous Materials Regulations under subparts F
and G of part 107, and parts 171, 172, 173, 177, 178, and 180 of this
title; and
    (2) Applicable standards and orders issued under these provisions.
    High Priority Program funds means total funds available for the
High Priority Program, less the administrative takedown funds.
    Investigation means an examination of motor carrier operations and
records, such as drivers' hours of service, maintenance and inspection,
driver qualification, commercial driver's license requirements,
financial responsibility, crashes, hazardous materials, and other
safety and transportation records, to determine whether a motor carrier
meets safety standards, including the safety fitness standard under
Sec.  385.5 of this subchapter, or, for intrastate motor carrier
operations, the applicable State standard.
    Lead state agency means the State CMV safety agency responsible for
administering the CVSP throughout a State.
    Maintenance of effort (MOE) means the level of a State's financial
expenditures, other than the required match, the Lead State Agency is
required to expend each fiscal year in accordance with Sec.  350.225.
    Motor carrier means a for-hire motor carrier or private motor
carrier. The term includes a motor carrier's agents, officers, and
representatives, as well as employees responsible for hiring,
supervising, training, assigning, or dispatching a driver or an
employee concerned with the installation, inspection, and maintenance
of motor vehicle equipment or accessories.
    Motor Carrier Safety Assistance Program (MCSAP) funds means total
formula grant funds available for MCSAP, less the administrative
takedown funds.
    New entrant safety audit means the safety audit of an interstate
motor carrier that is required as a condition of MCSAP eligibility
under Sec.  350.207(a)(26), and, at the State's discretion, an
intrastate new entrant motor carrier under 49 U.S.C. 31144(g) that is
conducted in accordance with subpart D of part 385 of this subchapter.
    North American Standard Inspection means the methodology used by
State CMV safety inspectors to conduct safety inspections of CMVs. This
consists of various levels of inspection of the vehicle or driver or
both. The inspection criteria are developed by FMCSA in conjunction
with the Commercial Vehicle Safety Alliance (CVSA), which is an
association of States, Canadian Provinces, and Mexico whose members
agree to adopt these standards for inspecting CMVs in their
jurisdiction.
    State means a State of the United States, the District of Columbia,
American Samoa, the Commonwealth of the Northern Mariana Islands, the
Commonwealth of Puerto Rico, Guam, and the Virgin Islands, unless
otherwise specified in this part.
    Traffic enforcement means the stopping of vehicles operating on
highways for moving violations of State, Tribal, or local motor vehicle
or traffic laws by State, Tribal, or local officials.

Subpart B--MCSAP Administration

Sec.  350.201  What is MCSAP?

    (a) General. MCSAP is a Federal formula grant program that provides
financial assistance to States to reduce the number and severity of
crashes, and resulting injuries and fatalities, involving CMVs and to
promote the safe transportation of passengers and hazardous materials.
The goal of MCSAP is to reduce CMV-involved crashes, fatalities, and
injuries through consistent, uniform, and effective CMV safety programs
that include driver or vehicle inspections, traffic enforcement,
carrier investigations, new entrant safety audits, border enforcement,
safety data improvements, and Performance and Registration Information
Systems Management (PRISM).
    (b) MCSAP purpose. The purpose of MCSAP is to ensure FMCSA and
States, local government agencies, other political jurisdictions,
Federally-recognized Indian Tribes, and other organizations and persons
work in partnership to establish programs to improve motor carrier,
CMV, and driver safety to support a safe and efficient transportation
system by--
    (1) Making targeted investments to promote safe CMV transportation,
including transportation of passengers and hazardous materials;
    (2) Investing in activities likely to generate maximum reductions
in the number and severity of CMV crashes and in fatalities resulting
from CMV crashes;
    (3) Adopting and enforcing effective and compatible (as defined in
Sec.  350.105 of this part) motor carrier, CMV, and driver safety laws,
regulations, standards, and orders; and
    (4) Assessing and improving State-wide performance of motor
carrier, CMV, and driver safety by setting

program goals and meeting performance standards, measurements, and
benchmarks.
    (c) State participation. MCSAP sets conditions of participation for
States and promotes the adoption and uniform enforcement of compatible
laws, regulations, standards, and orders on CMV safety.

Sec.  350.203  What are the national MCSAP elements?

    The national MCSAP elements are:
    (a) Driver inspections;
    (b) Vehicle inspections;
    (c) Traffic enforcement;
    (d) Investigations;
    (e) New entrant safety audits;
    (f) CMV safety programs focusing on international commerce in
border States;
    (g) Beginning October 1, 2020, full participation in PRISM or an
acceptable alternative as determined by the Administrator;
    (h) Accurate, complete, timely, and corrected data;
    (i) Public education and awareness; and
    (j) Other elements that may be prescribed by the Administrator.

