Tucker Blog

Friday, July 30, 2010

Transport Fraud Regulation Bill Introduced

At the urging of Representative Peter DeFazio (D, OR) and Chairman of the House Subcommittee on Highways and Transit, the Transportation Intermediaries Association (TIA) and the Owner Operators Independent Driver Association (OOIDA) reached compromise on several common ground issues relating to good practices and handling fraud in the freight marketplace. Legislation was introduced to the Senate on June 11, by Senators Snowe (R-ME) and Klobuchar (D-MN), in S. 3483.

The bill represents significant reform to the industry. It creates significant penalties for unauthorized brokering, and attempts to clarify vagaries that have existed for years, including requiring a motor carrier to obtain broker authority before it brokers a load it can’t handle with its own trucks. Motor carriers often feel entitled to broker shipments, but this is not allowed under regulations today (nor is it smart business, nor is it likely covered by the carrier’s insurance). The bill will outlaw brokering without specific broker authority, and heavily penalize each such transaction.

In short, the bill:
• Raises the required bond brokers must file from $10,000 to $100,000, and requires the bond from domestic freight forwarders, too.
• Forces bonding companies to conduct business in a clearer, publicly reported and uniform fashion.
• Requires brokers, carriers and domestic forwarders to renew their authorities annually, which will raise money for increased FMCSA oversight and will realistically track active market participants.
• Requires motor carriers who arrange freight, utilizing any company with a different authority number as the carrier’s, to obtain broker authority and bond.
• Requires that one corporate officer has sufficient industry experience in order to obtain authority. This will help track those who continue to go into and out of business, defrauding market participants.

Our own Jeff Tucker is Chairman of the Government Affairs Committee of TIA, and is supportive of the compromise. “Make no mistake, this legislation is a compromise. Both parties gave in on issues important to them and their members, in pursuit of a better industry with fewer fraudulent, questionable or dangerous activities occurring in it. If the bill passes, the whole market—shippers, brokers and carriers should all benefit. In a marketplace governed by these provisions, if any party didn’t do his or her homework before tendering or accepting a load, there is nobody to blame, but oneself.” Tucker said.