Registration and Financial Security Requirements for Brokers of Property and Freight Forwarders; Association of Independent Property Brokers and Agents' Exemption Application

Larry W. Minor
Federal Motor Carrier Safety Administration
December 26, 2013

[Federal Register Volume 78, Number 248 (Thursday, December 26, 2013)]
[Notices]
[Pages 78472-78474]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2013-30896]


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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

[FMCSA-2013-0513]


Registration and Financial Security Requirements for Brokers of 
Property and Freight Forwarders; Association of Independent Property 
Brokers and Agents' Exemption Application

AGENCY: Federal Motor Carrier Safety Administration (FMCSA).

ACTION: Notice of application for exemption; request for public 
comments.

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SUMMARY: FMCSA announces that it has received an application from the 
Association of Independent Property Brokers and Agents (AIPBA) for an 
exemption for all property brokers and freight forwarders from the 
$75,000 bond provision included in section 32918 of the Moving Ahead 
for Progress in the 21st Century Act (MAP-21), now codified in 49 
U.S.C. 13906. AIPBA filed its request pursuant to 49 U.S.C. 13541. On 
September 5, 2013, FMCSA published guidance in the Federal Register 
concerning section 32918 and on October 1, 2013, the Agency published a 
final rule amending 49 CFR part 387 to set a minimum $75,000 surety 
bond/trust fund requirement for brokers of property and freight 
forwarders. FMCSA requests comments from all interested parties on 
AIPBA's exemption request.

DATES: Comments must be received on or before January 27, 2014.

ADDRESSES: You may submit comments, identified by docket number FMCSA-
2013-0513, by any of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
     Fax: 1-202-493-2251.
     Mail: Docket Management Facility (M-30), U.S. Department 
of Transportation, West Building Ground Floor, Room W12-140, 1200 New 
Jersey Avenue SE., Washington, DC 20590-0001.
     Hand delivery: Same as mail address above, between 9 a.m. 
and 5 p.m. ET, Monday through Friday, except Federal holidays. The 
telephone number is 202-366-9329.
    To avoid duplication, please use only one of these four methods.

FOR FURTHER INFORMATION CONTACT: Mr. Thomas Yager, Chief of Driver and 
Carrier Operations, (202) 366-4001 or thomas.yager@dot.gov, FMCSA, 
Department of Transportation, 1200 New Jersey Ave., SE., Washington, DC 
20590.

Public Participation and Request for Comments

    FMCSA encourages you to participate in this proceeding by 
submitting comments, data, and related materials. All comments received 
will be posted without change to http://www.regulations.gov and will 
include any personal and/or copyrighted information you provide.

Submitting Comments

    If you submit a comment, please include the docket number for this 
proceeding (FMCSA-2013-0513), indicate the specific section of this 
document to which each comment applies, and provide a reason for each 
suggestion or recommendation. You may submit your comments and material 
online or by fax, mail, or hand delivery, but please use only one of 
these means. FMCSA recommends that you include your name and a mailing 
address, an email address, or a phone number in the body of your 
document so that FMCSA can contact you if there are questions regarding 
your submission. However, see the Privacy Act section below regarding 
availability of this information to the public.
    To submit your comment online, go to http://www.regulations.gov and 
click on the ``Submit a Comment'' box, which will then become 
highlighted in blue. In the ``Document Type'' drop down menu, select 
``Rules,'' insert ``FMCSA-2013-0513'' in the ``Keyword'' box, and click 
``Search.'' When the new screen appears, click on ``Submit a Comment'' 
in the ``Actions'' column. If you submit your comments by mail or hand 
delivery, submit them in an unbound format, no larger than 8\1/2\ by 11 
inches, suitable for copying and electronic filing. If you submit 
comments by mail and would like to know that they reached the facility, 
please enclose a stamped, self-addressed postcard or envelope.
    FMCSA will consider all comments and material received during the 
comment period.

