Transparency in Property Broker Transactions, 91648-91670 [2024-27115]

Agencies

• Federal Motor Carrier Safety Administration
• DEPARTMENT OF TRANSPORTATION

[Federal Register Volume 89, Number 224 (Wednesday, November 20, 2024)]
[Proposed Rules]
[Pages 91648-91670]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-27115]


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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

49 CFR Part 371

[Docket No. FMCSA-2023-0257]
RIN 2126-AC63


Transparency in Property Broker Transactions

AGENCY: Federal Motor Carrier Safety Administration (FMCSA), Department 
of Transportation (DOT).

ACTION: Notice of proposed rulemaking (NPRM).

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SUMMARY: FMCSA proposes amendments to its property broker rules in 
response to petitions for rulemaking from the Owner-Operator 
Independent Drivers Association (OOIDA) and the Small Business in 
Transportation Coalition (SBTC). Under current regulations, the parties 
to a brokered freight transaction have a right to review the broker's 
record of the transaction, which stakeholders often refer to as 
``broker transparency.'' Contracts between brokers and motor carriers 
frequently contain waivers of this right. OOIDA requested that FMCSA 
promulgate a requirement that property brokers provide an electronic 
copy of each transaction record automatically within 48 hours after the 
contractual service has been completed, and explicitly prohibit brokers 
from including any provision in their contracts that requires a motor 
carrier to waive its rights to access the transaction records. SBTC 
requested that FMCSA prohibit brokers of property from coercing or 
requiring parties to brokers' transactions to waive their right to 
review the record of the transaction as a condition for doing business 
and prohibit the use of clause(s) exempting the broker from having to 
comply with this transparency requirement. Though the proposed rule is 
responsive to the petitions in reinforcing the broker transparency 
requirement, the proposed provisions differ from those requested by 
OOIDA and SBTC. The proposed rule would revise the regulatory text to 
make clear that brokers have a regulatory obligation to provide 
transaction records to the transacting parties on request. The proposal 
would also make changes to the format and content of the records.

DATES: Comments must be received on or before January 21, 2025.

ADDRESSES: You may submit comments identified by Docket Number FMCSA-
2023-0257 using any of the following methods:
     Federal eRulemaking Portal: Go to https://www.regulations.gov/docket/FMCSA-2023-0257/document. Follow the online 
instructions for submitting comments.
     Mail: Dockets Operations, U.S. Department of 
Transportation, 1200 New Jersey Avenue SE, West Building, Ground Floor, 
Washington, DC 20590-0001.
     Hand Delivery or Courier: Dockets Operations, U.S. 
Department of Transportation, 1200 New Jersey Avenue SE, West Building, 
Ground Floor, 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.
     Fax: (202) 493-2251.

FOR FURTHER INFORMATION CONTACT: Mr. Michael Evans, Transportation 
Specialist, Commercial Enforcement Division, Office of Safety, FMCSA, 
1200 New Jersey Avenue SE, Washington, DC 20590-0001; (202) 568-0530; 
[email protected]. If you have questions on viewing or submitting 
material to the docket, call Dockets Operations at (202) 366-9826.

SUPPLEMENTARY INFORMATION: FMCSA organizes this NPRM as follows:

I. Public Participation and Request for Comments
    A. Submitting Comments
    B. Viewing Comments and Documents
    C. Privacy
    D. Comments on the Information Collection
II. Executive Summary
    A. Purpose and Summary of the Regulatory Action
    B. Summary of Major Provisions
    C. Costs and Benefits
III. Abbreviations
IV. Legal Basis
V. Background
    A. History of Property Broker Regulations
    B. History of the Current Rulemaking
    C. Related Actions
VI. Discussion of Proposed Rulemaking and Comments
    A. Proposed Rulemaking
    B. Comments and Agency Responses
    C. Issues on Which the Agency Seeks Further Comment
VII. Section-by-Section Analysis
    A. Section 371.2 Definitions.
    B. Section 371.3 Records To Be Kept by Brokers
VIII. Regulatory Analyses
    A. E.O. 12866 (Regulatory Planning and Review), E.O. 13563 
(Improving Regulation and Regulatory Review), E.O.

[[Page 91649]]

14094 (Modernizing Regulatory Review), and DOT Regulatory Policies 
and Procedures
    B. Advance Notice of Proposed Rulemaking
    C. Regulatory Flexibility Act
    D. Assistance for Small Entities
    E. Unfunded Mandates Reform Act of 1995
    F. Paperwork Reduction Act
    G. E.O. 13132 (Federalism)
    H. Privacy
    I. E.O. 13175 (Indian Tribal Governments)
    J. National Environmental Policy Act of 1969
    K. Rulemaking Summary

I. Public Participation and Request for Comments

A. Submitting Comments

    If you submit a comment, please include the docket number for this 
NPRM (FMCSA-2023-0257), 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-2023-0257/document, click on this NPRM, 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.
    FMCSA will consider all comments and material received during the 
comment period.
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 United States Code (U.S.C.) 552), CBI is exempt from 
public disclosure. If your comments responsive to the NPRM 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 NPRM, 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 of the NPRM. Submissions containing CBI should be 
sent to Brian Dahlin, Chief, Regulatory Evaluation Division, Office of 
Policy, FMCSA, 1200 New Jersey Avenue SE, Washington, DC 20590-0001 or 
via email at [email protected]. At this time, you need not send a 
duplicate hardcopy of your electronic CBI submissions to FMCSA 
headquarters. Any comments FMCSA receives not specifically designated 
as CBI will be placed in the public docket for this rulemaking.

B. Viewing Comments and Documents

    To view any documents mentioned as being available in the docket, 
go to https://www.regulations.gov/docket/FMCSA-2023-0257/document and 
choose the document to review. To view comments, click this NPRM, then 
click ``Browse Comments.'' If you do not have access to the internet, 
you may view the docket online by visiting Dockets Operations 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.

C. Privacy

    In accordance with 5 U.S.C. 553(c), DOT solicits comments from the 
public to better inform its regulatory process. DOT posts these 
comments, including any personal information the commenter provides, to 
www.regulations.gov as described in the system of records notice DOT/
ALL 14 (Federal Docket Management System (FDMS)), which can be reviewed 
at https://www.transportation.gov/individuals/privacy/privacy-act-system-records-notices. The comments are posted without edit and are 
searchable by the name of the submitter.

D. Comments on the Information Collection

    Written comments and recommendations for the information collection 
discussed in this NPRM should be sent within 60 days of publication to 
www.reginfo.gov/public/do/PRAMain. Find this information collection by 
clicking the link that reads ``Currently under Review--Open for Public 
Comments.''

II. Executive Summary

A. Purpose and Summary of the Regulatory Action

    Property brokers match motor carriers with shippers, which can 
create new business opportunities for motor carriers and transportation 
solutions for shippers. This business model can also lead to an 
asymmetry of information between parties, which in turn can affect the 
contracting process by limiting parties' ability to negotiate for their 
desired terms.\1\ These risks can lead to market inefficiencies, such 
as decreased freight capacity or decreased market competition, which 
can arise when parties lack material information about the transaction. 
FMCSA and its predecessor agencies have attempted to address these 
problems by requiring property brokers to keep certain records of their 
transactions and make the records available to motor carriers and 
shippers involved in those transactions. Making the records available 
to the transacting parties, sometimes referred to as ``broker 
transparency,'' is meant to inform business decisions and enable self-
policing of abuses that may arise.
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    \1\ Asymmetric information exists when one party in a 
transaction has more information than the other, which can result in 
a market failure. Asymmetric information provides an advantage to 
one side of a market over the other when negotiating a transaction. 
OMB Circular No. A-4, p. 17 (Nov. 9, 2023).
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    The Agency has received rulemaking petitions and other input from 
the public, however, that indicate many motor carriers cannot review 
the brokers' transaction records as the broker recordkeeping regulation 
intends. Brokers often include provisions in their contracts with motor 
carriers that require motor carriers to waive their ability to review 
broker records. In addition, even without waiver clauses, motor 
carriers often face practical hurdles in accessing records that they 
should be able to review under the current regulations. As a result of 
the SBTC and OOIDA petitions, the Agency reviewed its property broker 
recordkeeping requirements and is proposing certain amendments to those 
requirements. The proposed amendments are intended to reinforce broker 
transparency for motor carriers and to better tailor the required 
contents of the records to the purpose of broker transparency.
    The current and proposed regulations are based on the Agency's 
authority to regulate the procurement of interstate transportation, 
which includes authority over property brokers and their arrangement of 
transportation. The Agency has the authority to collect

[[Page 91650]]

information from brokers and require them to keep certain records. The 
Agency also has authority over the registration of property brokers, 
and when registering them, to determine whether the broker is willing 
and able to comply with all applicable regulations, including the 
recordkeeping regulations. In exercising its authority over brokers, 
the Agency is required to provide for the protection of motor carriers 
and shippers. The proposed rule would use and implement this authority 
by revising the broker recordkeeping requirements to further protect 
motor carriers and promote efficiency within the motor carrier 
transportation system.

