MAP-21 Treatment of Customs Brokers Remains an Open Question at FMCSA

Despite what seemed to be a statutory exemption in Moving Ahead for Progress in the 21st Century Act (MAP-21) for those involved in "customs business," there remains some uncertainty on how the Federal Motor Carrier Safety Administration will look at customs brokers as the agency implements the law, said John Drake, FMCSA director of Government Affairs. "I think it's not entirely clear to us what the appropriate reading of this statute is," he said at the National Customs Brokers and Forwarders Association of America (NCBFAA) government affairs conference Sept. 23. The NCBFAA has interpreted the bill's language to mean most work done by customs brokers is exempt from the new bonding requirements of MAP-21 (see 12070325).

Previous meetings between NCBFAA Legislative Counsel Jon Kent, the association's General Counsel Ed Greenberg and FMSCA senior staff seemed to indicate that those involved in the international movement would be exempt, said Greenberg at the conference. In fact, though, there hasn't been a decision made on the issue, said Drake. "This is not settled," he said. "It's not decided and this is something I think will be some months in the works." Part of the problem is some poorly written legislative language, said Drake. There's "underlying registration requirements" under Sections 1394 and 1396 that "aren't necessarily touched on under Section 14916," the section of the law that spells out the exemptions, he said.

It may be worth Congress eventually taking another look at the law because, outside of the customs broker question, there are some parts in MAP-21 that contradict other provisions in "long-standing statute," Drake said. "We're dealing with a number of provisions of that probably -- and hopefully we can agree on this -- were not the best constructed provisions that were ever put in place," he said. There should likely be room for addressing these questions in the next transportation reauthorization bill, he said. "A lot of this is clear as mud," said Drake.

The law says freight forwarders and property brokers can only provide interstate brokerage services if they're registered with the Department of Transportation and have filed a surety bond of at least $75,000, up from the previous minimum of $10,000. Exempt from those provisions, listed in Section 14916 of the law, are:

• a customs broker licensed in accordance with section CFR 19 Part 111.2 of title 19, only to the extent that the customs broker is engaging in a movement under a customs bond or in a transaction involving customs business, as defined by CFR 19 Part 111.1
• non-vessel-operating common carrier or an ocean freight forwarder when arranging for inland transportation as part of an international through movement involving ocean transportation between the United States and a foreign port;
• an indirect air carrier holding a Standard Security Program approved by the Transportation Security Administration, only to the extent that the indirect air carrier is engaging in the activities as an air carrier

The Office of Management and Budget recently approved new FMCSA wording changes to increase the $10,000 bond requirement to $75,000, and necessary forms will be available by the October deadline, said Drake. FMCSA recently released some guidance on the financial and licensing requirements of MAP-21, allowing for a 60-day phased-in period beginning Oct. 1 (see 13090417). Drake said phase-in period isn't meant to say that the $75,000 provision is not in place, but to allow the industry time to fall in line with the requirement, noting "you can potentially be held liable to private action."