FMCSA TESTING NEW WAY TO SCREEN CARRIER APPLICANTS
The FMCSA is testing a new approach to screening new entrants into the business, in hopes of saving money and improving their efficiency. In July 2013, the agency began a year-long test of a pre-screening process designed to identify high-risk applicants that need an on-site safety review and give low-risk applicants a way to file electronically. The agency used to have 18 months to audit all new entrants, but under the transportation law passed by Congress last year, it must conduct the audits within a year. The agency said it does more than 34,000 new-entrant audits each year, a number that has increased each year over the past three and is expected to continue growing. It has completed between 87% and 92% of the audits on time over the last several years, and between 65% and 74% of the applicants have passed their audits.
In the test, which is being conducted in five states and five Canadian provinces, certain carriers are automatically targeted for on-site inspections, while others have the opportunity to electronically submit information about their safety programs. Targeted companies include passenger carriers, carriers that have hazmat violations at roadside inspections and carriers with any CSA scores above the “intervention” threshold. Also targeted are new entrants that have violated licensing rules, out-of-service orders, hazmat rules and drugs and alcohol.
New entrants that clear this screening are being sent letters explaining that they can submit their information to a safety audit website. If the carrier has an adequate safety management program, the agency will skip the on-site safety audit. If it doesn’t, the agency will schedule an on-site audit. If it doesn’t respond, the agency can revoke its registration. The test is being conducted in California, Florida, Illinois, Montana and New York. Staffers in Montana and New York are using the procedures for Canadian carriers based in British Columbia, Alberta, Saskatchewan, Ontario and Quebec.
PROPERTY BROKER & FREIGHT FORWARDER OBLIGATIONS
The FMCSA published some guidance concerning the agency’s interpretation and implementation of provisions of MAP-21 in the September 5, 2013 edition of the Federal Register. The guidance addresses some of the most frequently-asked questions that the agency has received regarding the legislation. It helps to dispel some, but not all, of the misinformation that has been disseminated regarding the legislation since it was passed. Unfortunately, it creates some new questions, as well. Here are some of the key provisions addressed in the recently-published notice:
1) THE AGENCY WILL ISSUE A SECOND MC NUMBER TO NEW APPLICANTS FOR DUAL AUTHORITY. According to the notice, existing motor carriers applying for property broker authority in the same legal entity will be issued a second MC number with respect to the property broker authority. Presumably, existing property brokers that apply for motor carrier authority will likewise obtain a second MC number. Importantly, the notice does not impose any obligation on existing companies holding both authorities to take any steps to obtain a second MC number at this time. The agency acknowledges that MAP-21 actually requires the agency to develop a different type of indicator rather than just issuing multiple MC numbers, but the agency is not implementing that requirement at this time. This may be due to the Final Rule regarding the Unified Registration System (URS), which was published by the agency on August 23, 2012. Under that rule, which does not take effect until late 2015, the agency will actually do away with MC numbers entirely.
2) SURETY BONDS FOR JOINT OPERATIONS. A single entity holding both property broker and freight forwarder authority will only be required to hold a single surety bond or trust fund. Two filings will need to be made with the agency, one per registration, but only one surety bond or trust fund is required in the amount of $75,000.
3) GROUP SURETY BONDS AND GROUP TRUST FUNDS NOT AN OPTION AT THIS TIME. While the agency indicates that it is still examining this issue, it is not exercising its right, granted under MAP-21, to authorize property brokers and freight forwarders to use group surety bonds or group trust funds to meet the new $75,000 financial security requirement. The agency could still decide to do so at some point in the future.
4) SEPARATE LEGAL ENTITIES ARE NOT REQUIRED FOR EACH AUTHORITY HELD. Since MAP-21 became law, several commentators have taken the position that it prohibits a single legal entity from holding multiple authorities. That position directly contradicts the text of MAP-21, which is binding on the FMCSA. As by points 1 and 2 above make clear, the agency agrees and the notice confirms that a single entity can continue to hold multiple authorities.
5) ENFORCEMENT TIMELINES. The FMCSA has now expressly stated that new filings are required to comply with the $75,000 financial security requirements. There will be a 60-day grace period beginning on October 1, 2013, but it is not recommended that you wait until the last minute to file. The agency has indicated that new forms BMC-84 and BMC-85 will be available to make filings in advance of that date. Beginning November 1, 2013, the agency will begin mailing notices to brokers and freight forwarders that have not updated their surety bond or trust fund filings to comply with the new $75,000 filing requirement. The FMCSA will also provide a 30-day notice before revoking any operating authorities.
6) UNAUTHORIZED BROKERAGE BY CARRIERS. The FMCSA acknowledges that it does not have a mechanism to monitor compliance by motor carriers with the requirement to obtain brokerage authority since the agency is not in a position to know whether motor carriers are brokering freight. The notice invites ill-treated parties to file complaints against motor carriers that are brokering freight through its National Consumer Complaint Database. The agency is also committing to developing, for the first time, a comprehensive enforcement program to monitor compliance.
For additional information, or if you have questions regarding MAP-21 or the agency’s guidance, please feel free to contact me at wayne@ntassoc.com or at 1-800-805-0040.