Definitions of Broker and Bona Fide Agents, 68635-68640 [2022-24923]
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Federal Register / Vol. 87, No. 220 / Wednesday, November 16, 2022 / Rules and Regulations
40 CFR 52.02(a). Thus, in reviewing SIP
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state choices, provided that they meet
the criteria of the CAA. Accordingly,
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January 21, 2011);
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Order 13132 (64 FR 43255, August 10,
1999);
• Is not an economically significant
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13045 (62 FR 19885, April 23, 1997);
• Is not a significant regulatory action
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List of Subjects in 40 CFR Part 52
Environmental protection, Air
pollution control, Incorporation by
reference, Intergovernmental relations,
Reporting and recordkeeping
requirements, Sulfur oxides.
Dated: November 8, 2022.
Meghan A. McCollister,
Regional Administrator, Region 7.
For the reasons stated in the
preamble, the EPA amends 40 CFR part
52 as set forth below:
PART 52—APPROVAL AND
PROMULGATION OF
IMPLEMENTATION PLANS
1. The authority citation for part 52
continues to read as follows:
■
Authority: 42 U.S.C. 7401 et seq.
Subpart AA—Missouri
2. In § 52.1320, the table in paragraph
(d) is amended by adding an entry for
‘‘(37)’’ in numerical order to read as
follows:
■
§ 52.1320
*
Identification of plan.
*
*
(d) * * *
*
*
EPA-APPROVED MISSOURI SOURCE-SPECIFIC PERMITS AND ORDERS
Name of source
Order/permit No.
*
*
(37) Ameren Missouri—Sioux Energy Center.
*
*
*
*
*
*
Consent Agreement No. APCP–
2021–018.
*
State
effective
date
3/31/2022
EPA approval date
*
*
11/16/2022, [insert Federal Register citation].
DEPARTMENT OF TRANSPORTATION
[FR Doc. 2022–24789 Filed 11–15–22; 8:45 am]
Federal Motor Carrier Safety
Administration
BILLING CODE 6560–50–P
49 CFR Part 371
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[Docket No. FMCSA–2022–0134]
Definitions of Broker and Bona Fide
Agents
Federal Motor Carrier Safety
Administration (FMCSA), Department
of Transportation (DOT).
ACTION: Notification of interim
guidance; request for comments.
AGENCY:
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Explanation
*
FMCSA is issuing this interim
guidance to inform the public and
regulated entities about FMCSA’s
interpretation of the definitions of
‘‘broker’’ and ‘‘bona fide agents’’ as it
relates to all brokers of transportation by
motor vehicle. FMCSA is taking this
action to better define the terms in
response to a mandate in the
Infrastructure Investment and Jobs Act
(IIJA). After consideration of public
comments received, FMCSA is
providing clarification on its
interpretation of the definitions of
‘‘broker’’ and ‘‘bona fide agents,’’ in
addition to meeting other criteria
SUMMARY:
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Federal Register / Vol. 87, No. 220 / Wednesday, November 16, 2022 / Rules and Regulations
required by the IIJA. While this interim
guidance is effective immediately,
FMCSA is also seeking comments in
response to this interim guidance and
may issue updated guidance if
comments demonstrate a need.
DATES:
Effective date: This updated guidance
is effective November 16, 2022.
Comment date: Comments must be
received on or before January 17, 2023.
FOR FURTHER INFORMATION CONTACT: Mr.
Jeff Secrist, Registration, Licensing, and
Insurance Division, Office of
Registration and Safety Information,
FMCSA, 1200 New Jersey Avenue SE,
Washington, DC 20590–0001, (202) 385–
2367, jeff.secrist@dot.gov. If you have
questions on viewing or submitting
material to the docket, contact Dockets
Operations, (202) 366–9826.
SUPPLEMENTARY INFORMATION:
I. Public Participation and Request for
Comments
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A. Request for Public Comments
FMCSA requests public comment on
its regulatory guidance and the factors
the Agency will use in its interpretation
of the definitions of ‘‘broker’’ and ‘‘bona
fide agents.’’
Docket: For access to the docket to
read background documents or
comments, go to www.regulations.gov at
any time or visit Room W12–140 on the
ground level of the West Building, DOT,
1200 New Jersey Avenue SE,
Washington, DC, between 9 a.m. and 5
p.m., ET, Monday through Friday,
except Federal holidays. If you want
acknowledgment that we received your
comments, please include a selfaddressed, stamped envelope or
postcard or print the acknowledgement
page that appears after submitting
comments online.
Privacy: In accordance with 5 U.S.C.
553(c), DOT solicits comments from the
public to better inform its guidance
process. DOT posts these comments,
without edit, including any personal
information the commenter provides, to
www.regulations.gov, as described in
the system of records notice (DOT/ALL–
14 FDMS), which can be reviewed at
www.dot.gov/privacy.
B. Submitting Comments
If you submit a comment, please
include the docket number for this
notice (FMCSA–2022–0134), indicate
the specific section of this document to
which your comment applies, and
provide a reason for each suggestion or
recommendation. You may submit your
comments and material online or by fax,
mail, or hand delivery, but please use
only one of these means. FMCSA
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recommends that you include your
name and a mailing address, an email
address, or a phone number in the body
of your document so FMCSA can
contact you if there are questions
regarding your submission.
To submit your comment online, go to
https://www.regulations.gov/docket/
FMCSA-2022-0134/document, click on
this notice, click ‘‘Comment,’’ and type
your comment into the text box on the
following screen.
If you submit your comments by mail
or hand delivery, submit them in an
unbound format, no larger than 81⁄2 by
11 inches, suitable for copying and
electronic filing. If you submit
comments by mail and would like to
know that they reached the facility,
please enclose a stamped, self-addressed
postcard or envelope.
C. Confidential Business Information
(CBI)
CBI is commercial or financial
information that is both customarily and
actually treated as private by its owner.
Under the Freedom of Information Act
(5 U.S.C. 552), CBI is exempt from
public disclosure. If your comments to
this notice contain commercial or
financial information that is customarily
treated as private, that you actually treat
as private, and that is relevant or
responsive to the notice, it is important
that you clearly designate the submitted
comments as CBI. Please mark each
page of your submission that constitutes
CBI as ‘‘PROPIN’’ to indicate it contains
proprietary information. FMCSA will
treat such marked submissions as
confidential under the Freedom of
Information Act, and they will not be
placed in the public docket for this
notice. Submissions containing CBI
should be sent to Mr. Brian Dahlin,
Chief, Regulatory Evaluation Division,
Office of Policy, FMCSA, 1200 New
Jersey Avenue SE, Washington, DC
20590–0001. Any comments FMCSA
receives not specifically designated as
CBI will be placed in the public docket
for this proceeding.
D. Viewing Comments and Documents
To view any documents mentioned as
being available in the docket, go to
https://www.regulations.gov/docket/
FMCSA-2022-0134/document and
choose the document to review. To view
comments, click this notice, then click
‘‘Browse Comments.’’ If you do not have
access to the internet, you may view the
docket online by visiting Dockets
Operations in Room W12–140 on the
ground floor of the DOT West Building,
1200 New Jersey Avenue SE,
Washington, DC 20590–0001, between 9
a.m. and 5 p.m., Monday through
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Friday, except Federal holidays. To be
sure someone is there to help you,
please call (202) 366–9317 or (202) 366–
9826 before visiting Dockets Operations.
E. Privacy Act
In accordance with 49 U.S.C.
31315(b), DOT solicits comments from
the public to better inform its decisionmaking process DOT posts these
comments, without edit, including any
personal information the commenter
provides, to www.regulations.gov. As
described in the system of records
notice DOT/ALL 14—FDMS, which can
be reviewed at https://
www.transportation.gov/privacy, the
comments are searchable by the name of
the submitter.
II. Background
Broker is defined in 49 U.S.C.
13102(2) as a ‘‘person, other than a
motor carrier or an employee or agent of
a motor carrier, that as a principal or
agent sells, offers for sale, negotiates for,
or holds itself out by solicitation,
advertisement, or otherwise as selling,
providing, or arranging for,
transportation by motor carrier for
compensation.’’ It is also defined in 49
CFR 371.2(a) as a ‘‘person who, for
compensation, arranges, or offers to
arrange, the transportation of property
by an authorized motor carrier. Motor
carriers, or persons who are employees
or bona fide agents of carriers, are not
brokers within the meaning of this
section 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.’’
