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Forwarders, Brokers Face Penalties for Noncompliance with Transportation Law Starting Dec. 1

Monday, November 11, 2013
Sandler, Travis & Rosenberg Trade Report

Freight brokers, forwarders and carriers may face penalties beginning Dec. 1 if they do not comply with certain provisions of the Moving Ahead for Progress in the 21st Century Act (MAP-21). Sandler, Travis & Rosenberg will hold a webinar Nov. 15 to review these requirements and the implications they have for affected companies.

MAP-21, signed into law by President Obama on July 6, 2012, is 600+ pages of legislation that funds domestic surface transportation programs for fiscal years 2013 and 2014. Among other things, this law includes the following provisions.

Registration. Freight forwarders, brokers and motor carriers must register with and obtain authority from the Federal Motor Carrier Safety Administration for each type of service they provide. Freight forwarders that perform both forwarder and motor carrier services must register as both a forwarder and a carrier. Motor carriers that broker loads, even occasionally, must register as both a carrier and a broker. Freight forwarders, brokers and carriers must state in writing to their customers before providing service the specific authority under which they are providing that service.

Financial Security. Freight brokers must obtain and file with the FMCSA a surety bond or trust fund agreement in the amount of $75,000, up from $10,000 for general freight brokers.

Penalties. The civil penalties for violating FMCSA’s reporting, recordkeeping and registration requirements, which had been set at $500, have been increased to $1,000 generally and $10,000 for non-passenger carrier registration violations. Other penalties for evasion of FMCSA regulations have been increased to $2,000-$5,000 for a first violation and $2,500-$7,000 for subsequent violations. Penalties may be assessed not only against affected companies but also against their individual officers, directors and principals.

These requirements were all in effect as of Oct. 1 but FMCSA has allowed a 60-day grace period. As a result, starting Dec. 1 FMCSA will begin revoking the authority of noncompliant transportation entities.

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