Broker rule takes effect

A new rule aimed at improving broker security regulations has taken effect. However, it is unclear when the Federal Motor Carrier Safety Administration will respond to the Owner-Operator Independent Drivers Association’s calls for the agency to take additional steps.

In November, FMCSA published a final rule regarding the financial responsibilities of brokers and freight forwarders. The rule limits a broker’s asset types, immediately suspends a broker when the available financial security falls below $75,000, clarifies when a broker is insolvent and adds civil penalties for violations.

According to the notice, the final rule was set to take effect on Tuesday, Jan. 16.

“Brokers who fail or refuse to pay carriers for legitimate services rendered will have their operating authority suspended and will be unable to continue accruing claims over time,” FMCSA wrote. “Carriers will have more information to avoid contracting with unscrupulous brokers and could also receive payment for work completed in a more timely manner, without use of interpleader proceedings.”

OOIDA asks for more

OOIDA said it is generally supportive of FMCSA’s attempts to tighten broker regulations but petitioned the agency to take additional steps.

On Dec. 18, OOIDA filed a petition for reconsideration of FMCSA’s final rule.

“The final rule can be supplemented to further alleviate the concern of broker nonpayment of claims,” OOIDA wrote in a petition signed by President Todd Spencer. “We believe various modifications can improve the economic health of the broker/motor carrier component of the transportation industry. Additionally, small-business motor carriers who rely upon brokers will be spared financial loss from both brokers and ineffective bonds or trusts under these suggested amendments. This will result in safe, experienced motor carriers staying in business along with a more transparent process for both industry stakeholders and general consumers.”

OOIDA’s suggestions included having FMCSA enforce existing broker registration requirements, take steps to ensure a timely claims process and provide more information on how criminal broker activity is being handled.

“At a minimum, FMCSA should publish an annual report detailing their efforts to combat broker fraud,” OOIDA wrote. “Moving forward, OOIDA supports a more formal collaborative process between federal regulators, law enforcement and industry stakeholders to identify, penalize and protect against this fraudulent activity.”

OOIDA’s full petition can be found here.

As of Tuesday, Jan. 16, FMCSA had not responded to the petition.

In addition to the broker financial responsibility rule, FMCSA plans to issue a rulemaking regarding broker transparency in October. LL