FMCSA Proposes New Rules to Enhance Broker Transparency

 

Federal Motor Carrier Safety Administration (FMCSA) regulators have issued a long-anticipated proposed rule addressing broker transparency concerns raised by truck owner-operators. The rulemaking, designed to improve access to transaction records between brokers and carriers, comes in response to allegations of fraud and noncompliance in the freight brokerage industry.

While the proposed rules incorporate some suggestions from advocacy groups such as the Owner-Operator Independent Drivers Association (OOIDA) and the Small Business in Transportation Coalition (SBTC), they fall short of fully meeting their requests for tighter controls. The changes are intended to improve the transparency of transactions while balancing the operational realities of brokers.

Background: The Push for Transparency

The push for greater transparency began in May 2020 when OOIDA and SBTC filed petitions asking the FMCSA to enforce stricter measures on brokers. Both groups requested:

1. Automatic provision of transaction information within 48 hours of completing contractual services.
2. Prohibition of contract clauses requiring carriers to waive their rights to access transaction records.

SBTC also advocated for regulatory changes ensuring broker contracts could not exempt brokers from compliance with transparency rules. However, FMCSA’s proposed rule stops short of outright prohibitions, instead opting to clarify existing requirements.

Key Revisions in the Proposed Rule

FMCSA’s proposed rule introduces four significant changes to broker transparency regulations:

1. Electronic Recordkeeping Requirement
   Brokers must maintain transaction records in electronic formats, making it easier for carriers and shippers to access these records remotely. The FMCSA believes most brokers already maintain electronic records, and this change formalizes the requirement.
2. Detailed Transaction Records
   Brokers will now be required to itemize all charges and payments associated with each shipment, eliminating distinctions between brokerage and non-brokerage services. These records must include details such as the description, amount, and date of charges, along with any claims related to the shipment. This aims to give carriers full visibility into payments and fees, helping resolve disputes without costly legal interventions.
3. Obligation to Provide Records
   The rule reframes the responsibility for transparency as a regulatory duty imposed on brokers rather than a right carriers must request. Brokers will be required to provide transaction records proactively upon request.
4. Timely Record Access
   Brokers must provide requested records within 48 hours, ensuring carriers can quickly access the information they need to address service or payment issues.

Industry Reactions: Mixed Responses

Advocacy Groups’ Stance

• OOIDA welcomed some aspects of the proposal, particularly the inclusion of electronic recordkeeping, which it sees as a step toward fairness in the transportation system.
  Todd Spencer, OOIDA’s president, noted:
  “Broker transparency is necessary for a fair, efficient transportation system. We look forward to pressing FMCSA for better enforcement of these rules.”
• SBTC, however, expressed disappointment, calling the proposed changes insufficient. Executive Director James Lamb criticized FMCSA for catering to large broker interests, saying:
  “The FMCSA has gutted our request while making an appearance of strengthening the rule. Truckers and carriers must demand a prohibition against contractual waivers.”

Broker Perspectives

• Transportation Intermediaries Association (TIA), which represents brokers, voiced strong opposition, arguing that the FMCSA should focus on more pressing issues like freight fraud.
  TIA noted that during the COVID-19 pandemic, there were zero complaints related to broker transparency in FMCSA’s National Consumer Complaint Database, compared to over 80,000 complaints about freight fraud and unlawful brokerage practices. The group argued that this disparity highlights misplaced regulatory priorities.

FMCSA’s Position

FMCSA acknowledged that some carriers believe greater transparency could influence negotiated freight rates. However, the agency emphasized that broader market factors, rather than access to additional information, play a dominant role in determining rates. It did not rule out the possibility that improved transparency could help carriers negotiate better rates over time.

Next Steps

The public will have 60 days to submit comments on the proposed rules, including their potential impact on freight rates and operational efficiency. FMCSA will consider feedback before finalizing the regulations, which aim to strike a balance between carrier interests, broker compliance, and overall industry efficiency.

 

Source:

https://www.freightwaves.com/news/fmcsa-proposes-new-rules-on-broker-transparency