Issue 130
Broker Financial Responsibility Final Rule:
On November 15, 2023, the Federal Motor Carrier Safety Administration (FMCSA) published a pre-publication notice of its Final Rule titled "Broker and Freight Forwarder Financial Responsibility." This rulemaking was initiated as a result of the Moving Ahead for Progress in the 21st Century Act (MAP-21) passed by Congress in 2012, which mandated specific financial security requirements for brokers and freight forwarders. The Secretary was directed to develop regulations to enforce these requirements, leading to the release of this Final Rule in 2023, following a petition by the Transportation Intermediaries Association (TIA) in 2014.
The Final Rule encompasses several key areas of amendment, including defining acceptable assets readily available for financial security, outlining procedures for the immediate suspension of broker/forwarder authority, specifying responsibilities in cases of financial failure or insolvency, addressing enforcement authority, and determining eligible entities to provide trust funds for brokers and forwarders.
Notably, the FMCSA revised its approach regarding "assets readily available" based on feedback from industry groups like TIA. Instead of listing prohibited asset types, the agency will now publish a list of acceptable assets, including cash, irrevocable letters of credit (ILC) issued by federally insured depository institutions, and Treasury bonds.
Regarding the immediate suspension of authority, the Final Rule sets the threshold for falling below $75,000 in bond or trust fund coverage and establishes requirements for timely notifications by surety and trust fund providers.
In terms of responsibilities in solvency cases, the FMCSA adjusted the definition of financial failure or insolvency to allow flexibility for surety providers and financial institutions to make informed determinations. These providers may cite financial failure or insolvency as grounds for canceling surety bonds or trust agreements.
Enforcement authority stems from Congressional mandates, and the rule aims to reduce fraud by limiting the time brokers can accrue claims while in financial distress before their operating authority is suspended.
Regarding eligible entities to provide BMC-85 trust funds, the Final Rule maintains the prohibition of loan and finance companies from serving as trustees due to their lack of federal regulation and oversight.
Implementation dates for most provisions of the Final Rule are set for January 16, 2025, with the exception of acceptable assets readily available, which takes effect on January 16, 2026.
Overall, the Final Rule seeks to establish clearer financial responsibility requirements for brokers and freight forwarders, enhancing transparency and enforcement within the trucking industry while addressing concerns raised by stakeholders and industry experts like TIA members.
Top of Form
Congress Avoids Shutdown:
The Senate has successfully passed a stopgap spending bill, preventing a government shutdown with just days to spare. The bill, previously approved by the House, received an 87-11 vote in the Senate, but negotiations on defense policy legislation delayed the process for hours.
This stopgap bill employs a two-tiered deadline system introduced by Speaker Mike Johnson (R-4th/LA). It keeps a portion of the government funded until January 19th, 2024, while funding for the military and some major domestic programs extends until February 2nd, 2024. This approach aims to stagger funding deadlines, avoiding the usual challenge of trying to pass a massive 12-bill government funding package.
Senate Majority Leader Chuck Schumer (D-NY) assured the public that there would be no government shutdown on Friday night. While some senators initially had reservations about the "laddered" concept, it ultimately gained the necessary support. Democrats were pleased that it did not involve funding cuts and that defense funding was part of the second tranche with the February deadline.
Despite concerns from some Republicans about the length of the continuing resolution, the bill moved forward. The Senate has only passed three out of its 12 appropriations bills, and they are wanting to pursue more "minibuses" for the remaining nine bills while discussing a broader government funding agreement with House Republicans in January.
Senate Appropriations ranking member Susan Collins (R-ME) hopes to bundle four appropriations bills together in the next package – expected to be early 2024. However, House conservatives are upset over the stopgap's passage in the House and are refusing to pass further GOP spending bills until a plan to cut government funding for the fiscal year is produced.
Both sides will need to reconcile their differences across a dozen spending bills in the new year. Speaker Johnson has vowed not to create more stopgap measures, setting up January and February as hard deadlines for resolving spending disagreements between the chambers. Collins stressed the importance of passing the remaining bills to begin serious discussions with House Republicans, emphasizing that the topline funding level is significant, but passing bills is essential for the conference process.
New York to Subsidize Charge Stations via Rate Payers:
New York state is increasing the budget for utility subsidies of electric charging stations by $500 million, bringing the total to $1.2 billion. Who’s paying for the charging stations? The state’s electric customers. This move comes as the state adjusts its electric vehicle (EV) targets and aims to incentivize the buildout of charging infrastructure. The decision was made by the Public Service Commission (PSC) to support the installation of over 6,000 direct current fast charger plugs across the state.
New York has ambitious climate targets that require widespread EV adoption, and charging station availability is seen as a critical factor in encouraging consumer adoption. The "make ready" program, which supports utility upgrades for charging station installation, is funded by ratepayers.
The new targets for the program include 38,356 Level 2 charging plugs and 6,302 DCFC (Direct Current Fast Charger) chargers, reflecting updated analyses of the needs to support growing EV adoption.
However, concerns have been raised about the costs and pace of achieving the state's targets, especially as the PSC acknowledges that New York is not on track to meet its 2025 goal of 850,000 zero-emission vehicles due to various factors, including the impact of the COVID-19 pandemic and Buy American requirements.
Despite concerns, the increased budget also includes provisions for charging infrastructure in disadvantaged communities, electric bike charging infrastructure, and support for medium and heavy-duty fleets. The costs for the program are expected to raise customers' bills by 0.7 percent to 1.4 percent, although increased sales of electricity should offset some of these impacts.
If you have any questions about this newsletter or TIA 2023
Policy Forum, please email [email protected]
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