Since the broker bond amount was increased to $75,000, naysayers claim the higher bond amount will drive small-business brokers out of the industry.
One organization, the Association of Independent Property Brokers and Agents, which opposes the new bond amount, is seeking an exemption from the Federal Motor Carrier Safety Administration over the $75,000 surety bond/trust fund requirement. The AIPBA claims thousands of brokers have gone out of business since enforcement of the new regulation took effect on Dec. 1.
OOIDA Executive Vice President Todd Spencer calls the request for the exemption a “departure from reality.”
Spencer argues that the new broker amount will in fact add “legitimacy to the whole industry.”
“Clearly, historically, abuses of how the bonding system works have resulted in large numbers of motor carriers and truckers, specifically, being stiffed on freight charges,” Spencer told “Land Line Now” on Friday, Dec. 27. “The system that has been in place for years simply has failed miserably in terms of doing what it was supposed to do.”
The old $10,000 broker amount was set around 1980, before the industry was deregulated.
Spencer said that increasing the bond amount will force bond companies to better scrutinize the brokers applying for bonds to assure themselves that the bond won’t be abused and that the trucker using the broker will be paid.
He told “Land Line Now” that the FMCSA’s outdated record-keeping system may largely be to blame for those numbers.
“The agency has always had large numbers of both brokers and motor carriers on their records that actually aren’t operating and haven’t operated in a long time,” Spencer said. “This has simply been an opportunity for them to start cleaning up the process where their numbers actually mean something.”
Truck drivers may comment until Jan. 27, 2014, on AIPBA’s exemption request to FMCSA. Click here to read a copy of the Federal Register notice.
This isn’t the AIPBA’s first attempt to block enforcement of the new broker amount, which was enacted as part of the highway funding law – Moving Ahead for Progress in the 21st Century Act, or MAP-21 – which was signed into law in July 2012.
The AIPBA’s civil lawsuit against the U.S. Department of Transportation and the FMCSA in July was dismissed in November. This was after a joint stipulation of dismissal was filed in early November by the AIPBA and Anthony Foxx, in his capacity as Secretary of the U.S. Department of Transportation, along with 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.
OOIDA and other groups like the American Trucking Associations and Transportation Intermediaries Association have been supportive of upping the bond amount.
Spencer said from OOIDA’s view, this is as a way to weed out bad brokers, creating more opportunities for legitimate brokers to thrive – and for truckers to get paid.
“That’s mainly because there were too many bad brokers that were basically able to scam the system, and when you say scam the system, they were scamming truckers,” Spencer said. “And because of those relatively few that did that, they gave good legitimate small-business brokers a black eye and created unfair competition.”
Terry Scruton, senior correspondent for “Land Line Now” contributed to this report.
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