In that same section, bona fide agents
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.’’ 49 CFR
371.2(b).
On November 15, 2021, the President
signed the IIJA into law (Pub. L. 117–58,
135 Stat. 429). Section 23021 of the
IIJA 1 directed the Secretary (FMCSA) to
issue guidance, within one year of the
date of enactment of the IIJA, clarifying
the definitions of the terms ‘‘broker’’
and ‘‘bona fide agents’’ in 49 CFR 371.2.
The guidance must take into
consideration the extent to which
technology has changed the nature of
freight brokerage, the role of bona fide
1 The full text is available at congress.gov/117/
plaws/publ58/PLAW-117publ58.pdf.
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agents, and other aspects of the freight
transportation industry. Additionally,
when issuing the guidance, FMCSA
must, at a minimum: (1) examine the
role of a dispatch service in the
transportation industry; (2) examine the
extent to which dispatch services could
be considered brokers or bona fide
agents; and (3) clarify the level of
financial penalties for unauthorized
brokerage activities under 49 U.S.C.
14916, applicable to a dispatch service.2
In an effort to obtain and consider
stakeholder input in the development of
its guidance, FMCSA issued a Federal
Register notice on June 10, 2022,
seeking comment in 13 specific areas.
87 FR 35593.
Stakeholder Comments
FMCSA appreciates the robust
response to our request for comment.
Over 80 stakeholders filed comments in
the public docket, including
individuals, trade associations, brokers,
and dispatch services.3 While the
Agency does not specifically reference
all comments in this guidance, the
Agency would like to assure
stakeholders it has reviewed and
considered all comments filed.
III. Compliance With the IIJA
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A. Technology
As an initial matter, commenters were
nearly unanimous that while technology
has changed freight brokerage, such
changes have not affected the
fundamental nature of freight brokerage,
nor are they relevant for the issuance of
this guidance.4 One commenter did note
that the technological changes have
exacerbated fraud problems.5
2 Due to a statutory omission, FMCSA is unable
to assess civil penalties for violations of 49 U.S.C.
14916 and may pursue such penalties only through
the Department of Justice in federal court. Congress
has indicated interest in FMCSA’s statutory
authority in a recent House Appropriations
Committee Report.
3 FMCSA appreciates commenters that provided
submissions by the July 11 deadline for comment
submission. A number of commenters submitted
comments after the deadline. While FMCSA
reminds stakeholders of the importance of
submitting timely comments, in this particular
proceeding, FMCSA will consider the late-filed
comments in the interest of developing a complete
record. While FMCSA accepted the comments in
this proceeding, it may not consider late-filed
comments in future proceedings.
4 See comments of Truckstop.com, at 5; Mode
Transportation (Mode), at 8; Transportation
Intermediaries Association (TIA), at 10; National
Industrial Transportation League (NITL), at 2; Small
business in Transportation Coalition (SBTC), at 14;
England Logistics (England), at 8; and Uship, at 3.
5 See Comments of 13 stakeholders (13
Stakeholder comments), at 12–13. The 13
stakeholders include the Air & Expedited Motor
Carriers Association, Airforwarders Association,
Alliance for Safe, Efficient, and Competitive Truck
Transportation (ASECTT), Auto Haulers
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Accordingly, while the Agency
recognizes that brokerage has changed
immeasurably due to technology,
including moving from a phone based
system to one based on the internet,
such changes do not impact the
fundamental nature of brokerage, which
involves arranging transportation for
compensation, and hence do not have a
significant impact on this guidance.
B. Bona Fide Agents
Stakeholders provided FMCSA with
useful information on the role of bona
fide agents. Commenters have described
bona fide agents as advocates or a sales
force for a single motor carrier,6 an
outside sales force that acquires freight
for an employer,7 a dispatch service
used in lieu of motor carrier
employees,8 people who look for freight
for a motor carrier,9 a service that allows
motor carriers to outsource operations
instead of having employees handle
them,10 a sales force from acquired
motor carriers that big motor carriers
use,11 and an operation where people
work for one motor carrier and have no
discretion to allocate traffic.12 Based
upon stakeholder comments, it appears
that bona fide agents are generally
considered individuals/entities that
solicit business for a motor carrier.
C. Other Aspects of the Freight
Transportation Industry
Finally, stakeholders provided input,
albeit more limited, on other aspects of
the freight transportation industry. A
broker indicated that other aspects of
the transportation industry do not need
to be considered.13 A managing general
agency and program administrator for
insurance companies focused on
transportation indicated that FMCSA
should issue guidance that is consistent
with the Motor Carrier Safety
Improvement Act of 1999 and the
Moving Ahead for Progress in the 21st
Association of America, American Home
Furnishings Alliance, Apex Capital Corp, National
Association of Small Trucking Companies
(NASTC), PFA Transportation Insurance & Surety
Services, Sompo International, Transportation &
Logistics Council, Specialized Furniture Carriers,
The Expedite Association of North America,
Transportation Loss Prevention and Security
Association.
6 See Mode comments, at 7.
7 See comment of AWM Associates, LLC (AWM),
at 4.
8 See TIA comments, at 9.
9 See comments of the Owner-Operator
Independent Drivers Association (OOIDA), at 5.
10 See comments of the Intermodal Association of
North America (IANA), at 5.
11 See 13 Stakeholder comments, at 10–11.
12 See comments of the American Trucking
Associations Moving and Storage Conference
(MSC), at 5.
13 See comments of Mode, at 8.
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68637
Century Act (MAP–21).14 A truck safety
advocacy group indicated that FMCSA
must issue a clear definition of broker
that enables enforcement.15 And, a
coalition of stakeholders noted the
significant ramifications of being
considered a broker or not.16
While stakeholders did not provide
FMCSA with specific information
related to the requirement that the
Agency must consider ‘‘other aspects of
the freight transportation industry’’ in
issuing the guidance, FMCSA
recognizes that its guidance is operating
in a broader context and has impacts
beyond the immediate focus of this
guidance. In today’s notice, FMCSA has
worked to avoid creating unintended
consequences, in issuing guidance on its
interpretation of its regulations and
related matters. While guidance may be
relevant to stakeholder compliance with
FMCSA’s regulations, any changes to
FMCSA’s regulations and hence
compliance responsibilities would need
to be enacted in a separate rulemaking
proceeding.17
IV. Interim Guidance
With the aforementioned
consideration of factors as background,
FMCSA now turns to the core IIJA
mandate: the issuance of guidance
pertaining to the definition of broker
and bona fide agents, the examination of
the role of dispatch services in the
transportation industry, the extent to
which dispatch services could be
considered brokers or bona fide agents,
and the level of financial penalties for
unauthorized brokerage activities under
49 U.S.C. 14916 applicable to a dispatch
service. This document does not have
the force and effect of law and is not
meant to bind the public in any way,
and the document is intended only to
provide information to the public
regarding existing requirements under
the law or agency policies
A. Definition of Broker
While FMCSA is unable to change the
definition of ‘‘broker’’ absent a
rulemaking, it is able to provide
clarification here. As an initial matter,
14 See comments of Greenwich Transportation
Underwriters, at 2.
15 See comments of the Truck Safety Coalition
(TSC), at 3. FMCSA reminds stakeholders that
guidance is not enforceable, in contrast to statutes
and regulations, which are.
16 See 13 Stakeholder comments, at 4–6.
17 FMCSA notes and appreciates SBTC’s Petition
for rulemaking regarding the definition of
‘‘dispatcher.’’ As noted in its response to SBTC,
FMCSA is continuing to review SBTC’s petition.
Today’s notice is not to be interpreted as a decision
on SBTC’s petition. Other stakeholders are free to
file petitions for rulemaking related to the issues
covered in today’s notice as well.
