If you arrange for transportation of goods in interstate commerce, MAP-21 may impact your business. The Moving Ahead for Progress in the 21st Century Act (MAP-21) was signed into law in July of 2012 and took effect on October 1, 2012. The enforcement deadline for MAP-21 is October 1, 2013. Although there are various provisions included in this act, there are specific requirements applicable to brokers and freight forwarders that the Gibraltar Group wants to bring to your attention. These provisions cover registration and registration periods, fitness and training, financial security, availability of information and applicable penalties.
Enforcement of MAP-21 will be through the Federal Motor Carrier Safety Administration (FMCSA). The FMCSA states that the “new law includes many important provisions intended to help the Federal Motor Carrier Safety Administration in its important mission to reduce crashes, injuries and fatalities involving large trucks and buses.” The FMCSA further explains that “many of the provisions in MAP-21 track the Agency’s strategic framework to improve commercial motor vehicle safety by supporting its three core principles: 1) Raise the bar to enter the industry and operate on our roads; 2) Hold motor carrier and drivers to the highest safety standards to continue operations; and 3) Remove the highest risk drivers, vehicles, and carriers from our roads and prevent them from operating.”
Defined: Are you a Broker or a Freight Forwarder?
To determine whether these provisions apply to your organization, you must examine how your operations compare to the definitions provided for these services.
49 CFR 371.2 defines a broker as:
Broker means a person who, for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier. Motor carriers, or persons who are employees or bona fide agents of carriers, are not brokers within the meaning of this section when they arrange or offer to arrange the transportation of shipments which they are authorized to transport and which they have accepted and legally bound themselves to transport.
49 CFR 371.2(c) defines brokerage or brokerage service as:
Brokerage or brokerage service is the arranging of transportation or the physical movement of a motor vehicle or of property. It can be performed on behalf of a motor carrier, consignor, or consignee.
49 CFR 386.2 defines forwarders as:
Freight forwarder means a person holding itself out to the general public (other than as an express, pipeline, rail, sleeping car, motor, or water carrier) to provide transportation of property for compensation in interstate commerce, and in the ordinary course of its business: (1) Performs or provides for assembling, consolidating, break-bulk, and distribution of shipments;(2) Assumes responsibility for transportation from place of receipt to destination; and (3) Uses for any part of the transportation a carrier subject to FMCSA jurisdiction.
If your operations fall under these definitions, the following provisions require your review:
Requirements for Registration
§13901 – A provider must be specifically authorized for each type of service it provides and will receive separate and distinct registration numbers for each service. Freight forwarders and brokers are required to register with FMCSA separately. If a motor carrier also brokers loads and performs freight forwarder services, it must be registered as a motor carrier, freight forwarder and a broker (three separate registrations). Providers must specify, in writing, what authority they are acting under for every agreement to provide transportation services where registration is required.
Broker: The FMCSA issued guidance on implementation of MAP-21 provisions on September 5, 2013 stating that “a broker does not transport … property and does not assume responsibility for the property.” Keep in mind that although MAP-21 has left in place the definition of broker that excludes motor carriers and their agents and employees (49 U.S.C. 13102(2), the new law separately prohibits motor carriers from brokering transportation services unless they are registered as a broker (49. U.S.C. 13902(a)(6).
Freight Interlining: The FMCSA has also stated that a motor carrier that participates in freight interlining does not have to register as a broker. The FMCSA states that “a motor carrier that is performing part of the transportation as an interline operation … typically performs that service under its own motor carrier operating authority registration or the operating authority of the originating motor carrier. As a result, the motor carrier arranging the interline service in order to perform the transportation service requested by the shipper would not be brokering the load and would not require broker registration.”
How to Apply for Broker or Freight Forwarder Authority: To obtain broker authority, file a Form OP-1 and submit it to the FMCSA. If you have an existing USDOT number, include it on the form. FMCSA will issue a separate MC number for the broker or freight forwarder authority.
§32917 – All companies providing broker or freight forwarder services are required to obtain the appropriate operating authorities by October 1, 2013. Registration is not permanent and every freight forwarder or broker will be required to renew their registration within four years of the effective date of these provisions (by 2017). This renewal will last at least five years before requiring additional renewal.
FMCSA is allowing 60 days from October 1, 2013 to complete all necessary filings. This effectively sets the deadline for completing all filings at November 29, 2013. Beginning November 1, 2013, notifications will be mailed to all brokers and freight forwarders that have not met registration and financial responsibility requirements.
Fitness, Experience and/or Training Required
§32916 – In order to receive registration, Freight forwarders and brokers must be determined to be fit, have sufficient experience to qualify the person to act as a freight forwarder or broker, and meet the experience or training requirement. The experience or training requirement says that each freight forwarder or broker shall employ as an officer an individual who has at least three years of relevant experience or who provides satisfactory evidence of the individual’s knowledge of related rules, regulations, and industry best practices.
Financial Security of Brokers and Freight Forwarders
§32918– General freight brokers currently are required to maintain a surety bond or trust fund agreement in the amount of $10,000 to comply with the financial security requirements of the FMCSA. The required surety bond or trust fund agreement required under FMCSA will increase to $75,000 effective October 1, 2013. Beginning November 1, 2013, FMCSA will mail notifications to all brokers and forwarders that have not met the minimum financial security requirements. FMCSA will give a 30 day notice before revoking operating authority registrations.
Approved Surety Bond Companies: Additionally, MAP-21 states that brokers and forwarders must use a surety bond company that is approved by the U.S. Treasury. To determine if a surety bond company is approved, visit the Treasury Department’s online listing at http://fms.treas.gov/c570/index.html.
Group Surety Bonds and Trust Funds: Group surety bonds or trust funds are not currently allowed by the FMCSA to satisfy these requirements. The FMCSA has recently stated that they are “considering enforcement implications of group sureties as well as the effect on small entities and new entrants.” This issue is expected to be reexamined as implementation of MAP-21 continues.
BMC-84/85 Forms: All brokers and freight forwarders subject to FMCSA jurisdiction must file new BMC-84 or BMC-85 forms to reflect the new $75,000 financial security requirement as of October 1, 2013. The FMCSA has communicated that they will be developing new forms for use by surety bonding and trust fund organizations in advance of the October 1, 2013 deadline. Note that only one $75,000 bond or trust is needed if your organization has both freight forwarder and broker authority. You will, however, need to file separate BMC-84/85 forms for both operations.
Availability of Information
§13909 – Information identifying “the names and business addresses of the principals of each entity holding such registrations; the status of such registration; and the electronic address of the entity’s surety provider for the submission of claims” will be made available. This information will be public information in the form of a web posting. This information may be presented through the SAFER system.
Unlawful Brokerage Activities – Civil Penalties and Private Cause of Action
§14916 – A civil penalty will be owed to the government not exceed $10,000 for knowingly operating as a broker without proper registration. In addition to the civil penalty, an injured party may pursue all claims without limit. An important part of this provision outlines that claims may be brought jointly and severally against not only the corporation, but individual officers, directors and principals of entities. This means that any individual found liable could be individually required to pay all penalties.
If you arrange for transportation of goods in interstate commerce, MAP-21 will impact your business. The Gibraltar Group is committed to providing the tools and expertise necessary to ensure the success of your organization. Please contact us today for answers and solutions to your transportation challenges.