Sec.  350.205  What entities are eligible for funding under MCSAP?

    Only States are eligible to receive MCSAP grants directly from
FMCSA.

Sec.  350.207  What conditions must a State meet to qualify for MCSAP
funds?

    (a) General. To qualify for MCSAP funds, a State must:
    (1) Designate a Lead State Agency;
    (2) Assume responsibility for improving motor carrier safety by
adopting and enforcing compatible (as defined in Sec.  350.105 of this
part) laws, regulations, standards, and orders on CMV safety, except as
may be determined by the Administrator to be inapplicable to a State
enforcement program;
    (3) Ensure that the State will cooperate in the enforcement of
financial responsibility requirements under part 387 of this
subchapter;
    (4) Provide that the State will enforce the registration
requirements under 49 U.S.C. 13902 and 31134 by prohibiting the
operation of any vehicle discovered to be operated by a motor carrier
without a registration issued under those sections or operated beyond
the scope of the motor carrier's registration;
    (5) Provide a right of entry (or other method a State may use that
is adequate to obtain necessary information) and inspection to carry
out the CVSP;
    (6) Give satisfactory assurances in its CVSP that the Lead State
Agency and any subrecipient of MCSAP funds have the legal authority,
resources, and qualified personnel (including individuals certified in
accordance with 49 CFR part 385, subpart C, to perform inspections,
audits, and investigations) necessary to enforce compatible laws,
regulations, standards, and orders on CMV safety;
    (7) Provide satisfactory assurances that the State will undertake
efforts that will emphasize and improve enforcement of State and local
traffic laws and regulations on CMV safety;
    (8) Give satisfactory assurances that the State will devote
adequate resources to the administration of the CVSP throughout the
State, including the enforcement of compatible laws, regulations,
standards, and orders on CMV safety;
    (9) Provide that the MOE of the Lead State Agency will be
maintained each fiscal year in accordance with Sec.  350.225;
    (10) Provide that all reports required in the CVSP be available to
FMCSA upon request, meet the reporting requirements, and use the forms
for recordkeeping, inspections, and investigations that FMCSA
prescribes;
    (11) Implement performance-based activities, including deployment
and maintenance of technology, to enhance the efficiency and
effectiveness of CMV safety programs;
    (12) Establish and dedicate sufficient resources to a program to
ensure that accurate, complete, and timely motor carrier safety data
are collected and reported, and to ensure the State's participation in
a national motor carrier safety data correction system prescribed by
FMCSA;
    (13) Ensure that the Lead State Agency will coordinate the CVSP,
data collection, and information systems with the State highway safety
improvement program under 23 U.S.C. 148(c);
    (14) Ensure participation in information technology and data
systems as required by FMCSA for jurisdictions receiving MCSAP funding;
    (15) Ensure that information is exchanged with other States in a
timely manner;
    (16) Grant maximum reciprocity for inspections conducted under the
North American Standard Inspection Program through the use of a
nationally accepted system that allows ready identification of
previously inspected CMVs;
    (17) Provide that the State will conduct comprehensive and highly
visible traffic enforcement and CMV safety inspection programs in high-
risk locations and corridors;
    (18) Ensure that driver or vehicle inspections will be conducted at
locations that are adequate to protect the safety of drivers and
enforcement personnel;
    (19) Except in the case of an imminent or obvious safety hazard,
ensure that an inspection of a vehicle transporting passengers for a
motor carrier of passengers is conducted at a bus station, terminal,
border crossing, maintenance facility, destination, or other location
where a motor carrier may make a planned stop (excluding a weigh
station);
    (20) Provide satisfactory assurances that the State will address
activities in support of the national program elements listed in Sec.
350.203, including activities:
    (i) Aimed at removing impaired CMV drivers from the highways
through adequate enforcement of regulations on the use of alcohol and
controlled substances and by ensuring ready roadside access to alcohol
detection and measuring equipment;
    (ii) Aimed at providing training to MCSAP personnel to recognize
drivers impaired by alcohol or controlled substances; and
    (iii) Related to criminal interdiction, including human
trafficking, when conducted with an appropriate CMV inspection and
appropriate strategies for carrying out those interdiction activities,
including interdiction activities that affect the transportation of
controlled substances (as defined in section 102 of the Comprehensive
Drug Abuse Prevention and Control Act of 1970 (21 U.S.C. 802) and
listed in 21 CFR part 1308) by any occupant of a CMV;
    (21) Ensure that detection of criminal activities and size and
weight activities described in Sec.  350.227(b), if financed through
MCSAP funds, will not diminish the effectiveness of the development and
implementation of the programs to improve motor carrier, CMV, and
driver safety;
    (22) Ensure consistent, effective, and reasonable sanctions;
    (23) Provide that the State will include in the training manuals
for the licensing examinations to drive a CMV and non-CMV information
on best practices for driving safely in the vicinity of CMVs and non-
CMVs;
    (24) Require all registrants of CMVs to demonstrate their knowledge
of applicable FMCSRs, HMRs, or compatible State laws, regulations,
standards, and orders on CMV safety;
    (25) Ensure that the State transmits to inspectors the notice of
each Federal exemption granted under subpart C of part 381 of this
subchapter and Sec. Sec.  390.23 and 390.25 of this subchapter that
relieves a person or class of persons in whole or in part from
compliance