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there was a split amongst stakeholders
on whether the current definition of
broker was adequate. A majority of
stakeholders believed that the current
definition of broker was adequate,18
while others proposed some changes. A
safety advocacy group recommended
amendment of the definition of
‘‘broker.’’ 19 A stakeholder representing
the household goods (HHG) motor
carrier industry asked FMCSA to clarify
that merely selling leads does not
require an entity to obtain broker
authority.20 One broker believed that
FMCSA should amend the definition of
‘‘broker’’ to comport with changes in
MAP–21 that required motor carriers
and hence their agents to obtain broker
operating authority.21 Additionally,
internet based load matching services
have requested that FMCSA consider
electronic load boards to not be
considered brokers.22
Given the prevailing view among
commenters that the current definition
of ‘‘broker’’ is adequate, the Agency
feels the need to clarify it in only one
area: the relevance of an entity’s
handling of funds in a transaction
between shippers and motor carrier.
18 See comments of Mode, at 3–4; TIA, at 3;
OOIDA, at 2; NITL, at 2; IANA, at 2; MSC, at 2–
3; Agricultural and Food Transporters Conference
of ATA and multiple state trucking associations
(AFTC), at 2; 13 Stakeholder comments, at 4; Larry
Walker.
19 TSC comments, at 2. In order for FMCSA to
consider such a change, TSC would need to file a
petition for rulemaking.
20 See comments of MSC, at 4. FMCSA
appreciates MSC’s comments and recognizes that
they have raised the issue with the Agency for quite
some time. In order to give stakeholders a chance
to comment in this area, FMCSA will treat MSC’s
comments as a request for guidance on the
definition of HHG broker and issue guidance in a
separate proceeding.
21 See Comments of England, at 1–4. FMCSA
recognizes this issue but does not believe that this
is the appropriate forum to resolve it. England
would need to file a petition for rulemaking with
the Agency for a change in the definition of
‘‘broker.’’ However, as England notes, Congress did
not change the definition of ‘‘broker’’ in 49 U.S.C.
13102(2). In order for FMCSA to change the
definition of broker in its regulations as England
suggests, the Agency would have to carefully
consider its authority to make such a change given
that Congress specifically left the prior definition of
‘‘broker’’ in place in MAP–21.
22 See comments of DAT, at 1; Truckstop.com, at
1–5; and Uship, at 4. Comments filed by
representatives of the HHG motor carrier industry
do not believe a carveout from the broker definition
for load boards is appropriate. See comments of
Unigroup/Mayflower/MoveRescue, at 3. While
whether an entity requires broker operating
authority must be determined on a case by case
basis, FMCSA does not believe that where entities
merely host an electronic platform for shippers and
motor carriers to connect directly that broker
operating authority registration is required. This
position is consistent with a 2000 letter from
FMCSA that has been placed in the docket. See
Letter from Judith Rutledge, FMCSA Acting Chief
Counsel, to Andrew K. Light, Esq.
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FMCSA appreciates the robust input it
received on this issue. Some
commenters believed that whether one
handles funds is irrelevant to whether
one is a broker.23 A coalition of
stakeholders believed the handling of
money is not determinative in the
broker determination.24 Other
stakeholders felt that the handling of
money had at least some relevance as to
whether one is brokering.25
After consideration of the stakeholder
comments and the important role of
financial responsibility in broker
regulation,26 FMCSA wishes to clarify
that handling money exchanged
between shippers and motor carriers is
a factor that strongly suggests the need
for broker authority, but it is not an
absolute requirement for one to be
considered a broker.
B. Definition of Bona Fide Agent
Next, FMCSA is mandated to clarify
the definition of ‘‘bona fide agents’’ in
49 CFR 371.2. Stakeholders provided
feedback on this point. A HHG motor
carrier trade association thought the
current definition was ‘‘clear as to what
entities fall within that term.’’ 27 A
broker indicated that the definition
should be eliminated due to MAP–21
requiring motor carriers, and hence their
agents, to have broker authority.28 And
multiple entities believe that in order to
be deemed a ‘‘bona fide agent’’ one can
represent only one motor carrier.29
After careful consideration, FMCSA
has determined that representing more
than one motor carrier does not
necessarily mean one is a broker rather
than a bona fide agent. Any
determination will be highly fact
specific and will entail determining
whether the person or company is
engaged in the allocation of traffic
between motor carriers.
23 See comments of SBTC, at 6; England, at 5;
TSC, at 2.
24 See 13 Stakeholder comments, at 6–7.
25 See comments of TIA, at 7; OOIDA, at 4; MSC,
at 4; Cox Automotive, at 1–2.
26 One of the most significant broker regulations
is the requirement that brokers have a $75,000 bond
or trust fund to protect motor carriers from nonpayment. Where a shipper pays a fee to third party
that then takes a profit and remits the balance to
a motor carrier, the third party is clearly required
to have broker authority. FMCSA will soon be
issuing a Notice of Proposed Rulemaking on broker
and freight forwarder financial responsibility,
which will further clarify related duties.
27 See comments of the MSC, at 5.
28 See comments of England, at 1–4. As noted
above, any such change would require rulemaking
in accordance with the APA and statutory authority
concerns would need to be addressed.
29 See comments of TIA, at 8; NITL, at 2; SBTC,
at 9.
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C. Role of Dispatch Services
Next, the IIJA required the agency to
examine the role of dispatch services in
the transportation industry and the
extent to which such services could be
considered brokers or bona fide agents.
Stakeholder comments make clear
that there is no universally accepted
definition of ‘‘dispatch service,’’ nor did
Congress define the term in the IIJA
provision mandating this guidance.30
One broker trade association
characterized it is as a vague term,31
while a coalition of stakeholders said it
is an invented term.32 According to a
self-identified dispatch service,
dispatchers represent motor carriers,
they don’t connect shippers and motor
carriers, they don’t handle money, but
they do provide carrier support
services.33 Additional commenters
stated that dispatchers perform back
office operations for motor carriers; 34
they book freight and perform other
tasks; 35 they perform many
administrative duties and basic
accounting for small carriers; 36 and
they are paid a percentage of the freight
charges from a motor carrier.37 Other
stakeholders indicate that dispatch
services find loads for motor carriers,
handle administrative tasks and assist
with compliance,38 source shipments,
and allocate shipments between motor
carriers.39 According to a shipper trade
association, dispatch services would be
expected to be like an in-house truck
dispatcher, but in reality many are
operating more like brokers.40 A broker
commenter indicated that dispatch
services have multiple motor carriers in
their client base, they seek freight and
obtain freight for motor carriers, and
they are paid by motor carriers.41
After consideration of the public
comments, while it is clear that there is
no commonly accepted definition of a
dispatch service, such services appear to
have certain common features. First,
30 See
comments of England, at 5–7.
TIA comments, at 7.
32 See 13 stakeholder comments, at 7.
33 See comments of Seeley & Sylvester. LLC, at 2–
4; See also comments of A1 Express, at 2 (stating
that dispatch services ‘‘are and should be a carrier
support service.’’) Note that a number of
individuals submitted identical comments which
are cited as A1 Express.
34 See Mode comments, at 5; See also comments
from Shelley Smith (stating that ‘‘a dispatcher
should be categorized as a back office assistant
because that is truly a power dispatcher.’’).
35 See comments of Quality Dispatching, at 5.
36 See comments of WCF Freight Transport.
37 See comments of AWM Associates LLC, at 2.
38 See comments of OOIDA, at 4.
39 See comments of IANA, at 3–4.
40 See comments of the Transportation and
Logistics Council, Inc., at 2.
41 See comments of England, at 5–7.
31 See
E:\FR\FM\16NOR1.SGM
16NOR1
Federal Register / Vol. 87, No. 220 / Wednesday, November 16, 2022 / Rules and Regulations
they work exclusively for motor carriers,
not for shippers. Second, they source
loads for motor carriers. And third, they
perform additional services for motor
carriers that are unrelated to sourcing
shipments.
khammond on DSKJM1Z7X2PROD with RULES
D. Dispatch Service: Broker or Bona
Fide Agent
Further, the IIJA mandated that
FMCSA examine when a dispatch
service could be considered a broker
and when it could be considered a bona
fide agent. Stakeholders provided
significant input on these points.
