FMCSA’s Guidance Still Missing on Many MAP-21 Provisions

FMCSA’s Guidance Still Missing on Many MAP-21 Provisions

It’s been nearly two years since the Moving Ahead for Progress in the 21^st Century Act (“MAP-21”) was signed into law. Yet, there is still a great deal of uncertainty as to how those new laws will be interpreted and applied to customs brokers, FMC (Federal Maritime Commission) Ocean Transportation Intermediaries (“OTIs”), and indirect air carriers (“IACs”).

Many existing FMCSA (Federal Motor Carrier Safety Administration) laws were created or modified by MAP-21 in an attempt to improve regulation of the domestic transportation of freight and passengers.  Unfortunately, MAP-21 also created some ambiguity for customs brokers and OTIs, specifically whether domestic movement of international freight would be regulated by the FMCSA or be within the scope of an exemption from regulation.

Just prior to when many of the MAP 21 provisions took effect October 1, 2013, the FMCSA published changes to its regulations that only implemented the non-discretionary aspects of MAP 21. This meant the discretionary aspects, and many other matters requiring clarification, would be handled at a later time through a more formal public notice and comment rulemaking process commenced.  Eight months later, the industry is still waiting.

A non-discretionary aspect of MAP-21, which took effect October 1, 2012, is the creation of a new statute, 49 U.S.C. §14916 (http://www.law.cornell.edu/uscode/text/49/14916), that defines unlawful brokerage activities, carves out limited exemptions, and established the consequences of unlawful brokering.  The FMCSA has yet to provide sufficient guidance to the industry to clarify when certain activities by customs brokers and FMC OTIs fall within the scope of an exemption to the unlawful brokerage statue.

The FMCSA regulates the interstate movement of goods by surface carrier, subject to a few very specific exemptions. Arranging for the movement of a short list of commodities is exempt.  Also, certain transactions performed by licensed customs brokers, licensed or registered OTIs, and indirect air carriers, may be exempt. But these same firms are not granted an automatic exemption merely because they are customs brokers, OTIs, or indirect air carriers.  It is the nature of the specific movement of freight that determines whether an exemption applies, or whether the FMCSA requires broker or freight forwarder authority be in place.

For OTIs, arranging inland transportation for goods moving under a through ocean bill of lading is exempt since this activity is regulated by the FMC.  For customs brokers, the inbond movement of goods, or “engaging … in a transaction involving customs business” is exempt from FMCSA regulation because US Customs and Border Protection oversight applies.  However, the FMCSA has given no clarity or examples of non-exempt or exempt activities.  Finally, for indirect air carriers, arranging trucking services that are subsequent or prior to the movement by air is exempt from FMCSA regulation.

The consequences of unlawful brokerage can be significant. The FMCSA may impose penalties of up to $10,000 per incident, and the statue allows injured parties to pursue claims without regard to amount (such as any limitation of liability).  Additionally, such claims can be pursued not only against the business entity, but the individual officers, directors, and principals of such entity.  Finally, many liability insurance policies may not provide coverage for claims arising from unlawful activity.

Roanoke recommends customs brokers, OTIs, and IACs consult with their legal counsel and take a close look at their specific role in the supply chain when they are arranging for trucking services to determine if those activities are exempt from, or subject to, FMCSA regulation.  If there is a doubt, we recommend obtaining the proper FMCSA authority for the activity.