While the Federal Motor Carrier Safety Administration rethinks how it defines brokers and bona fide agents, the agency issued placeholder definitions to meet a mandate in the Infrastructure Investment and Jobs Act. But it seeks more input from trucking industry stakeholders on brokers, agents, and dispatching services.
In a notification of interim guidance issued in November, FMCSA noted it must consider how technology has changed freight brokerage, the roles of bona fide agents, and other parts of the freight transportation industry.
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As part of the infrastructure law’s mandates, FMCSA is examining the role dispatch services play in the transportation industry, how dispatch services could be considered brokers or bona fide agents, and the level of financial penalties for unauthorized brokerage activities, as cited under the unlawful brokerage activities detailed in 49 U.S.C. 14916.
How FMCSA defines brokers
While FMCSA cannot change the broker definition without a final rulemaking, the Nov. 16 filing is intended to clarify existing requirements under the law or agency policies.
“The question of whether a dispatch service can be a bona fide agent of a motor carrier is important because bona fide agents of motor carriers are not required to hold broker authority when acting in the capacity of an agent of the motor carrier,” according to a law alert from Scopelitis, Garvin, Light, Hanson & Feary, a transportation law firm.
After consideration of the stakeholder comments and the critical role of financial responsibility in broker regulation, FMCSA clarified that handling money exchanged between shippers and motor carriers is a factor that strongly suggests the need for broker authority, but it is not an absolute requirement for one to be considered a broker.
There was a split among freight transportation stakeholders on whether the current definition of broker was adequate, according to the FMCSA filing. A safety advocacy group recommended amending the broker definition. Another stakeholder representing the household goods motor carrier industry asked FMCSA to clarify that merely selling leads does not require an entity to obtain broker authority. One broker argued that FMCSA should amend the definition of “broker” to comport with changes in MAP-21 that required motor carriers and hence their agents to obtain broker operating authority. Additionally, internet-based load matching services requested that FMCSA not consider electronic load boards to be brokers.
Given the prevailing view among commenters that the current definition of “broker” is adequate, FMCSA sought to clarify just one area: the relevance of an entity's handling of money in a transaction between shippers and carriers. Some commenters believed that whether one handles funds is irrelevant to being a broker. Other stakeholders felt that the handling of money had at least some relevance as to whether one is brokering, according to FMCSA.
How FMCSA defines bona fide agents
FMCSA determined that representing more than one motor carrier does not necessarily mean one is a broker rather than a bona fide agent, according to the November filing. “Any determination will be highly fact specific and will entail determining whether the person or company is engaged in the allocation of traffic between motor carriers,” wrote the agency.
The FMCSA is mandated to clarify its definition of bona fide agents, according to the federal regulations code.
“As to the question of whether one can represent multiple motor carriers and still operate as a bona fide agent, the FMCSA was less clear,” wrote Scopolitis attorneys Nathanial G. Saylor and Prasad Sharma. “The FMCSA did not adopt an interpretation that a bona fide agent may only represent a single carrier… We take this conclusion to mean that FMCSA believes one could represent multiple motor carriers without having discretion as to how to allocate freight between motor carriers.”
How FMCSA defines the role of dispatch services
The infrastructure law also requires FMCSA to examine the role of dispatch services in the transportation industry and if those services could be considered brokers or bona fide agents.
The roughly 80 stakeholders who submitted comments made it “clear there is no universally accepted definition of ‘dispatch service,’ nor did Congress define the term in the IIJA provision mandating this guidance,” according to the FMCSA filing.
But the agency said dispatch services have three common features:
- They work exclusively for motor carriers, not for shippers.
- They source loads for motor carriers.
- They perform additional services for motor carriers that are unrelated to sourcing shipments.
“It is clear, based on feedback from the industry, that there is a need and desire for dispatch services among large and small motor carriers,” wrote the Scopelitis attorneys. “A beneficial role that a dispatch service may provide is the outsourcing of resources for small motor carriers who cannot afford a full-time employee to perform these functions. The dispatch service can help to ensure the motor carrier has a steady stream of shipments while allowing the motor carrier to focus on its core business of safely transporting freight. FMCSA does not believe it is the intent of Congress to eliminate the services that dispatch services provide.”
FMCSA is accepting public comment on its regulatory guidance and the factors the agency will use in its interpretation of the definitions of “broker” and “bona fide agent” until Jan. 17, 2023. The agency is also seeking comments from stakeholders relevant to identifying a dispatch service that engages in actions that would require broker authority compared with activities that don't require broker authority. And finally, FMCSA will accept comments concerning the potential impact of this guidance on dispatch services upon which the broker rules would be considered applicable.
