FMCSA Issues MAP-21 Q&A Guidelines For Brokers and Forwarders

Last year, President Obama signed into law MAP-21, the “Moving Ahead for Progress in the 21st Century Act.”  This law funds a number of surface highway programs.  It also includes a number of new registration and bonding requirements for transportation intermediaries and motor carriers, as well as new regulations on how, when, and by whom highway transportation intermediary services can be performed.  While the law sets an October 1, 2013 implementation date for these new regulations, until now the the Federal Motor Carrier Safety Administration (FMCSA) has remained silent as to how transportation brokers, surface freight forwarders, and motor carriers are to comply with their new statutory obligations.

The FMCSA’s silence has caused some consternation for existing motor carriers, property brokers, and surface freight forwarders seeking guidance about the changes in the law.  It has also created uncertainty with customs brokers, nvoccs, ocean freight forwarders, and other international transportation intermediaries who may need to register as domestic transportation intermediaries under the new law or increase their financial security for existing registrations.

The FMCSA has now provided some direction to the industry.  In a Guidance published in the September 5, 2013 edition of the Federal Register, the FMCSA has published a series of Questions & Answers for “the most common questions” transportation intermediaries are asking about compliance with Map-21 on October 1, 2013.

Motor carriers and transportation intermediaries should note the following key points from the FMCSA’s Guidance:

1.         The FMCSA states that many of the regulatory changes governing the registration and financial security for motor carrier property brokers are mandatory; non-discretionary; and self-executing.  Thus, while the FMCSA will be phasing in forms and enforcement implementation of the new regulations, it notes that brokers, surface freight forwarders, and motor carriers must comply with the October 1, 2013 statutory deadline for registration and new bond filings.

 2.         By October 1, 2013, motor carrier property brokers and surface freight forwarders are required to be registered with the FMCSA.  Companies that provide both freight forwarder and motor carrier services must register both as a freight forwarder and a motor carrier property broker.

 3.         By October 1, 2013, motor carrier property brokers and surface freight forwarders will also be required to have a $75,000 surety bond or trust fund agreement on file with the FMCSA.  The FMCSA states that it will develop new BMC-84 or BMC-85 forms for this new requirement by October 1, 2013.  It also states that it will only require one $75,000 bond or trust fund for any entity that is registered as both a surface freight forwarder and a motor carrier property broker, provided that it is the same legal entity holding both registrations.  At this time it will not accept group financial security bonds or trust funds to satisfy the financial responsibility requirement.  The FMCSA also notes that while MAP-21 has a provision stating that the FMCSA may require freight forwarders to provide cargo insurance, at this time the FMCSA is not requiring non-household goods freight forwarders to obtain cargo insurance.

 4.         By October 1, 2013, motor carriers that also broker loads to other motor carriers are required to apply for separate broker authority and to perform such services pursuant to their broker authority, not their motor carrier authority, since MAP-21 prohibits motor carriers from providing brokerage services without having a separate broker registration.  They will also be required to have the financial security on file for a broker registration.

However, the FMCSA notes that motor carriers are legally allowed to interline shipments under their motor carrier operating authority and/or the authority of the interlining carrier.  The FMCSA states that it does not know how many motor carriers may be engaged in some brokering activities, so it will phase in its enforcement of the broker registration requirements for motor carriers that also broker loads.  The FMCSA will be accepting complaints regarding unregistered brokerage activities by motor carriers.  It also notes that such activities may subject the motor carrier to private civil actions for such activity and it “strongly encourages all motor carriers not to accept loads from unregistered brokers or freight forwarders.”

 The FMCSA also generally notes that a broker or freight forwarder who knowingly engages in interstate brokerage or freight forwarding operations without the required operating authority is liable to the U.S. for a civil penalty of up to $10,000 and can be liable to any injured third party for all valid claims regardless of the amount.  These penalties and liability to injured parties may apply jointly and severally to all corporations and partnerships involved in the transportation and individually to all officers, directors and principals.

 5.         The FMCSA states that it will provide a 60-day phase-in period beginning October 1, 2013 to allow the industry to complete all necessary filings.  Beginning November 1, 2013, notifications will be mailed to all freight forwarders and brokers that have not met the MAP-21 financial security requirement.  Thirty (30) days advance notice will be provided before the FMCSA revokes a broker or forwarder’s operating authority.

Additional information regarding these MAP-21 requirements can be found in the FMCSA’s MAP-21 Broker/Forwarder Questions & Answers or by contacting Ron Cobert,  Bob Cope; or Andrew Danas.

Posted in All Advisories, Practice & Industries, Transportation

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