B. Summary of Major Provisions

    FMCSA proposes several amendments to 49 CFR 371.3, ``Records to be 
kept by brokers.'' The first proposed provision would require property 
brokers to keep their records in an electronic format. This provision 
would serve the purpose of broker transparency by making it easier for 
motor carriers and shippers to review broker records on request, and 
remotely, as compared to the current practice of some brokers who 
respond to transparency requests by making only physical records 
available at their principal place of business. The Agency believes 
that many brokers already maintain their records in an electronic 
format.
    The second proposed provision would modernize and tailor the 
required contents of the records to better achieve broker transparency. 
The current requirement uses a distinction between brokerage and non-
brokerage services, which is rooted in a previous regulatory approach. 
FMCSA proposes eliminating this distinction and instead requiring that 
the records contain, for each shipment in the transaction, all charges 
and payments connected to the shipment, including a description, 
amount, and date. This is substantially similar to the current 
requirement but removes the outdated distinction. The record would also 
be required to include any claims connected to the shipment, such as a 
shipper's claims for damage or delay. This amendment would ensure the 
parties have full visibility into the payments, fees, and charges 
associated with the transaction so they can resolve issues and disputes 
among themselves without resorting to costlier remedies.
    The third proposed provision would clarify the obligation imposed 
on brokers to respond to requests for transaction records and the 
process parties must follow when requesting and supplying such records. 
The current regulation frames the broker transparency requirement as a 
right, given to the transacting parties, to review the records. The 
proposed amendment would reframe broker transparency as a regulatory 
duty imposed on brokers to provide records to the transacting parties.
    The fourth proposed provision would require brokers to provide the 
records required to be maintained under Sec.  371.3(a) within 48 hours 
when a party to the transaction requests those records. This provision 
is intended to ensure that the requesting party receives the records in 
a timely manner, to support the resolution of issues around service or 
payment.

C. Costs and Benefits

    Broker transparency is intended to enable efficient outcomes in the 
transportation industry by providing the material information necessary 
for the transacting parties to make informed business decisions. Broker 
transparency also supports the efficient resolution of disputes between 
parties. Though the current regulations are meant to provide broker 
transparency, the Agency has heard through numerous listening sessions 
and comments from motor carriers that broker transparency is rare in 
practice. The Agency believes the revisions to the regulation will make 
it more likely that brokers will comply with their regulatory duty to 
provide information. The Agency analyzes these potential benefits 
qualitatively and seeks further information and data from the public to 
better analyze the benefits.
    Some motor carriers believe that increased broker transparency 
would have a material effect on negotiated freight rates. The Agency 
believes that other market factors, rather than the availability of 
additional information through broker transparency, are likely dominant 
in setting freight rates. However, the Agency has not ruled out the 
possibility that motor carriers and shippers could negotiate for better 
rates over time using the broker transparency information. The Agency 
seeks further comment on this issue.
    The Agency believes that the cost of the proposed rule would be 
minimal. Based upon its interactions with brokers, the Agency believes 
that most brokers already keep records electronically and that these 
records already contain the information that would be required by the 
proposed rule. The Agency believes that brokers already provide 
information and documents, e.g., rate confirmation documents, to motor 
carriers. The Agency believes that these current practices can be 
adjusted, at relatively low cost, to provide broker transparency 
information within 48 hours of request. The Agency analyzes these 
potential costs qualitatively and seeks further information and data 
from the public to better analyze the costs. The Agency does not 
believe that this rule would be economically significant.

III. Abbreviations

API Application programming interface
BLS Bureau of Labor Statistics
COVID-19 Coronavirus disease 2019
DOJ Department of Justice
DOT Department of Transportation
DTSA Defend Trade Secrets Act of 2016
EDI Electronic data interchange
FHWA Federal Highway Administration
FMCSA Federal Motor Carrier Safety Administration
FR Federal Register
HHG Household goods
ICC Interstate Commerce Commission
IT Information technology
MATS Mid-America Trucking Show
NAICS North American Industry Classification System
NCCDB National Consumer Complaint Database
NPRM Notice of proposed rulemaking
OIRA Office of Information and Regulatory Affairs
OMB Office of Management and Budget
OOIDA Owner-Operator Independent Drivers Association
PIA Privacy Impact Assessment
PII Personally identifiable information
PPP Paycheck Protection Program
PTA Privacy Threshold Assessment
SAS Service Annual Survey
SBA Small Business Administration
SBTC Small Business in Transportation Coalition
Secretary Secretary of Transportation
TIA Transportation Intermediaries Association
UMRA Unfunded Mandates Reform Act of 1995
U.S.C. United States Code

IV. Legal Basis

    The Secretary of Transportation (Secretary) has general 
jurisdiction to establish regulations concerning the procurement by 
property brokers of for-hire transportation in interstate or foreign 
commerce (49 U.S.C. 13501). The Secretary is authorized to obtain 
information from motor carriers, brokers, and other related parties 
that the Secretary determines is necessary to ensure a transportation 
system that meets the needs of the United States (49 U.S.C. 13101 and 
13301(b)).
    The Secretary has broad authority to adopt regulations to carry out 
the requirements of the commercial statutes in Title 49 U.S.C., 
subtitle IV, part B (49 U.S.C. 13301(a)). Some of the needs articulated 
in the national transportation policy (49 U.S.C. 13101) include 
encouraging fair competition and reasonable rates for transportation by 
motor carriers of property; promoting

[[Page 91651]]

efficiency in the motor carrier transportation system; enabling 
efficient and well-managed motor carriers to earn adequate profits, 
attract capital, and maintain fair wages and working conditions; and 
improving and maintaining a sound, safe, and competitive privately 
owned motor carrier system. The Secretary is also authorized to 
prescribe the form of any required records prepared or compiled by 
brokers, including those related to movement of traffic and receipts 
and expenditures of money, and the time period for preservation of such 
records (49 U.S.C. 14122). Furthermore, under 49 U.S.C. 13904(e), 
regulations applicable to brokers ``shall provide for the protection of 
motor carriers and shippers by motor vehicle.'' \2\
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    \2\ The previous version of the statute (located at 49 U.S.C. 
13904(c)) only required the Secretary to provide for the protection 
of shippers by motor vehicle in broker regulations. The Moving Ahead 
for Progress in the 21st Century Act (MAP-21), Public Law 112-141 
(July 6, 2012), amended this provision to include the protection of 
motor carriers as a requirement for regulations applicable to 
brokers. Sec. 32916, Public Law 112-141, 126 Stat. 820 (July 6, 
2012).
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    In recent years, many motor carriers, industry-wide, have expressed 
concern about their inability to access records pertaining to their 
transactions with brokers. The inability to obtain these records from 
brokers has led to financial harm, including but not limited to, an 
inability to present a proper defense when shippers or brokers allege 
problems with a shipment. Because FMCSA's mandate under 49 U.S.C. 13904 
specifically includes providing for the protection of motor carriers 
with respect to broker regulations, and because a records-transmittal 
regulation would protect both motor carriers and shippers, FMCSA's 
promulgation of such a regulation is authorized by 49 U.S.C. 13904(e).
    This rulemaking is intended to address an asymmetry of information 
between brokers, shippers, and motor carriers that affects the ability 
of all parties to participate effectively in a fair, efficient 
transportation system. FMCSA intends to modernize regulations 
applicable to broker recordkeeping and disclosure while complying with 
the requirement in 49 U.S.C. 13904(e) to ensure that the regulations 
provide for the protection of motor carriers and shippers. FMCSA relies 
on the statutory authorities cited above.
    Authority to carry out the functions and exercise the authorities 
cited above is delegated to the FMCSA Administrator under 49 CFR 
1.87(a)(1)-(3) and (5)-(6).