A trade association indicated that
when a dispatch service represents one
motor carrier it is a bona fide agent, but
when it represents more than one it is
a broker.42 A broker thought that when
a dispatch service only performed back
office operations, it was not a broker,
but if it arranges loads it is.43 A dispatch
service indicated that dispatch services
are bona fide agents, as they are merely
agents to locate freight and are paid a
flat fee or a percentage.44 Another
dispatch service also believes that a
dispatch service is a bona fide agent and
not a broker because dispatch services
do not connect shippers with carriers
that can transport their loads, and
therefore do not meet the broker
business model.45 A consulting firm
believes that dispatch services are bona
fide agents if they are employees per IRS
regulations, but not if they represent
more than one motor carrier.46 Several
trade organizations believe that if a
dispatch service represents more than
one motor carrier it is a broker, and that
the handling of funds warrants a finding
of brokerage.47 A coalition of 13
stakeholders believes that representing
more than one motor carrier renders a
dispatch service a broker, and a broker
believes that representing more than one
motor carrier takes one outside of the
definition of ‘‘bona fide agent.’’ 48
Finally, a dispatch service indicated
that broker authority should be required
only when arranging transportation on
behalf of shippers.49
After careful consideration, FMCSA
clarifies that when a dispatch service
does not participate in the arrangement
of freight, or when it represents only
one motor carrier, it is not a broker. If
a dispatch service arranges
transportation on behalf of multiple
42 See
comments of IANA, at 4.
comments of Mode, at 5.
44 See comments of Quality Dispatching, at 4–5.
45 See comments of A1 Express, at 2.
46 See comments of AWM, at 4.
47 See comments of TIA, at 7; and OOIDA, at 4.
48 See comments of 13 stakeholders, at 10;
England, at 8.
49 See comments of Seeley & Sylvester LLC, at 4.
43 See
VerDate Sep<11>2014
15:43 Nov 15, 2022
Jkt 259001
motor carriers and engages in the
allocation of traffic, however, then
pursuant to 49 CFR 371.2, it is not a
bona fide agent and must obtain broker
operating authority registration.
Ultimately, the analysis of whether a
person or entity requires broker
authority is often highly fact specific
and must be made on a case-by-case
basis.
Regarding whether a dispatch service
is a bona fide agent, one must analyze
whether the service falls within the
definition of bona fide agent in 49 CFR
371.2(b). However, if the dispatch
service allocates traffic between two
motor carriers, it cannot be a bona fide
agent by definition.
E. Dispatch Services That Would Not
Require Broker Authority
Generally, the factors relevant to
whether a dispatch service is not
required to obtain broker authority are
stated below:
(1) The dispatch service has a written
legal contractual relationship with a
motor carrier that clearly reflects the
motor carrier is appointing the dispatch
service as a licensed agent for the motor
carrier. This is often a long-term
contractual relationship;
(2) The written legal contract specifies
the insurance and liability
responsibilities of the dispatch service
and motor carrier. The dispatch service
must also meet all state licensing
requirements;
(3) The dispatch service goes through
a broker to arrange for the transportation
of shipments for the motor carrier. The
dispatch service may not seek or solicit
shippers for freight;
(4) The dispatch service does not
provide billing nor accept compensation
from the broker, 3PL (third-party
logistics company), or factoring
company, but instead receives
compensation from the motor carrier(s)
based on the pre-determined written
legal contractual agreement;
(5) The dispatch service is not an
intermediary or involved in the
financial transaction between a broker
and motor carrier;
(6) The dispatch service is an IRS
1099 recipient from the motor carrier, or
a W2 employee of the motor carrier as
specified in the legal written contract
agreement;
(7) The dispatch service discloses that
they are a dispatch service operating
under the authority of a specific motor
carrier, and the shipment is arranged for
that motor carrier only;
(8) The dispatch service does not
subsequently assign or arrange for the
load to be carried/moved by another
motor carrier; or
PO 00000
Frm 00045
Fmt 4700
Sfmt 4700
68639
(9) A dispatch service does not
provide their ‘‘services’’ for a motor
carrier unless that motor carrier
specifically appointed the dispatch
service as their agent in accordance with
the aforementioned requirements.
F. Dispatch Services That Require
Broker Authority
The following factors would indicate
the dispatch service should obtain
broker authority:
(1) The dispatch service interacts or
negotiates a shipment of freight directly
with the shipper, or a representative of
the shipper;
(2) The dispatch service accepts or
takes compensation for a load from the
broker, or factoring company, or is
involved in any part of the monetary
transaction between any of those
entities;
(3) The dispatch service arranges for
a shipment of freight for a motor carrier,
with which there is no written legal
contract with the motor carrier that
meets the aforementioned criteria;
(4) The dispatch service accepts a
shipment without a truck/carrier, then
attempts to find a truck/carrier to move
the shipment;
(5) The dispatch service is a named
party on the shipping contract; or
(6) The dispatch service is soliciting
to the open market of carriers for the
purposes of transporting a freight
shipment.
It is clear based on feedback from
industry that there is a need and desire
for dispatch services, among large and
small motor carriers. A beneficial role
that a dispatch service may provide is
the outsourcing of resources for small
motor carriers who cannot afford a fulltime employee to perform these
functions. The dispatch service can help
to ensure the motor carrier has a steady
stream of shipments while allowing the
motor carrier to focus on its core
business of safely transporting freight.
FMCSA does not believe it is the intent
of Congress to eliminate the services
that dispatch services provide.
While no single factor is paramount in
assessing the business relationship
between a dispatch service and a motor
carrier, the extent of a motor carrier’s
control over the individual(s)
performing the dispatch services is
highly significant, i.e., the dispatch
service works on behalf of the motor
carrier and makes decisions based on
the motor carrier’s guidance and
direction. As noted, FMCSA determines
whether a dispatcher is conducting
broker operations on a case-by-case
basis, utilizing factors including those
above.
E:\FR\FM\16NOR1.SGM
16NOR1
68640
Federal Register / Vol. 87, No. 220 / Wednesday, November 16, 2022 / Rules and Regulations
G. Financial Penalties
Finally, FMCSA must clarify the level
of penalties for unauthorized brokerage
applicable to dispatch services. Such an
assessment is straightforward. If the
dispatch service is deemed to be
providing unauthorized brokerage
services pursuant to 49 U.S.C. 14916,
the service will be subject to applicable
penalties. 50 If no finding of
unauthorized brokerage is made, it will
not be subject to such penalties.
V. Request for Public Comment
FMCSA requests public comment on
its regulatory guidance and the factors
the Agency will use in its interpretation
of the definitions of ‘‘broker’’ and ‘‘bona
fide agent.’’ The Agency welcomes
comments from stakeholders that are
relevant to identifying a dispatch
service that engages in actions that
would require broker authority
compared with actions that don’t
require broker authority. Additionally,
FMCSA welcomes comments
concerning the potential impact of this
guidance on dispatch services upon
which the broker rules would be
considered applicable.
Robin Hutcheson,
Administrator.
[FR Doc. 2022–24923 Filed 11–15–22; 8:45 am]
BILLING CODE 4910–EX–P
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
50 CFR Part 679
[Docket No. 220223–0054; RTID 0648–
XC383]
Fisheries of the Exclusive Economic
Zone Off Alaska; Atka Mackerel in the
Central Aleutian District of the Bering
Sea and Aleutian Islands Management
Area
National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Temporary rule; closure.
AGENCY:
NMFS is prohibiting directed
fishing for Atka mackerel in the Central
Aleutian district (CAI) of the Bering Sea
and Aleutian Islands management area
(BSAI) by vessels participating in the
BSAI trawl limited access sector fishery.
This action is necessary to prevent
exceeding the 2022 total allowable catch
khammond on DSKJM1Z7X2PROD with RULES
SUMMARY:
50 Penalties for violations of section 14916 are
provided in 49 U.S.C. 14916(c)(1),(d).
VerDate Sep<11>2014
15:43 Nov 15, 2022
Jkt 259001
(TAC) of Atka mackerel in the CAI
allocated to vessels participating in the
BSAI trawl limited access sector fishery.
DATES: Effective 1200 hrs, Alaska local
time (A.l.t.), November 10, 2022,
through 2400 hrs, A.l.t., December 31,
2022.
FOR FURTHER INFORMATION CONTACT:
Steve Whitney, 907–586–7228.
SUPPLEMENTARY INFORMATION: NMFS
manages the groundfish fishery in the
BSAI exclusive economic zone
according to the Fishery Management
Plan (FMP) for Groundfish of the BSAI
prepared by the North Pacific Fishery
Management Council under authority of
the Magnuson-Stevens Fishery
Conservation and Management Act
(Magnuson-Stevens Act). Regulations
governing fishing by U.S. vessels in
accordance with the FMP appear at
subpart H of 50 CFR part 600 and 50
CFR part 679.