with the FMCSRs or HMRs that has been provided to the State by FMCSA
and identifies the person or class of persons granted the exemption and
any terms and conditions that apply to the exemption;
    (26) Subject to paragraphs (b) and (c)(1) of this section, conduct
new entrant safety audits of interstate and, at the State's discretion,
intrastate new entrant motor carriers in accordance with subpart D of
part 385 of this subchapter;
    (27) Subject to paragraph (c)(2) of this section, beginning October
1, 2020, participate fully in PRISM by complying with the conditions
for full participation, or receiving approval from the Administrator
for an alternative approach for identifying and immobilizing a motor
carrier with serious safety deficiencies in a manner that provides an
equivalent level of safety;
    (28) Ensure that the State will cooperate in the enforcement of
hazardous materials safety permits issued under subpart E of part 385
of this subchapter by verifying possession of the permit when required
while conducting vehicle inspections and investigations, as applicable;
and
    (29) For Border States, conduct a border CMV safety program
focusing on international commerce that includes enforcement and
related projects, or forfeit all funds allocated for border-related
activities.
    (b) New entrant safety audits--Use of third parties. If a State
uses a third party to conduct new entrant safety audits under paragraph
(a)(26) of this section, the State must verify the quality of the work
and the State remains solely responsible for the management and
oversight of the audits.
    (c) Territories. (1) The new entrant safety audit requirement under
paragraph (a)(26) does not apply to American Samoa, the Commonwealth of
the Northern Mariana Islands, the Commonwealth of Puerto Rico, Guam,
and the Virgin Islands.
    (2) The required PRISM participation date under paragraph (a)(27)
of this section does not apply to American Samoa, the Commonwealth of
the Northern Mariana Islands, the Commonwealth of Puerto Rico, Guam,
and the Virgin Islands.

Sec.  350.209  How and when does a State apply for MCSAP funds using a
CVSP?

    (a) MCSAP application submission format. (1) The CVSP is a 3-year
plan.
    (2) The first year of the CVSP varies by State, depending on when
the State implemented the CVSP.
    (3) For the first year of the CVSP, the Lead State Agency must
submit a CVSP projecting programs and projects covering 3 years and a
budget for the first fiscal year for which the CVSP is submitted, as
explained in Sec.  350.211.
    (4) For the second and third years of the CVSP, the Lead State
Agency must submit an annual update and budget for that fiscal year and
any other needed adjustments or changes to the CVSP, as explained in
Sec.  350.213.
    (b) MCSAP application submission deadline. (1) The Lead State
Agency must submit the first year of the CVSP, or the annual updates,
to FMCSA by the date prescribed in the MCSAP application announcement
for the fiscal year.
    (2) The Administrator may extend for a period not exceeding 30 days
the deadline prescribed in the MCSAP application announcement for
document submission for good cause.

Sec.  350.211  What must a State include for the first year of the
CVSP?

