The Federal Motor Carrier Safety Administration (FMCSA) will be seeking public comment on proposed plans to increase transparency in freight broker transactions.
In a document to be published in the Federal Register on August 19, the FMCSA is asking for comments on two petitions for rulemaking regarding freight broker transactions.
The move to request public comment signals that the agency is serious about addressing one of the most hot button issues in the trucking industry in 2020.
One of the petitions was put forward by the Owner-Operator Independent Drivers Association (OOIDA). OOIDA has argued that brokers knowingly sidestep existing regulations that would allow carriers to view records. In the petition, OOIDA requests that FMCSA require brokers to provide an electronic copy of each transaction record automatically within 48 hours after the contractual service has been completed, and prohibit explicitly brokers from including any provision in their contracts that requires a motor carrier to waive its rights to access the transaction records.
The second petition was introduced by trucking trade group Small Business in Transportation Coalition (SBTC). This petition requests that FMCSA prohibit brokers from coercing or otherwise requiring parties to brokers’ transactions to waive their right to review the record of the transaction as a condition for doing business. SBTC also requests that FMCSA adopt regulatory language indicating that brokers’ contracts may not include a stipulation or clause exempting the broker from having to comply with the transparency requirement.
The FMCSA asks commenters to respond to the following eight questions:
- FMCSA has authority under 49 U.S.C. 14122(a) to require the form of records to be prepared or compiled by carriers and brokers, the Agency’s right of inspection under
49 U.S.C. 14122(b), its authority to prescribe time periods for preservation of records under 49 U.S.C. 14122(c), and its authority to require annual financial reports from motor carriers, freight forwarders and brokers. FMCSA also has discretionary authority to prescribe regulations to carry out the provisions of 49 U.S.C. 13101-14916 that govern the commercial aspects of motor carrier and broker transportation. 49 U.S.C. 13301(a). Section 13301(a) is the statutory successor to former 49 U.S.C. 10321, which the ICC relied on in 1980 in prescribing the regulations later redesignated as part 371. In light of the significant statutory changes reducing the scope of regulatory authority over commercial transportation that have occurred since 1980, 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 the Agency’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, as requested in the OOIDA and SBTC petitions, 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 by OOIDA and SBTC limited to small brokers or large brokers (e.g., brokers with revenues above a certain threshold, brokers with a certain number of transactions, etc.) 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. The Agency requests commenters to provide their views on the most efficient and effective means of accomplishing this request. Should each broker have, for example, a stand-alone system with motor carriers receiving an email from the broker after the contractual service has been completed, or should brokers be allowed to satisfy the request with partnerships or networks through which registered brokers would upload transaction information which would then be automatically transmitted via the network to the registered carrier associated with the transaction?
- The OOIDA petition request that FMCSA require brokers to provide transaction information automatically within 48 hours of the completion of the contractual services would likely require information technology (IT) resources that are currently not in use. FMCSA requests that commenters provide cost estimates for implementing an IT solution to accomplish OOIDA’s request, either through stand-alone systems run by individual brokers, or systems operated by groups of brokers notifying the individual carriers utilizing any of the brokers within the group.
- Please provide a quantitative estimate of the economic benefits that would likely be achieved by motor carriers if FMCSA adopted the rules OOIDA and SBTC requests. How much additional revenue might motor carriers receive on a per-transaction basis?
- Please provide a quantitative estimate of the economic costs to brokers or others if FMCSA adopted the rules OOIDA and SBTC request. 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?
When the comment period opens, you can visit www.regulations.gov and reference Docket No. FMCSA-2020-0150 to leave your comment.
In a May 1 letter to members that led up to the filing of the petition, OOIDA warned of “unscrupulous brokers” who were taking advantage of the ongoing Coronavirus crisis to exploit truck drivers.
For three weeks in May 2020, a group of truckers protested on Constitution Avenue in Washington D.C. asking for relief from plummeting freight rates and unfair broker practices. Their message made its way all the way to President Trump, who Tweeted in support of truckers and went so far as to say that truckers are being “price gouged” by brokers
The Washington D.C. protest activities ended shortly after trucking representatives Mike Landis and Sergey “C.J.” Karman met with Mullen and White House Chief of Staff Mark Meadows at the White House to ask for broker transparency.