The 2022 TAC of Atka mackerel, in
the CAI, allocated to vessels
participating in the BSAI trawl limited
access sector fishery was established as
a directed fishing allowance of 1,500
metric tons by the final 2022 and 2023
harvest specifications for groundfish in
the BSAI (87 FR 11626, March 2, 2022).
In accordance with § 679.20(d)(1)(iii),
the Regional Administrator finds that
this directed fishing allowance has been
reached. Consequently, NMFS is
prohibiting directed fishing for Atka
mackerel in the CAI by vessels
participating in the BSAI trawl limited
access sector fishery. While this closure
is effective, the maximum retainable
amounts at § 679.20(e) and (f) apply at
any time during a trip.
Classification
NMFS issues this action pursuant to
section 305(d) of the Magnuson-Stevens
Act. This action is required by 50 CFR
part 679, which was issued pursuant to
section 304(b), and is exempt from
review under Executive Order 12866.
Pursuant to 5 U.S.C. 553(b)(B), there
is good cause to waive prior notice and
an opportunity for public comment on
this action, as notice and comment
would be impracticable and contrary to
the public interest, as it would prevent
NMFS from responding to the most
recent fisheries data in a timely fashion,
and would delay the closure of the Atka
mackerel directed fishing in the CAI for
vessels participating in the BSAI trawl
limited access sector fishery. NMFS was
unable to publish a notice providing
time for public comment because the
most recent, relevant data only became
available as of November 9, 2022.
The Assistant Administrator for
Fisheries, NOAA also finds good cause
PO 00000
Frm 00046
Fmt 4700
Sfmt 4700
to waive the 30-day delay in the
effective date of this action under 5
U.S.C. 553(d)(3). This finding is based
upon the reasons provided above for
waiver of prior notice and opportunity
for public comment.
Authority: 16 U.S.C. 1801 et seq.
Dated: November 10, 2022.
Jennifer M. Wallace,
Acting Director, Office of Sustainable
Fisheries, National Marine Fisheries Service.
[FR Doc. 2022–24941 Filed 11–10–22; 4:15 pm]
BILLING CODE 3510–22–P
DEPARTMENT OF COMMERCE
National Oceanic and Atmospheric
Administration
50 CFR Part 679
[Docket No. 220223–0054]
RTID 0648–XC380
Fisheries of the Exclusive Economic
Zone Off Alaska; Pacific Ocean Perch
in the Central Aleutian District of the
Bering Sea and Aleutian Islands
Management Area
National Marine Fisheries
Service (NMFS), National Oceanic and
Atmospheric Administration (NOAA),
Commerce.
ACTION: Temporary rule; closure.
AGENCY:
NMFS is prohibiting directed
fishing for Pacific ocean perch in the
Central Aleutian district (CAI) of the
Bering Sea and Aleutian Islands
management area (BSAI) by vessels
participating in the BSAI trawl limited
access sector fishery. This action is
necessary to prevent exceeding the 2022
total allowable catch (TAC) of Pacific
ocean perch in the CAI allocated to
vessels participating in the BSAI trawl
limited access sector fishery.
DATES: Effective 1200 hrs, Alaska local
time (A.l.t.), November 10, 2022,
through 2400 hrs, A.l.t., December 31,
2022.
SUMMARY:
FOR FURTHER INFORMATION CONTACT:
Steve Whitney, 907–586–7228.
NMFS
manages the groundfish fishery in the
BSAI exclusive economic zone
according to the Fishery Management
Plan for Groundfish of the Bering Sea
and Aleutian Islands Management Area
(FMP) prepared by the North Pacific
Fishery Management Council under
authority of the Magnuson-Stevens
Fishery Conservation and Management
Act (Magnuson-Stevens Act).
Regulations governing fishing by U.S.
vessels in accordance with the FMP
SUPPLEMENTARY INFORMATION:
E:\FR\FM\16NOR1.SGM
16NOR1
]]>Agencies
[Federal Register Volume 87, Number 220 (Wednesday, November 16, 2022)]
[Rules and Regulations]
[Pages 68635-68640]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2022-24923]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF TRANSPORTATION
Federal Motor Carrier Safety Administration
49 CFR Part 371
[Docket No. FMCSA-2022-0134]
Definitions of Broker and Bona Fide Agents
AGENCY: Federal Motor Carrier Safety Administration (FMCSA), Department
of Transportation (DOT).
ACTION: Notification of interim guidance; request for comments.
-----------------------------------------------------------------------
SUMMARY: FMCSA is issuing this interim guidance to inform the public
and regulated entities about FMCSA's interpretation of the definitions
of ``broker'' and ``bona fide agents'' as it relates to all brokers of
transportation by motor vehicle. FMCSA is taking this action to better
define the terms in response to a mandate in the Infrastructure
Investment and Jobs Act (IIJA). After consideration of public comments
received, FMCSA is providing clarification on its interpretation of the
definitions of ``broker'' and ``bona fide agents,'' in addition to
meeting other criteria
[[Page 68636]]
required by the IIJA. While this interim guidance is effective
immediately, FMCSA is also seeking comments in response to this interim
guidance and may issue updated guidance if comments demonstrate a need.
DATES:
Effective date: This updated guidance is effective November 16,
2022.
Comment date: Comments must be received on or before January 17,
2023.
FOR FURTHER INFORMATION CONTACT: Mr. Jeff Secrist, Registration,
Licensing, and Insurance Division, Office of Registration and Safety
Information, FMCSA, 1200 New Jersey Avenue SE, Washington, DC 20590-
0001, (202) 385-2367, [email protected]. If you have questions on
viewing or submitting material to the docket, contact Dockets
Operations, (202) 366-9826.
SUPPLEMENTARY INFORMATION:
I. Public Participation and Request for Comments
A. Request for Public Comments
FMCSA requests public comment on its regulatory guidance and the
factors the Agency will use in its interpretation of the definitions of
``broker'' and ``bona fide agents.''
Docket: For access to the docket to read background documents or
comments, go to www.regulations.gov at any time or visit Room W12-140
on the ground level of the West Building, DOT, 1200 New Jersey Avenue
SE, Washington, DC, between 9 a.m. and 5 p.m., ET, Monday through
Friday, except Federal holidays. If you want acknowledgment that we
received your comments, please include a self-addressed, stamped
envelope or postcard or print the acknowledgement page that appears
after submitting comments online.
Privacy: In accordance with 5 U.S.C. 553(c), DOT solicits comments
from the public to better inform its guidance process. DOT posts these
comments, without edit, including any personal information the
commenter provides, to www.regulations.gov, as described in the system
of records notice (DOT/ALL-14 FDMS), which can be reviewed at
www.dot.gov/privacy.
B. Submitting Comments
If you submit a comment, please include the docket number for this
notice (FMCSA-2022-0134), indicate the specific section of this
document to which your comment applies, and provide a reason for each
suggestion or recommendation. You may submit your comments and material
online or by fax, mail, or hand delivery, but please use only one of
these means. FMCSA recommends that you include your name and a mailing
address, an email address, or a phone number in the body of your
document so FMCSA can contact you if there are questions regarding your
submission.
To submit your comment online, go to https://www.regulations.gov/docket/FMCSA-2022-0134/document, click on this notice, click
``Comment,'' and type your comment into the text box on the following
screen.
If you submit your comments by mail or hand delivery, submit them
in an unbound format, no larger than 8\1/2\ by 11 inches, suitable for
copying and electronic filing. If you submit comments by mail and would
like to know that they reached the facility, please enclose a stamped,
self-addressed postcard or envelope.
C. Confidential Business Information (CBI)
CBI is commercial or financial information that is both customarily
and actually treated as private by its owner. Under the Freedom of
Information Act (5 U.S.C. 552), CBI is exempt from public disclosure.
If your comments to this notice contain commercial or financial
information that is customarily treated as private, that you actually
treat as private, and that is relevant or responsive to the notice, it
is important that you clearly designate the submitted comments as CBI.