    (a) General. (1) For the first year of the CVSP, the Lead State
Agency must submit a CVSP that complies with the MCSAP application
announcement and, at a minimum, provides a performance-based program
with a general overview section that includes:
    (i) A statement of the Lead State Agency's goal or mission; and
    (ii) A program summary of the effectiveness of prior activities in
reducing CMV crashes, injuries, and fatalities and in improving driver
and motor carrier safety performance.
    (2) The program summary must identify and address safety or
performance problems in the State.
    (3) The program summary must use 12-month data periods that are
consistent from year to year. This may be a calendar year, fiscal year,
or any 12-month period for which the State's data is current.
    (4) The program summary must show trends supported by safety and
program performance data collected over several years.
    (b) National MCSAP elements. (1) For the first year of the CVSP,
the Lead State Agency must include a brief narrative describing how the
State CVSP addresses the national program elements listed in Sec.
350.203.
    (2) The CVSP must address each national program element even if
there are no planned activities in a program area.
    (c) Resource allocation. For the first year of the CVSP, the Lead
State Agency must explain the rationale for the State's resource
allocation decisions.
    (d) Specific activities. For the first year of the CVSP, the Lead
State Agency must have a narrative section that includes a description
of how the CVSP supports:
    (1) Activities aimed at removing impaired CMV drivers from the
highways through adequate enforcement of restrictions on the use of
alcohol and controlled substances and by ensuring ready roadside access
to alcohol detection and measuring equipment;
    (2) Activities aimed at providing an appropriate level of training
to MCSAP personnel to recognize drivers impaired by alcohol or
controlled substances;
    (3) Criminal interdiction activities and appropriate strategies for
carrying out those interdiction activities, including human
trafficking, and interdiction activities affecting the transportation
of controlled substances by any occupant of a CMV; and
    (4) Activities to enforce registration requirements and to
cooperate in the enforcement of financial responsibility requirements
under Sec.  392.9a and part 387 of this subchapter.
    (e) Performance objectives. For the first year of the CVSP, the
Lead State Agency must include performance objectives, strategies, and
activities stated in quantifiable terms, that are to be achieved
through the CVSP.
    (f) Monitoring. For the first year of the CVSP, the Lead State
Agency must include a description of the State's method for ongoing
monitoring of the progress of the CVSP.
    (g) Budget. For the first year of the CVSP, the Lead State Agency
must include a budget for that year that describes the expenditures for
allocable costs, such as personnel and related costs, equipment
purchases, printing, information systems costs, and other eligible
costs consistent with Sec.  350.229.
    (h) List of MCSAP contacts. For the first year of the CVSP, the
Lead State Agency must include a list of MCSAP contacts.
    (i) Certification. (1) For the first year of the CVSP, the Lead
State Agency must certify that it has:
    (i) Met all the MCSAP conditions in Sec.  350.207; and
    (ii) Completed the annual review required by Sec.  350.303 and
determined that State laws, regulations, standards, and orders on CMV
safety are compatible (as defined in Sec.  350.105 of this part).
    (2) If a State law, regulation, standard, or order on CMV safety is
no longer compatible, the certifying official must explain the State's
plan to address the discrepancy.
    (3) A certification under this paragraph must reflect that the
certifying official has authority to make the certification on behalf
of the State.

    (j) New or amended laws. For the first year of the CVSP, the Lead
State Agency must submit to FMCSA a copy of any new or amended law,
regulation, standard, or order on CMV safety that was enacted by the
State since the prior year's submission.
    (k) Further submissions. For the first year of the CVSP, the Lead
State Agency must also submit other information required, as described
in the MCSAP application announcement for that fiscal year.

Sec.  350.213  What must a State include for the second and third years
of the CVSP?

    (a) General. For the second and third years of the CVSP, a Lead
State Agency must submit an annual update that complies with the MCSAP
application announcement and, at a minimum, must include program goals,
certifications, and other information revised since the prior year's
submission, and the items listed in paragraphs (b) to (g) of this
section.
    (b) Budget. For the second and third years of the CVSP, the Lead
State Agency must include a budget that supports the applicable fiscal
year of the CVSP and describes the expenditures for allocable costs,
such as personnel and related costs, equipment purchases, printing,
information systems costs, and other eligible costs consistent with
Sec.  350.229.
    (c) Resource allocation. For the second and third years of the
CVSP, the Lead State Agency must explain the rationale for the State's
resource allocation decisions.
    (d) List of MCSAP contacts. For the second and third years of the
CVSP, the Lead State Agency must include a list of MCSAP contacts.
    (e) Certification. (1) For the second and third years of the CVSP,
the Lead State Agency must certify that it has:
    (i) Met all the MCSAP conditions in Sec.  350.207; and
    (ii) Completed the annual review required by Sec.  350.303 and
determined that State laws, regulations, standards, and orders on CMV
safety are compatible (as defined in Sec.  350.105 of this part).
    (2) If a State law, regulation, standard, or order on CMV safety is
no longer compatible, the certifying official must explain the State's
plan to address the discrepancy.
    (3) A certification under this paragraph must reflect that the
certifying official has authority to make the certification on behalf
of the State.
    (f) New or amended laws. For the second and third years of the
CVSP, the Lead State Agency must submit to FMCSA a copy of any new or
amended law, regulation, standard, or order on CMV safety that the
State enacted since the prior year's submission.
    (g) Further submissions. For the second and third years of the
CVSP, the Lead State Agency must submit other information required, as
described in the MCSAP application announcement for that fiscal year.