Viewing Comments and Documents

    AIPBA's exemption application and all public comments are available 
in the public docket. To view comments filed in this docket, go to 
http://www.regulations.gov and click on the ``Read Comments'' box in 
the upper right hand side of the screen. Then, in the ``Keyword'' box, 
insert ``FMCSA-2013-0513'' and click ``Search.'' Next, click the ``Open 
Docket Folder'' in the ``Actions'' column. Finally, in the ``Title'' 
column, click on the document you would like to review. If you do not

[[Page 78473]]

have access to the Internet, you may view the docket online by visiting 
the Docket Management Facility in Room W12-140 on the ground floor of 
the Department of Transportation West Building, 1200 New Jersey Avenue 
SE., Washington, DC 20590, between 9 a.m. and 5 p.m. ET, Monday through 
Friday, except Federal holidays.

Privacy Act

    Anyone is able to search the electronic docket for all comments 
received into any of our dockets by the name of the individual 
submitting the comment (or signing the comment, if submitted on behalf 
of an association, business, labor union, etc.). You may review the DOT 
Privacy Act system of records notice for the Federal Docket Management 
System (FDMS) that DOT published in the Federal Register on January 17, 
2008 (73 FR 3316).

SUPPLEMENTARY INFORMATION: 

Legal Basis

    Section 13541 of title 49 of the United States Code (49 U.S.C. 
13541) requires the Secretary of Transportation (Secretary) to exempt a 
person, class of persons, or a transaction or service from the 
application, in whole or in part, of a provision of 49 U.S.C. Part B 
(Chapters 131-149), or to use the exemption authority to modify the 
application of a provision of 49 U.S.C. Part B (Chapters 131-149) as it 
applies to such person, class, transaction, or service when the 
Secretary finds that the application of the provision:
     Is not necessary to carry out the transportation policy of 
49 U.S.C. 13101
     Is not needed to protect shippers from the abuse of market 
power or that the transaction or service is of limited scope; and
     Is in the public interest.
    Further, the exemption authority provided by section 13541 ``may 
not be used to relieve a person from the application of, and compliance 
with, any law, rule, regulation, standard, or order pertaining to cargo 
loss and damage [or] insurance . . .'' 49 U.S.C. 13541(e)(1).
    AIPBA seeks an exemption from the $75,000 financial security 
requirements for brokers and freight forwarders at 49 U.S.C. 13906 (b) 
& (c). Section 13906 is located in 49 U.S.C. Part B (chapter 139) and 
therefore may be considered within the general scope of the exemption 
authority provided by section 13541. The Secretary may begin a section 
13541 exemption proceeding on the application of an interested party. 
49 U.S.C. 13541(b). See, e.g., Motor Carrier Financial Information 
Reporting Requirements-Request for Public Comments, 68 FR 48987 (Aug. 
15, 2003). The Secretary may ``specify the period of time during which 
an exemption'' is effective and may revoke the exemption ``to the 
extent specified, on finding that application of a provision of [49 
U.S.C. Chapters 131-149] to the person, class, or transportation is 
necessary to carry out the transportation policy of [49 U.S.C.] section 
13101.'' 49 U.S.C. 13541(c), (d).
    The Administrator of FMCSA has been delegated authority under 49 
CFR 1.87 to carry out the functions vested in the Secretary by 49 
U.S.C. 13541.

Background

    On July 6, 2012, the President signed MAP-21 into law, which 
included a number of mandatory, non-discretionary changes to FMCSA 
programs. Some of these changes amended the financial security 
requirements applicable to property brokers and freight forwarders 
operating under FMCSA's jurisdiction. P.L. 112-141, Sec.  32918, 126 
Stat. 405 (codified at 49 U.S.C. Sec.  13906(b) & (c)). More 
specifically, 49 U.S.C. Sec.  13906(b) and (c) requires brokers and 
freight forwarders to provide evidence of minimum financial security in 
the amount of $75,000.
    On September 5, 2013, FMCSA published guidance (78 FR 54720) 
``concerning the implementation of certain provisions of . . . (MAP-21) 
concerning persons acting as a broker or a freight forwarder.'' On 
October 1, 2013, FMCSA issued regulations requiring brokers and freight 
forwarders to have a $75,000 surety bond or trust fund in effect. 49 
CFR Sec. Sec.  387.307(a), 387.403(c). 78 FR 60226, 60233.
    On November 14, 2013, after initially filing and dismissing in 
district court, AIPBA filed a petition for review in the U.S. Court of 
Appeals for the 11th Circuit. Association of Independent Property 
Brokers and Agents, Inc. v. Foxx, No. 13-15238-D (11th Cir.). The 
petition alleges the Agency's October 1 final rule was improperly 
issued without notice and comment.

