Senate Bill S. 3483: Will this be helpful?

Last week, Senate Bill S. 3483, the so-called Motor Carrier Protection Act of 2010 was introduced by Senators Olympia Snow (R-Maine) and Amy Klouchbar (D-Minnesota). S. 3483 would amend section 139 of title 49, United States Code, to add more regulation and oversight of freight brokers and freight forwarders – as the name implies with the goal of protecting smaller carriers from fraudulent or abusive brokers.

Will it really achieve those aims?

The bill puts a number of new requirements on brokers and forwarders. Currently, there are some 16,000 registered freight brokers in the US, with little barrier to entry. The new law attacks that status quo.

The bill would Increase the required broker bond from $10,000 to $100,000 and expand that bond requirement to freight forwarders. Typically, brokers do not pay the full bond, but rather put up 10% or so to a bonding service that remits the majority of the fee.

The bill also would clarify that trucking companies must have a broker or freight forwarder license and an appropriate bond in addition to their motor carrier operating authority to arrange freight for another carrier for compensation. This would in essence mean that motor carriers could not broker freight without a broker’s license, and also that brokers could not haul freight without obtaining carriage authority from the Dept. of Transportation (DOT).

The legislation also creates a new requirement for brokers and freight forwarders to renew their operating authority and pay a fee annually, and requires the Federal Motor Carrier Safety Administration (FMCSA) to revoke operating authority that is not renewed annually (versus the one-time registration process currently in practice today).

“If passed, this law would put a stop to a system that allows rogue brokers and scam artists to operate unchecked,” said Todd Spencer, Executive Vice President of the Owner-Operator Independent Drivers Association (OOIDA), in a statement. OOIDA says it worked with both the Senators and the Transportation Intermediaries Association (which represents brokers) to develop this legislation.

“Too often, we’ve seen bad brokers get away with collecting payment from shippers but leaving truckers holding the bag,” Spencer said.

The full bill – which is quite short by Washington standards – can be found here: Motor Carrier Protection Act.

But some say the law if passed would simply put small brokers out of business, and thereby reduce competition among brokers, giving more clout to the largest players.