Sec.  350.215  What response does a State receive to its CVSP?

    (a) First year of the CVSP. (1) FMCSA will notify the Lead State
Agency within 30 days after FMCSA begins its review of the State's
first year of the CVSP, including the budget, whether FMCSA:
    (i) Approves the CVSP; or
    (ii) Withholds approval because the CVSP:
    (A) Does not meet the requirements of this part; or
    (B) Is not adequate to ensure effective enforcement of compatible
(as defined in Sec.  350.105 of this part) laws, regulations,
standards, and orders on CMV safety.
    (2) If FMCSA withholds approval of the CVSP, FMCSA will give the
Lead State Agency a written explanation of the reasons for withholding
approval and allow the Lead State Agency to modify and resubmit the
CVSP for approval.
    (3) The Lead State Agency will have 30 days from the date of the
notice under paragraph (a)(2) of this section to modify and resubmit
the CVSP.
    (4) Failure to resubmit the modified CVSP may delay funding or
jeopardize MCSAP eligibility.
    (5) Final disapproval of a resubmitted CVSP will result in
disqualification for MCSAP funding for that fiscal year.
    (b) Annual update for the second or third year of the CVSP. (1)
FMCSA will notify the Lead State Agency within 30 days after FMCSA
begins its review of the State's annual update, including the budget,
whether FMCSA:
    (i) Approves the annual update; or
    (ii) Withholds approval because the annual update:
    (A) Does not meet the requirements of this part; or
    (B) Is not adequate to ensure effective enforcement of compatible
laws, regulations, standards, and orders on CMV safety.
    (2) If FMCSA withholds approval of the annual update, FMCSA will
give the Lead State Agency a written explanation of the reasons for
withholding approval and allow the Lead State Agency to modify and
resubmit the annual update for approval.
    (3) The Lead State Agency will have 30 days from the date of the
notice under paragraph (b)(2) of this section to modify and resubmit
the annual update.
    (4) Failure to resubmit the modified annual update may delay
funding or jeopardize MCSAP eligibility.
    (5) Final disapproval of a resubmitted annual update will result in
disqualification for MCSAP funding for that fiscal year.
    (c) Judicial review. Any State aggrieved by an adverse decision
under this section may seek judicial review under 5 U.S.C. chapter 7.

Sec.  350.217  How are MCSAP funds allocated?

    (a) General. Subject to the availability of funding, FMCSA must
allocate MCSAP funds to grantees with approved CVSPs in accordance with
this section.
    (b) Territories--excluding the Commonwealth of Puerto Rico. (1) Not
more than 0.49 percent of the MCSAP funds may be allocated in
accordance with this paragraph among the Territories of American Samoa,
the Commonwealth of the Northern Mariana Islands, Guam, and the Virgin
Islands.
    (2) Half of the MCSAP funds available under paragraph (b)(1) of
this section will be divided equally among the Territories.
    (3) The remaining MCSAP funds available under paragraph (b)(1) of
this section will be allocated among the Territories in a manner
proportional to the Territories' populations, as reflected in the
decennial census issued by the U.S. Census Bureau.
    (4) The amounts calculated under paragraphs (b)(2) and (b)(3) of
this section will be totaled for each Territory.
    (5) The amounts calculated under paragraph (b)(4) of this section
will be adjusted proportionally, based on population, to ensure that
each Territory receives at least $350,000.
    (c) Border States. (1) Not more than 11 percent of the MCSAP funds
may be allocated in accordance with this paragraph among Border States
that maintain a border enforcement program.
    (2) The shares for each border State will be calculated based on
the number of CMV crossings at each United States port of entry, as
determined by the Bureau of Transportation Statistics, with each border
State receiving:
    (i) 1 share per 25,000 annual CMV crossings at each United States
port of entry on the Mexican border, with a minimum of 8 shares for
each port of entry; or
    (ii) 1 share per 200,000 annual CMV crossings at each United States
port of entry on the Canadian border, with a minimum of 0.25 share for
each port of entry with more than 1,000 annual CMV crossings.