V. Background

    FMCSA regulates property brokers, defined as persons who, for 
compensation, arrange or offer to arrange the transportation of 
property by an authorized motor carrier (49 CFR 371.2(a)). The property 
broker regulations include recordkeeping requirements, for each 
transaction, at 49 CFR 371.3 ``Records to be kept by brokers.'' A 
brokered transaction for transportation of property involves at least a 
shipper seeking to have the property transported, a carrier willing to 
transport the property, and a broker who arranges the transportation. 
There may be separate contracts between the broker and the shipper and 
between the broker and the carrier, but the broker, carrier, and 
shipper are all party to the same brokered transaction for the purpose 
of the broker recordkeeping regulation. The relationship between the 
parties is further explained in the Property Broker Practices NPRM (45 
FR 31140, 31141, May 12, 1980). Under the broker recordkeeping 
regulation, FMCSA requires brokers to make certain transaction records 
available to the transacting parties, that is, the shipper, the motor 
carrier, and any other party to the brokered property transaction. The 
availability of this information is sometimes referred to as ``broker 
transparency.'' The term should not be misunderstood to mean public 
disclosure of the information, i.e., ``public transparency.''
    FMCSA proposes to amend the broker transparency requirement. FMCSA 
initiated the rulemaking based on the grant of two rulemaking petitions 
regarding broker transparency, and the Agency has also received input 
on the topic through several related actions. The petitions and related 
actions are summarized below. The broker transparency regulation has a 
long history, with several predecessor rules and regulations. The 
regulatory history is summarized below.

A. History of Property Broker Regulations

    Congress tasked the Interstate Commerce Commission (ICC) with 
regulating the motor carrier industry in the Motor Carrier Act of 1935, 
which included regulating property brokers operating in the industry 
(Pub. L. 74-255). The ICC issued its initial rule regulating brokers in 
1949 (14 FR 2833, May 28, 1949). The rule was based on an ICC report 
entitled Practices of Property Brokers (Ex Parte MC-39, 49 Motor 
Carrier Cases (MCC) 277 (May 16, 1949)). The report contemplated 
imposing a cap on broker commissions to address concerns over alleged 
excesses. The ICC postponed implementation of a cap because it lacked 
information to determine an appropriate upper limit. In the interim, 
the ICC believed that concerns over commissions could be addressed by 
having brokers maintain a public schedule of services with their 
maximum charges for brokerage services. The cap was not pursued 
further, and the interim solution persisted, as described in the 
follow-on report ``Practices of Property Brokers'' (Ex Parte MC-39, 53 
MCC 633 (Dec. 27, 1951)).
    The property broker regulations remained unmodified for several 
decades, except for a recodification that relocated them within Title 
49, from part 167 to part 1045 (49 FR 20003, Dec. 20, 1967). On May 12, 
1980, the ICC published an NPRM to revise the property broker 
regulations (45 FR 31140). This proposed rule sought to eliminate 
unnecessary regulations and to modify regulations that were 
unnecessarily restrictive. The intent generally aligned with the 
purpose of the Motor Carrier Act of 1980 (Pub. L. 96-296), which was 
not in force at the time, but which was enacted a few months later, on 
July 1, 1980. The ICC made this connection clear in the final rule 
published on October 17, 1980 (45 FR 68941). That rule explained that 
Congress had given the ICC the general mandate to open up the 
bargaining process between shippers and motor carriers, and it sought 
to remove unnecessary restrictions which might impede the free 
operation of the marketplace. The ICC viewed its revisions to the 
property broker regulations as consistent with those goals. The 
rulemaking put into place regulations that are substantially similar to 
FMCSA's current property broker regulations.
    The final rule included a revised 49 CFR 1045.3, which had the same 
requirements as the current 49 CFR 371.3 in all significant respects, 
including the recordkeeping requirement placed on brokers and the right 
of each party to the transaction to review the record. In discussing 
the revisions to the required records in the NPRM, the ICC stated that 
the primary purpose of the recordkeeping requirements was to ascertain 
whether improper rebating activities were taking place, and it noted 
that the proposed rule also included revisions to the rebating rules 
(45 FR 31140). When the ICC issued the original property broker 
regulations, it was concerned with a form of indirect rebating where 
brokers would undercharge for services to

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shippers as a means to secure and control the shippers' traffic and 
make up for the undercharging by charging motor carriers instead (49 
MCC 277, 317-18). In the 1980 NPRM, the ICC stated that this concern 
over indirect rebating was no longer valid, and it revised the rebating 
regulations accordingly (45 FR 31140, 31141).
    After explaining the revisions to the required record contents, the 
ICC then explained the addition of the right-to-review requirement as a 
replacement for more complex requirements in Sec. Sec.  1045.5, 1045.6, 
and 1045.10 (45 FR 31140). The ICC explained that Sec.  1045.5, which 
required brokers to make their maximum prices for brokerage services 
publicly available and to adhere to those prices, could be rendered 
ineffective by brokers giving a wide price range instead (45 FR 31140, 
31141). The same was true of Sec.  1045.6, which set forth similar 
restrictions on prices for non-brokerage services. In removing these 
regulations in favor of the new Sec.  1045.3(c), the ICC explained that 
the new regulation would enable parties to determine what portion of 
their bill was related to the broker's services (45 FR 31140, 31141). 
Section 1045.10 prohibited brokers from charging both the shipper and 
the carrier for a service without first advising both parties of the 
details of the charges. The ICC stated that this requirement was 
unnecessary and potentially burdensome since proper notification could 
delay service, particularly when the broker was trying to arrange 
freight transportation on an expedited basis, and it was replaced by 
the right to review in Sec.  1045.3(c) (45 FR 31140, 31141). The broker 
regulations remain substantially the same as when they were amended in 
1980.
    In 1996, pursuant to the ICC Termination Act (Pub. L. 104-88), 
responsibility for certain transportation regulations was transferred 
from the ICC to DOT and delegated by DOT to FHWA (61 FR 54706, Oct. 21, 
1996). This transfer and redesignation included part 1045, which was 
moved to part 371. Part 371 was subject to a minor technical amendment 
in 1997 but has remained otherwise unchanged since that time (62 FR 
15417, Apr. 1, 1997). FMCSA assumed responsibility for part 371 when 
the Agency was created by the Motor Carrier Safety Improvement Act of 
1999 (Pub. L. 106-159), and the Secretary subsequently delegated 
authority to administer 49 U.S.C. chapters 131, 133, 135, and 139 to 
the FMCSA Administrator (65 FR 220, Jan. 4, 2000).

B. History of the Current Rulemaking

    On May 6, 2020, the Small Business in Transportation Coalition 
(SBTC) petitioned the Department to initiate a rulemaking amending the 
broker transparency regulation. SBTC described Sec.  371.3, the broker 
transparency regulation, as providing motor carriers with a ``right to 
know'' the rate offered by the broker as a proportion of the rate paid 
by the shipper to the broker. SBTC raised concerns about the widespread 
practice of brokers including clauses in their contracts that waive a 
carrier's rights under Sec.  371.3(c). Transparency is necessary for a 
market to operate in an ethical and fair manner, SBTC argued, and the 
prevalence of waiver clauses undercuts that transparency. As a remedy, 
the petition proposed prohibiting brokers from requiring waiver of 
broker transparency as a condition of doing business. SBTC's petition 
referenced the economic impacts of the COVID-19 national emergency, 
impacts that were being acutely felt when the petition was filed in May 
2020.
    On May 19, 2020, the Owner-Operator Independent Drivers Association 
(OOIDA) petitioned the Department to initiate a rulemaking amending the 
broker transparency regulation. The petition sought two changes to 
Sec.  371.3. First, the petition proposed adding a requirement that 
brokers provide a copy of the transaction record required under Sec.  
371.3(a), in an electronic format, within 48 hours of the service being 
completed. Second, the petition proposed prohibiting brokers from 
including clauses in their contracts that waive motor carriers' rights 
to access the transaction records required under 371.3. The petition 
argued that the prevalence of waiver clauses and instances of 
retaliation by brokers against motor carriers seeking to exercise their 
rights under Sec.  371.3(c) undercut the transparency envisioned by 
Sec.  371.3. As with the SBTC petition, the OOIDA petition referenced 
the economic conditions affecting truckers at the time. Both petitions 
for rulemaking are included in the docket for this rulemaking.
    FMCSA published a notice in the Federal Register on August 19, 
2020, requesting public comment on OOIDA's and SBTC's rulemaking 
petitions (85 FR 51145). On October 16, 2020, the Agency extended the 
comment period by 30 days (85 FR 65898). The Agency received 1,391 
comments on OOIDA's and SBTC's rulemaking petitions by the end of the 
extended comment period. The public commented on the transparency of 
charges and payments, broker margins, freedom of contract, pricing 
confidentiality, and the history of the broker transparency regulation. 
These issues are discussed below in Section VI.B., Comments and Agency 
Responses. On March 16, 2023, FMCSA granted OOIDA's and SBTC's 
rulemaking petitions. In the letters granting the SBTC and OOIDA 
petitions, FMCSA made clear that, while the Agency found good cause to 
open a rulemaking to amend 49 CFR 371.3, the proposed rule would not 
necessarily include the changes SBTC or OOIDA sought. The letters 
granting the petitions are available in the docket for this rulemaking.

