On Wednesday, the Federal Motor Carrier Safety Administration (FMCSA) provided an update on a forthcoming rule intended to regulate broker and freight forwarder financial responsibility.
The FMCSA announced on Wednesday that the public now has until April 6, 2023, to share their comments on a Notice of Proposed Rule Making (NPRM) published on January 5.
The NPRM seeks to toughen up financial security rules to better protect truckers from brokers who fail to pay.
The comment period was previously scheduled to close on March 5, but the FMCSA pushed the deadline back ahead of a public listening session allowing comments on this topic to be hosted by FMCSA at 10:00 a.m. on March 31, 2023, in Louisville, Kentucky, and held concurrently with the Mid America Trucking Show (MATS).
The NPRM that the FMCSA is considering looks at changes in the following five areas to increase financial responsibility for brokers and freight forwarders:
- Assets readily available — The NPRM proposes allowing brokers or freight forwarders to meet the MAP-21 requirement to have “assets readily available” by maintaining trusts that meet certain criteria, including that the assets can be liquidated within 7 calendar days of the event that triggers a payment from the trust, and that do not contain certain assets as specified in this NPRM.
- Immediate suspension of broker/freight forwarder operating authority — The NPRM proposes that “available financial security” falls below $75,000 when there is a drawdown on the broker or freight forwarder’s surety bond or trust fund. This would happen when a broker or freight forwarder consents to a drawdown, or if the broker or freight forwarder does not respond to a valid notice of claim from the surety or trust provider, causing the provider to pay the claim, or if the claim against the broker or freight forwarder is converted to a judgment and the surety or trust provider pays the claim. FMCSA also proposes that, if a broker or freight forwarder does not replenish funds within 7 business days after notice by FMCSA, the agency will issue a notification of suspension of operating authority to the broker or freight forwarder.
- Surety or trust responsibilities in cases of broker/freight forwarder financial failure or insolvency — FMCSA proposes to define “financial failure or insolvency” as bankruptcy filing or State insolvency filing. This proposal also requires that if the surety/trustee is notified of any insolvency of the broker or freight forwarder, it must notify FMCSA and initiate cancelation of the financial responsibility. In addition, FMCSA proposes to publish a notice of failure in the FMCSA Register immediately.
- Enforcement authority — FMCSA proposes that to implement MAP-21’s requirement for suspension of a surety provider’s authority, the agency would first provide notice of the suspension to the surety/trust fund provider, followed by 30 calendar days for the surety or trust fund provider to respond before a final Agency decision is issued. The agency also proposes to add penalties in 49 CFR part 386, appendix B, for violations of the new requirements.
- Entities eligible to provide trust funds for form BMC-85 trust fund filings — FMCSA proposes to remove the rule allowing loan and finance companies to serve as BMC-85 trustees.
So far, the FMCSA has received 55 public comments on the NPRM.
You can click here to leave a public comment.