FMCSA launches broker transparency rulemaking

In a move that could level the playing field for truckers in negotiations with brokers, the Federal Motor Carrier Safety Administration has launched a proposed rulemaking.

The notice of proposed rulemaking is in response to a pair of petitions filed in 2020 by the Owner-Operator Independent Drivers Association and the Small Business in Transportation Coalition. Both petitions sought to push the agency to perfect the broker transparency regulations already on the books.

The proposal, which will publish in the Federal Register on Wednesday, Nov. 20, includes four specific provisions to improve broker transparency:

• FMCSA proposes several amendments to 49 CFR 371.3, “Records to be kept by brokers.” The first proposed provision would require property brokers to keep their records in an electronic format. This provision would serve the purpose of broker transparency by making it easier for motor carriers and shippers to review broker records on request, and remotely, as compared to the current practice of some brokers responding to transparency requests by making only physical records available at their principal place of business. The agency believes that many brokers already maintain their records in an electronic format.
• The second proposed provision would modernize and tailor the required contents of the records to better achieve broker transparency. The current requirement uses a distinction between brokerage and non-brokerage services, which is rooted in a previous regulatory approach. FMCSA proposes eliminating this distinction and instead requiring that the records contain, for each shipment in the transaction, all charges and payments connected to the shipment, including a description, amount and date. This is substantially similar to the current requirement but removes the outdated distinction. The record would also be required to include any claims connected to the shipment, such as a shipper’s claims for damage or delay. This amendment would ensure the parties have full visibility into the payments, fees, and charges associated with the transaction so they can resolve issues and disputes among themselves without resorting to costlier remedies.
• The third proposed provision would clarify the obligation imposed on brokers to respond to requests for transaction records and the process parties must follow when requesting and supplying such records. The current regulation frames the broker transparency requirement as a right, given to the transacting parties, to review the records. The proposed amendment would reframe broker transparency as a regulatory duty imposed on brokers to provide records to the transacting parties.
• The fourth proposed provision would require brokers to provide the records required to be maintained under Section 371.3(a) within 48 hours when a party to the transaction requests those records. This provision is intended to ensure that the requesting party receives the records in a timely manner to support the resolution of issues around service or payment.

The proposed rule drew praise from OOIDA.

“Four years ago, we asked FMCSA to improve broker transparency and we welcome this overdue Notice of Proposed Rulemaking. We appreciate that FMCSA incorporated input from our petition, including a requirement to make records available electronically and emphasizing that brokers have a duty to comply with regulations,” OOIDA President Todd Spencer said.

“As FMCSA noted in its proposal, broker transparency is necessary for a fair, efficient transportation system and is especially important to help carriers defend themselves against alleged claims on a shipment,” Spencer added. “We look forward to responding to FMCSA’s request for feedback and, most importantly, will continue to press the agency, lawmakers and other regulators to make all resources available to enforce these regulations and ensure that brokers finally play by the rules.”

FMCSA will accept comments on the proposal for 60 days starting on Wednesday, Nov. 20.

The proposal lists eight specific questions on which the agency is seeking input:

1. What impact, if any, would the proposed rule have on freight rates? Please provide support for your position.
2. How common is electronic recordkeeping among household goods brokers? What burden, if any, would be imposed if electronic recordkeeping was required?
3. How much time would a broker spend creating an electronic record from paper documents for the record mandated by Section 371.3? What would be the costs for a broker to create an electronic record per transaction?
4. Do you believe that the 48-hour timeframe proposed for Section 371.3(c) would create a substantial burden for brokers? Why or why not? If you disagree with the proposed 48-hour timeframe, what timeframe would best balance the objectives of transparency while minimizing the burden on brokers?
5. If this proposal effectively reduced instances of illegal brokering, through carrier policing with transparency information, would the brokers engaged in illegal practices exit the market, resulting in the transfer of illicit profits to legally operating motor carriers and/or brokers?
6. Should freight brokers and household goods brokers be subject to the same recordkeeping requirements under Section 371.3? If your answer is “no,” why should they be subject to different requirements?
7. Should parties requesting records under Section 371.3(c) be required to submit their request in writing? Should parties requesting records under Section 371.3(c) be required to submit their request electronically? Would requiring a specific format for submitted requests impose a cost on the parties or otherwise deter requests for transparency? Please provide support for your position.
8. Would the proposal that records be provided electronically under Section 371.3(c) make broker transparency more likely, as compared to not specifying a method of provided the records? Should the Agency be more specific in requiring a particular format for records provided under Section 371.3(c), and if so, what method and/or format is preferable? Please provide support for your position.

Truckers will be able to file comments on Docket No. FMCSA-2023-0257 at Regulations.gov starting Wednesday, Nov. 20. LL