C. Related Actions

    In the time between the filing and grant of these petitions several 
related actions have provided the Agency with further information about 
broker transparency and wider context of the rulemaking. The related 
actions also indicate that the concerns surrounding broker transparency 
have persisted beyond the specific economic conditions of the freight 
industry in 2020.
    Shortly after the OOIDA and SBTC petitions were filed, the 
Transportation Intermediaries Association (TIA) filed a rulemaking 
petition on August 4, 2020, seeking the elimination of Sec.  371.3(c) 
and requesting guidance on dispatch services. Only the portion directed 
towards the elimination of Sec.  371.3(c) is relevant to this 
rulemaking.\3\ The TIA petition argued that the regulation is outdated 
given the changes in the brokered freight industry since the regulation 
was introduced in 1980. The petition further argued that broker 
transparency jeopardizes the confidentiality of proprietary pricing, 
and that motor carriers have sufficient information about prevailing 
rates to make informed business decisions without needing the records 
required by Sec.  371.3.
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    \3\ FMCSA issued guidance on the definitions of ``broker'' and 
``bona fide agent,'' including guidance on the role dispatch 
services play in the transportation industry and clarification on 
when such entities must register as brokers, on November 16, 2023 
(88 FR 39368).
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    The Agency published a request for public comments regarding TIA's 
petition on November 25, 2020 (85 FR 75280) and received 179 comments 
in response. These comments were substantially similar to those filed 
in response to the OOIDA and SBTC petitions. FMCSA denied TIA's 
petition on March 17, 2023.\4\ In denying the

[[Page 91653]]

petition, the Agency stated that TIA's proposal would be contrary to 
the stated transportation policy goals in 49 U.S.C. 13101, including 
promotion of fairness and efficiency in the transportation industry.
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    \4\ The petition for rulemaking and denial letters are available 
in the docket for this rulemaking.
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    While the SBTC, OOIDA, and TIA petitions were pending, FMCSA held a 
public listening session on October 28, 2020, regarding the three 
petitions and property brokers in general (85 FR 64613, Oct. 13, 2020). 
FMCSA received 76 written comments in response to the Federal Register 
notice announcing the listening session. During the listening session, 
participants expressed concerns about freight rates, disclosure of 
confidential pricing information, motor carriers directly soliciting 
shippers, so-called ``double brokering,'' record-keeping costs, 
comparisons to other industries, charge backs, and detention time fees.
    The Agency has received additional input from the public on the 
topic of broker transparency in several other contexts. In March 2023, 
the Agency held a listening session at the Mid-America Trucking Show 
(MATS) shortly after granting the SBTC and OOIDA petitions.\5\ Despite 
the Agency's public statement that the listening session would focus on 
other broker matters, including financial responsibility, public 
commenters at MATS focused on broker transparency. Many of the 
transparency related concerns were consistent with those raised in the 
comments on the OOIDA and SBTC rulemaking petitions in 2020, suggesting 
that the issues raised at the time of the public comment period for 
those petitions had not subsided as of March 2023.
---------------------------------------------------------------------------

    \5\ The transcript of the listening session is available in the 
docket for this rulemaking.
---------------------------------------------------------------------------

    The topic of broker transparency has also appeared in the comments 
received on other proposed rules.\6\ While comments are most useful to 
the Agency when directed towards the subject matter of the public 
notice to which they respond, the Agency acknowledges these ancillary 
comments as evidence of continuing concerns around broker transparency.
---------------------------------------------------------------------------

    \6\ See, e.g., Comment FMCSA-2023-0268-0026 (comment on ``Fees 
for the Unified Carrier Registration Plan and Agreement'') available 
at https://www.regulations.gov/comment/FMCSA-2023-0268-0026; comment 
FMCSA-2016-0102-0351 (comment on ``Broker and Freight Forwarder 
Financial Responsibility'') available at https://www.regulations.gov/comment/FMCSA-2016-0102-0351.
---------------------------------------------------------------------------

VI. Discussion of Proposed Rulemaking and Comments

    FMCSA proposes this rulemaking in response to OOIDA's and SBTC's 
petitions. The NPRM differs in certain ways from the provisions sought 
by OOIDA and SBTC, as discussed below. The rulemaking is also informed 
by the comments received in response to the petitions, as well as in 
the related actions detailed elsewhere in this NPRM. The comments, 
input from related actions, and the Agency's responses are discussed 
after the provisions of the proposed rulemaking.

A. Proposed Rulemaking

    To address the concerns over broker transparency raised in the 
rulemaking petitions and subsequent public comments, FMCSA proposes the 
following amendments to Sec.  371.3, ``Records to be kept by brokers,'' 
presented in the order in which they would appear in the section. The 
Agency also proposes a conforming amendment to Sec.  371.2, 
``Definitions.''
    Sections 371.2 and 371.3 apply to all property brokers FMCSA 
regulates, as would the proposed amendments. Property brokers are 
divided between household goods (HHG) brokers, who arrange the 
transportation of personal property between homes, and non-HHG (i.e., 
general freight) brokers. FMCSA believes that the broker transparency 
regulation should continue to apply equally to HHG brokers and general 
freight brokers, and the Agency has not identified any rationale for 
imposing different transparency requirements on HHG brokers versus 
general freight brokers. The comments received to date do not raise any 
broker transparency concerns unique to HHG brokers, and the Agency 
seeks comment on this issue.
1. Brokers Must Keep Records in an Electronic Format
    FMCSA proposes requiring that the records covered by Sec.  371.3(a) 
be kept in an electronic format to promote compliance with the broker 
transparency requirement in Sec.  371.3(c). The Agency is aware of 
brokers avoiding meaningful compliance with Sec.  371.3(c) by making 
the required records available for inspection only at their principal 
place of business, which often makes inspection by the motor carrier 
difficult or impossible. By requiring that the records be kept in an 
electronic format, the Agency intends to remedy this issue. Because the 
Agency, based on its interactions with various brokers, believes that 
most freight brokers already keep their records in an electronic 
format, this requirement should not impose a significant burden on 
these brokers. FMCSA believes that electronic recordkeeping may not be 
as common among household goods brokers and seeks comment on what 
burden, if any, would be imposed upon those brokers if electronic 
recordkeeping were required.
2. Revisions to the Required Contents of Brokers' Records
    Within the recordkeeping requirements of Sec.  371.3, paragraph (a) 
specifies the details that the records must contain. The Agency 
proposes the following revisions to ensure that the records are 
tailored to the needs of the parties, therefore better addressing the 
concerns of motor carriers while not imposing unnecessary recordkeeping 
burdens on brokers.
Date of Payment
    The Agency proposes adding the date of payment from both the 
shipper to the broker and from the broker to the carrier. Some brokers 
commented that they bear significant risk because they tender payment 
to motor carriers prior to receiving payment from shippers, for 
instance, in a situation where the carrier is paid within 3 days of 
delivering a load, but the shipper has 30 days to pay the broker. On 
the other hand, motor carriers have commented about not being paid by 
brokers in a timely manner, often in the context of a charge back or 
other contractual dispute over whether the carrier performed their 
duties adequately under the contract. Including the date of payment 
would provide transparency to all parties about the benefits and risks 
of the carrier's payment structure. It would also provide motor 
carriers with necessary information in the event they experience charge 
backs or other instances of nonpayment, because the carrier would be 
better able to understand any deductions the shipper may have made to 
the payment it remitted to the broker and to verify that those 
deductions correspond to the charge back against the carrier.
Elimination of Brokerage Service vs. Non-Brokerage Service Distinction
    The Agency proposes eliminating the distinction between brokerage 
services and non-brokerage services in Sec.  371.3(a) by removing 
current paragraph (5) and revising paragraph (4). This distinction was 
originally made by the ICC in its 1949 rule, which was based on the 
``Practices of Property Brokers'' report. As explained in the report, 
the ICC was contemplating a cap on brokers' commissions. The ICC 
distinguished between brokerage and non-brokerage services to support 
implementation of the cap and to prevent brokers from circumventing it 
through charges for non-brokerage services. The

