The Federal Motor Carrier Safety Administration (FMCSA) recently denied the rulemaking petition by the Transportation Intermediaries Association (TIA). This would remove the requirement that freight brokers must disclose to carriers’ transaction records between brokers and shipping companies.
This denial was issued just one day after the agency had consented to a formal rulemaking by two groups who were representing small-business truckers. The two groups were the Owner-Operator Independent Drivers Association and the Small Business in Transportation Coalition (SVTC), each requesting that brokers be prohibited from denying carriers the ability to access such records.
All petitions – which the FMCSA combined the OOIDA and SBTC petitions into one rulemaking procedure that was filed in 2020. The FMCSA believes the petition does not have enough information required to justify a rulemaking, which was stated in a letter to the TIA Vice President of government affairs Chris Burroughs.
The FMCSA believes that by eliminating the records disclosure provision would be contradictory to the transportation policy goals in the 49 USC 13101, which would include the promotion of fairness and efficiency in the transport industry. Burroughs has noted that they are disappointed with the agency on this route.
Burroughs notes that hundreds of millions of dollars of freight being stolen by fraudulent companies within the trucking company, truck crashes up 10%, and a majority of the trucks on the road are without a safety rating, all are signs of the failures by the FMCSA. Burroughs believes that the FMCSA should be focusing on safety as opposed to rulemaking involving private commercial contract negotiations.
Further issues is whether a provision requiring the driver or other party to a broker-managed transaction would be able to review documentation on the deal form the broker, which is current law 49 CFR 371.3(c).
According to the SBTC’s petition, the FMCSA noted that the group had explained how freight rates had dropped drastically and that motor carriers are reporting occurrences of brokers practicing price gouging and even low-balling tactics. The FMCSA has even underscored the SBTC’s claims that the brokers were receiving commissions up to 65% on loads due to the sudden freight shortage in the early years of the Covid-19 pandemic.
In an effort to avoid regulations, some brokers would require carriers to waive their rights to obtain documents which show the amount the shipper is paying the broker. The FMCSA believes that the 49 CFR 371.3 should actually be strengthened so this scenario does not continue. In addition to improving the broker transparency provision, the OOIDA also wants the FMCSA to have brokers provide an electronic copy of their transactions automatically within 48 hours after the conclusion of their contract.
The issue with the electronic submission of data from the members is that this is customer’s information, and Burroughs is unsure if their information will be kept secure and confidential. Burroughs believes that brokers have to include contract language that would have shipper information protected. He added that whenever there is a downturn in the market, the freights are driven down by supply and demand.
On the same day that the FMCSA agreed to the rulemaking, the OOIDA President and CEO Todd Spencer wrote to emphasize that more regulatory oversight on the issue will not only protect from unethical brokers. This would help protect the public by creating a marketplace where each party is acting in a clear and transparent manner. Furthermore, this will also provide better protection for motor carriers when there are claims or disagreements with brokers.
Overall, the FMCSA recently decided to deny the rulemaking petition by the Transportation Intermediaries Association (TIA). There are ultimately two opposing sides for this decision. The FMCSA believes that the law is in place to protect the trucking industry. However, many within the trucking industry believes that the law is a hindrance for the company as it could divulge customer information.
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