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Federal Register / Vol. 86, No. 239 / Thursday, December 16, 2021 / Notices
VI. Public Comments On April 10, 2020, FMCSA requested public comment on SBTCs exemption application. 85 FR 20334.11 Specifically, FMCSA requested comments on whether the Agency should grant or deny the application, in whole or in part. The Agency also requested comments on how it should apply 49
U.S.C. 13541a13 to SBTCs request. 85 FR at 20335. In addition to SBTCs comments, which are discussed above, the Agency received 22
comments in response to the Federal Register notices. Seventeen commenters opposed the request for exemption. Five commenters did not directly address the request, with two of those commenters expressing general opposition to the broker bond. The commenters are: Amy Bourne, James Anonymous, Stephen Oatley, Navpreet Khaira, Jas Pannu, Amandeep Ghuman, Brian Klink, Don Juan, Rajdeep Singh, Patricia Newkirk, Melissa Carbonell, Jim Asad, Lisa Schmitt, Small Business in Transportation Coalition SBTC, JW
Surety Bonds, Motor Carrier Regulatory Reform MCCR Coalition,12 OwnerOperator Independent Drivers Association OOIDA, American Trucking Associations ATA, The Surety & Fidelity Association of America SFAA, Transportation and Logistics Council, Inc. TL Council, TIA, and two anonymous commenters.

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Specific Comments by Opponents of SBTCs Application FMCSA provides a sampling of comments provided by opponents of SBTCs application below.
ATA indicated that granting SBTCs request would deprive motor carriers of the bond protection where it is most neededin dealings with brokers who turn out to be financially precarious. 13
ATA also indicated that if FMCSA had the authority to decide this exemption, which it questions due to Separation of Powers concerns, SBTCs request does not meet the standard pursuant to 49
U.S.C. 13541.14
11 On May 4, 2020, FMCSA corrected the public docket number referenced in its April 10 notice and extended the public comment period until June 3, 2020. 85 FR 26516.
12 MCRR Coalition is composed of Air &
Expedited Motor Carrier Association AEMCA, Alliance for Safe, Efficient and Competitive Truck Transportation ASECTT, American Home Furnishings Alliance AHFA/Specialized Furniture Carriers, Apex Capital Corp., Auto Haulers Association of America AHAA, National Association of Small Trucking Companies NASTC, The Expedite Alliance of North America TEANA and the Transportation Loss Prevention &
Security Association TLP&SA.
13 Comments of the American Trucking Associations ATA, at 2.
14 Id. at 23.

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TL Council, whose members include approximately 300 shippers, carriers, transportation intermediaries and other transportation service providers, described concerns over unfit or illegal operators and stated that the Exemption Application should be denied. 15
JW Surety Bonds JW Surety stated, The SBTC seeks a frictionless environment for freight brokers to transact business without the need of financial security in the $75,000 bond without taking into consideration the consequences if such an exception was granted. The surety bond industry which issues the BMC84 product has paid more than $3 million in claims to carriers and shippers which licensed freight brokers had defaulted upon their obligations for payment. Most recently during the COVID crisis, we have only seen claim occurrences increase. Our estimates for 2020, are that the surety industry will pay out $3.2$3.5
million in carrier claims on freight brokers. 16 JW Surety also indicated that surety bonds are not a barrier to entry for legitimate brokers and that surety premiums are consistently low.
According to JW Surety, exemption of the bond requirement would be of greatest benefit to repeat offenders that are regularly in breach of their payment commitments harming carriers. 17
OOIDA stated, FMCSA must deny any exemptions that would weaken current broker bond standards and further defraud professional truck drivers and motor carriers from their rightful compensation. 18
SFAA explained, The bonds required under 49 U.S.C. 13906 are intended to ensure that commercial entities, such as motor carriers and shippers, are protected if the freight forwarder fails to pay freight charges under its contracts, agreements or arrangements for transportation. The protections for shippers and carriers, who may also be small businesses themselves, should not be sacrificed in the interest of the Small Business in Transportation Coalition. The loss experience from this type of bond demonstrates it is serving its intended purpose, which Congress believed was necessary when it raised the bond requirement to $75,000. 19 SFAA
further indicated that the increased bond amount has not had an impact on
the availability of surety bonds for small businesses operating as forwarders or brokers. 20
TIA indicated that the requested exemption would frustrate Congresss intent to protect payments to motor carriers and prevent unauthorized brokering. 21
MCRR Coalition included statements from its member associations in opposition to SBTCs request. Tom Ogrodowski, of the Auto Haulers Association of America, stated that the increased bond requirement has not hindered the growth of brokers in the auto hauler sector.22 In an affidavit, David Gee, President of the Alliance for Safe, Efficient and Competitive Truck Transportation ASECTT, indicated that the price of a broker bond has crashed since 2013 where with a personal guarantee by the owner, a yearly bond cost of approximately $2,000 or less is involved. 23 And, in an affidavit, David Owen, the President of the National Association of Small Trucking Companies NASTC, a 12,000
member organization the vast majority of which are small motor carriers operating less than 20 trucks, indicated that our initial fear that the bonding amount would be cost prohibitive for small brokers and have an anticompetitive effect on the industry did not come to pass. Our experience in helping new members shows that bonds from reputable sureties are available and commercially reasonable. 24
Melissa Carbonell wrote, We are a broker and have been since 2006. We were also a carrier for a few years so we know both sides of this story. We have watched brokers get licenses, get cheap bonds, rack up large carrier bills and then go out of business and the carriers never get paid. The broker will restart another license and cheap bond and do it all over again! $10,000 is not enough to cover sometimes 3 freight bills. The bond needs to stay $75,000. We have $10,000 in a trust account and only pay $2,500 a year for our broker bond. Any broker doing more than $1 Million a year in business should be able to afford this amount! If they cant afford the bond then they are not solvent enough to be getting hundreds of thousands of dollars in credit on the backs of carriers.
Please keep the broker bond the same!
Please do not lower the broker bond!
20 Id.

15 Comments
of the Transportation and Logistics Council, Inc. at 2.
16 Comments of JW Surety Bonds, at 1.
17 Id.
18 Comments of the Owner-Operator Independent Drivers Association, at 3.
19 Comments of the Surety & Fidelity Association of America, at 1.

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21 Comments
of the Transportation Intermediaries Association, at 4.
22 Comments of the Motor Carrier Regulatory Reform Coalition, Statement of Tom Ogrodowski.
23 Comments of the Motor Carrier Regulatory Reform Coalition, Affidavit of David Gee, at 1.
24 Comments of the Motor Carrier Regulatory Reform Coalition, Affidavit of David Owen, at 1.

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