[[Page 91654]]

contemplated cap was deferred from the 1949 rule and ultimately never 
adopted. Despite this, the distinction between brokerage and non-
brokerage services was included as part of the rule and has remained in 
the regulations ever since.
    The Agency believes that the distinction between brokerage and non-
brokerage services is unnecessary for the purposes of the broker 
transparency regulation and proposes removing the distinction in favor 
of a simpler itemization requirement described below. The term non-
brokerage service is defined at Sec.  371.2(d), and used only in Sec.  
371.3(a)(5), so the Agency also proposes removing the definition of 
non-brokerage service, which would no longer be used.
Itemization of Charges and Fees
    The Agency proposes clarifying that the records must itemize all 
charges and fees associated with the brokerage service, to include an 
amount and description of each charge and fee. Brokers would also be 
required to itemize any penalties assessed in connection with the 
shipment, for example, a penalty for late delivery or cargo damage. 
This revision is intended to ensure the parties have visibility into 
the payments, fees, and charges associated with the transaction, and 
can resolve issues and disputes without resorting to costlier remedies.
3. Brokers Must Provide Records Upon Request
    In their petitions, both OOIDA and SBTC sought an explicit ban on 
waivers of the requirements in 371.3(c). However, as a general 
principle, parties are permitted to waive any right unless Congress, by 
statute, specifically makes a right non-waivable. The Agency has not 
identified any statutory provision in which Congress expressly barred 
waivers in this context, and therefore the Agency has not included the 
requested language in the revised regulation. The petitions did, 
however, identify inconsistencies between this regulation and the rest 
of part 371, which the Agency intends to address through this 
rulemaking. To this end, the Agency proposes amending the language of 
Sec.  371.3(c) to more accurately describe the regulatory obligation 
imposed on brokers and the process for requesting and supplying 
transaction records.
    When the ICC issued the broker transparency regulation in 1980, it 
stated that it would enable the elimination of other, more complex 
regulations. One of the major provisions eliminated, former 49 CFR 
1045.10, related to the duties and obligations of a broker, which 
included giving fair advice to shippers and not misrepresenting or 
making false promises about the services motor carriers would provide; 
not misrepresenting or giving false information to motor carriers about 
the commodities in the shipment; advising both the shipper and carrier 
of the amount and basis of any compensation being received from the 
other; exercising due diligence in carrying out the terms of its 
contracts with shippers and motor carriers and ensuring prompt payment; 
and paying any freight charges in full to the carrier or carriers 
without deduction for any amount due to the broker from such carrier or 
carriers. The ICC was clear that its intention was not to eliminate 
these duties and responsibilities entirely, but rather that providing 
shippers and carriers with the ability to review the transaction 
records would ensure that brokers were acting honestly and fairly.
    By phrasing the requirement as a private ``right to review,'' the 
original regulation did not prohibit a broker from requiring a waiver 
of the private ``right to review'' as a condition of brokering a load 
to a motor carrier and did not contain an enforcement mechanism for the 
Agency to enforce the private ``right to review.'' However, FMCSA 
believes the original wording did not adequately capture the ICC's 
intent that brokers continue to comply with those duties and 
obligations, particularly disclosure of such records to shippers and 
motor carriers who find value in such information. To address these 
concerns, FMCSA has reframed the disclosure requirement as a regulatory 
obligation, as the Agency believes this more closely aligns with the 
original intent of the regulation. Moreover, a regulated entity must 
adhere to the regulations and cannot ``disguise its regulatory 
obligations as contractual ones.'' Taylor Energy Co. LLC v. United 
States, 975 F.3d 1303, 1306 (Fed. Cir. 2020). These changes would also 
ensure that the language in Sec.  371.3(c) is consistent with the other 
broker requirements in part 371.
    The proposed amendments to Sec.  371.3(c) would clarify that 
brokers maintain a continuing duty to act fairly and honestly, and that 
visibility into the transaction records is the mechanism by which 
shippers and carriers can ensure that brokers are complying with this 
duty. The requirement to provide the records upon request would thus be 
made explicit as a regulatory obligation. The proposed rule would not, 
however, prohibit brokers from including confidentiality clauses in 
their contracts with motor carriers. As long as brokers are complying 
with the requirement to disclose records upon request, the parties may 
negotiate and reach agreements regarding non-disclosure of the 
information to non-parties.
4. Records Must Be Provided Within 48 Hours of Request
    As discussed in the comments, the Agency is aware of brokers 
avoiding meaningful compliance with the regulation by delaying the 
availability of records for review, and by restricting access for 
review to their principal place of business. The Agency proposes 
amending Sec.  371.3(c) to require that records must be provided within 
48 hours. This amendment is intended to provide the requestor with the 
records in a timely fashion, which enables the use of the records to 
resolve any issues around service or payment. By requiring the broker 
to ``provide'' records electronically, this amendment is intended to 
prevent a broker from only making its records available for review at 
its principal place of business or another, potentially inconvenient, 
location. Instead, the amendment plainly places the responsibility of 
delivering the information to the requestor on the broker.

B. Comments and Agency Responses

    In the notice requesting public comment on OOIDA's and SBTC's 
rulemaking petitions (85 FR 51145, Aug. 19, 2020), the Agency posed a 
series of questions regarding the rulemaking sought by the petitions. 
FMCSA received a large number of comments in response to the notice, 
and in subsequent related actions, many responsive to the questions 
posed and others raising additional issues for the Agency's 
consideration. The comments expressed a range of views from motor 
carriers, brokers, and other interested parties, and the Agency's 
proposed rulemaking is informed by this input.
1. The Agency's Authority Over Broker Transparency
    The first question the Agency posed in the notice regarding the 
rulemaking petitions referenced FMCSA's existing authorities related to 
brokers (49 U.S.C. 13101-14916) and asked what statutory provisions, if 
any, would be carried out by the regulatory changes requested 
petitioners requested. Both successful petitioners, OOIDA and SBTC, 
indicated that FMCSA has existing authority to carry out the proposed 
changes in the petitions for rulemaking. OOIDA indicated Congress has 
required the Secretary, and hence FMCSA, to regulate brokers to protect 
motor carriers, including requiring brokers to

[[Page 91655]]

