The Federal Motor Carrier Safety Administration on Thursday will publish a proposal for the implementation of several Congressionally-required regulations for brokers and freight forwarders that will help protect motor carriers in the event of non-payment, including the immediate suspension of a broker's authority.
In a Notice of Proposed Rulemaking (NPRM) set for publication Thursday, FMCSA is proposing to implement regulations in five separate areas related to brokers' financial responsibility: 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; and entities eligible to provide trust funds for form BMC-85 trust fund filings.
An Advance Notice of Proposed Rulemaking (ANPRM) seeking industry feedback on a potential proposal was published in 2018. The regulations are requirements under the Moving Ahead for Progress in the 21st Century Act (MAP-21) transportation bill signed into law in 2012. The Transportation Intermediaries Association, American Trucking Associations, and the Owner-Operator Independent Driver’s Association in the ANPRM each voiced their general support for FMCSA’s plan to implement a rulemaking on broker and freight forwarder financial responsibility.
FMCSA will accept comments on its new NPRM for 60 days beginning Thursday. Comments can be filed here through March 6.
The agency said its proposal would result in benefits to motor carriers, adding that it is aware that some brokers choose to withhold payment to carriers for services rendered. In the event of non-payment, carriers can file against a broker’s bond to attempt to receive payment. If, however, claims against an individual broker exceed $75,000, the financial responsibility provider will often submit the claims to a court in an interpleader action to determine how to allocate the broker bond or trust fund.
“The interpleader process can be costly and time consuming for motor carriers, and generally results in motor carrier claims being paid pro rata, depending on the number of claims against the broker bond or trust fund,” FMCSA added.
Based on available data, FMCSA estimates that approximately 1.3% of brokers (approximately 440 in 2022) would experience a drawdown on their surety bond or trust fund within a given year, with average claim amounts of approximately $1,700 per claim submitted. Of these brokers, 17% may receive total claims in excess of $75,000, FMCSA said, potentially leading to interpleader proceedings.
