OOIDA submits comments on broker transparency rules
October 13, 2020
Amending broker transparency regulations can allow truckers to “achieve economic benefits” among other things, according to official comments submitted by the Owner-Operator Independent Drivers Association.
On Tuesday, Oct. 13, OOIDA submitted comments to the Federal Motor Carrier Safety Administration about petitions for rulemaking regarding broker transparency. OOIDA answered eight key questions asked by FMCSA covering topics such as statutory authority, enforcement, broker size threshold, and how truckers and carriers would benefit economically.
Comments are still being accepted. Those comments can be sent by going to Regulations.gov, entering the docket number FMCSA-2020-0190 in the “Keyword” block and clicking “Search.” From there, click on the “Comment Now!” button. FMCSA recommends that you include your name, email address, or phone number in the body of your document.
Comments can also be made during FMCSA’s virtual listening session on broker transparency. The listening session is scheduled for 1-2:30 p.m. Eastern on Wednesday, Oct. 28. Registration is required in advance at FMCSA.dot.gov.
FMCSA’s authority on broker transparency rules
Addressing questions about FMCSA’s role in broker transparency, OOIDA gives a brief history of how all this came about. Record keeping and transparency requirements have always been a key component of broker regulations.
According to OOIDA’s comments, original broker regulations established 85 years ago had the objective “to protect the public’s interest in an ‘adequate, economical, and efficient’ motor carrier transportation system free from the ‘unjust discriminations’ and ‘destructive competitive practices’ of unscrupulous middlemen.” The Interstate Commerce Commission confirmed that 45 years later with broker transparency revisions. Since then, nothing has changed to suggest broker transparency is no longer needed.
“Broker contracts designed to help brokers avoid compliance with the disclosure requirements under § 371.3 undermine the explicit public policy objectives passed by Congress and since implemented by various agencies,” OOIDA states. “Noncompliance undermines the goals of a secure transportation system. Therefore, it is part of the agency’s mandate to ensure that brokers do not avoid their legal responsibilities by contract or by imposing unreasonably burdensome disclosure conditions.”
Enforcement of proposed broker transparency amendments
For the most part, amending broker transparency regulations will not add any burdens to FMCSA. OOIDA states that new provisions would only facilitate compliance with current rules.
Current statute gives FMCSA the authority to promulgate rules governing brokers for the protection of motor carriers, OOIDA points out. Additionally, the agency has the general authority to investigate a violation of broker rules. FMCSA can suspend, amend or revoke a broker’s authority if it willfully violates regulations. It can even file civil action if needed.
“Through our petition, we are not asking FMCSA to exercise any of its other plenary authority over brokers, except to amend an existing rule,” OOIDA states. “Nor would OOIDA’s proposed rule expand FMCSA’s current responsibility to enforce its rules.”
One question asked is whether broker transparency rules should be limited to small or large brokers. OOIDA states size does not matter.
In its comments, OOIDA states that proposed amendments should not be limited based on a broker’s size or revenue.
“No entity that would find difficulty complying with these simple and nonburdensome electronic disclosure rules should be allowed to be a broker,” OOIDA states. “Additionally, there are no broker size qualifications in the current rules, which already require compliance consistent with OOIDA’s petition.”
Broker transaction information
OOIDA’s petition requests brokers to provide information to motor carriers automatically and electronically. How is this to be accomplished? Should be easy, OOIDA claims.
Providing information to carriers can be accomplished using a variety of methods, including forms of communication brokers already use to interact with shippers and carriers. Such methods include email, digital photos/scans, smartphone apps, etc. OOIDA is not opposed to brokers reaching partnerships with others to comply with transaction information requests. However, the Association cautions that such a method must provide timely compliance and not allow brokers to use that partnership to skirt broker transparency responsibilities.
OOIDA also disagrees with any suggestion that requiring automatic and electronic information within 48 hours would require significant information technology resources not currently in use.
“Typically, the required information already exists at the time the load is arranged – well before 48 hours after the delivery of a load,” OOIDA states. “It is doubtful that modern brokers do not already create electronic documents, conduct electronic transactions, and transmit data to and from shippers and carriers for every load they arrange.”
Economic benefits of broker transparency
FMCSA also wants to know how motor carriers may benefit from more broker transparency requirements.
To start, motor carriers would save time and money by receiving the required information in a timely and convenient manner via electronic transmission instead of being forced to visit the broker’s physical office location, OOIDA states. Also, brokers will not be able to retaliate against carriers requesting information. There have been claims of carriers being put on a “Do Not Use” list from brokers after requesting information.
“Improving and enforcing broker transparency would also help motor carriers make better-informed decisions about which loads they choose to haul and which brokers they choose to haul for,” OOIDA states. “Too often, motor carriers have to rely on the word of brokers informing them of rates and percentages, and motor carriers end up getting shortchanged.”
Furthermore, some motor carriers are currently being unfairly billed by brokers after transactions are completed. In some instances, a carrier might have wage deductions or receive a bill stating there is a claim on the load without any proof. More broker transparency can help solve these issues.
But what about the economic burden on brokers if more transparency is required? OOIDA refutes any claims of lost earnings. In fact, more broker transparency can benefit the good actors in the industry.
In its comments, OOIDA refers to claims that brokers can incur costs of $2,500 to $10,000 per carrier to comply with the proposed rules. However, OOIDA states there is no evidence being offered to support those claims.
“They do not explain why the cost to transmit a single document to carriers within a new timeframe of 48 hours will cost $2,500 to $10,000 per carrier,” OOIDA states.
Additionally, if more broker transparency rules are adopted, the industry and free-market will award brokers that comply with the regulations, OOIDA suggests. Carriers will more likely do business with those brokers while ignoring those that do not.
“OOIDA has long pushed for greater transparency in transactions with brokers and supports FMCSA’s initiative to bring much-needed improvements to broker regulations,” OOIDA states. “When rates are on the decline, many truckers are concerned they’re the only ones feeling the pain – or at least feeling a disproportionate share of the pain. This will not change until federal regulators enhance and enforce the broker transparency regulations listed in § 371.3.” LL