    (3) The shares of all Border States calculated under paragraph
(c)(2) of this section will be totaled.
    (4) Each individual border State's shares calculated under
paragraph (c)(2) of this section will be divided by the total shares
calculated in paragraph (c)(3) of this section.
    (5) The percentages calculated in paragraph (c)(4) of this section
will be adjusted proportionally to ensure that each Border State
receives at least 0.075 percent but no more than 55 percent of the
total border allocation available under paragraph (c)(1) of this
section.
    (6) Each Border State's percentage calculated in paragraph (c)(5)
of this section will be multiplied by the total border allocation
available under this paragraph to determine the dollar amount of the
border State's allocation.
    (7) To maintain eligibility for an allocation under this paragraph,
a Border State must maintain a border enforcement program, but may
expend more or less than the amounts allocated under this paragraph for
border activities. Failure to maintain a border enforcement program
will result in forfeiture of all funds allocated under this paragraph,
but will not affect the Border State's allocation under paragraph (d)
of this section.
    (8) Allocations made under this paragraph are in addition to
allocations made under paragraph (d) of this section.
    (d) States--including the Commonwealth of Puerto Rico. (1)(i) At
least 88.51 percent of the MCSAP funds must be allocated in accordance
with this paragraph (d)(1)(i) among the eligible States, including the
Commonwealth of Puerto Rico, but excluding American Samoa, the
Commonwealth of the Northern Mariana Islands, Guam, and the Virgin
Islands.
    (ii) The amounts made available under paragraphs (b) and (c) of
this section that are not allocated under those paragraphs must be
added to the total amount to be allocated in accordance with this
paragraph.
    (iii) In the case of reallocation of funds under paragraph (c) of
this section by a border State that no longer maintains a border
enforcement program, no portion of the reallocated funds will be
allocated to that border State.
    (2) The amount available under paragraph (d)(1) of this section
will be calculated based on each State's percentage of the national
total for each of the following equally-weighted factors:
    (i) National Highway System Road Length Miles, as reported by the
Federal Highway Administration (FHWA);
    (ii) All Vehicle Miles Traveled, as reported by the FHWA;
    (iii) Population (annual census estimates), as issued by the U.S.
Census Bureau;
    (iv) Special Fuel Consumption, as reported by the FHWA; and
    (v) Carrier Registrations, as determined by FMCSA, based on the
physical State of the carrier, and calculated as the sum of interstate
carriers and intrastate hazardous materials carriers.
    (3) Each State's percentages calculated in paragraph (d)(2) of this
section will be averaged.
    (4) The percentage calculated in paragraph (d)(3) of this section
will be adjusted proportionally to ensure that each State receives at
least 0.44 percent but no more than 4.944 percent of the MCSAP funds
available under paragraph (d)(1) of this section.
    (5) Each State's percentage will be multiplied by the total MCSAP
funds available under this paragraph to determine the dollar amount of
the State's allocation.
    (e) Hold-harmless provision and funding cap. (1) The dollar amounts
calculated under paragraphs (c)(6) and (d)(5) of this section will be
totaled for each State and then divided by the total MCSAP funds
available for allocation under paragraphs (c) and (d) of this section
to determine a State's percentage of the total MCSAP funds.
    (2) Each State's percentage of total MCSAP funding in the fiscal
year immediately prior to the year for which funding is being allocated
will be determined by dividing the State's dollar allocation by the
total MCSAP funding in that prior year, excluding funds allocated to
the Territories of American Samoa, the Commonwealth of the Northern
Mariana Islands, Guam, and the Virgin Islands.
    (3) Proportional adjustments will be made to ensure that each
State's percentage of MCSAP funds as calculated under paragraph (e)(1)
of this section will be no less than 97 percent or more than 105
percent of the State's percentage of MCSAP funds allocated for the
prior fiscal year as calculated under paragraph (e)(2) of this section.
    (f) Withholding. (1) Allocations made under this section are
subject to withholdings under Sec.  350.231(d).
    (2) Minimum or maximum allocations described in paragraphs (b),
(c), and (d) of this section are to be applied prior to any reduction
under Sec.  350.231(d).
    (3) State MCSAP funds affected by Sec.  350.231(d) will be
allocated to the unaffected States in accordance with paragraph (d) of
this section.
    (4) Paragraph (e) of this section does not apply after any
reduction under Sec.  350.231(d).

Sec.  350.219  How are MCSAP funds awarded under a continuing
resolution or an extension of FMCSA's authorization?

    In the event of a continuing resolution or an extension of FMCSA's
authorization, subject to the availability of funding, FMCSA may first
issue grants to States that have the lowest percent of undelivered
obligations of the previous Federal fiscal year's funding, or as
otherwise determined by the Administrator.

Sec.  350.221  How long are MCSAP funds available to a State?

    MCSAP funds obligated to a State will remain available for the
Federal fiscal year that the funds are obligated and the next full
Federal fiscal year.

Sec.  350.223  What are the Federal and State shares of costs incurred
under MCSAP?

