FMCSA wants more feedback to help weed out corrupt brokers

“While the interim guidance was effective immediately upon publication [on Nov. 16], FMCSA sought comments to the interim guidance and will issue final guidance by June 16, 2023.”

In addition to clarifying the definitions of brokers and bona fide 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.

FMCSA’s Jan. 5 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.

The agency received relatively few comments on the two policies. It received just 14 comments on the initial guidelines, including from the American Trucking Associations’ Moving & Storage Conference (ATA-MSC), the Owner-Operator Independent Drivers Association, and the Small Business in Trucking Coalition (SBTC).

“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 55 comments, including from ATA-MSC. With regard to FMCSA considering assets readily available as it relates to trust funds secured with broker-funded assets, ATA-MSC contends that 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,” the association stated in its comments.

“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 [the] 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.” 

Related articles:

• FMCSA commenters debate whether load boards should register as brokers
• FMCSA rejects 2nd shot at $75,000 truck-broker bond exemption
• What is a truck dispatcher?

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