Broker issues to heat up in 2023
October 27, 2022
A pair of issues regarding brokers are on the Federal Motor Carrier Safety Administration’s agenda for early next year.
FMCSA is projected to publish a notice of proposed rulemaking on broker and freight forwarder financial responsibility in January. In addition, FMCSA Administrator Robin Hutcheson told Land Line last week that the agency is expected to issue a decision on OOIDA’s petition for broker transparency in early 2023.
Broker financial responsibility
Prompted by 2012’s Moving Ahead for Progress in the 21st Century Act, FMCSA published a 2018 advance notice of proposed rulemaking that aimed to revoke the license of a broker whose bond falls below $75,000.
In the 2018 notice, FMCSA said it was considering an approach where it would “immediately suspend” the authority of a broker or freight forwarder when it receives notice from the surety or trust fund provider that a payout has occurred to where the financial security is less than $75,000. The approach also would suspend authority when a surety or trust fund provider gives reasonable notice of a claim to the broker and the broker does not respond.
OOIDA showed support for the proposal.
“OOIDA is grateful that FMCSA has taken the initiative to bring long-needed improvements to the broker financial security rules,” OOIDA President Todd Spencer wrote in November 2018. “If the final rules produce clear and effective steps for the resolution of motor carrier claims against a bond or trust, then disputes between motor carriers and sureties will be reduced. There will be less need for litigation, and the economic health of the broker/motor carrier component of the transportation industry will be stronger.
“Most importantly, the small-business men and women motor carriers who rely upon brokers will be relieved from so many significant financial claims by both brokers and their bonds or trusts.”
The Association suggested that a broker must have a surety bond or trust fund in effect continuously for a minimum of $75,000.
The U.S. Department of Transportation’s 2022 Significant Rulemaking Report indicates that FMCSA plans to propose changes to the broker financial responsibility requirements by Jan. 25.
In 2020, OOIDA petitioned FMCSA to begin the rulemaking process for more transparency in transactions with brokers.
The petition asks the agency:
- To require brokers to automatically provide an electronic copy of each transaction record within 48 hours after the contractual service has been completed.
- To explicitly prohibit brokers from including any provision that requires a carrier to waive their rights to access the transaction records.
CFR 371.3 already requires that brokers keep records of each transaction with a carrier and that each party to the transaction has a right to view these records.
“OOIDA’s recommendations to enhance compliance with 371.3 are not attempts to control rates or impose burdensome requirements but would simply ensure that motor carriers have access to documents they have the right to view,” OOIDA wrote.
FMCSA opened OOIDA’s petition for comments in August 2020. Later that year, FMCSA held a listening session regarding broker issues. Then in November 2020, the Transportation Intermediaries Association petitioned the agency to eliminate the transparency requirements. In all, nearly 1,500 comments were filed to the broker transparency-related dockets.
In an interview with Land Line last week, Hutcheson said that the agency will address the issue in the coming months.
“We have been considering the issues raised by the petition for rulemaking, and based on that work we are targeting early 2023 to issue a decision,” she said. LL