FMCSA Looks to Clear Up Confusion Over ‘Broker’ Definition

The Federal Motor Carrier Safety Administration (FMCSA) is trying to end confusion over what qualifies as a freight broker, as well as clarify penalties for unapproved brokerages.

The FMSCA is seeking feedback to a number of questions it’s posed on these issues, in an effort to reexamine definitions for “broker” and “bona fide agents” — and in the process — tackle unauthorized brokerages, according to a notice published June 10 in the Federal Register.

Over the past decade, FMCSA has received numerous inquiries and several petitions on the subject, and says it is aware of “significant stakeholder interest” in the topic.

A broker is currently defined by the Code of Federal Regulation (CFR) as a “person who, for compensation, arranges, or offers to arrange, the transportation of property by an authorized motor carrier.”

However, the CFR also says that “motor carriers, or persons who are employees or bona fide agents of carriers, are not brokers when they arrange or offer to arrange the transportation of shipments which they are authorized to transport and which they have accepted and legally bound themselves to transport.”

Bona fide agents currently are defined as “persons who are part of the normal organization of a motor carrier and perform duties under the carrier’s directions pursuant to a preexisting agreement which provides for a continuing relationship, precluding the exercise of discretion on the part of the agent in allocating traffic between the carrier and others,” the CFR states.

New Technology, New Standards

The Infrastructure Investment and Jobs Act, which President Biden signed into law in November 2021, requires the FMCSA to take into consideration the extent to which technology has changed the nature of freight brokerage when issuing guidance to clarify the definition of a broker. The law also mandates that FMCSA clarify the level of financial penalties for unauthorized brokerage activities.

Here are some of the questions the FMCSA wants answers to by July 11:

• What criteria should FMCSA use when determining whether a business model/entity meets the definition of a broker?
• 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 or not?
• If a dispatch service represents more than one carrier, does this make it a broker operating without authority?
• When should a dispatch service be considered a bona fide agent?
• Are there other business models/services, other than dispatch services and electronic bulletin boards, that should be considered when clarifying the definition of a 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?