Comment Period Extended to April 6
The Federal Motor Carrier Safety Administration (FMCSA) has issued a Notice of Proposed Rulemaking (NPRM) to change the financial responsibility requirements of brokers and freight forwarders. The changes are intended to benefit motor carriers.
Current federal law requires brokers and freight forwarders to maintain “assets readily available” in the amount of $75,000 to meet obligations to motor carriers. Brokers and freight forwarders often meet the financial responsibility requirement through surety bonds or trust funds administered by others, known as “financial responsibility providers.”
When a broker or freight forwarder improperly withholds payment for services from a motor carrier, the trucking company can submit claims to the financial responsibility provider backing the surety or trust fund. If the total claims from all carriers exceed the $75,000 figure, the financial responsibility provider may seek assistance from a court, which would decide the amount of the $75,000 each claimant receives.
FMCSA maintains that the percentage of unscrupulous brokers is small but acknowledges that legal action is slow and tedious. To minimize claims and expedite the process, the NPRM would:
- Require that the “assets readily available” to meet the $75,000 requirement be capable of conversion into cash within 7 business days to pay motor carriers. FMCSA lists several types of assets, such as real property, which commonly cannot be liquidated that quickly.
- Prohibit loan and finance companies from serving as financial responsibility providers.
- Initiate the immediate suspension of a broker or freight forwarder’s operating authority if their “assets readily available” are drawn down below $75,000 and not replenished within 7 business days. The bankruptcy or insolvency of a broker or freight forwarder would also be reported by financial responsibility providers.
The NPRM would allow three years for brokers, freight forwarders and their financial backers to make the proposed changes. Comments on the NPRM were due by March 6, 2023. However, as noted below, the comment period has been extended to April 6, 2023. ICSA will report on the comments and direction of the rulemaking in an upcoming Regulatory Roundup.