FMCSA updates guidance on broker definitions

The Federal Motor Carrier Safety Administration is finalizing its guidance about the definitions of “brokers” and “bona fide agents” in the transportation industry.

FMCSA’s notification of final regulatory guidance is scheduled to publish in the Federal Register on Friday, June 16 and will become effective at that time.

The update to the guidance was prompted by a provision in the 2021 infrastructure law. In June 2022, FMCSA issued a notice asking for feedback from stakeholders to clarify the definitions.

“Over the past decade, FMCSA has received numerous inquiries and several petitions related to the definition of a broker,” the agency wrote. “FMCSA is aware that there is significant stakeholder interest in FMCSA’s unauthorized brokerage enforcement.”

The Owner-Operator Independent Drivers Association told the agency that the definition of a broker is not the source of the problem for truckers.

“In our opinion, the current definition provides sufficient clarity to distinguish between brokers, bona fide agents, and dispatch services,” OOIDA wrote in comments. “It is not the definition of a broker that constitutes potential problems but rather how the business itself operates.”

As part of FMCSA’s final guidance, the agency said the current definition of “broker” is adequate.

Broker means a person who, for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier. Motor carriers, or persons who are employees or bona fide agents of carriers, are not brokers within the meaning of this section when they arrange or offer to arrange the transportation of shipments, which they are authorized to transport and which they have accepted and legally bound themselves to transport.

FMCSA’s guidance added that handling money exchanged between shippers and motor carriers is one factor that strongly suggests the need for broker authority, but it is not an essential requirement for one to be considered a broker.

Regarding bona fide agents, FMCSA’s guidance says that it may be either an employee of a motor carrier or a contractor but must perform its duties as specified in a preexisting agreement between the parties. The agency also clarified that the term “allocating traffic,” which appears in the definition, means any exercise of discretion on an agent’s part when assigning a load to a motor carrier. If an entity representing more than one carrier exercises such discretion, it would not meet the definition of “bona fide agent.”

FMCSA’s complete updated guidance can be found here.

Broker transparency

The agency also is expected to tackle concerns about a lack of broker transparency in the industry.

According to the U.S. Department of Transportation’s Spring 2023 Unified Regulatory Agenda, the Federal Motor Carrier Safety Administration projects to publish in June a notice of proposed rulemaking regarding transparency in property carrier broker transactions.

The proposal was prompted by a May 2020 petition from the Owner-Operator Independent Drivers Association that asked the agency to begin the rulemaking process for more transparency in trucking transactions with brokers. LL