have a bond as found in 49 U.S.C. 13904(e) and (f), as detailed in 
OOIDA's petition. SBTC indicated FMCSA already has existing authority 
to act on these petitions for rulemaking under U.S.C. 13101 through 
14916, and more specifically, 49 U.S.C. 14906, which addresses evasion 
of regulation by motor carriers and brokers.
    Few commenters responded directly to the Agency's questions about 
authority. Of those who did, most indicated that FMCSA has a mission to 
promote safe operation of commercial motor vehicles, and any form of 
market regulation falls outside of this mission. Scopelitis, a national 
transportation law firm, for example, indicated there is no need for 
the existing regulations in a highly competitive industry, much less 
the proposed addition of even more regulatory burden.
    FMCSA also asked how a rule restricting the rights of private 
parties (e.g., brokers) from including certain terms in their 
agreements would align with the Agency's statutory authority. Few 
commenters directly addressed this question. TIA and MODE 
Transportation, for example, indicated that 49 U.S.C. 14101 provides 
brokers the option to include a waiver provision. The applicability of 
49 U.S.C. 14101 is discussed in Section VI.B.8. The National 
Association of Small Trucking Companies did not cite a specific statute 
but indicated that dictating the terms of contracts between private 
parties was beyond FMCSA's authority. In contrast, OOIDA and SBTC 
commented that FMCSA has the authority to restrict private parties from 
including a waiver under FMCSA's existing authority. Overall, there was 
substantial disagreement on this question.
    FMCSA response: As discussed in Section IV. Legal Basis, the Agency 
has the authority to establish certain regulations for property 
brokers. The Agency believes that the proposed rule, which revises the 
recordkeeping regulations for property brokers, falls squarely within 
this authority. Comments that characterize broker transparency as 
beyond the Agency's authority and unrelated to safety oversimplify both 
the Agency's authority and the purpose of broker transparency. FMCSA 
and its predecessor agencies have long been responsible for regulating 
certain commercial aspects of motor carrier transportation, including 
broker recordkeeping.
2. FMCSA Enforcement Role
    Question two asked how a rulemaking expanding FMCSA's enforcement 
of a requirement that brokers automatically disclose financial details 
about each transaction to the motor carrier transporting the load, as 
requested in the OOIDA and SBTC petitions, would align with the 
statutes identified above (i.e., 49 U.S.C. 13301 and 14122).
    In its comments on the petitions, CR England Logistics stated that 
the rulemakings proposed by OOIDA and SBTC do not align with existing 
FMCSA statutes. TIA indicated that disclosure of financial details is 
in direct conflict with 49 U.S.C. 14101(b), in addition to 
Congressional intent. A small number of commenters, such as TIA, stated 
disclosure of commission, a violation of Sec.  371.3, has not been an 
issue. TIA further stated there have been no complaints made to DOT's 
National Consumer Complaint Database (NCCDB) for a violation of a 
broker not disclosing its commission under Sec.  371.3(c). OOIDA stated 
FMCSA would not experience additional burdens by adopting the changes 
proposed in the petitions and already has existing authority to do so 
under 49 U.S.C. 13904 and 14122.
    FMCSA response: The Agency believes that the proposed rulemaking is 
an appropriate exercise of its authority that builds on the current 
recordkeeping requirements. Since the filing of these petitions, broker 
transparency has become a topic of intense interest in the 
transportation industry. According to Agency records, at least 32 
complaints were received from 2018 through 2020. The Agency receives 
complaints through NCCDB and other sources. As detailed above, FMCSA 
believes the language of the original regulation does not accurately 
describe the transacting parties' rights and burdens, and that a 
broker's obligation to provide records is not premised on any inherent 
right of the carrier or shipper to receive those records, but rather on 
the Agency's statutory authority to protect motor carriers in 
connection with its broker recordkeeping regulations.
    FMCSA has several options for enforcing these regulations. In order 
to register with FMCSA, brokers must agree to comply with all 
applicable regulations (49 U.S.C. 13904(a)(2)), and FMCSA has the 
authority to suspend or revoke a broker's operating authority for 
willful failure to comply with a condition of registration (49 U.S.C. 
13905(d)(2)(A)(iii)). FMCSA may also decline to renew a broker's 
registration if the broker has demonstrated it is not willing or able 
to comply with the regulations.
    The Agency has a further option to seek a civil penalty for 
regulatory violations. The penalty schedule in 49 CFR part 386 Appendix 
B already sets out penalties for violations of FMCSA's commercial 
regulations in paragraph (g), as well as penalties for evasion in 
paragraph (i). The existing penalties cover violations of this proposed 
rule, so FMCSA does not propose a new enforcement mechanism or alter 
the current penalty schedule as part of this rulemaking. FMCSA is aware 
that the Department of Justice (DOJ) must bring certain enforcement 
actions for civil penalties on behalf of FMCSA.\7\ However, parties may 
still file complaints with FMCSA for the Agency to investigate, take 
enforcement action within its existing authorities, and refer to DOJ as 
appropriate.
---------------------------------------------------------------------------

    \7\ See In the Matter of Darlene Riojas, Manuel J. Riojas, Four 
Star Trucking, Inc., 7 Star Transport, LLC--Order Dismissing Three 
Charges for Lack of Subject Matter Jurisdiction, and Reserving 
Ruling on Other Summary Judgment Requests, Docket No. FMCSA-2012-
0174-0056 (May 8, 2019). This decision is available on the internet 
at https://www.regulations.gov/document/FMCSA-2012-0174-0056.
---------------------------------------------------------------------------

    The Agency's exercise of authority to regulate broker 
recordkeeping, including its issuance of broker transparency 
regulations, is not in conflict with 49 U.S.C. 14101(b). That statute 
permits shippers and carriers to waive certain rights and remedies by 
contract, but for reasons discussed in section VI.B.8. of this NPRM, 
the Agency believes brokers are not shippers within the meaning set out 
by 49 U.S.C. 14101(b). Because the statute does not relate to brokers, 
it does not conflict with the Agency's broker transparency regulations. 
Congress has also expressed its clear intent in 49 U.S.C. 13904(e) for 
the Agency to issue regulations applicable to brokers that provide 
protection for shippers and motor carriers, consistent with the 
Agency's responsibility to carry out the objectives of the national 
transportation policy and its general authority to regulate brokers of 
property.
3. Broker Size as Related to Transparency
    The third question in the notice was whether the transparency 
issues raised by OOIDA and SBTC are limited to small brokers or large 
brokers (e.g., brokers with revenues above a certain threshold, brokers 
with a certain number of transactions, etc.) or whether they are more 
widespread such that the rulemaking should cover all brokers, 
regardless of size. The fourth question assumed that transparency 
issues were primarily associated with large brokers and asked what 
revenue threshold FMCSA should consider for the applicability of any 
new requirements. It also asked how the Agency could

[[Page 91656]]

obtain accurate information about brokers' revenues.
    Of the commenters that responded directly to the third question, 
the majority indicated that the proposed rule should apply equally to 
large and small brokers. These commenters included brokers and trade 
associations, such as England Logistics and OOIDA, and a large number 
of individuals involved in the trucking industry.
    A smaller number of commenters responding to question four 
indicated that freight brokers, particularly large brokers, due to 
their size and resources, are taking advantage of the current 
situation. However, most commenters did not differentiate based on the 
size of the broker but rather stated that brokers as a whole were not 
transparent and were not treating motor carriers fairly.
    FMCSA response: The Agency believes that the proposed broker 
transparency requirements should apply to all brokers, regardless of 
size, as is the case with the current regulation. The Agency believes 
that a lack of broker transparency causes problems whether the broker 
who arranged the transportation is large or small.
4. Cost of Providing Transaction Records
    The fifth question posed related to the most efficient and 
effective means for brokers to provide information, automatically and 
electronically, to motor carriers. The Agency asked whether each broker 
should have, for example, a stand-alone system with motor carriers 
receiving an email from the broker after the contractual service has 
been completed, or whether the brokers should be allowed to satisfy the 
request with partnerships or networks through which registered brokers 
would upload transaction information which would then be automatically 
transmitted via the network to the registered carrier associated with 
the transaction. The sixth question, related to the fifth, was a 
request for cost estimates for implementing an information technology 
(IT) solution to accomplish OOIDA's request, either through stand-alone 
systems run by individual brokers, or systems operated by groups of 
brokers notifying the individual motor carriers utilizing any of the 
brokers within the group.
    The majority of the commenters agreed that electronic transmission 
is the most efficient means for brokers to provide information. 
However, one commenter, MODE Transportation, indicated that 
implementing an electronic or IT solution is not required to solve the 
transparency issue and was never envisioned when Sec.  371.3 was 
developed. Echo Global Logistics stated that much of the information 
sought through broker transparency is already publicly available, 
including rate information from aggregators like DAT.com and required 
financial reports from publicly-held brokers. Echo Global Logistics 
argued that, given the public availability of this information, the 
cost of developing and maintaining an electronic reporting system to 
comply with the petitioners' proposed regulations is not justifiable.
    There was disagreement among commenters as to whether a proposed 
electronic system should be stand alone or a current electronic 
format(s) which the broker may already be using. Some commenters 
mentioned use of existing electronic formats, such as email, 
spreadsheets, faxes, which are in common use to meet a proposed 
electronic requirement. However, most brokers that commented indicated 
that dedicated stand-alone systems such as an electronic data 
interchange (EDI) or application programming interface (API) are just 
as likely to be already in use by many freight brokers, and these 
systems provide the necessary data privacy and security. England 
Logistics mentioned that the data transmitted could potentially be 
trade secrets and therefore would require more intensive IT systems to 
protect.
    In terms of cost, most commenters indicated that, if the use of a 
standalone system such as EDI or API were required, it would have a 
cost impact on those brokers which do not have such systems in place 
already. Both Axle and Lange Logistics indicated this cost impact may 
affect small businesses more profoundly than others.
    Five commenters directly responded to question six and provided a 
cost estimate for brokers to establish an electronic system to transmit 
records. Trinity Logistics and Tucker Worldwide estimated a cost of 
$2,500 to $10,000 per carrier setup. TIA further provided an estimated 
cost example of a broker that utilizes 5,000 motor carriers in their 
database, using their own existing IT system (presumably EDI- or API-
based), would incur a cost of $12.5 million to $50 million for 
implementation. ArcBest indicated personnel and equipment required to 
implement the electronic information transfer would be $500,000 per 
broker.
    FMCSA response: FMCSA is not proposing to prescribe a specific type 
of electronic system brokers must use, provided the system complies 
with 49 CFR 390.32, ``Electronic documents and signatures.'' The Agency 
finds that the requirements listed there are appropriate in the context 
of the broker recordkeeping requirements and sees a benefit in having a 
consistent standard for electronic documents. FMCSA's experience in 
reviewing brokers' records shows that most records covered by Sec.  
371.3(a), including bills of lading, are already kept in electronic 
format, though paper bills of lading may still be occasionally used. 
Thus, the burden on parties to keep and transmit transaction records 
electronically is expected to be minimal.
    The proposed rule does not include an automatic disclosure 
provision. FMCSA believes that the cost estimates provided in response 
to question 6, which were related to developing an IT solution for 
automatic disclosure within 48 hours of the completion of contractual 
obligations, are overestimated. Since the rule does not include an 
automatic disclosure provision and records would only be provided upon 
request within 48 hours, the Agency expects that the costs would be 
significantly lower because brokers' existing systems, either as 
currently implemented or with minor modification, could be used to 
fulfill these requirements. However, the Agency lacks specific data to 
quantify these costs and is seeking public comments on the cost 
estimates for this proposal.
    In response to the comment that much of the information brokers 
would have to provide is already publicly available, FMCSA notes that 
information found on publicly held brokers' financial reports is not 
transaction specific. While reviewing this information could give 
shippers and motor carriers a general sense of the state of the freight 
brokerage industry, it does not provide them with information about the 
loads they have consigned or hauled. Rate aggregation websites provide 
pricing information that carriers may find useful in deciding whether 
to accept an offer to haul a prospective load, but it is also not a 
substitute for broker transparency information. In particular, it would 
not provide shipper, carrier, or bill of lading information for a 
particular shipment, nor would it provide carriers with any information 
about chargebacks or other fees assessed against them in connection 
with a particular delivery. FMCSA therefore does not believe relying on 
publicly-available information is an adequate substitute for the 
information disclosure proposed in this rule.
5. Economic Benefits to Motor Carriers and Costs to Brokers
    Both rulemaking petitions linked broker transparency to concerns 
over carrier revenue and broker margins, and the notice requesting 
public comment

