FMCSA seeks comments on proposal to suspend insolvent brokers

By Mark Schremmer, Land Line associate editor | Monday, October 22, 2018

The Federal Motor Carrier Safety Administration announced in September that it was proposing a rule that aims to revoke the license of a broker whose bond falls below the federally required minimum of $75,000. Now, the agency is seeking comments on the advance notice of proposed rulemaking.

Comments will be accepted by the agency through Nov. 26.

The proposal was prompted by the Moving Ahead for Progress in the 21st Century Act, or MAP-21, which was signed into law in 2012. MAP-21 increased the financial security amount for brokers to $75,000 and for the first time established financial security requirements for freight forwarders.

As part of the advance notice of proposed rulemaking, FMCSA is looking at eight areas:

  • Group surety bonds/trust funds. 
  • 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. 
  • Entities eligible to provide trust funds for form BMC-85 trust fund filings.
  • Form BMC-84 and BMC-85 trust fund revisions.
  • Household goods. 

The Owner-Operator Independent Drivers Association was a big advocate for increasing the bond amount from $10,000.

During a previous roundtable discussion on these issues, OOIDA suggested that as soon as a surety provides notice to a broker in connection with a claim and the broker does not respond to the notice, the broker’s operating authority registration should be suspended.

FMCSA is considering an approach where it would “immediately suspend” the authority of a broker or freight forwarder when it receives notice from the surety or trust fund provider that a payout has occurred to where the financial security is less than $75,000, as well as when a surety or trust fund provider gives reasonable notice of a claim to the broker, and the broker does not respond.

“FMCSA seeks comment on the appropriate cushion time for brokers or freight forwarders to respond to claims made to the guarantors, valid or otherwise,” the agency wrote in the advance notice of proposed rulemaking. “Such a grace period would seem to give firms adequate time to adjudicate claims and settlements internally, as well as price in the costs associated with any claims relating to contract noncompliance.”

The agency also seeks comment on the definition of “group surety bond” or “group trust fund” and how FMCSA could administer such a group surety or trust option.

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