AIPBA Exemption Application

    In an August 14, 2013 letter to the Secretary, AIPBA, through its 
counsel, requests that the Department ``permanently exempt all property 
brokers and freight forwarders from the $75,000 broker bond provision 
of MAP-21. . . .'' AIPBA argues that the ``$75,000 broker surety bond 
amount is not necessary to carry out the transportation policy of 
section 13101, [or] . . . to protect shippers from the abuse of market 
power . . . and . . . is not in the public interest.'' AIPBA seeks a 
categorical exemption ``so that property brokers and forwarders can 
continue to do business under the existing bond regulations.'' A copy 
of the exemption application is included in the docket referenced at 
the beginning of this notice.
    First, AIPBA believes that the $75,000 bond requirement is contrary 
to the transportation policy of 49 U.S.C. 13101 because it violates the 
federal government's policy of ``encourage[ing] fair competition, and 
reasonable rates for transportation by motor carriers of property'' and 
``allow[ing] a variety of quality and price options to meet changing 
market demands and the diverse requirements of the shipping and 
traveling public. . . .'' 49 U.S.C. 13101(a)(2)(A),(D).
    AIPBA also argues that the $75,000 broker bond requirement ``is not 
necessary to protect shippers from the abuse of market power.'' 
According to AIPBA, ``[t]he unnecessarily high $75,000 broker bond 
requirement will cause the majority of property brokers to leave the 
marketplace, which will expose shippers to abuses of market power by 
the few large property brokers able to stay in business.''
    With regard to the public interest, AIPBA believes the new bond 
requirement will ``cause a significant increase in consumer prices once 
the supply of property brokers is drastically reduced.'' AIPBA 
indicated that a lack of competition will require shippers to pay more 
for transportation services. In addition to predicting that small and 
mid-sized brokers will be forced out of the market place due to the new 
higher bond requirement, AIPBA believes the new requirement will serve 
as a barrier to entry into the market place for other property brokers.
    Finally, while AIPBA acknowledges that ``there are certain 
regulations from which [the Secretary] cannot issue exemptions,'' it 
believes that ``the broker bond does not fall into one of the listed 
categories. Specifically, AIPBA argues that the bond is a financial 
security rather than a type of required insurance, a distinction 
emphasized in 49 U.S.C. 13906 by the choice of a bond or insurance as 
well as MAP-21's amendment to 49 U.S.C. 13906, which still requires the 
broker bond but deletes all reference to insurance.''

Request for Comments

    FMCSA requests public comment on the AIPBA exemption application. 
Specifically, FMCSA requests comments on whether the Agency should 
grant or deny the application, in whole or in part. The Agency also 
requests comments on how it should apply 49 U.S.C. 13541(a)(1-3) to 
AIPBA's request.

[[Page 78474]]

Additionally, FMCSA seeks comment on whether the reference to ``cargo 
loss and damage'' and/or ``insurance'' in section 13541(e)(1) bars 
FMCSA from granting the requested exemption as a matter of law and 
without application of the three-part statutory test under section 
13541(a). Commenters are encouraged to provide data or information 
concerning the impact of the new bond requirements and/or the impact of 
granting this exemption request on carriers, brokers, freight 
forwarders and shippers.

    Issued on: December 18, 2013.
Larry W. Minor,
Associate Administrator for Policy.
[FR Doc. 2013-30896 Filed 12-24-13; 8:45 am]
BILLING CODE 4910-EX-P