Federal regulators have asked for public comment on a petition for a five-year exemption for small-business truck brokers from a $75,000 security bond requirement.
The petition, filed with the Federal Motor Carrier Safety Administration (FMCSA) in September by the Small Business in Transportation Coalition (SBTC), is a resubmission of a 2013 bond exemption request by the Association of Independent Property Brokers and Agents, which merged with SBTC in 2016. The FMCSA denied the request in 2015.
“Under the current regulatory climate, unlicensed entities, including motor carriers and dispatch services, are permitted to engage in unfair competition because FMCSA has not enforced the broker licensing requirement and has allowed unlicensed entities arranging for transportation to operate with impunity,” SBTC stated in its petition. The group asserted that FMCSA “had promised to crack down” on unlawful operations in 2013 but has so far failed to do so.
“We are therefore now asking for all small property brokers and freight forwarders as defined by the [Small Business Administration] for freight transportation arrangement with revenues under $15 million be made exempt for five years to give FMCSA more time to develop its ‘comprehensive enforcement program’ to enforce the licensing and bonding requirement. Until FMCSA levels the playing field, enforcement against some transportation intermediaries — but not others — constitutes an unlawfully arbitrary and capricious regulatory scheme.”
In denying the group’s initial request filed in 2013, the FMCSA concluded that it could not issue a blanket exemption under its authority to exempt transportation services. And even if it did have the authority, FMCSA stated, the exemption application did not meet certain hurdles, including proof that the $75,000 bond requirement “is not needed to protect shippers from the abuse of market power.”
SBTC also argues in its petition that during the previous recession, small carriers and owner-operators survived by securing a broker license and brokering freight to themselves in order to “cut out the middleman.” But a $75,000 bond requirement “effectively eliminated this revenue-enhancement mechanism and forced small carriers and owner-operators to work with the large brokers represented by the Transportation Intermediaries Association,” the group asserts.
“With fears of yet another recession on the horizon, now is the time for FMCSA to grant this exemption as it is in the public interest to ensure an uninterrupted supply chain. Rather than have no choice but to secure loads from large brokers, SBTC believes that small carriers should have the right to add small brokerage components to their existing operations. The current bond level impedes this.”
Comments on SBTC’s petition are due 30 days after the FMCSA application notice is posted in the Federal Register on April 10.
BILL
I AM TOTTALLY AGAINST ANY EASE FOR BROKERS THEY TAKE THE CREAM AND THE CARRIER SUFFERS 1)THE BOND SHOULD BE CASH OF 100,000 PAY OR BRKERAGE PERMT 0F 10,000 INSURANCE TO GUARENTEE AB THE BOND HAVE TO PAY CARRIER
UPON RECEIPT OF DELIVERY
JT Williams
The bond was increased from 10,000 to 75,000 because of you small brokers NOT PAYING for freight delivered. Therefore bankrupting small carriers. I think it should be higher like 250,000. That way if your a crook like most brokers are, at least 150 carrier can file against your bond and get paid once the factoring companies kick the claim back to the carriers for collections. Screw you!
T
We ALL need to comment on the Federal Register and I’m in shock that Freightwaves didnt provide the link and information to access the comments. http://www.regulations.gov In the Keyword box enter “FMCSA-2020-0239”. Even a small broker can QUICKLY get more than 75k in carrier payables and the cost of a bond is literally a few dollars a day, if they afford the bond, they have no business running up the carrier payable.
Nancy
Worst idea ever, every scam artist will rejoice and start 15 companies.
I don’t know how James Lamb sleeps at night.
Owning a business is earned, it is hard work and requires sacrifice.
NO accountability or safety net will allow every underfunded brokerage to act how ever they want. Every Scammer will have no accountability and only the carriers and customers will suffer.
Ben
James Lamb is a crack pot and scam artist. He files the petitions and law suits to make big show to scam money from small carriers for his “non-profit”.
Do people know he is the person that sends out those letters and makes the calls to new carriers pretend to be the FMCSA and stealing money from New carriers? The FMCSA does and has sued him over it.