The deadline is approaching for brokers and freight forwarders to comply with the Federal Motor Carrier Safety Administration’s new surety bond requirements, which were raised for the first time since before 1980, from $10,000 to $75,000.
The mandated provisions, set to take effect on Oct. 1, were enacted as part of the highway funding law, Moving Ahead for Progress in the 21 Century Act, or MAP-21, which was signed in July 2012.
While there are many reputable brokers in the industry, there are some bad brokers who have relied on the low bond amount not to have to pay truck drivers the freight charges they are owed.
“By increasing the bond amount, in addition to other changes, the bond companies will better scrutinize the brokers applying for bonds to assure themselves that the bond won’t be abused and that truckers using the broker will be paid,” wrote Todd Spencer, executive vice president for OOIDA, in a Land Line article explaining the need to raise the broker bond to $75,000.
All brokers and freight forwarders who engage in interstate brokerage or freight forwarding operations must register with FMCSA reflecting the new minimum security amount of $75,000. Motor carriers who occasionally broker loads must register both as motor carriers and as brokers, according to the FMCSA guidance.
The maximum civil penalty for brokers and freight forwarders who engage in interstate operations and who do not register with FMCSA is $10,000.
The agency will be providing a 60-day phase-in period beginning Oct. 1 to allow “the industry to complete all necessary filings.”
On Nov. 1, the agency will mail notifications to all brokers and freight forwarders that have not met the $75,000 minimum financial security requirement. The guidance states that FMCSA will provide 30 days advance notice before revoking freight forwarder and broker operating authority registrations.
As a provision outlined in MAP-21, bond companies and trust fund institutions must electronically report to FMCSA when bonds are canceled and the agency is to immediately suspend the registration of the broker and post notification on the agency’s website.
As part of the initial phase-in period, FMCSA will accept complaints regarding unregistered brokerage activities through its National Consumer Complaint Database and will continue to develop “a comprehensive enforcement program” in an attempt to determine the number of unlicensed brokers within the motor carrier industry.
Copyright © OOIDA