Recently, the Federal Motor Carrier Safety Administration ("FMCSA") released its 2012-2016 strategic plan, which lays out the agency's safety-focused initiatives over the next five years. The strategic plan is built around a three-pronged approach to truck and bus safety: raise the barrier to entry to the industry; enforce high safety standards; and eliminate high-risk carriers and drivers.
Among other things, the agency plans to development a smartphone application called the "SaferBus App" in order to assist consumers in selecting a particular carrier. Additionally, the FMCSA hopes to increase accessibility to its data management system. The FMCSA plans to complete rulemaking revisions to the Safety Fitness Procedures, in accordance with the CSA. Through this rulemaking FMCSA would establish safety fitness determinations based on safety data from crashes, inspections, and violation history rather than the old compliance review. The intention is to permit the FMCSA to assess the safety performance of a greater segment of the motor carrier industry with the hope of reducing large truck and bus crashes, injuries, and fatalities. The FMCSA will also work on rulemaking revisions to the Electronic On-Board Recorders for Hours of Service Drivers to require motor carriers to install and operate Electronic On-Board Recorders (EOBRs).
Further, the FMCSA will create a single comprehensive safety ranking system that covers all regulated carriers (ie, passenger, HAZMAT property, and HHG carriers, as well as shippers, including intermodal freight, brokers, drivers, and cargo tank manufacturers or repair facilities.) The Agency hopes to expand CSA and the number of carriers with SMS BASIC scores.
The FMCSA's strategic plan is available at http://www.fmcsa.dot.gov/about/what-we-do/Strategic-Plan/Strategic-Plan.aspx.
Pursuant to SAFETEA-LU and a petition for rulemaking from the American Moving and Storage Association, the FMCSA has amended its freight broker regulations by adopting new final consumer protection rules governing brokers of household goods shipments moving in interstate or foreign commerce. The final rules become effective January 28, 2011.
Under the new regulations, household goods brokers must provide their DOT and MC numbers on advertisements and web sites (the FMCSA is planning to notify affected brokers of their future DOT numbers under the new URS), furnish estimates of expected moving charges and brokerage fees, give customers FMCSA pamphlets containing tips for successful moves and detailing the consumer’s rights and responsibilities, and disclose the broker’s policies concerning deposits, cancellations, and refunds. Brokers' estimates for consumers must be in writing, must be made on behalf of a specific household goods motor carrier pursuant to a written agreement containing specified provisions, and must (unless waived) be based on a physical survey by the motor carrier on whose behalf the estimate is provided if the goods are within 50 miles of the motor carrier’s or its agent’s location. The household goods motor carrier is required to ensure that brokers' estimates meet all the requirements of the consumer disclosure rules that apply to the motor carrier's own estimates.
Finally, household goods brokers must increase their surety bonds or trust funds from the current requirement of $10,000 (which applies to all brokers of freight) to the new minimum of $25,000 by January 1, 2012.
The Motor Carrier Protection Act of 2010 (Senate Bill S. 3483) was introduced and referred to the Senate Committee on Commerce, Science and Transportation on June 14, 2010. If passed, Part 139 of Title 49 of the United States Code would be amended to add more regulation and oversight of transportation brokers and freight forwarders, with the purported goal of protecting smaller carriers from fraudulent or abusive brokers.
The bill imposes a number of new requirements on carriers, brokers and forwarders. Among other things, the bill:
- Increases the broker bond from $10,000 to $100,000 and applies the bonding requirement to freight forwarders;
- Clarifies that trucking companies must have broker authority or freight forwarder authority in addition to their motor carrier authority to arrange freight through another carrier for compensation; and
- Creates an annual operating authority renewal requirement for brokers and freight forwarders; and requires the FMCSA to revoke operating authority that is not renewed annually.
The full text of the bill can be viewed at: http://www.govtrack.us/congress/billtext.xpd?bill=s111-3483.
In the current economy, as more and more shippers and/or logistics companies with broker authority file bankruptcy, the firm has seen a marked increase in the number of preference claims filed against transportation service providers. Preference claims seek to avoid payments made by the bankrupt entity in the 90 days prior to its bankruptcy filing. When the bankrupt company is a shipper, logistics company, or property broker, the resulting preference claims can affect common carriers, contract carriers, and transportation brokers. Recently, in the Quebecor bankruptcy the trustee filed over 1,700 preference claims -- approximately 300 of which are against transportation service providers. Defenses to preference claims include that the payments received were made in the ordinary course of business and that additional unpaid services were provided to the debtor after the allegedly preferential payment(s). In addition, in some cases the freight broker regulations or a critical vendor order approving payments to certain transportation service providers may provide additional defenses. Quick analysis of historical data and the assertion of both traditional and transportation specific defenses can potentially limit exposure to preference claims.
Trucking (common carrier ) groups have recently pushed Congress to impose tougher financial rules on transportation brokers. In order to appease groups like the Owner-Operator Independent Drivers Association who want to require brokers open their financial records to scrutiny so that companies using the brokers can determine their financial health, the Transportation Intermediaries Association (“TIA”) is proposing that the freight broker regulations increase the bond requirement from $10,000 to $100,000. In addition, TIA seeks tougher overall regulations for bonding companies, including the way they collect/pay out claims. TIA has taken its plan to Rep. Peter DeFazio, D-Ore., chairman of the House Highways and Transit Subcommittee, along with a request that the bonding process be more tightly regulated, - from the way funds are posted through bonding companies to the way payments are actually made. They also want the regulations to clarify that motor carriers cannot broker freight to other carriers without themselves posting the $100,000 bond.
Pursuant to legislation adopted in 2008, the Defense Department in late July published an immediately effective interim amendment to the Defense Federal Acquisition Regulation, mandating a fuel surcharge pass-through clause in Defense Department transportation contracts and solicitations. Under the interim rule, this clause is to be inserted in “solicitations and contracts for carriage in which a motor carrier, broker, or freight forwarder will provide or arrange truck transportation services that provide for a fuel-related adjustment.” The rule includes a “flow-down” requirement, thus applying to carriers serving Defense Department contractors and subcontractors–including brokers and forwarders, who are required to pass fuel surcharges on to the motor carrier.
The Surface Deployment and Distribution Command has already included the pass-through requirement in its international and domestic household goods moving solicitations for the next rate cycles beginning October 1 and November 1, 2009, respectively. Other carriers should carefully review further announcements and solicitations from the defense agencies on the subject. Carriers, brokers, and forwarders should begin review and revision of their agreements with contractors and other motor carriers, forwarders, and brokers as necessary to ensure compliance. Those who pay flat per-mile or “adjusted” or “imputed” fuel surcharges, or who pass through less than 100% of the surcharge as shown on the government invoice, should pay special attention to these requirements.
Comments on the interim rule will be accepted until September 28, 2009. These new requirements relate only to Defense Department shipments, though legislative efforts to expand pass-through requirements are not unexpected.
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