The New Transportation Broker Law - Map 21

An Analysis for Attorneys

TASA ID: 2109

 Many motor carrier accidents involve a dispatch by a transportation broker. The broker’s usual position in the event of an accident is “to run away” from responsibility, thinking incorrectly, that they are not liable. However; If any of the broker’s actions in the act of transportation, are normally, actions reserved, in common practice, to a motor carrier, the Broker may be held to strict liability, in that transportation event. 

According to the DOT legal counsel, each broker and the actions of that broker are to be judged on a case-by-case basis. If the non-liable broker undertakes a transportation action that is normally under the purview of the motor carrier, then that broker has assumed motor carrier liability and responsibility.

The United States Government has taken steps to define the transportation broker’s role in an act of transportation. On July 2012, The President signed into law, Public Law 112-141, commonly referred to as “Map 21,” which in distillation, limits transportation brokering, to those who are licensed under [Regulation 49 CFR 371.2]. Motor carriers are barred from “brokering” freight they are in possession of and legally bound to pick and deliver on their own equipment. The new laws provide “broker penalties” for those who break Map 21 rules. 

Consequently, almost 40% of trucking accidents involve a broker, as well as the trucker, some are authorized or licensed and some are not. More importantly, brokers who act or hold themselves out to public as a "motor carrier” while brokering, are as liable as the motor carrier in any loss, during the act of transportation. Double brokering is actually forbidden by Map 21, and the shipper primarily ends up in a short shrift, when their cargo is lost, as neither broker(s) nor motor carrier will accept and pay for that loss. In many cases, shippers may end up paying twice for one act of transportation.

There are ways to distinguish one broker type from another. There are two types of surface transportation. The old-fashioned “truck broker” type that is now outlawed by Map 21, commonly called “truck broker.” This type is defined as one motor carrier “hiring” another motor carrier on a load-by-load basis. Both carriers insure and are responsible for the cargo and the public safety.

The only broker type that is allowed under Map 21 is the licensed and bonded broker, aka, property broker, aka, “pure broker” and is in each load arrangement for a commission compensation.  

Logistics companies who assume more than one transportation position in supply chain steps and have a real problem separating their services on individual loads. Map 21 requires all forwarders to obtain a “brokers” license [as defined 49 CFR 371.2] in order to arrange [broker] freight. 

The one stop logistics shop usually ends with motor carrier liability, without knowing the liability implications. Obviously, the problem is exacerbated in “taking multiple commissions” from their owned subsidiaries, with that one act of transportation. Map 21 requires owned entities to “separate their owned business” in practice, representation to the public and actual operations. Most logistics companies seek the efficiency of running all types of transportation modes in one operation, much to their consternation.  

Forwarders have a beneficial interest in a cargo, and assume all cargo liability from points A to B, buying various modes of transportation, such as motor carrier truck, train, then back to a truck. They generally are not publicly liable for the actions of modes of transportation purchased, e.g., truck, train or truck. Most forwarders then can be loosely defined as super brokers with some liability. 

Over the last 30 years, the Federal Motor Carrier Safety Administration (FMCSA) has wrestled with the obvious problem of what distinguishes licensed and bonded property brokers, [49 CFR 371.2] from a motor carrier truck broker. 

In common practice, transportation workers think in error that brokering and trucking are the same thing. In 1992, the DOT legal counsel published an opinion that brokers may broker freight without liability to be determined by their actions. The government thinks that trucking and brokering should be separate functions. Toward that end, 20 years later, the FMCSA received from Congress, Map 21 which completely separates brokering from motor carriage.

The thought is that the trucker works for the broker as a result of a “hiring,” because that’s what “truck brokering” was all about. As a result of Map 21, the exact opposite market positions prevail. The licensed and bonded property broker, works for the interests of the motor carrier, and indeed is the fiduciary of the motor carrier funds. This position separates truck brokering from licensed and bonded property brokering.

Analogy: brokering as a motor carrier does not rid that carrier of liability, whereas, a licensed and bonded property broker who acts like a “travel agent” escapes motor carrier liability in a plane crash, by limiting their liability to issuing the ticket. 

There is the crux, does a broker hire a motor carrier, or does the broker “arrange” transportation on an authorized and insured motor carrier, as required in statute?

It is possible to broker transportation without motor carrier liability, according to a DOT legal opinion published in 1992. The latest iteration of this FMCSA wrestling job is manifested by Congress passing “Map 21,” in 2012. The players in the marketplace are loath to change their brokering practices, and consequently most brokers are unable to distinguish their brokering actions from those of a motor carrier and its liability. The trend in the transportation marketplace by regulation, is separation of brokering from motor carriage.

The FMCSA has yet to implement and enforce most Map 21 provisions, based on their own admission of inadequate staff and budget; however, The last leader of the FMCSA Secretary Ferro, has published in August 2013, the FMCSA will advocate in the event of an exercise of a right to private action with respect to Map 21 provisions. If you are taking legal action, consult with the DOT legal counsel for advice and direction on issues of broker penalties and liability. The FMCSA may be a friend, in your legal action.

In the last three years, brokering experience has proven how ineffective the passage of Map 21 is for America. This time period is markedly one of a collapse of “financial responsibility” called for in the law. Double, triple, and quadruple load brokering has swept the marketplace. Lawyers have seen the uptick in truck/car accidents where there is more than one broker, and more than one motor carrier, involved in the transportation loss at question. 

Strict liability comes into play based upon which state the accident occurred. A distinction needs to be drawn when multiple transportation parties infest your legal action. Simply name all of the parties in your legal action, or get counseling about the nature of each transportation provider involved in the one act of transportation. Legal action quickly sorts out who is involved in the financial transaction. Follow the money, follow the insurance trail which memorializes those accepting risk.