Please mark each page of your submission that constitutes CBI as
``PROPIN'' to indicate it contains proprietary information. FMCSA will
treat such marked submissions as confidential under the Freedom of
Information Act, and they will not be placed in the public docket for
this notice. Submissions containing CBI should be sent to Mr. Brian
Dahlin, Chief, Regulatory Evaluation Division, Office of Policy, FMCSA,
1200 New Jersey Avenue SE, Washington, DC 20590-0001. Any comments
FMCSA receives not specifically designated as CBI will be placed in the
public docket for this proceeding.
D. Viewing Comments and Documents
To view any documents mentioned as being available in the docket,
go to https://www.regulations.gov/docket/FMCSA-2022-0134/document and
choose the document to review. To view comments, click this notice,
then click ``Browse Comments.'' If you do not have access to the
internet, you may view the docket online by visiting Dockets Operations
in Room W12-140 on the ground floor of the DOT West Building, 1200 New
Jersey Avenue SE, Washington, DC 20590-0001, between 9 a.m. and 5 p.m.,
Monday through Friday, except Federal holidays. To be sure someone is
there to help you, please call (202) 366-9317 or (202) 366-9826 before
visiting Dockets Operations.
E. Privacy Act
In accordance with 49 U.S.C. 31315(b), DOT solicits comments from
the public to better inform its decision-making process DOT posts these
comments, without edit, including any personal information the
commenter provides, to www.regulations.gov. As described in the system
of records notice DOT/ALL 14--FDMS, which can be reviewed at https://www.transportation.gov/privacy, the comments are searchable by the name
of the submitter.
II. Background
Broker is defined in 49 U.S.C. 13102(2) as a ``person, other than a
motor carrier or an employee or agent of a motor carrier, that as a
principal or agent sells, offers for sale, negotiates for, or holds
itself out by solicitation, advertisement, or otherwise as selling,
providing, or arranging for, transportation by motor carrier for
compensation.'' It is also defined in 49 CFR 371.2(a) as a ``person
who, for compensation, arranges, or offers to arrange, the
transportation of property by an authorized motor carrier. Motor
carriers, or persons who are employees or bona fide agents of carriers,
are not brokers within the meaning of this section 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.'' In that same section, bona fide agents 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.'' 49 CFR 371.2(b).
On November 15, 2021, the President signed the IIJA into law (Pub.
L. 117-58, 135 Stat. 429). Section 23021 of the IIJA \1\ directed the
Secretary (FMCSA) to issue guidance, within one year of the date of
enactment of the IIJA, clarifying the definitions of the terms
``broker'' and ``bona fide agents'' in 49 CFR 371.2. The guidance must
take into consideration the extent to which technology has changed the
nature of freight brokerage, the role of bona fide
[[Page 68637]]
agents, and other aspects of the freight transportation industry.
Additionally, when issuing the guidance, FMCSA must, at a minimum: (1)
examine the role of a dispatch service in the transportation industry;
(2) examine the extent to which dispatch services could be considered
brokers or bona fide agents; and (3) clarify the level of financial
penalties for unauthorized brokerage activities under 49 U.S.C. 14916,
applicable to a dispatch service.\2\
---------------------------------------------------------------------------
\1\ The full text is available at congress.gov/117/plaws/publ58/PLAW-117publ58.pdf.
\2\ Due to a statutory omission, FMCSA is unable to assess civil
penalties for violations of 49 U.S.C. 14916 and may pursue such
penalties only through the Department of Justice in federal court.
Congress has indicated interest in FMCSA's statutory authority in a
recent House Appropriations Committee Report.
---------------------------------------------------------------------------
In an effort to obtain and consider stakeholder input in the
development of its guidance, FMCSA issued a Federal Register notice on
June 10, 2022, seeking comment in 13 specific areas. 87 FR 35593.
Stakeholder Comments
FMCSA appreciates the robust response to our request for comment.
Over 80 stakeholders filed comments in the public docket, including
individuals, trade associations, brokers, and dispatch services.\3\
While the Agency does not specifically reference all comments in this
guidance, the Agency would like to assure stakeholders it has reviewed
and considered all comments filed.
---------------------------------------------------------------------------
\3\ FMCSA appreciates commenters that provided submissions by
the July 11 deadline for comment submission. A number of commenters
submitted comments after the deadline. While FMCSA reminds
stakeholders of the importance of submitting timely comments, in
this particular proceeding, FMCSA will consider the late-filed
comments in the interest of developing a complete record. While
FMCSA accepted the comments in this proceeding, it may not consider
late-filed comments in future proceedings.
---------------------------------------------------------------------------
III. Compliance With the IIJA
A. Technology
As an initial matter, commenters were nearly unanimous that while
technology has changed freight brokerage, such changes have not
affected the fundamental nature of freight brokerage, nor are they
relevant for the issuance of this guidance.\4\ One commenter did note
that the technological changes have exacerbated fraud problems.\5\
Accordingly, while the Agency recognizes that brokerage has changed
immeasurably due to technology, including moving from a phone based
system to one based on the internet, such changes do not impact the
fundamental nature of brokerage, which involves arranging
transportation for compensation, and hence do not have a significant
impact on this guidance.
---------------------------------------------------------------------------
\4\ See comments of Truckstop.com, at 5; Mode Transportation
(Mode), at 8; Transportation Intermediaries Association (TIA), at
10; National Industrial Transportation League (NITL), at 2; Small
business in Transportation Coalition (SBTC), at 14; England
Logistics (England), at 8; and Uship, at 3.
\5\ See Comments of 13 stakeholders (13 Stakeholder comments),
at 12-13. The 13 stakeholders include the Air & Expedited Motor
Carriers Association, Airforwarders Association, Alliance for Safe,
Efficient, and Competitive Truck Transportation (ASECTT), Auto
Haulers Association of America, American Home Furnishings Alliance,
Apex Capital Corp, National Association of Small Trucking Companies
(NASTC), PFA Transportation Insurance & Surety Services, Sompo
International, Transportation & Logistics Council, Specialized
Furniture Carriers, The Expedite Association of North America,
Transportation Loss Prevention and Security Association.
---------------------------------------------------------------------------
B. Bona Fide Agents
Stakeholders provided FMCSA with useful information on the role of
bona fide agents. Commenters have described bona fide agents as
advocates or a sales force for a single motor carrier,\6\ an outside
sales force that acquires freight for an employer,\7\ a dispatch
service used in lieu of motor carrier employees,\8\ people who look for
freight for a motor carrier,\9\ a service that allows motor carriers to
outsource operations instead of having employees handle them,\10\ a
sales force from acquired motor carriers that big motor carriers
use,\11\ and an operation where people work for one motor carrier and
have no discretion to allocate traffic.\12\ Based upon stakeholder
comments, it appears that bona fide agents are generally considered
individuals/entities that solicit business for a motor carrier.
---------------------------------------------------------------------------
\6\ See Mode comments, at 7.
\7\ See comment of AWM Associates, LLC (AWM), at 4.
\8\ See TIA comments, at 9.
\9\ See comments of the Owner-Operator Independent Drivers
Association (OOIDA), at 5.
\10\ See comments of the Intermodal Association of North America
(IANA), at 5.
\11\ See 13 Stakeholder comments, at 10-11.
\12\ See comments of the American Trucking Associations Moving
and Storage Conference (MSC), at 5.
---------------------------------------------------------------------------
C. Other Aspects of the Freight Transportation Industry
Finally, stakeholders provided input, albeit more limited, on other
aspects of the freight transportation industry. A broker indicated that
other aspects of the transportation industry do not need to be
considered.\13\ A managing general agency and program administrator for
insurance companies focused on transportation indicated that FMCSA
should issue guidance that is consistent with the Motor Carrier Safety
Improvement Act of 1999 and the Moving Ahead for Progress in the 21st
Century Act (MAP-21).\14\ A truck safety advocacy group indicated that
FMCSA must issue a clear definition of broker that enables
enforcement.\15\ And, a coalition of stakeholders noted the significant
ramifications of being considered a broker or not.\16\
---------------------------------------------------------------------------
\13\ See comments of Mode, at 8.
\14\ See comments of Greenwich Transportation Underwriters, at
2.
\15\ See comments of the Truck Safety Coalition (TSC), at 3.
FMCSA reminds stakeholders that guidance is not enforceable, in
contrast to statutes and regulations, which are.