    (a) Federal share. FMCSA will reimburse at least 85 percent of the
eligible costs incurred under MCSAP.
    (b) Match. (1) In-kind contributions are acceptable in meeting a
State's matching share under MCSAP if they represent eligible costs, as
established by 2 CFR parts 200 and 1201 and the MCSAP application
announcement.
    (2) States may use amounts generated under the Unified Carrier
Registration Agreement as part of the State's match required for MCSAP,
provided the amounts are not applied to the MOE required under Sec.
350.225 and are spent on eligible costs, as established by 2 CFR parts
200 and 1201 and the MCSAP application announcement.
    (c) Waiver. (1) The Administrator waives the requirement for the
matching share under MCSAP for American Samoa, the Commonwealth of the
Northern Mariana Islands, Guam, and the Virgin Islands.
    (2) The Administrator reserves the right to reduce or waive the
matching share under MCSAP for other States in any fiscal year:
    (i) As announced in the MCSAP application announcement; or
    (ii) As determined by the Administrator on a case-by-case basis.

Sec.  350.225  What MOE must a State maintain to qualify for MCSAP
funds?

    (a) General. Subject to paragraph (e) of this section, a State must
maintain an MOE each fiscal year for CMV safety programs eligible for
funding under this part at a level at least equal to:
    (1) The average level of that expenditure for the base period of
fiscal years 2004 and 2005; or
    (2) The level of expenditure in fiscal year 2021, as adjusted under
section

5107 of the Fixing America's Surface Transportation (FAST) Act (Pub. L.
114-94, 129 Stat. 1312, 1532-34 (2015)).
    (b) Calculation. In determining a State's MOE, FMCSA:
    (1) May allow the State to exclude State expenditures for
Federally-sponsored demonstration and pilot CMV safety programs and
strike forces;
    (2) May allow the State to exclude expenditures for activities
related to border enforcement and new entrant safety audits;
    (3) May allow the State to use amounts generated under the Unified
Carrier Registration Agreement, provided the amounts are not applied to
the match required under Sec.  350.223;
    (4) Requires the State to exclude Federal funds; and
    (5) Requires the State to exclude State matching funds required
under Sec.  350.223.
    (c) Costs. (1) In calculating the MOE under paragraph (b) of this
section, a State must include all eligible costs associated with
activities performed during the base period by the Lead State Agency
that receives funds under this part.
    (2) In its annual MOE, a State must include only those activities
that meet the current requirements for funding eligibility under MCSAP.
    (d) Waivers and modifications. (1) If a State requests, FMCSA may
waive or modify the State's obligation to meet its MOE for a fiscal
year if FMCSA determines that the waiver or modification is reasonable,
based on circumstances described by the State.
    (2) Requests to waive or modify the State's obligation to meet its
MOE must be submitted to FMCSA in writing.
    (3) FMCSA will review the request and provide a response as soon as
practicable, but no later than 120 days following receipt of the
request.
    (e) Permanent adjustment. After Federal fiscal year 2021, at the
request of a State, FMCSA may make a permanent adjustment to reduce the
State's MOE only if a State has new information unavailable to it
during Federal fiscal year 2021.

Sec.  350.227  What activities are eligible for reimbursement under
MCSAP?

    (a) General. The primary activities eligible for reimbursement
under MCSAP are:
    (1) Activities that support the national program elements listed in
Sec.  350.203; and
    (2) Sanitary food transportation inspections performed under 49
U.S.C. 5701.
    (b) Additional activities. If part of the approved CVSP and
accompanied by an appropriate North American Standard Inspection and
inspection report, additional activities eligible for reimbursement
are:
    (1) Enforcement of CMV size and weight limitations at locations,
other than fixed-weight facilities, where the weight of a CMV can
significantly affect the safe operation of the vehicle, such as near
steep grades or mountainous terrains, or at ports where intermodal
shipping containers enter and leave the United States; and
    (2) Detection of, and enforcement activities taken as a result of,
criminal activity involving a CMV or any occupant of the vehicle,
including the trafficking of human beings.
    (c) Traffic enforcement activities. (1) Documented activities to
enforce State traffic laws and regulations designed to promote the safe
operation of CMVs are eligible for reimbursement under MCSAP.
    (2) Documented activities to enforce State traffic laws and
regulations relating to non-CMVs are eligible for reimbursement under
MCSAP if:
    (i) The documented activities are necessary to promote the safe
operation of CMVs;
    (ii) The number of motor carrier safety activities, including
safety inspections, is maintained at a level at least equal to the
average level of such activities conducted in the State in fiscal years
2004 and 2005; and
    (iii) The State does not use more than 10 percent of its MCSAP
funds for enforcement activities relating to non-CMVs, unless the
Administrator determines that a higher percentage will result in
significant increases in CMV safety.

Sec.  350.229  What specific costs are eligible for reimbursement under
MCSAP?

