FMCSA seeks comment on definitions of broker, bona fide agent

Dive Brief:

The Federal Motor Carrier Safety Administration is requesting comments on the definitions of broker and bona fide agent to “take into consideration the extent to which technology has changed” the freight transportation industry, the agency announced June 10.
The agency is required to clarify the definitions by Nov. 15 as part of the Infrastructure Investment and Jobs Act passed last fall.
The deadline for comments, which can be submitted online, is July 11, 2022.

Dive Insight:

The FMCSA said it has received many inquiries and petitions over the past decade related to the definition of a broker.

“FMCSA is aware that there is significant stakeholder interest in FMCSA’s unauthorized brokerage enforcement,” the agency said in the notice.

Federal law currently defines a broker as a “person, other than a motor carrier or an employee or agent of a motor carrier, that as a principal or agent sells, offers 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.”

It defines bona fide agent as “persons who are part of the normal organization of a motor carrier and perform duties under the carrier’s directions pursuant to a preexisting agreement which provides for a continuing relationship, precluding the exercise of discretion on the part of the agent in allocating traffic between the carrier and others.”

Clarifying the financial penalties for unauthorized brokerage activities is one of the agency’s three requirements when issuing its guidance on the definitions. The FMCSA must also examine the role of a dispatch service and investigate the extent to which dispatch services could be considered brokers or bona fide agents.

One of owner-operators’ main concerns is a lack of transparency in broker rates, Todd Spencer, president and CEO of the Owner-Operator Independent Drivers Association, wrote in a November 2020 letter to the FMCSA.

In the letter, Spencer argued that brokers’ confidentiality agreements with shippers should not allow brokers to withhold information to which the carriers are entitled.

“All that truckers want is for brokers to comply with existing federal regulations,” the letter said. “They’re not asking for anything more than their right to transparency, which is used to help them differentiate good brokers from unscrupulous ones.”