Maps-21 Roundtable with FMCSA

The sole purpose of this particular notice and relevant attachments goes to my attempt to further the industry’s awareness of recent regulatory progress towards correcting certain unintended consequences of the fact that only a limited number of the statutory provisions of MAP-21, Section 32918, have actually been subject to regulatory implementation as elements of 49 CFR Parts 300 to 399 through a September 2013 “Omnibus Rulemaking”.  To be specific, I’m referring to the currently ENFORCEABLE $75,000 “Minimum Financial Security” requirement mandated under 49 USC 13906 (b) (3), when considered within the context of the currently UNENFORCEABLE “Immediate Suspension” of a broker’s actual “registration” mandated by 49 USC 13906 (b) (5) when “the available financial security of that person falls below the [$75,000] amount required under this subsection.”  Hence the importance of completing the further rulemaking necessary for consistent enforcement of this section of MAP-21.  Quite obviously, what we’re talking about here is the frequently recurring pattern of known financially failing brokerage operations being able to continue soliciting freight from shippers at (say) $2.00 a mile, while still able to lure in motor carriers with promises of (say) $7.00 a mile.  Such is the clear avenue of blatant fraud occasioned by the perpetuation of apparently “current” $75,000 BMC-85 surety filings for up to sixty (60) days following even complete exhaustion of the corpus of any such trust formally evidenced thereby, a regulatory anomaly facilitated by the unequivocal language of paragraphs 7 through 9 of the Form BMC-85 itself


As a matter of fact, with decades of experience in the industry, and acting as the sole owner of a BMC-85 provider with more than 1,300 such surety filings at the time the $75,000 “Bond” requirement was implemented in 2013, my reaction was immediate:  The very first thing that occurred to me was that from that point on such a surely increase certainly would create the clear impression that somehow the federal government would be guaranteeing full payment to motor carriers engaged in brokered transactions regardless of imprudent or outright fraudulent activity by the party actually handling the money.  That’s why I voluntarily discontinued more than 1,000 such surety instrument relationships with all but some 300 of what could be deemed my most reliable BMC-85 clients and proceeded to diversify my firm’s activities as a consulting, and service referral agency accordingly.  Nevertheless, I’ve remained in the forefront of current transportation intermediary surety industry developments, both good and bad.   As an example of the latter, after I’d authorized a full payout of the $75,000 corpus of one broker’s trust just recently my staff received more than $300,000 in new claims THE NEXT DAY.


Whereupon, for a better introduction to the recent regulatory progress I’ve noted, check out the attached copy of my own “Post-Event Comments” on the Federal Motor Carrier Safety Administration’s (FMCSA’s) “Broker & Freight Forwarder Financial Responsibility Roundtable” convened in Washington D.C. on 20 May 2016.  In the event, I was specifically invited to attend that formal administrative fact-finding proceeding in order to testify as to circumstances material to “… when on 4 November 2015 my BMC-85 provider became the first qualified business entity ever to actually file a formal ‘Request for Immediate Suspension’ of an FMCSA licensed broker’s actual operating authority ‘Registration’  pursuant to the express provisions of 49 USC 13906 (b) (5).”   Subsequently, “… the entire roundtable panel appeared to approve of both the theory and practical applications of the ‘Immediate Suspension’ of the actual operating authority registration … of financially failing brokers which my BMC-85 provider had introduced.” To be sure, since then I’ve been working diligently with that agency’s Registration, Licensing & Insurance Division towards facilitating further rulemaking towards that particular end, which only now has been advanced to the third item in significance (behind only “group surety bonding” and “assets readily available”) listed for priority consideration in DOT/FMCSA’s Fall 2017 “RIN: 2126-AC10” publication, a copy of which reproduced under elements of a more recent FMCSA notice introducing it is attached hereto as well.


Furthermore, for those of you interested in discussing such matters I have my my regular outside counsel, Oregon attorney John P. Manning.  Significantly, in 1992 Mr. Manning began serving as in-house counsel of the management contractor for the BMC-85 Division of United California Discount Corporation (“UCD”), and accordingly had been involved in the first instance in the development of most of the basic BMC-85 contractual and operational procedures currently employed by the surety providers for a very large segment of that market.  In fact, my own company (along with several others I could name) was a spin-off of another spin-off of one of UCD’s former brokerage clients which decided to change roles.  Accordingly, should you decide to follow up on and /or have your organization support the regulatory processes I’ve referenced, I hope you’ll find this notice and attachments introduced hereby instructive as stated when cancellations are submitted for BMC-84 “Surety Bonds” and BMC-85 “Trusts” the industry is notified to contact the surety provider, but once the notice is posted

Brokers will  no longer process loads in the business as usual format.  The new standard eliminates the thirty (30) days waiting period  for brokers to accept loads from shippers and hire motor carriers

that the FMCSA and DOT websites have identified as pending insurance cancellations. This synchronized posted warning In “Bold Red  Letters” that the accounts are pending cancellation.  The DOT,

Safer web-site no longer trails the FMCSA site for 30-45 days, but is current on the status of cancellations, and simultaneously warns the industry with a “Broker Alert”.

Post Event Comments-Round Table

Pending Regulatory Initiatives

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