OOIDA supports initiative to improve broker security regulations

By Mark Schremmer, Land Line associate editor | 11/27/2018

The Owner-Operator Independent Drivers Association supports FMCSA’s initiative to update its broker security regulations, OOIDA President Todd Spencer wrote in formal comments submitted Monday, Nov. 26.

“OOIDA is grateful that FMCSA has taken the initiative to bring long-needed improvements to the broker financial security rules,” OOIDA wrote. “If the final rules produce clear and effective steps for the resolution of motor carrier claims against a bond or trust, then disputes between motor carriers and sureties will be reduced. There will be less need for litigation, and the economic health of the broker/motor carrier component of the transportation industry will be stronger.

“Most importantly, the small-business men and women motor carriers who rely upon brokers will be relieved from so many significant financial claims by both brokers and their bonds or trusts.”

In September, FMCSA announced an advance notice of proposed rulemaking pertaining to the implementation of a provision in MAP-21, which raised the financial security amount for brokers to $75,000 and established financial security requirements for freight forwarders.

“For more than 20 years, OOIDA has been communicating to DOT and Congress the inadequacy of the current statutory and regulatory framework for broker bonds and trusts to fulfill the intent of Congress: to ensure that motor carriers get paid when brokers do not pay them,” OOIDA wrote. “The MAP-21 legislation increased the amount of the broker bond to a minimum $75,000, but raising the bond to this amount did not stop brokers from continuing to steal transportation services in excess of the bond amount.”

As part of the advance notice of proposed rulemaking, FMCSA is looking at eight separate 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.

In the comments, OOIDA proposed regulatory language to ensure that the broker bond functions more efficiently. The proposal was organized into three general sections: the responsibilities of the broker, the responsibilities of the motor carrier, and the responsibilities of the surety or trustee.

OOIDA suggests that a broker must have a surety bond or trust fund in effect continuously for a minimum of $75,000.

“FMCSA will not register a broker’s authorization to operate until a surety has filed proof of a surety bond or a trustee has filed proof of a trust fund for the full limits of liability,” OOIDA’s proposal said. “If FMCSA suspends or revokes the broker’s registration, the broker must immediately cease operations for which it is required to have federal operating authority.”

The Association said each of its provisions addresses important needs of the regulated community and the requirements of the statute.

“The OOIDA proposal seeks to be self-implementing, thereby minimizing the resources that FMCSA would need to expend on this program,” OOIDA wrote. “Finally, OOIDA’s proposal is intended to give each party very clear responsibilities with the goal of minimizing the opportunity or need for litigation.”

FMCSA’s comment period on its advance notice of proposed rulemaking closed on Nov. 26.

 

 

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