Brokers request for free pass on $75,000 bond denied

By Jami Jones, Land Line managing editor | Tuesday, March 31, 2015


A group of property brokers were told they would not be exempt from the requirement to carry a $75,000 bond by the Federal Motor Carrier Safety Administration in a notice posted to the Federal Register Tuesday, March 31.

The Association of Independent Property Brokers and Agents submitted a petition for exemption to FMCSA in August 2014. The FMCSA published the request in December 2014 and accepted comments from the public on the request.

The FMCSA increased the broker bond from $10,000 to $75,000 in October 2013. The bonds are intended to assist motor carriers in securing payment when a broker fails to pay or goes out of business.

In its exemption application, the broker group argued that the required $75,000 bond reduced competition in the broker market and would drive up freight rates.

A number of comments – largely from brokers – supported the request. There were, however, several comments opposing the request, including comments filed by the Owner-Operator Independent Drivers Association.

The opposition pointed out that the previous $10,000 required bond had been inadequate for quite some time – as it had not been increased since 1979. The $10,000 bond proved to be insufficient for many trucking companies to collect from brokers who had gone out of business.

Additionally, the opposition argued that having the $75,000 bond requirement meant trucking companies, especially small-business owner-operators, were better protected.

The request also presented a very slippery slope for the FMCSA, according to OOIDA.

“The application would have the effect of permitting all brokers to operate without a broker bond or trust of any amount. When Congress enacted a $75,000 bond or trust statute, it repealed the $10,000 bond or trust statute. AIPBA’s requested exemption would not re-enact the $10,000 bond or trust requirement; it would exempt all property brokers from the requirement to carry any bond or trust,” OOIDA’s comments state.

In its denial of the exemption request, the agency did not find that the bond was burdensome in any way, had not reduced competition, and instead of increased freight rates found that rates have actually dropped.

Copyright © OOIDA

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