    (a) General. FMCSA must establish criteria for activities eligible
for reimbursement and make those criteria available to the States in
the MCSAP application announcement before the MCSAP application period.
    (b) Costs eligible for reimbursement. All costs relating to
activities eligible for reimbursement must be necessary, reasonable,
allocable, and allowable under this subpart and 2 CFR parts 200 and
1201. The eligibility of specific costs for reimbursement is addressed
in the MCSAP application announcement and is subject to review and
approval by FMCSA.
    (c) Ineligible costs. MCSAP funds may not be used for the:
    (1) Acquisition of real property or buildings; or
    (2) Development, implementation, or maintenance of a State registry
of medical examiners.

Sec.  350.231  What are the consequences for failure to meet MCSAP
conditions?

    (a) General. (1) If a State is not performing according to an
approved CVSP or not adequately meeting the conditions set forth in
Sec.  350.207, the Administrator may issue a written notice of proposed
determination of nonconformity to the chief executive of the State or
the official designated in the CVSP.
    (2) The notice will set forth the reasons for the proposed
determination.
    (b) Response. The State has 30 days from the date of the notice to
reply. The reply must address the discrepancy cited in the notice and
must provide documentation as requested.
    (c) Final Agency decision. (1) After considering the State's reply,
the Administrator makes a final decision.
    (2) In the event the State fails to timely reply to a notice of
proposed determination of nonconformity, the notice becomes the
Administrator's final determination of nonconformity.
    (d) Consequences. Any adverse decision will result in FMCSA:
    (1) Withdrawing approval of the CVSP and withholding all MCSAP
funds to the State; or
    (2) Finding the State in noncompliance in lieu of withdrawing
approval of the CVSP and withholding:
    (i) Up to 5 percent of MCSAP funds during the fiscal year that
FMCSA notifies the State of its noncompliance;
    (ii) Up to 10 percent of MCSAP funds for the first full fiscal year
of noncompliance;
    (iii) Up to 25 percent of MCSAP funds for the second full fiscal
year of noncompliance; and
    (iv) Up to 50 percent of MCSAP funds for the third and any
subsequent full fiscal year of noncompliance.
    (e) Judicial review. Any State aggrieved by an adverse decision
under this section may seek judicial review under 5 U.S.C. chapter 7.

Subpart C--MCSAP-Required Compatibility Review

Sec.  350.301  What is the purpose of this subpart?

    The purpose of this subpart is to assist States receiving MCSAP
funds to address compatibility (as defined in Sec.  350.105), including
the availability of variances or exemptions allowed under Sec.  350.305
or Sec.  350.307, to:
    (a) Promote adoption and enforcement of compatible laws,
regulations, standards, and orders on CMV safety;
    (b) Provide for a continuous review of laws, regulations,
standards, and orders on CMV safety;
    (c) Establish deadlines for States to achieve compatibility; and

    (d) Provide States with a process for requesting variances and
exemptions for intrastate commerce.

Sec.  350.303  How does a State ensure compatibility?

    (a) General. The Lead State Agency is responsible for reviewing and
analyzing State laws, regulations, standards, and orders on CMV safety
to ensure compatibility (as defined in Sec.  350.105 of this part).
    (b) Compatibility deadline. As soon as practicable, but no later
than 3 years after the effective date of any new addition or amendment
to the FMCSRs or HMRs, the State must amend its laws, regulations,
standards, and orders to ensure compatibility.
    (c) State adoption of a law, regulation, standard, or order on CMV
safety. A State must submit to FMCSA a copy of any new or amended State
law, regulation, standard, or order on CMV safety immediately after its
enactment or issuance and with the State's next annual compatibility
review.
    (d) Annual State compatibility review. (1) A State must conduct a
review of its laws, regulations, standards, and orders on CMV safety,
including those of its political subdivisions, for compatibility and
report in the first year of the CVSP or annual update as part of its
application for funding under Sec.  350.209 each fiscal year. In
conducting this compatibility review, the State must determine which of
its laws, regulations, standards, and orders on CMV safety are
identical to or have the same effect as, are in addition to or more
stringent than, or are less stringent than the FMCSRs or are identical
to the HMRs.
    (2) As applicable to interstate commerce not involving the movement
of hazardous materials:
    (i) If a State satisfactorily demonstrates a law, regulation,
standard, or order on CMV safety is identical to or has the same effect
as the FMCSRs, the State provision is compatible and enforceable.
    (ii) If a State satisfactorily demonstrates a law, regulation,
standard, or order on CMV safety that is in addition to or more
stringent than the FMCSRs has a safety benefit, does not unreasonably
frustrate the Federal goal of uniformity, and does not cause an