Letters: Broker Authority, Cap-and-Trade Bill
These Letters to the Editor appear in the Aug. 2 print edition of Transport Topics. Click here to subscribe today.
Broker Authority
David Dwinell is right and, respectfully, Jeffrey Tucker is wrong (previous writings here, here, here and here): There no longer is such a thing as a contract carrier, so the FAQs [frequently asked questions] Tucker relies upon have been overtaken by events.
The old question-and-answer provision with respect to “contract” carriers emanated from Interstate Commerce Commission case law that held contract carriers had to dedicate equipment to the exclusive use of named shippers. It has accordingly been bad precedent for decades.
Dwinell did not provide the statutory authority, but it is clear. The very definition of a broker states that “motor carriers . . . are not brokers . . . when they arrange or offer to arrange the transportation of shipments which they are authorized to transport and which they have accepted or legally bound themselves to transport.”
This regulation is supported by the statute 49 U.S.C. 13904 (the terms under which the secretary shall register a person to be a broker). Subsection (b) provides that registration as a carrier is required when a broker seeks to provide transportation (13904(b)(1)) and that a broker’s license does not imply “to a motor carrier . . . to the extent the transportation is provided entirely by the motor carrier, with other registered motor carriers, or with rail or motor carriers.” See subsection 13904(b)(2).
Unfortunately, most post-deregulation transportation experts have forgotten the history of motor carrier regulation, past precedent and practices.
Motor carriers, such as freight forwarders, are clearly authorized to arrange and provide transportation. During the days of intense regulation, so-called “convenience interlining” was a permissive practice that allowed a carrier to accept traffic pursuant to its service terms and conditions as an origin carrier, with the actual transportation services provided by an authorized subcontracted carrier that held
appropriate authority.
Nothing in the statutes or regulations precluded a motor carrier from arranging for the transportation it agreed to provide, the same way a freight forwarder does under the statute.
When the statute was revised, the scope of permissive motor carrier service was not changed. The term “motor carrier” was defined as “a person providing motor vehicle transportation for transportation.” See 49 U.S.C. 13102(14).
It is important to note that the term “transportation” was defined expressly to include services related to a motor carrier movement, including “arranging for,” among other things, the receipt and delivery of shipments. See 49 U.S.C. 13102(25).
In this post-deregulation world, it would seem that asset-based carriers most frequently would be best served by eschewing legal
responsibility as a “carrier” for shipments (liability as the origin carrier under the Carmack amendment for cargo loss or damage and state law vicarious liability claims included) when door-to-door service is provided by carriers they hire pursuant to a contract, or “concurrence.”
The broker community has found this out the hard way when it has allowed its name to be placed on the bill of lading as the origin carrier or has accepted or assumed carrier duties in contracts.
It’s ironic that the Federal Motor Carrier Safety Administration has now done away with the cargo insurance filing requirement altogether for motor carriers, and that the Transportation Intermediaries Association and the Owner-Operator Independent Drivers Association have come together to address “the scourge of double brokerage” through a legislative initiative for a $100,000 bond.
Obviously, the carrier that actually renders the service, whether the shipment is brokered or tendered to it by another carrier, deserves to be paid and a legislative solution to the problem is a good idea.
While they are at it, though, shouldn’t TIA and OOIDA seek legislative clarification of the statute under the public utility principles in which it originally was enacted? Carriers should be required to have cargo insurance in the amount of $100,000 per occurrence and neither a carrier, a broker nor a shipper should be vicariously liable for the negligent hiring of a carrier FMCSA has determined to be licensed, authorized and insured to operate.
Henry Seaton Esq.
Seaton & Husk LP
Vienna, Va.
Cap-and-Trade Bill
Transport Topics writers recently have discussed the low-carbon fuels initiative and Sen. John Kerry’s cap-and-trade bill.
In the June 28 article headlined “Study of Low-Carbon Fuel Standard Projects Massive Price Increases” (click here for story), the additional costs associated with the conversion to low-carbon fuels were shown to be astronomical and would lower the gross domestic product.
A July 19 article written by The Associated Press stated that the Congressional Budget Office rated the Kerry cap-and-trade bill as cutting deficits by $19 billion in a little more than 10 years. What was not said was that the huge sum of money discussed in the article would come directly out of American consumers’ pockets.
This is not smoke-and-mirrors. This is a national energy tax that is completely unnecessary and also would lower the gross domestic product. The burdens this tax places on the working poor are immense, and regardless of how you spin it, it will continue to run jobs offshore and raise the cost of everything a person buys because everything is delivered by truck.
Remember, too, that there is no viable alternative to carbon as a motor fuel, and there will be none for the foreseeable future.
The Kerry bill seeks to make energy based on carbon so expensive that consumers no longer will use it unless they have to — a condition called “energy poverty” that lowers our standard of living.
The article also mentions a study by the U.S. Environmental Protection Agency, but with Lisa Jackson running the EPA, their credibility is completely shot as they already have threatened to regulate us to death in case the Kerry legislation fails to pass.
I also have read the report on the Kerry bill recently released by the Energy Information Administration and the numbers it uses to make its case are farcical. It rolls back the price of diesel to the highs of 2008, and then the price increases five times by the end of the study period.
The additional monies taken in by our government are used to give huge subsidies for wind and solar power — subsidies the European Union are now reducing because they have found them to be prohibitively expensive to maintain.
If the socialist Europeans have determined these subsidies to be bad for business and consumers, why in the world would we follow them down that road? It makes absolutely no sense, unless you own shares in the Chicago Climate Exchange or are the United Nations or the International Monetary Fund. CCS shareholders will become rich and the U.N. will take huge amounts of U.S. tax money and distribute it through the IMF as a form of reparation for our past carbon use.
Besides, the bill will have no effect on pollution because India and China already said “no” to cap and trade and will continue, maybe even speed up, their use of coal-fired power plants.
Access to adequate oil supplies is a matter of national security and the current administration and our congressional leaders are destroying the security of our energy supplies on a continuing basis. Just think about the drilling moratorium that our courts have rejected more than once, and yet the administration continues to enforce. Once those rigs and jobs leave our shores, we will not get them back again.
Dale Valenti
Manager, Corporate Logistics
Menu Foods
Emporia, Kan.
Editor’s Note: The so-called “cap-and-trade” bill, S. 1733, has been at least temporarily abandoned by Senate Democratic leaders, who instead have pledged to quickly pass scaled-back energy legislation that would include incentives for motor carriers to purchase heavy-duty vehicles powered by natural gas. However, many Washington observers believe that cap-and-trade is destined to reappear in some form once Congress returns to work in the fall.
