Broker transparency the goal of OOIDA petition
After the Owner-Operator Independent Drivers Association pushed tirelessly for the federal government to address broker transparency, the Federal Motor Carrier Safety Administration is officially seeking comments on the petition for rulemaking.
In August, FMCSA published a notice of request for comments regarding OOIDA’s petition for rulemaking. The petition, filed in May, asks to amend federal broker transparency regulations that many brokers are accused of exploiting via a loophole. Comments on the notice will be accepted until Oct. 19.
OOIDA requests that FMCSA require a broker to provide an electronic copy of each transaction record automatically within 48 hours after the contractual service has been completed. Additionally, OOIDA wants to prohibit brokers from including any provision in their contracts that requires a motor carrier to waive its rights to access the transaction records.
FMCSA encourages those providing comments to respond to the following questions:
- What statutory provisions, if any, would be carried out by the regulatory changes requested by the petitioners? In particular, how would a rule restricting the rights of private parties from including certain terms in their agreements align with FMCSA’s statutory authority?
- How would a rulemaking expanding FMCSA’s role in enforcement of the requirement mandating that brokers automatically disclose financial details about each transaction to the respective motor carrier transporting the load align with the statutes identified above? What measures could FMCSA take to ensure that regulatory action in this area is an appropriate exercise of the agency’s authority?
- Are the transparency issues raised limited to small brokers or large, or are they more widespread such that the rulemaking should cover all brokers, regardless of size?
- If the transparency issues are primarily associated with large brokers, what revenue threshold should the FMCSA consider for the applicability of any new requirements, and how would the agency obtain accurate information about brokers’ revenues?
- The OOIDA petition requested that brokers provide information to motor carriers automatically and electronically. FMCSA requests commenters to provide their views on the most efficient and effective means of accomplishing this request.
- Provide a quantitative estimate of the economic benefits that would likely be achieved by motor carriers if FMCSA adopted the requested rules. How much additional revenue might motor carriers receive on a per-transaction basis?
- Provide a quantitative estimate of the economic costs to brokers or others if FMCSA adopted the rules. How much profit reduction on a per-transaction basis would brokers experience, and what percentage of the costs would be passed through to shippers or motor carriers?
Evading broker transparency regulations
The federal regulation in question is 49 CFR 371.3, which requires brokers to keep records of transactions with motor carriers. One subsection of that regulation gives each party to the transaction, including the carriers, the right to review the record. This provision allows truckers to see exactly what their cut is of the full rate that the shipper paid.
OOIDA has documented that brokers are skirting these transparency regulations. In fact, some contracts with a broker waive the requirements set forth in 371.3 regulations. During the peak of the pandemic, truckers saw historically low freight rates.
“Motor carriers have expressed frustration about the lack of transparency between brokers and motor carriers,” FMCSA states in its notice. “OOIDA believes the problem is that the regulations designed to provide transparency are routinely evaded by brokers or simply not enforced by FMCSA.”
Also, OOIDA’s petition explains how brokers intentionally throw out road blocks in contracts that prevent motor carriers from seeing information. In some cases, carriers can access records only at the broker’s office during normal business hours. Consequently, this makes it virtually impossible for an owner-operator to get information.
To solve some of those issues, OOIDA wants to modernize the regulations. Since the regulation was put in place, many – if not most – business transactions take place electronically. Requiring electronic copies will address some of the loopholes.
Furthermore, OOIDA also wants an update that will prevent brokers from retaliating against carriers that request information. Some truckers have accused brokers of refusing to offer them loads after requesting transaction information.
A similar petition filed by the Small Business in Transportation Coalition is also included in FMCSA’s request for comments. LL