[[Page 91657]]

sought input on these concerns. Margins, as discussed in this proposed 
rulemaking, refer to the division of a shipper's payment between the 
broker and the motor carrier, expressed as a percentage. SBTC stated 
that, in the context of the economic impact of the COVID-19 national 
emergency, freight rates had dropped drastically, yet brokers, in at 
least a few instances, were making large margins on freight. SBTC 
stated that it did not seek regulations limiting the amounts or 
percentages brokers earn, but it viewed broker transparency as 
essential to making sure market forces operate ethically and fairly. 
The OOIDA petition raised similar concerns. The notice asked for 
quantitative estimates of the economic benefits that would likely be 
achieved by motor carriers if FMCSA adopted the rules requested by 
OOIDA and SBTC, including how much additional revenue motor carriers 
might receive on a per-transaction basis. The notice also sought 
quantitative estimates of the economic costs to brokers or others, 
including how much profit reduction on a per-transaction basis brokers 
would experience and what percentage of the costs would be passed 
through to shippers or motor carriers.
    Only a few commenters responded to these questions. OOIDA estimated 
that the additional revenue a carrier would earn in an individual 
transaction would be between tens to thousands of dollars, depending on 
the specifics of the transaction. This estimate was preceded by a 
discussion of increased convenience and a decrease in unfair billing 
practices, and it is unclear how OOIDA's estimated additional revenue 
was apportioned among the increase in convenience, the decrease in 
unfair billing practices, greater negotiating power for motor carriers, 
or other factors. Few of the comments from small motor carriers 
contained responsive estimates, and several motor carriers noted that 
the current lack of broker transparency meant that they do not have 
access to the transaction information necessary to provide an informed 
estimate. Brokers commented that motor carriers would not receive any 
economic benefit from the proposed transparency rulemaking. Brokers 
provided estimates of the cost to comply with OOIDA's proposal based on 
information technology and staffing costs but did not provide an 
estimate of the economic impact due to changes to freight rates, profit 
reduction on a per-transaction basis for brokers, or percentage of 
costs that would be passed through to shippers or motor carriers.
    Although the Agency received few quantitative estimates of the 
economic benefits of broker transparency to motor carriers and the 
economic costs to brokers, many comments addressed carrier revenue and 
broker margins. Motor carriers commented on the prevailing low freight 
rates at the time and provided examples of offers of one dollar or less 
per mile. Motor carriers described the impact of these low rates. For 
example, some comments stated that the offered rates make it difficult 
to cover motor carriers' operating expenses, including maintaining 
equipment in safe working condition. Some comments also described low 
rates as a contributor to undue stress on drivers and unsafe operating 
practices. Many comments from motor carriers characterized the rates as 
inequitable given the difficulty of the work they do and value of the 
service they provide. Many of these comments identified brokers as 
responsible, at least in part, for low rates and many characterized the 
brokers' business practices as deceitful. Carriers also say they cannot 
operate a profitable business unless they haul brokered loads, and some 
have reported taking brokered loads at a loss, citing the need for 
revenue to service business debts. In addition, many motor carriers 
expressed concern that they lack negotiating power to exclude 
transparency waiver provisions from contracts and, if they exercise 
their right to view the transaction records, brokers will select other 
motor carriers to work with and refuse to do business with them in the 
future.
    Many comments from motor carriers support the broker transparency 
proposals in the petitions as a remedy for the issues they raised. Some 
comments state that increased broker transparency would allow motor 
carriers to negotiate higher rates. Many comments simply supported 
broker transparency as a means for increasing carrier revenue, without 
describing how revenue would increase as a result of transparency. 
Other comments suggested modifying the rules requested by OOIDA and 
SBTC to address their concerns about low rates more directly, including 
several suggestions to provide the broker transparency information when 
the parties are negotiating a rate, before the service is provided. 
Some of these comments stated that the transparency information would 
not be useful to the carrier after the transportation service had been 
provided.
    Some motor carriers did not support broker transparency and stated 
that the information is irrelevant to motor carriers because the only 
pricing information they need is the offered rate. Other commenters 
proposed a rule limiting broker margins to a certain percentage of the 
price paid by the shipper.
    Many of the comments from brokers challenged the assertions made in 
the petitions and other comments regarding freight rates and broker 
margins. Broker commenters also argued that low freight rates are not a 
result of high broker margins but rather a result of broad market 
forces, particularly the short-term acute economic impact of the COVID-
19 national emergency. They disputed claims about price gouging by 
identifying a variety of factors that influence the price a broker sets 
for a load. Brokers also explained that their contracts with shippers 
are typically for a set period, often one year, while their contracts 
with motor carriers are typically shorter, often on a load-by-load 
basis. As a result, the broker's margin for a load covered by the 
shipper contract will fluctuate based on the spot market, so that the 
broker may have a higher margin on some loads and a lower, sometimes 
negative, margin on other loads. Brokers also explained that their 
margins should not be equated with profitability and described the 
various expenses incurred to provide brokerage services to shippers. 
These expenses would not be reflected in the broker transparency 
information.
    Many of the comments from brokers stated that the rulemaking the 
petitions sought would not have the claimed effect of increasing 
carrier revenue. These comments stated that broker transparency would 
not increase freight rates. They also stated that load boards and other 
commonly available services already provide motor carriers with enough 
information regarding freight availability, traffic lanes, market rate 
information, seasonality adjustments, and so on to make informed 
business decisions, rendering the records available under Sec.  371.3 
unnecessary. Some comments added that motor carriers can decline to 
take a load if the offered rate is too low to be profitable. In 
response, some comments explained that motor carriers with leased 
trucks may accept unprofitable loads to secure revenue, even as that 
revenue is not profitable.
    Since the comment period closed, FMCSA has received further input 
regarding broker transparency. This input includes further expressions 
of concern regarding low prevailing freight rates, and of the belief 
that the low freight rates are caused, at least in part, by high broker 
margins. There is continued interest from motor carriers in broker 
transparency as a solution to low prevailing rates.