\16\ See 13 Stakeholder comments, at 4-6.
---------------------------------------------------------------------------
While stakeholders did not provide FMCSA with specific information
related to the requirement that the Agency must consider ``other
aspects of the freight transportation industry'' in issuing the
guidance, FMCSA recognizes that its guidance is operating in a broader
context and has impacts beyond the immediate focus of this guidance. In
today's notice, FMCSA has worked to avoid creating unintended
consequences, in issuing guidance on its interpretation of its
regulations and related matters. While guidance may be relevant to
stakeholder compliance with FMCSA's regulations, any changes to FMCSA's
regulations and hence compliance responsibilities would need to be
enacted in a separate rulemaking proceeding.\17\
---------------------------------------------------------------------------
\17\ FMCSA notes and appreciates SBTC's Petition for rulemaking
regarding the definition of ``dispatcher.'' As noted in its response
to SBTC, FMCSA is continuing to review SBTC's petition. Today's
notice is not to be interpreted as a decision on SBTC's petition.
Other stakeholders are free to file petitions for rulemaking related
to the issues covered in today's notice as well.
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IV. Interim Guidance
With the aforementioned consideration of factors as background,
FMCSA now turns to the core IIJA mandate: the issuance of guidance
pertaining to the definition of broker and bona fide agents, the
examination of the role of dispatch services in the transportation
industry, the extent to which dispatch services could be considered
brokers or bona fide agents, and the level of financial penalties for
unauthorized brokerage activities under 49 U.S.C. 14916 applicable to a
dispatch service. This document does not have the force and effect of
law and is not meant to bind the public in any way, and the document is
intended only to provide information to the public regarding existing
requirements under the law or agency policies
A. Definition of Broker
While FMCSA is unable to change the definition of ``broker'' absent
a rulemaking, it is able to provide clarification here. As an initial
matter,
[[Page 68638]]
there was a split amongst stakeholders on whether the current
definition of broker was adequate. A majority of stakeholders believed
that the current definition of broker was adequate,\18\ while others
proposed some changes. A safety advocacy group recommended amendment of
the definition of ``broker.'' \19\ A stakeholder representing the
household goods (HHG) motor carrier industry asked FMCSA to clarify
that merely selling leads does not require an entity to obtain broker
authority.\20\ One broker believed that FMCSA should amend the
definition of ``broker'' to comport with changes in MAP-21 that
required motor carriers and hence their agents to obtain broker
operating authority.\21\ Additionally, internet based load matching
services have requested that FMCSA consider electronic load boards to
not be considered brokers.\22\
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\18\ See comments of Mode, at 3-4; TIA, at 3; OOIDA, at 2; NITL,
at 2; IANA, at 2; MSC, at 2-3; Agricultural and Food Transporters
Conference of ATA and multiple state trucking associations (AFTC),
at 2; 13 Stakeholder comments, at 4; Larry Walker.
\19\ TSC comments, at 2. In order for FMCSA to consider such a
change, TSC would need to file a petition for rulemaking.
\20\ See comments of MSC, at 4. FMCSA appreciates MSC's comments
and recognizes that they have raised the issue with the Agency for
quite some time. In order to give stakeholders a chance to comment
in this area, FMCSA will treat MSC's comments as a request for
guidance on the definition of HHG broker and issue guidance in a
separate proceeding.
\21\ See Comments of England, at 1-4. FMCSA recognizes this
issue but does not believe that this is the appropriate forum to
resolve it. England would need to file a petition for rulemaking
with the Agency for a change in the definition of ``broker.''
However, as England notes, Congress did not change the definition of
``broker'' in 49 U.S.C. 13102(2). In order for FMCSA to change the
definition of broker in its regulations as England suggests, the
Agency would have to carefully consider its authority to make such a
change given that Congress specifically left the prior definition of
``broker'' in place in MAP-21.
\22\ See comments of DAT, at 1; Truckstop.com, at 1-5; and
Uship, at 4. Comments filed by representatives of the HHG motor
carrier industry do not believe a carveout from the broker
definition for load boards is appropriate. See comments of Unigroup/
Mayflower/MoveRescue, at 3. While whether an entity requires broker
operating authority must be determined on a case by case basis,
FMCSA does not believe that where entities merely host an electronic
platform for shippers and motor carriers to connect directly that
broker operating authority registration is required. This position
is consistent with a 2000 letter from FMCSA that has been placed in
the docket. See Letter from Judith Rutledge, FMCSA Acting Chief
Counsel, to Andrew K. Light, Esq.
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Given the prevailing view among commenters that the current
definition of ``broker'' is adequate, the Agency feels the need to
clarify it in only one area: the relevance of an entity's handling of
funds in a transaction between shippers and motor carrier. FMCSA
appreciates the robust input it received on this issue. Some commenters
believed that whether one handles funds is irrelevant to whether one is
a broker.\23\ A coalition of stakeholders believed the handling of
money is not determinative in the broker determination.\24\ Other
stakeholders felt that the handling of money had at least some
relevance as to whether one is brokering.\25\
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\23\ See comments of SBTC, at 6; England, at 5; TSC, at 2.
\24\ See 13 Stakeholder comments, at 6-7.
\25\ See comments of TIA, at 7; OOIDA, at 4; MSC, at 4; Cox
Automotive, at 1-2.
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After consideration of the stakeholder comments and the important
role of financial responsibility in broker regulation,\26\ FMCSA wishes
to clarify that handling money exchanged between shippers and motor
carriers is a factor that strongly suggests the need for broker
authority, but it is not an absolute requirement for one to be
considered a broker.
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\26\ One of the most significant broker regulations is the
requirement that brokers have a $75,000 bond or trust fund to
protect motor carriers from non-payment. Where a shipper pays a fee
to third party that then takes a profit and remits the balance to a
motor carrier, the third party is clearly required to have broker
authority. FMCSA will soon be issuing a Notice of Proposed
Rulemaking on broker and freight forwarder financial responsibility,
which will further clarify related duties.
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B. Definition of Bona Fide Agent
Next, FMCSA is mandated to clarify the definition of ``bona fide
agents'' in 49 CFR 371.2. Stakeholders provided feedback on this point.
A HHG motor carrier trade association thought the current definition
was ``clear as to what entities fall within that term.'' \27\ A broker
indicated that the definition should be eliminated due to MAP-21
requiring motor carriers, and hence their agents, to have broker
authority.\28\ And multiple entities believe that in order to be deemed
a ``bona fide agent'' one can represent only one motor carrier.\29\
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\27\ See comments of the MSC, at 5.
\28\ See comments of England, at 1-4. As noted above, any such
change would require rulemaking in accordance with the APA and
statutory authority concerns would need to be addressed.
\29\ See comments of TIA, at 8; NITL, at 2; SBTC, at 9.
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After careful consideration, FMCSA has determined that representing
more than one motor carrier does not necessarily mean one is a broker
rather than a bona fide agent. Any determination will be highly fact
specific and will entail determining whether the person or company is
engaged in the allocation of traffic between motor carriers.
C. Role of Dispatch Services
Next, the IIJA required the agency to examine the role of dispatch
services in the transportation industry and the extent to which such
services could be considered brokers or bona fide agents.
Stakeholder comments make clear that there is no universally
accepted definition of ``dispatch service,'' nor did Congress define
the term in the IIJA provision mandating this guidance.\30\ One broker
trade association characterized it is as a vague term,\31\ while a
coalition of stakeholders said it is an invented term.\32\ According to
a self-identified dispatch service, dispatchers represent motor
carriers, they don't connect shippers and motor carriers, they don't
handle money, but they do provide carrier support services.\33\
Additional commenters stated that dispatchers perform back office
operations for motor carriers; \34\ they book freight and perform other
tasks; \35\ they perform many administrative duties and basic
accounting for small carriers; \36\ and they are paid a percentage of
the freight charges from a motor carrier.\37\ Other stakeholders
indicate that dispatch services find loads for motor carriers, handle
administrative tasks and assist with compliance,\38\ source shipments,
and allocate shipments between motor carriers.\39\ According to a
shipper trade association, dispatch services would be expected to be
like an in-house truck dispatcher, but in reality many are operating
more like brokers.\40\ A broker commenter indicated that dispatch
services have multiple motor carriers in their client base, they seek
freight and obtain freight for motor carriers, and they are paid by
motor carriers.\41\
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\30\ See comments of England, at 5-7.