Common practice in the transportation industry still includes truck brokering, more commonly trucking companies who own no trucks of their own, but broker freight they take possession of from confused shippers still offering tenders for transport. Many of these illegal operations are required by the new law to apply and register as a “licensed and bonded property brokers” post a surety bond. The law requirement has been universally ignored by truck brokers, as there is no enforcement by the FMCSA or states’ scale houses. Shippers still don't understand the differences in transportation brokers.

Unfortunately, shippers require brokers to obtain transportation insurance, in order to be considered for load tenders. The question then becomes, if a broker is not liable, does obtaining insurance for shippers make that broker liable in the process. Brokers are then ensuring a risk that the shipper is forcing upon them, in order for the broker to have business to broker.  Brokers work to avoid liability, and ensuring a transportation risk they are not assuming, is problematic. The common issue can be resolved based on the individual broker’s public representations to the shipping client. 

Should America’s state scale house find out about the penalty fines available under Map 21, and begin to levy fines against carriers whose bills of lading have a different name written in as “Carrier” than the motor carrier name appearing on the door of the truck. The confusion is the order of the day. Transportation will change in character. Keep in mind, no reasonable or prudent person would undertakes the risky business of transportation, if there is a legal opportunity they will not be paid. Extra fines make trucking unprofitable, same result; less commerce to regulate.

Motor carriers will stop accepting excess freight from shippers when they do NOT have equipment available to haul. American shippers’ search for motor carriage, will multiply in complexity, and the final impact, equipment supply is obscured. There is no “airline reservation system” equivalence in surface trucking, no way to find tomorrow's truck today. There is a new cloud technology available but has yet to be deployed - “”

A new Map 21 provision that is widely overlooked is the provision that those parties arranging or trucking transportation are required to give “written notice” to the shipper of the motor carrier registration number, actually in possession of and responsible for shippers' cargo, before a consignment may occur [49 USC 13901(c)]. This provision has yet to be tested, but the intent of Congress is quite clear; provide for the public financial responsibility in every transportation transaction. 

Shippers virtually to a man/woman, complain that they are almost never in the full knowledge of who is responsible in the event of loss. This is exacerbated by brokers who “run away,” in the event of transportation loss; hence, the new “written notice” requirement in the Map 21 Law.

Standard of care in motor carrier selection for shippers and brokers are different. This big issue plays a prominent role in most in which cases I have been involved. In truck brokering, since the public and cargo liability is known and shared by both motor carriers, vetting is deeper into available safety information examination. A safety inspection of the agent vehicle (used to be required) by the principal motor carrier can be accomplished by examining and judging risk from government online credentials and posted safety records. A principal/agent relation is established in “truck brokering.”

In licensed and bonded property brokering, (the other kind of brokering), there is no principal/agent relationship established if that brokers limits their liability by their transportation actions. This broker does not take or declare a “beneficial interest” in the Cargo [see 49 USC 80101 et al.], nor insures the risk with insurance, nor in action, takes possession of the cargo. 

These brokers have a “non-delegated duty” to provide for the public safety, by vetting to “fitness only” judgment of the arranged motor carrier actually hauling the load. They cannot judge “motor carrier safety “as they are not qualified safety evaluators to examine and judge another motor carrier safety record. This kind of broker is limiting their liability to issuing the “ticket” as a travel agent would. This brokers’ duty to the shipper is one of “reporting” arranged motor carrier’s FMCSA safety rating, satisfactory, conditional, unsatisfactory, to the shipper of record, in that “written notice” described earlier in this dissertation. 

Of course, the biggest changes wrought by Map 21, is the take away of a motor carriers ability to broker without a license freight they are in possession of.  The motor carriers have to apply and receive a broker’s license after posting a Surety Bond. 

Map 21 is a huge tax on motor carriers, by establishing that carrier, must go thru the expense of starting up another company and operating that company completely separate from the actual motor carrier operation. The law implies, that motor carriers may no longer bill shippers directly for the loads that carrier gives to it “owned” brokerage. Operating “separately” as required in MAP 21, means only the motor carriers’ “owned” licensed and bonded brokerage can still bill the shippers for brokered loads. The motor carrier is out of that brokered act of transportations’ revenue stream, all together. Remember this Law when initially proposed, was called the “Motor Carrier Protection Act of 2010,” and the effect of Map 21 passage is not what was intended, thanks to The ATA, OOIDA, and the TIA organizations lobbying. 
Map 21 increase in the brokers Surety Bond from $10,000 to $75,000, is a minor cost increase to existing brokers.

This discussion covers a few of the biggest issues in truck car accidents that happened after July 2012, the date MAP 21 was signed into law. The separation of businesses, the required written notice and other broker life altering changes, have yet to be enforced by any governments. It is clear that trucking and brokering have no efficiency in operating as the same company. Strict liability applies, is they were operated as one company. Who wants to take the risk for a 15% commission to accept 100% of the liability and responsibility for one act of transportation and. 

Map 21 requires “broker training,” from the cases examined, it appears that this ignored requirement if fulfilled by the government would go a long way to alter today's brokering practices toward “financial responsibility.”

This article discusses issues of general interest and does not give any specific legal or business advice pertaining to any specific circumstances.  Before acting upon any of its information, you should obtain appropriate advice from a lawyer or other qualified professional.

This article may not be duplicated, altered, distributed, saved, incorporated into another document or website, or otherwise modified without the permission of TASA. Contact for any questions.

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