On July 6, 2012, the Moving Ahead for Progress in the 21st Century Act (aka M.A.P-21) (“MAP-21”) was signed into law. MAP-21’s intent was to more clearly define who is a broker, a carrier and a freight forwarder and more stringently regulate them by closing loopholes through which people who were functioning as brokers and freight forwarders but who were calling themselves something else, thereby justifying lack of compliance with federal regulations.
Born from the attempt to side-step regulation were names such as 3PL, 4PL, transportation consultant and so on. The ambiguity ensnared regulators and made it difficult to enforce the law under the former statutory scheme, so the Federal Motor Carriers Safety Administration (“FMCSA”) pushed for “reform” on these issues.
The result of the reform push were clearer definitions of “carrier,” “broker” and “freight forwarder.” Carrier is defined as a “motor carrier” and a freight forwarder falls under the definition of a carrier. A broker is defined as “a person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offer for sale, negotiates for, or holds itself out by solicitation advertisement, or otherwise as selling, providing or arranging for, transportation by motor carrier for compensation.”
So far, as to a shipper, who cares, right? Well, here is where and why you should care: MAP-21 has a conspiracy-like element to the enforcement and penalty portions. It reads, “[a]ny person,” I stress and underscore here, “any person.” “Any person who knowingly authorizes, consents to, or permits, directly or indirectly, either alone or in conjunction with any other person, a violation…is liable (1)” to the United States Government up to $10,000 per violation and (2) to the injured party for all valid claims incurred without regard to amount
This private right of action under part (2) is not something Congress always puts into law. Congress could have limited financial accountability to the government only, but under MAP-21, you could be liable to both the government and to the little old lady who was almost fatally injured by the load of freight your broker put on the back of an unlicensed carrier, or your unlicensed broker let a licensed carrier haul, or your licensed broker co-brokered to an unlicensed broker who used either a licensed or unlicensed carrier.
If shippers are not verifying that their brokers are licensed today, assuming they were licensed when they checked last week, they are in sense, playing roulette. The broad and expansive way the penalty portion of MAP-21 is written opens the door for the government and injured old ladies, women and children to point their fingers at you and argue that you are “any person” and that you permitted, even if indirectly, your freight to be moved by and through an unlicensed broker. Your only hope will be that you did not move volumes of loads in that manner. And you better hope grandma’s injuries are minimal, or else, the size of the civil penalties and legal damages could be debilitating to you, the shipper; the one party in all of this who never thought they could get entangled in such a mess.
General Counsel, Vestra Logistics, LLC