License for Arrangers of Transportation Services in USA

Freight forwarders, load brokers, carriers and agents who arrange for transportation of property with U.S. carriers should be aware of the U.S. Federal Motor Carrier Safety Administration (“FMCSA”) requirements for a license (“Operating Authority”), even if that arranger is in Canada.(*1). Carriers are also included unless the carriage is part of an interlining operation. (*2)

The FMCSA sets out the following definitions for licensing:

Broker of Property (except Household Goods)

An individual, partnership, or corporation that receives payment for arranging the transportation of property (excluding household goods) belonging to others by using an authorized Motor Carrier. A Broker does not assume responsibility for the property and never takes possession of it.

Broker of Household Goods — An individual, partnership, or corporation that receives payment for arranging the transportation of household goods belonging to others by using an authorized Motor Carrier. A Broker does not assume responsibility for the household goods and never takes possession of the goods. Household goods are personal items that will be used in a home. They include items shipped from a factory or store, if purchased with the intent to use in a home, and transported at the request of the householder who pays for the transportation charges.

Freight forwarders, load brokers, carriers and agents based in the U.S. or Canada must obtain an Operating Authority by submitting the appropriate form in the OP-1 series. All brokers are required to have proof of insurance coverage: a surety bond (form BMC-84) or trust fund agreement (form BMC-85). Form BOC-3 must also be submitted for the license. It is a designation of process agent form identifying an individual or company in the U.S. for the purposes of service of documents/claims. The application form and fee of $300 U.S. must also be filed. The application processing time is about 4-6 weeks.

An arranger who knowingly engages in interstate brokerage or freight forwarding operations without the required operating authority is liable to the United States for a civil penalty not to exceed $10,000 and can be liable to any injured third party for all valid claims regardless of the amount (49 U.S.C. 14916(c)). The penalties and liability to injured parties apply jointly and severally to all corporations or partnerships involved in the transportation and individually to all officers, directors, and principals of these business forms (49 U.S.C. 14916(d)). Under 49 U.S.C. 14901(d)(3), a broker of household goods (HHG) who engages in interstate operations without the required operating authority is liable to the United States for a civil penalty of not less than $25,000 for each violation. Source:78 FR 54720.

Endnotes

(*1) For more information see the articles in the Fernandes Hearn LLP newsletters of October 2013 and April 2014.

(*2) A motor carrier that is performing part of the transportation as an interline operation, however, typically performs that service under its own motor carrier operating authority registration or the operating authority of the originating motor carrier. As a result, the motor carrier arranging the interline service in order to perform the transportation service requested by the shipper would not be brokering the load and would not require broker registration. See https://www.fmcsa.dot.gov/faq/does-motor-carrier-participates-freight-interlining-have-register-broker