AIPBA Files Federal Suit Against FMCSA to Stop Hike in Broker Bonds to $75,000
This story appears in the July 22 print edition of Transport Topics. Click here to subscribe today.
The Association of Independent Property Brokers & Agents has filed a federal lawsuit claiming a requirement to increase broker bonds to $75,000 from $10,000 violates the Fifth Amendment right to due process.
The lawsuit was filed July 16 in the U.S. District Court for the Middle District of Florida, Ocala Division.
AIPBA is asking the court to declare the bond amount “arbitrary and not reasonably related” to any effort to weed out fraudulent brokers.
“No one has ever furnished the data to us that they purport exists and would somehow support the notion of a $75,000 bond fighting fraud,” AIPBA President James Lamb told Transport Topics.
The lawsuit argues that the Federal Motor Carrier Safety Administration has denied the brokers due process by ignoring the federal rulemaking process and preparing to take their licenses if they do not post $75,000 bonds by Oct. 1.
“All this does is put small business out of business,” Lamb said of the requirement included in last year’s MAP-21 highway-funding law. “If they want to fight fraud, there’s many other ways to fight fraud.”
The lawsuit claims that just because Congress passed a law specifying the bond amount does not mean that FMCSA can collect the money without promulgating a rule.
FMCSA spokeswoman Marissa Padilla said the agency does not comment on pending litigation. The lawsuit names as defendants FMCSA and Transportation Secretary Anthony Foxx.
Currently, brokers are required to post $10,000 bonds, but proponents of the higher level have wanted the amount raised for years in hopes of curbing fraudulent brokers who place loads with truckers and then do not pay them.
In 2010, FMCSA announced it believed the bond amount should be raised, and Congress included a provision in MAP-21 after negotiations with brokers and trucking groups that reduced the original proposal from $100,000 to $75,000.
Lamb has estimated that 75% will shut their doors, and only 5,000 will be left. Opponents of the new bond requirement also say it will prevent new brokers from entering the field.
The MAP-21 provision raising the bond minimum was supported by American Trucking Associations, the Owner-Operator Independent Drivers Association and AIPBA’s rival organization, the Transportation Intermediaries Association.
In its lawsuit, AIPBA said the $75,000 amount “lobbied” by ATA, OOIDA and TIA “is an amount generated by anti-competitive collusion rather than appropriate findings of fact.”
None of the three groups is named as a defendant in the lawsuit, but TIA President Robert Voltmann said, “We disagree with the suit,” and that TIA will help the Department of Transportation with its defense.