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FMCSA Asks for Input to Clarify Freight Broker Definition

In a notice published in the federal register last Friday, FMCSA is asking the public for responses to a series of questions “to inform future guidance on the definitions of broker and bona fide agents,” the agency stated.

Brokers are required to get operating authority and operate under federal regulations. But it appears that the rise of load boards, dispatching services, and load-matching technology are muddying the waters, in some cases leading to illegal double-brokering, lawsuits regarding who’s responsible in the case of a crash, and more.

“Over the past decade, FMCSA has received numerous inquiries and several petitions related to the definition of a broker. FMCSA is aware that there is significant stakeholder interest” in how FMCSA enforces unauthorized brokerages, it noted.

Part of the problem is that there are differences in the definition of a broker in different sections of federal regulations. In addition, because the responsibilities of truck brokers and freight dispatchers sometimes overlap, there is a question as to whether a dispatch service is acting as a licensed broker without proper authority.

FMCSA stated that its new guidance is required by law to “take into consideration the extent to which technology has changed the nature of freight brokerage, the role of bona fide agents and other aspects of the freight transportation industry.”

Additionally, 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 under 49 U.S.C. 14916, applicable to a dispatch service.

FMCSA is looking to have the following questions answered:

  • What evaluation criteria should FMCSA use when determining whether a business model/entity meets the definition of a broker?

  • Provide examples of operations that meet the definition of broker in 49 CFR 371.2 and examples of operations that do not meet the definition in 49 CFR 371.2.

  • What role should the possession of money exchanged between shippers and motor carriers in a brokered transaction play in determining whether one is conducting brokerage?

  • How would you define the term dispatch service? Is there a commonly accepted definition? What role do dispatch services play in the transportation industry?

  • Do dispatch services need to obtain a business license/employer identification number from the state in which they primarily conduct business?

  • If a dispatch service represents more than one carrier, does this in and of itself make it a broker operating without authority?

  • When should a dispatch service be considered a bona fide agent?

  • What role do bona fide agents play in the transportation of freight?

  • Electronic bulletin boards match shippers and carriers for a fee. The fee is a membership fee to have access to the bulletin board information. Should electronic bulletin boards be considered brokers and required to register with FMCSA to obtain broker operating authority? If so, when and why?

  • How has technology changed the nature of freight brokerage, and how should these changes be reflected, if at all, in FMCSA’s guidance?

  • Are there other business models/services, other than dispatch services and electronic bulletin boards, that should be considered when clarifying the definition of broker?

  • Are there other aspects of the freight transportation industry that FMCSA should consider in issuing guidance pertaining to the definitions of broker and bona fide agents?

Comments must be submitted no later than July 11, 2022.


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