A requirement for brokers that was originally mandated by Congress in 2012 is finally going into effect.
Beginning Friday, Jan. 16, the Federal Motor Carrier Safety Administration now has the authority to suspend the operating authority of brokers and freight forwarders when their minimum financial security falls below $75,000 and is not replenished in seven days.
The change is a significant one as the Owner-Operator Independent Drivers Association has long pushed for regulations that create a level playing field between brokers and truckers.
“OOIDA welcomes FMCSA’s Final Rule on Broker and Freight Forwarder Financial Responsibility,” Association President Todd Spencer said. “This is a step forward that helps make sure truckers get paid what they’re owed on time in cases of theft, damage and insolvency.”
The rule contains five major provisions:
- Assets Readily Available. The rule specifies that the only acceptable assets include cash, irrevocable letters of credit issued by federally insured depository institutions and U.S. Treasury bonds.
- Immediate Suspension of Operating Authority. FMCSA will suspend the operating authority of a broker or freight forwarder if the available financial security falls below $75,000 and is not replenished in seven calendar days.
- Surety and Trust Provider Duties in Financial Failure or Insolvency. This rule requires that if the surety/trustee becomes aware that a broker or freight forwarder is experiencing financial failure or insolvency, it must notify FMCSA and initiate cancellation of the financial responsibility. FMCSA will then publish a notice of failure in the Federal Register. Filing bankruptcy under Title 11 of the U.S. Code does not constitute insolvency under the rule.
- Enforcement Authority. A surety company or financial institution found in violation of 49 U.S.C. 13906 or § 387.307 faces a monetary penalty and a mandatory three-year ineligibility period to provide broker/freight forwarder financial security.
- Entities Eligible to Provide Trust Funds for BMC-85 Filings. Loan and finance companies are no longer eligible to serve as BMC-85 trustees.
OOIDA is supportive of the changes but says that more can be done to protect truckers from unscrupulous brokers.
“Most importantly, the rule requires FMCSA to suspend brokers who do not maintain the minimum $75,000 bond,” Spencer said. “This will assist carriers in determining if a broker has legitimate finances before hauling a load. OOIDA has fought for these changes for nearly 15 years, and today marks progress in holding bad brokers accountable. However, this rule alone does not solve the problem, and we will continue fighting for more reforms until truckers no longer have to pay the price for broker misconduct.”
Much of that continued fight revolves around the lack of broker transparency.
Despite a longstanding regulation, 371.3, that requires brokers to keep records of each transaction and provide each party a right to review it, truckers have reported that the rule is often evaded or completely ignored.
Truckers got so frustrated that hundreds of them traveled to Washington, D.C., in May 2020 to protest. OOIDA also petitioned FMCSA at that time to strengthen existing broker transparency rules. The actions drew the attention of the White House.
FMCSA issued a proposal to address broker transparency in 2024. Although the notice drew nearly 7,000 comments, the agency did not follow through with a final rule. Instead, the agency plans to issue a second notice of proposed rulemaking in May.
Broker financial responsibility rule
The broker financial responsibility requirements were mandated in the Moving Ahead for Progress in the 21st Century Act (MAP-21), which was signed into law in 2012.
FMCSA published a final rule in November 2023. The compliance date was set for Jan. 16, 2025, but was delayed a year because the agency’s new registration system was not ready.
In December, FMCSA published a list of frequently asked questions to help brokers and motor carriers navigate the new rule. Those can be found here. LL
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