Broker issues take spotlight in 2023

Concerns regarding broker requirements is not a new issue.

Not even close. In fact, 2012’s Moving Ahead for Progress in the 21st Century Act implemented a requirement to increase the financial security amount for brokers to $75,000.

Jump ahead to 2023 and the Federal Motor Carrier Safety Administration is proposing 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 in a notice of proposed rulemaking published on Jan. 5.

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

As of press time, the Owner-Operator Independent Drivers Association was 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. (The) 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.”

How to comment

The public will have through March 6 to comment on the proposal. Comments can be made by going to Regulations.gov and entering Docket No. FMCSA-2016-0102.

Broker transparency

In 2020, OOIDA petitioned FMCSA to require brokers to automatically provide an electronic copy of each transaction record within 48 hours after the contractual service has been completed. It also asks the agency to prohibit brokers from requiring a carrier to waive that right.

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