OOIDA opposes group’s broker bond exemption request

The Owner-Operator Independent Drivers Association has filed official comments in opposition to the Small Business in Transportation Coalition’s request for exemption from the $75,000 broker bond requirement.

On Wednesday, June 3, OOIDA submitted comments to the Federal Motor Carrier Safety Administration in response to the group’s application for exemption from the registration and financial security requirements for brokers of property and freight forwarders (Docket #FMCSA-2020-0130). OOIDA is urging FMCSA to deny the application.

The group is seeking exemption from a regulation that requires all brokers and freight forwarders subject to FMCSA’s jurisdiction to maintain $75,000 in financial security. Established under the Moving Ahead for Progress in the 21st Century Act, that security must be in the form of a surety bond or trust fund.

In its comments, OOIDA points out that the broker bond provisions were enacted to help eliminate a system of loopholes and skirting regulations “that stiffs truckers out of what they are rightfully owed.”

Granting exemptions from the $75,000 broker bond requirement will undermine the intent authorized in MAP-21, OOIDA said.

“Any exemptions from the $75,000 bond requirement, codified in 49 U.S.C. 13906(b) and (c), would further encourage a longstanding practice of defrauding professional truck drivers and motor carriers,” OOIDA President and CEO Todd Spencer said in comments. “Under this practice, when legitimate claims aggregating in excess of the bond amount have been presented to the surety, the bond is still good and the broker can stay in business as long as the surety has not yet paid a single claim. In too many instances, a broker will let multiple claims on the $75,000 bond accrue, forcing truckers to settle for a fraction of what they should be paid. In other words, a broker can continue to contract with motor carriers even if they have no intention of paying them.”

The exemption request comes during a time when OOIDA has been pushing for more transparency within broker transactions with motor carriers.

In September, the Small Business in Transportation Coalition petitioned to FMCSA seeking a five-year exemption from the requirement for brokers and freight forwarders with revenues below $15 million. Before that, the group filed a federal lawsuit against the U.S. Department of Transportation on May 6, 2019. That lawsuit asks the courts to force agency action on two other exemption applications. The group claims that the delays in action are unlawful.

“For over 20 years, OOIDA has been communicating to FMCSA and Congress about the inadequacy of the current statutory and regulatory framework for broker bonds and trusts,” Spencer states. “FMCSA must deny any exemptions that would weaken current broker bond standards and further defraud professional truck drivers and motor carriers from their rightful compensation. Additionally, the agency must implement a final broker and freight forwarder financial responsibility rulemaking that will better enforce all of the MAP-21 broker-related provisions.”