By David Buffo
Kansas City has always been a transportation hub, thanks to its central location, its position on major east-west and north-south interstate highways, the presence of large transportation companies, Kansas City International Airport, and its “bustling” intermodal activity. As such, when changes to the laws and regulations in the transportation industry take effect, those changes certainly impact the transportation industry in Kansas City.A recent change to transportation laws and regulations is known as MAP-21, short for the “Moving Ahead for Progress in the 21st Century Act,” which was signed into law by President Obama on July 6, 2012. MAP-21’s purpose is to improve the condition and performance of the national freight network and support investment in freight-related surface transportation projects.
MAP-21 contains numerous provisions; however, as discussed in this article, a few provisions applicable to transportation providers could affect the way local transportation companies operate their business—and, in turn, their customers. Importantly, violating certain of the new rules may result in monetary penalties of up to $10,000 per violation.Registration Requirements. In order to lawfully operate as a motor carrier, broker or freight forwarder, a provider of these services must now hold specific authority from the Federal Motor Carrier Safety Administration to provide that service. In other words, if a company wants to operate as a motor carrier, it must hold motor carrier authority. If the same company also wants to operate as a broker, it must also hold broker authority. Likewise, if the same company also wants to operate as a freight forwarder, it must hold freight forwarder authority. Additionally, MAP-21 mandates that brokers and freight forwarders have bonds in the amount of $75,000.A provider of these services must be specifically authorized for each type of service provided. More important, the service provider must specify in writing the specific authority under which it is providing the service. As such, motor carriers are no longer allowed to provide broker services without a license.
Additionally, under the new rules, a motor carrier can only provide service if:
• It uses a vehicle it leases or owns for transportation; or
• During interchanges, the company physically transports the cargo and retains liability for cargo and payment of interline carriers.
The common practice of accepting shipments and then arranging for their transport with another carrier, sometimes called “brokering,” “sub-brokering,” or “interlining,” is now illegal without a broker’s license. In order for this practice to be legal without a license, motor carriers must do a portion of the
transporting themselves and retain liability for the freight.Heightened Standards to Obtain Operating Authority.
The so-called “check the box” days of obtaining FMCSA authority have been eliminated. Applicants for motor carrier authority
must now establish that they know and will comply with the safety requirements, disclose any relationship between them and other providers and, eventually, pass a written proficiency examination. Similarly, additional requirements now apply to household goods carriers and passenger carriers.Motor Carrier Responsibility for Disqualified Drivers. Prior to MAP-21, a motor carrier was only prohibited from using a driver it “knew” to be disqualified or otherwise lacking authority to operate a commercial motor vehicle. MAP-21 and the new regulations now prohibit the use of a driver if the carrier “knows or should reasonably know” that the driver is not qualified.MAP-21 also requires the Department of Transportation to establish a “clearinghouse” to capture drivers’ positive drug/alcohol test results and records of refusals to test. Motor carriers will be required to inquire of the clearing-house when screening new driver applicants and annually thereafter.
Family-Owned Transportation Businesses. MAP-21 requires family-owned transportation businesses to disclose to shippers which specific company division is owned by which family member. This is a fraud-prevention measure intended to prevent these multiple-owner entities from engaging in a shell game to avoid liability for a loss. Similarly, it is also now illegal to close down a failed trucking company and then start over with new authority. Electronic On-Board Recorders (EOBRs). MAP-21 also requires EOBRs by 2014, regardless of the size of the trucking company. MAP-21 also establishes a national registry of drivers with CDLs, including driving history and drug and alcohol test results. In addition, MAP-21 requires the Department of Transportation to establish a national standard for driver training. This brief overview highlights some of the key regulatory changes in MAP-21. Please consult with your business adviser or legal counsel for specific advice regarding your situation.
David Buffo is a partner in the Kansas City office of the Husch Blackwell law firm.