\31\ See TIA comments, at 7.
\32\ See 13 stakeholder comments, at 7.
\33\ See comments of Seeley & Sylvester. LLC, at 2-4; See also
comments of A1 Express, at 2 (stating that dispatch services ``are
and should be a carrier support service.'') Note that a number of
individuals submitted identical comments which are cited as A1
Express.
\34\ See Mode comments, at 5; See also comments from Shelley
Smith (stating that ``a dispatcher should be categorized as a back
office assistant because that is truly a power dispatcher.'').
\35\ See comments of Quality Dispatching, at 5.
\36\ See comments of WCF Freight Transport.
\37\ See comments of AWM Associates LLC, at 2.
\38\ See comments of OOIDA, at 4.
\39\ See comments of IANA, at 3-4.
\40\ See comments of the Transportation and Logistics Council,
Inc., at 2.
\41\ See comments of England, at 5-7.
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After consideration of the public comments, while it is clear that
there is no commonly accepted definition of a dispatch service, such
services appear to have certain common features. First,
[[Page 68639]]
they work exclusively for motor carriers, not for shippers. Second,
they source loads for motor carriers. And third, they perform
additional services for motor carriers that are unrelated to sourcing
shipments.
D. Dispatch Service: Broker or Bona Fide Agent
Further, the IIJA mandated that FMCSA examine when a dispatch
service could be considered a broker and when it could be considered a
bona fide agent. Stakeholders provided significant input on these
points.
A trade association indicated that when a dispatch service
represents one motor carrier it is a bona fide agent, but when it
represents more than one it is a broker.\42\ A broker thought that when
a dispatch service only performed back office operations, it was not a
broker, but if it arranges loads it is.\43\ A dispatch service
indicated that dispatch services are bona fide agents, as they are
merely agents to locate freight and are paid a flat fee or a
percentage.\44\ Another dispatch service also believes that a dispatch
service is a bona fide agent and not a broker because dispatch services
do not connect shippers with carriers that can transport their loads,
and therefore do not meet the broker business model.\45\ A consulting
firm believes that dispatch services are bona fide agents if they are
employees per IRS regulations, but not if they represent more than one
motor carrier.\46\ Several trade organizations believe that if a
dispatch service represents more than one motor carrier it is a broker,
and that the handling of funds warrants a finding of brokerage.\47\ A
coalition of 13 stakeholders believes that representing more than one
motor carrier renders a dispatch service a broker, and a broker
believes that representing more than one motor carrier takes one
outside of the definition of ``bona fide agent.'' \48\ Finally, a
dispatch service indicated that broker authority should be required
only when arranging transportation on behalf of shippers.\49\
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\42\ See comments of IANA, at 4.
\43\ See comments of Mode, at 5.
\44\ See comments of Quality Dispatching, at 4-5.
\45\ See comments of A1 Express, at 2.
\46\ See comments of AWM, at 4.
\47\ See comments of TIA, at 7; and OOIDA, at 4.
\48\ See comments of 13 stakeholders, at 10; England, at 8.
\49\ See comments of Seeley & Sylvester LLC, at 4.
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After careful consideration, FMCSA clarifies that when a dispatch
service does not participate in the arrangement of freight, or when it
represents only one motor carrier, it is not a broker. If a dispatch
service arranges transportation on behalf of multiple motor carriers
and engages in the allocation of traffic, however, then pursuant to 49
CFR 371.2, it is not a bona fide agent and must obtain broker operating
authority registration. Ultimately, the analysis of whether a person or
entity requires broker authority is often highly fact specific and must
be made on a case-by-case basis.
Regarding whether a dispatch service is a bona fide agent, one must
analyze whether the service falls within the definition of bona fide
agent in 49 CFR 371.2(b). However, if the dispatch service allocates
traffic between two motor carriers, it cannot be a bona fide agent by
definition.
E. Dispatch Services That Would Not Require Broker Authority
Generally, the factors relevant to whether a dispatch service is
not required to obtain broker authority are stated below:
(1) The dispatch service has a written legal contractual
relationship with a motor carrier that clearly reflects the motor
carrier is appointing the dispatch service as a licensed agent for the
motor carrier. This is often a long-term contractual relationship;
(2) The written legal contract specifies the insurance and
liability responsibilities of the dispatch service and motor carrier.
The dispatch service must also meet all state licensing requirements;
(3) The dispatch service goes through a broker to arrange for the
transportation of shipments for the motor carrier. The dispatch service
may not seek or solicit shippers for freight;
(4) The dispatch service does not provide billing nor accept
compensation from the broker, 3PL (third-party logistics company), or
factoring company, but instead receives compensation from the motor
carrier(s) based on the pre-determined written legal contractual
agreement;
(5) The dispatch service is not an intermediary or involved in the
financial transaction between a broker and motor carrier;
(6) The dispatch service is an IRS 1099 recipient from the motor
carrier, or a W2 employee of the motor carrier as specified in the
legal written contract agreement;
(7) The dispatch service discloses that they are a dispatch service
operating under the authority of a specific motor carrier, and the
shipment is arranged for that motor carrier only;
(8) The dispatch service does not subsequently assign or arrange
for the load to be carried/moved by another motor carrier; or
(9) A dispatch service does not provide their ``services'' for a
motor carrier unless that motor carrier specifically appointed the
dispatch service as their agent in accordance with the aforementioned
requirements.
F. Dispatch Services That Require Broker Authority
The following factors would indicate the dispatch service should
obtain broker authority:
(1) The dispatch service interacts or negotiates a shipment of
freight directly with the shipper, or a representative of the shipper;
(2) The dispatch service accepts or takes compensation for a load
from the broker, or factoring company, or is involved in any part of
the monetary transaction between any of those entities;
(3) The dispatch service arranges for a shipment of freight for a
motor carrier, with which there is no written legal contract with the
motor carrier that meets the aforementioned criteria;
(4) The dispatch service accepts a shipment without a truck/
carrier, then attempts to find a truck/carrier to move the shipment;
(5) The dispatch service is a named party on the shipping contract;
or
(6) The dispatch service is soliciting to the open market of
carriers for the purposes of transporting a freight shipment.
It is clear based on feedback from industry that there is a need
and desire for dispatch services, among large and small motor carriers.
A beneficial role that a dispatch service may provide is the
outsourcing of resources for small motor carriers who cannot afford a
full-time employee to perform these functions. The dispatch service can
help to ensure the motor carrier has a steady stream of shipments while
allowing the motor carrier to focus on its core business of safely
transporting freight. FMCSA does not believe it is the intent of
Congress to eliminate the services that dispatch services provide.
While no single factor is paramount in assessing the business
relationship between a dispatch service and a motor carrier, the extent
of a motor carrier's control over the individual(s) performing the
dispatch services is highly significant, i.e., the dispatch service
works on behalf of the motor carrier and makes decisions based on the
motor carrier's guidance and direction. As noted, FMCSA determines
whether a dispatcher is conducting broker operations on a case-by-case
basis, utilizing factors including those above.
[[Page 68640]]
G. Financial Penalties
Finally, FMCSA must clarify the level of penalties for unauthorized
brokerage applicable to dispatch services. Such an assessment is
straightforward. If the dispatch service is deemed to be providing
unauthorized brokerage services pursuant to 49 U.S.C. 14916, the
service will be subject to applicable penalties.\50\ If no finding of
unauthorized brokerage is made, it will not be subject to such
penalties.
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\50\ Penalties for violations of section 14916 are provided in
49 U.S.C. 14916(c)(1),(d).
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V. Request for Public Comment
FMCSA requests public comment on its regulatory guidance and the
factors the Agency will use in its interpretation of the definitions of
``broker'' and ``bona fide agent.'' The Agency welcomes comments from
stakeholders that are relevant to identifying a dispatch service that
engages in actions that would require broker authority compared with
actions that don't require broker authority. Additionally, FMCSA
welcomes comments concerning the potential impact of this guidance on
dispatch services upon which the broker rules would be considered
applicable.
Robin Hutcheson,
Administrator.
[FR Doc. 2022-24923 Filed 11-15-22; 8:45 am]
BILLING CODE 4910-EX-P
