Broker Bonds Cover International Loads
By Henry E. Seaton

June 2004
Reprinted from

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.)

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.
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