Broker bonds cover international loads

The ATA Litigation Center will host the Forum for Motor Carrier General Counsels July 25-28 at the Lodge at Vail in Vail, Colo. The program will feature sessions on the new hours rules, owner-operator class action litigation, driver background check requirements, negligent highway/retention liability, freight claims issues and insurance options and considerations. The forum also features a full-day symposium on highway accident litigation. For more information, visit

American Trucking Associations told the Small Business Administration that it supports the agency’s proposal to simplify and restructure size standards by adopting 200 employees as the ceiling for small trucking companies in place of the current $21.5 million revenue limit. ATA argued the 200-employee size standard should be applied consistently for all agencies, regulations and laws.

The District of Columbia, beginning July 1, will require use of hands-free devices when talking on wireless phones while driving. Violators are subject to a $100 fine. Similar legislation takes effect in New Jersey on the same date and already is in place in New York.

Z Transport was ordered to pay $89,725 for failing to execute a written lease agreement with an owner-operator as required by the truth-in-leasing regulations. [Bonkowski v. Z Transport, (N.D. Ill.)]

Q As a motor carrier, we recently filed a bond claim with a broker’s surety for a shipment originating in the United States and delivered to British Columbia. The bonding company denied the claim, stating that the bond does not cover loads that ship outside the United States. Is this correct?

A No. A broker must register and obtain a bond if it arranges for the transportation of property subject to the jurisdiction of the Federal Motor Carrier Safety Administration. (See 49 U.S.C. 13904). The definition of a broker includes one who, as a principal or agent, arranges for transportation by motor carrier for compensation, without restriction to whether the traffic moves exclusively in domestic interstate commerce. FMCSA has also expressed jurisdiction over transportation occurring within the United States even if it represents a portion of transportation between the United States and a foreign country. (See 49 U.S.C. 13501.) Foreign and domestic motor carriers and property brokers must comply with federal licensing, bonding, insurance and designation of agent requirements. (See Sec. 13904, 13906 and 13304.)

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To understand the scope of the federal regulations, recognize that FMCSA would have authority over this load even if it originated in Washington state and crossed no other state line before entering Canada. The courts and the Interstate Commerce Commission deemed that a shipment moved in interstate commerce when it had an immediately prior or subsequent movement outside the state and there was a fixed intent on the shipper’s part that the traffic move from origin to ultimate destination – via an intrastate warehouse or break bulk facility. [See Texas v. U.S., 866 F.2d 1546 (5th Cir. 1989).]

The characterization of transportation between two points within a state as interstate or intrastate depends upon the essential character of the shipment. [See Texas & N.O.R.R. v. Sabine Tram Co., 227 U.S. 111, 122 (1913).] Crucial to the determination of the essential character of the shipment is the shipper’s fixed persistent intent at the time of shipment. [See Baltimore and O.S.W.R.R. Co. v. Settle, 260 U.S. 166 (1922).] It is clear that shipments drayed from a point in one state to a port in the same state for export in foreign commerce are likewise subject to federal jurisdiction under 49 U.S.C. 13501(d).

Likewise, a motor carrier transporting a shipment between a point in the U.S. and a point in Canada or Mexico requires authority issued by FMCSA at least as far as the international border. It follows that one who arranges for such transportation similarly is required to be a licensed and bonded broker. The “regulated” transportation to which the bond applies includes both domestic interstate and foreign origin or destination traffic to the extent it moves by truck within the United States. I believe your claim should be honored.

States move to regulate aggressive driving
Some state legislatures are battling driving behaviors such as aggressive driving and lingering in the passing lane. Among the many proposals, South Carolina is considering adding a $10 surcharge to tickets for aggressive driving offenses. The Senate referred that bill to the transportation committee in April.

Colorado succeeded in making motorists guilty of a traffic infraction if they are convicted of hanging out in the passing lane when the speed limit is 65 miles per hour or more. The exceptions are when a motorist is passing another vehicle, when it is not safe to merge back into the right-hand lane and when remaining in the passing lane does not present a safety hazard. The bill was signed in March.

In Florida, Sen. Steve Geller told newspapers he was tired of aggressive driving and proposed a bill that prohibits driving outside authorized lanes. But the bill died in committee April 30, according to the state legislature website.

Appeals court upholds rejection of OOIDA injunction
The U.S. Court of Appeals for the Ninth Circuit ruled last month that a lower court had used the proper test in rejecting a preliminary injunction sought by the Owner-Operator Independent Drivers Association and several owner-operators against the standard lease agreement used by Swift Transportation.

OOIDA, which claims the agreement violates the truth-in-leasing rules, had argued that the injunction should be granted based on a showing of “reasonable cause” that the leases were invalid. The district court, however, used the traditional equity balancing test to conclude that the parties had not shown irreparable harm if the injunction were not granted.

TCA to hold owner-operator audio conferences
The Truckload Carriers Association, in conjunction with law firm Scopelitis, Garvin, Light and Hanson, will hold a series of three audio conferences covering legal issues related to working with owner-operators.

The first session, covering charge-backs, fuel and compensation, is scheduled for June 10. The second session, covering lease-purchase agreements and escrow funds, will be held Sept. 23.

The series concludes Nov. 18 with an audio conference on insurance and indemnification. For more information, visit this site.