FMCSA Requesting Feedback to Help Deal With Corrupt Brokers
The FMCSA is seeking public input that will help the agency deal with illegal brokering.
updated March 28, 2023
FMCSA wants to hear comments on two different subjects related to brokers. The first, guidance issued in November on the agency’s interpretation of how brokers and qualified agents are defined and the second being a proposal issued on January 5th to regulate five areas of broker financial responsibility.
When is the Deadline for Feedback?
The new comment deadline for both the interim guidance and the proposed rule is March 6th.
“FMCSA is taking this action to better define the terms in response to a mandate in the Infrastructure Investment and Jobs Act,” the agency stated with regard to the interim guidance.
“While the interim guidance was effective immediately upon publication [on November 16th], FMCSA sought comments to the interim guidance and will issue final guidance by June 16, 2023.”
Clarifying Definitions of Brokers and Agents
In addition to clarifying the definitions of brokers and agents, Congress directed that FMCSA must, at a minimum:
- Examine the role of a dispatch service in the transportation industry.
- Examine the extent to which dispatch services could be considered brokers or bona fide agents.
- Clarify the level of financial penalties for unauthorized brokerage activities applicable to a dispatch service.
5 Key Areas of the Proposed Rule
FMCSA’s January 5th proposed rule requested public comment in five areas:
- Assets readily available.
- Immediate suspension of broker/freight forwarder operating authority.
- Surety or trust responsibilities in cases of broker/freight forwarder financial failure or insolvency.
- Enforcement authority.
- Entities eligible to provide trust funds for form BMC-85 trust fund filings.
Low Comments on Policies
The agency received very little comments (around 14) the two policies.
“The central problematic issue, here, is FMCSA draws misguided and improper conclusions that ‘arrangement of freight’ and ‘allocation of traffic’ can only be construed to mean arranging or allocating between a shipper and carrier and not a broker and carrier by a party purporting to be agents of competing carriers authorized by FMCSA,” SBTC stated.
“We believe if a third party is involved in any portion of the arrangement of transportation, including helping the carrier ‘find’ the load that the broker is trying to place for his shipper client, then that constitutes, well, arranging.”
The proposed rule received 214 comments, including from ATA-MSC who stated that the FMCSA is responsible for ensuring that trust funds “do not become a tool for bad actors to initiate brokerage companies, defraud motor carriers and shippers, and then move on when the call to make good on the guarantee comes in”.
“Unfortunately, by taking a more permissive approach to what assets would be considered readily available, the agency risks opening the door to expanded — instead of restricted — use of broker-funded trust funds. While the agency’s proposal is clear that there are a number of asset types that are unable to meet an ability to liquidate within seven business day standard, the proposal does not fully evaluate the more fundamental question of which asset types specifically meet a standard to serve as a financial guarantee.”
“A prescriptive list would provide an answer to this question while also ensuring that the FMCSA is exercising its regulatory authority and responsibility to set financial responsibility policies that reduce unscrupulous brokers.”
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