Enforcement begins on increased broker bond amount

By Land Line staff | Monday, December 02, 2013

Starting Dec. 1 enforcement has begun on a new regulation mandating all brokers and freight forwarders have a $75,000 bond.

The new regulation, which upped the broker bond from $10,000 to $75,000, was 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.

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 increased bond amount went into effect on Oct. 1, but the agency allowed a 60-day phase in period to allow the industry to complete all necessary filings.

The maximum civil penalty for brokers and freight forwarders who engage in interstate operations and who do not register with FMCSA is $10,000.

Before the implementation of the regulation, the Association of Independent Property Brokers and Agents filed a civil lawsuit followed by a petition for review of the regulation in an attempt to block the increase of the bond amount.

The AIPBA’s civil lawsuit filed against the U.S. Department of Transportation and the Federal Motor Carrier Safety Administration in July was dismissed in U.S. District Court for the Middle District in Ocala, Fla., on Nov. 12. This was after a joint stipulation of dismissal was filed on Nov. 8 by the AIPBA and Anthony Foxx, in his capacity as Secretary of the U.S. Department of Transportation, as well as FMCSA, with each party agreeing to pay its own fees and costs.

The petition for review was filed with the United States Court of Appeals for the Eleventh Circuit on Nov. 14 following the dismissal of the civil lawsuit. Along with the petition for review, the broker group also filed a motion for an emergency injunction in an attempt to delay the Dec. 1 enforcement deadline.

The court denied the emergency injunction petition on Nov. 26. The group’s petition for review still remains before the court, although not on an expedited schedule.

The Owner-Operator Independent Drivers Association has been supportive of upping the bond amount from $10,000, which was set before deregulation before 1980, back when there were fewer than 100 brokers in the U.S.

“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,” OOIDA Executive President Todd Spencer has stated about the new broker bond amount.

Copyright © OOIDA

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