Federal regulators are now considering opposing petitions on rulemakings affecting how brokers conduct business in the latest development of a regulatory battle between brokers and independent owner-operators.
The Federal Motor Carrier Safety Administration (FMCSA) will publish on Wednesday a request for comment on the Transportation Intermediaries Association (TIA) petition to overturn a rule that allows parties involved in a brokered transaction to review records related to the transaction — a regulation created as trucking was being deregulated in 1980. TIA is also asking FMCSA to close a “dangerous loophole” that it claims allows unlicensed brokers to operate.
The revisions, according to TIA, “will improve safety for all entities within the transportation marketplace by removing bad actors from the marketplace and eliminating an administrative burden from the agency to enforce outdated and unnecessary regulations.”
TIA’s request contrasts with petitions filed earlier this year from the Owner-Operator Independent Drivers Association (OOIDA) and the Small Business in Transportation Coalition (SBTC) asking that FMCSA propose a rulemaking that offers more transparency and strengthens the rule in question – 49 CFR 371.3(c) – as opposed to eliminating it.
“Prior to this becoming a recent hot-button issue, with truck protests outside the White House during the COVID-19 pandemic, there has not been one single complaint made to the Department of Transportation’s National Consumer Complaint Database for a violation of a broker not disclosing their commission” under the regulation, TIA stated in its petition request.
“Moreover, motor carrier transportation on the spot market is one of the most transparent marketplaces in the world. Load boards, the internet and rate quotes in person-to-person communications within the industry provide the rate transparency that was intended by 49 CFR 371.3 when commissions paid by carriers to brokers were common. Motor carriers have sufficient access to current market rates without inspecting brokers’ shipment records to find out what the brokers’ gross margins are on a load-by-load basis.”
TIA wants FMCSA to also provide guidance on what constitutes a “dispatch service,” which the association asserts is essentially unlicensed brokers.
“The dispatch service is paid a commission by the motor carrier for their services, not the model that generally applies to brokers, where the shipper pays the broker for their service and the broker pays the motor carrier,” TIA stated. “We believe there are many illegal dispatch services that are operating illegally as unlicensed brokers. FMCSA should prohibit these companies from offering such a service without a license.”
A 60-day comment period will begin after the petition is posted in the Federal Register.
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