FMCSA proposes update to broker requirements

On Jan. 5, the Federal Motor Carrier Safety Administration is set to publish a notice of proposed rulemaking regarding brokers that is more than a decade in the making.

Prompted by 2012’s Moving Ahead for Progress in the 21st Century Act, FMCSA previously implemented a requirement to increase the financial security amount for brokers to $75,000.

Now, FMCSA proposes modifications to broker and freight forwarder financial responsibility requirements.

“The agency proposes regulations in five separate areas: Assets readily available, immediate suspension of broker/freight forwarder operating authority, surety or trust responsibilities in cases of broker/freight forwarder financial failure or insolvency, enforcement authority and entities eligible to provide trust funds for form BMC-85 trust fund filings,” FMCSA wrote.

Assets readily available

FMCSA proposes allowing brokers or freight forwarders to meet the MAP-21 requirement to have assets readily available by maintaining trusts that meet certain criteria, including that the assets can be liquidated within seven calendar days of the event that triggers a payment from the trust.

Immediate suspension of authority

According to the notice, available financial security falls below $75,000 when there is a drawdown on the broker or freight forwarder’s surety bond or trust fund. FMCSA proposes that the agency will issue a notification of suspension of operating authority to the broker or freight forwarder if the funds are not replenished within seven business days.

Surety or trust responsibilities

The agency proposes to define financial failure or insolvency as a bankruptcy filing or state insolvency filing. If the surety or trustee is notified of any insolvency of the broker or freight forwarder, it must notify FMCSA and initiate cancellation of the financial responsibility. FMCSA also proposes to immediately issue a notice of failure in the Federal Register.

Enforcement authority

FMCSA proposes that to implement MAP-21’s requirement for suspension of a surety provider’s authority, the agency would first provide notice of the suspension to the surety/trust fund provider, followed by 30 calendar days for the surety or trust fund provider to respond before a final agency decision is issued. The agency also proposes to add penalties in 49 CFR part 386, appendix B, for violations of the new requirements.

Eligible entities

FMCSA proposes to remove the rule allowing loan and finance companies to serve as BMC-85 trustees.

OOIDA’s response

The Owner-Operator Independent Drivers Association is in the process of reviewing the 85-page proposal.

“After more than 10 years since the enactment of the MAP-21 highway bill which raised minimum broker bond levels to $75,000 and established financial security requirements for freight forwarders, FMCSA has announced a notice of proposed rulemaking that might actually implement many of those principles,” said Jay Grimes, OOIDA’s director of federal affairs.

“Unfortunately, the MAP-21 broker bond provisions have not really been enforced, and motor carriers are still being denied rightful claims or in many cases only getting a small percentage of what they’re owed. Today’s proposal attempts to mitigate the need for interpleader proceedings and alleviate broker nonpayment of claims, and OOIDA is reviewing the notice of proposed rulemaking to ensure that it does. We will continue advocating for any necessary reforms as FMCSA finalizes this long-overdue rulemaking.”

How to comment

Once the notice is published in the Federal Register, the public will have 60 days to comment on the proposal. Comments can be made by going to regulations.gov and entering Docket NO. FMCSA-2016-0102.

Broker transparency

The FMCSA also is expected to respond to an OOIDA petition regarding broker transparency in the coming months.

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.

FMCSA Administrator Robin Hutcheson told Land Line in October that the agency plans to address the issue in 2023. LL