FMCSA Final Rule Lets It Suspend Brokers Whose Financial Security Falls Below $75,000
A November 2023 rule tightened requirements for broker and freight forwarder bonds and trusts to cut down on unpaid claims by motor carriers.
In November 2023, the Federal Motor Carrier Safety Administration issued a final rule on broker and freight forwarder financial responsibility. The rule was published in the Federal Register on November 16, 2023, with an effective date of January 16, 2024.
The rule implements provisions of the 2012 MAP-21 highway law, which raised the required broker bond or trust fund to $75,000. It changes the regulations in five areas.
The five changes
Assets readily available. Trust funds filed on Form BMC-85 may hold only cash, irrevocable letters of credit issued by federally insured depository institutions, and Treasury bonds. FMCSA said these assets are stable and can be liquidated within seven calendar days. Compliance date: January 16, 2026.
Immediate suspension. When a broker's or freight forwarder's available financial security falls below $75,000 and is not replenished within seven calendar days after notice from FMCSA, the agency will issue a notice of suspension of operating authority. Sureties and financial institutions must notify FMCSA within two business days of a payment that drops security below $75,000, or of a determination that such a payment is inevitable. Compliance date: January 16, 2025.
Financial failure or insolvency. If a surety or trustee becomes aware that a broker is in financial failure or insolvency, it must notify FMCSA and start cancellation of the bond or trust, and FMCSA will publish a notice. Compliance date: January 16, 2025.
Enforcement. FMCSA can suspend a surety or trust provider that violates the requirements, after notice and 30 days to respond. FreightWaves reported penalties of $12,882 per violation and three years of ineligibility to provide broker financial security. Compliance date: January 16, 2025.
Eligible trustees. Loan and finance companies were removed from the list of entities allowed to serve as BMC-85 trustees. Compliance date: January 16, 2026.
Why FMCSA acted
The agency said some brokers withhold payment from motor carriers, which must then file claims against the broker's bond or trust. When claims against one broker exceed $75,000, the provider often goes to court in an interpleader action, which FMCSA said can be costly and slow and generally pays carriers pro rata. FMCSA estimated that about 1.3% of brokers, or about 429 in 2022, would see a drawdown on their bond or trust in a given year.
"FMCSA will immediately suspend brokers that do not respond following a drawdown on their financial security. Such brokers will no longer be able to accrue liabilities that they do not plan, or lack the ability, to pay," the agency wrote.
Reaction
The Transportation Intermediaries Association told FreightWaves the rule was "a huge step towards addressing potential financial fraud and making sure that funding is available to protect motor carriers and brokers." The Owner-Operator Independent Drivers Association called it "a step in the right direction" and urged FMCSA to act on its 2020 petition on broker transparency.
What it means for drivers and fleets
For carriers, the November 2023 rule promised that a broker that stops paying and lets its security fall below $75,000 would lose its authority sooner, rather than continuing to book loads while claims piled up. FMCSA said carriers would be able to check whether a broker had active authority before accepting a load. Because the key provisions had compliance dates in 2025 and 2026, carriers still needed to vet brokers and watch payment patterns in the meantime.