[[Page 91658]]

    FMCSA response: The purpose of the proposed rule is not to provide 
an economic benefit to motor carriers, nor to impact broker margins. 
However, the Agency considers the economic impacts of the proposed rule 
as part of its mandated regulatory analysis. The comments received to 
date do not conclusively establish what the economic impact of the 
proposed rule would be. As with the current rule, the proposed rule 
would give shippers and carriers the option to access information about 
a brokered freight transaction after the parties have negotiated the 
terms of the contract and the transaction is complete but would not 
require disclosure prior to that time, nor would it require automatic 
disclosure. The information provided would allow the carrier to compare 
the amount that the shipper paid the broker to the amount that the 
broker paid the carrier but would not set or limit rates or brokers' 
margins. By clarifying the regulatory obligation for brokers to provide 
the transaction records, the proposed rule would make the information 
enumerated at Sec.  371.3(a) available to all parties participating in 
a brokered freight transaction.
    Although the Agency cannot determine, with the currently available 
information, what economic impact the proposed rule would have, two 
main theories can be derived from the comments. Under one theory, 
broker transparency would not provide an economic benefit to motor 
carriers even if such transparency was widespread. Motor carriers would 
not have access to the transparency information when determining 
whether to accept a brokered load at the broker's offered price or when 
negotiating the price of a load with a broker. The information, 
provided after the fact, would not change the price of the load. The 
information may not have an impact on the price of future loads for a 
variety of reasons. The carrier may not find the information from past 
transactions useful when negotiating prices for future loads offered by 
the same broker or loads offered by other brokers. If, based on the 
transparency information, the carrier chose not to accept future loads 
from that broker, the carrier might not be able to find higher-paying 
loads from other brokers. Relatedly, the broker in that scenario may be 
able to find other motor carriers willing to accept the load, even if 
one carrier refuses to work with them.
    Under the second theory, broker transparency would provide an 
economic benefit to motor carriers if such transparency was more widely 
available. The broker transparency information might impact the price 
of future loads that the carrier accepts. Motor carriers may be able to 
negotiate a higher price if they can apply their knowledge from 
previous loads to negotiations for future loads from the same broker or 
future loads with similar characteristics. Brokers may have to accept 
the higher price if they cannot find other motor carriers. Although the 
transparency information would not be publicly available, a broker 
might develop a reputation among motor carriers for offering low rates 
relative to the price paid by the shipper. If that reputation deterred 
motor carriers from taking loads, the broker may have to offer higher 
rates to place their loads. At least one broker highlighted concerns 
that transparency information could result in motor carriers directly 
soliciting shippers, bypassing brokers for future loads. The ICC 
considered this issue when it adopted the current regulations in 1980, 
emphasizing that motor carriers and shippers are free to deal directly 
with each other and ``[o]nly where the shipper finds that it can get 
better service from the broker will it stay with the broker'' (45 FR 
68941, Oct. 17, 1980).
    There exists a possibility that transparency information could 
reduce the exclusive knowledge that brokers bring to a transaction if 
shippers and motor carriers collect transparency information over time. 
If the Agency were to assume that the broker's exclusive knowledge is 
considered value-added and therefore currently captured in broker 
margins, then increased transparency with this proposal could result in 
downward pricing pressure on broker margins from motor carriers, 
shippers, or both.
    As discussed in section VI.B.4, above, FMCSA does not view the 
information available on load boards or through other publicly 
available sources to be an adequate substitute for the transaction-
specific information set out in this proposed rule. Shippers and motor 
carriers have an interest in knowing details about their particular 
shipments, especially when problems with a shipment arise or the 
compensation received differs from the contractual amount. Broker 
transparency provides the retrospective transaction-specific detail on 
completed loads necessary to resolve these issues. By contrast, the 
prevailing rate information available on load boards for prospective 
loads is useful for making informed decisions about which offers to 
accept but is not useful in addressing issues with completed loads.
    From the comments received, the Agency cannot determine whether 
either of these theories would prove correct under the proposed rule. 
The actual impact may be somewhere in between these theories, or both 
theories may be incorrect. If broker transparency remained rare under 
the proposed rule, there may not be any economic impact. The Agency 
seeks further comment to better estimate the economic impact of the 
proposed rule.
6. Transparency of Charge Backs, Accessorial Fees, and Surcharges
    The broker transparency comments brought up several issues not 
raised in the petitions or in the notice. One issue was the 
transparency of charge backs. Several comments described questionable 
claims in situations where a carrier delivered a load, got a clean bill 
of lading from the receiver, and then later had a claim, or ``charge 
back,'' on the load from the broker despite the clean bill of lading. 
Motor carriers contend that these claims often lack sufficient 
explanation or description of the reason for the charge back, and the 
motor carriers find it difficult to contest them, particularly when 
their payment for transporting the load is withheld unless they accede 
to the claim. In situations where the contracts include cross-
collateralization provisions, payment for other loads transported by 
the same carrier for the same broker may also be withheld unless the 
claim is accepted.
    Other comments described issues with detention charges and fuel 
surcharges, where the rates and conditions of the fees that brokers 
charge shippers are different than the rates and conditions of payments 
remitted to the carrier, despite the fees being premised on the 
carrier's operating costs. As an example, fees for detention time are 
premised on the operating costs of keeping a truck idle while waiting 
to load or unload, costs that include the driver's time. One commenter 
described a situation where the broker charged the shipper for 
detention time after the first hour, at a rate of $50 per hour, but 
paid the carrier for detention only after 4 hours, and at a rate of $35 
per hour. Comments from motor carriers expressed similar concerns 
regarding fuel surcharges.
    FMCSA response: The practices identified in the comments are 
concerning because, depending on their prevalence, they may 
significantly disrupt the efficiencies and opportunities offered by 
brokered freight transactions. Broker transparency seems to be a useful 
tool in addressing these concerns, by providing parties to a brokered 
transaction visibility into the associated payments, fees, and charges,

[[Page 91659]]

enabling the parties to resolve issues and disputes among themselves 
without resorting to costlier remedies. If a claim is made against a 
shipment, the carrier should be able to understand the basis of the 
claim, not just to dispute questionable claims, and in instances of 
well-founded claims, to take precautions with future shipments and 
thereby avoid such claims. On the remittance of surcharges, there may 
be a reasonable justification for a broker to remit less than the full 
amount of a surcharge received from a shipper to a carrier, but the 
carrier should be able to see that difference, particularly when the 
surcharge is premised on the carrier's operating costs.
    In addressing broker transparency, FMCSA cannot replace prudent 
business judgment and cannot guarantee the trustworthiness of every 
shipper, broker, and carrier. However, the brokered freight 
transportation industry requires a certain degree of trust to operate 
efficiently. Trust is eroded when motor carriers are prevented from 
seeing the charges and payments associated with the service they are 
providing. In addition to creating mistrust, unsubstantiated and 
specious charges levied on motor carriers divert resources to paying or 
litigating the charges, that could otherwise be spent providing safe 
and efficient transportation.
7. Confidentiality of Pricing
    Brokers commenting on transparency raised concerns about the 
confidentiality of their pricing. Brokers stated that shippers require 
pricing confidentiality in their contracts with brokers, which is one 
reason why brokers require confidentiality in their agreements with 
motor carriers. In this regard, several motor carriers noted that the 
broker-carrier contracts typically have confidentiality clauses, which 
would serve to protect shipper pricing in the context of greater broker 
transparency.
    Brokers also asserted that their pricing can constitute trade 
secrets, and broker transparency requirements would conflict with the 
Defend Trade Secrets Act (DTSA) (18 U.S.C. 1831 et seq.). Motor 
carriers commented that DTSA doesn't apply to this situation because 
motor carriers have a right to the transaction information under the 
current regulations and, consistent with DTSA, the information can 
still be protected from public disclosure without waiving the carrier's 
right to access. Motor carriers argued that a broker disclosing to a 
carrier the transactional information to which the carrier is 
authorized to access is not equivalent to theft of a trade secret.
    FMCSA response: The Agency recognizes that shippers, motor 
carriers, and brokers in a brokered freight transaction likely have a 
compelling business interest in protecting information about that 
transaction. The broker transparency regulation does not require public 
disclosure, and the Agency believes that broker transparency is 
compatible with the prudent protection of business information. Section 
371.3 does not require the broker to disclose to the carrier all 
details of the business relationship between the broker and shipper, 
but rather only the transaction-specific details enumerated in Sec.  
371.3(a). The Agency believes that the confidentiality provisions in 
broker-carrier contracts can provide protection consistent with broker 
transparency. The concerns around confidentiality must be balanced 
against the issues that broker transparency is meant to remedy, as 
described above.
    Regarding trade secrets, the Agency does not believe that Sec.  
371.3 in its current form, or with the amendments proposed, conflicts 
with trade secret protections. The DTSA prohibits economic espionage 
and theft of trade secrets, defined as when a person steals, receives, 
buys, possesses, duplicates, transmits, or engages in other similar 
activities regarding proprietary economic information, or conspires 
with others to do so. Here, the information is required to be kept and 
handled in accordance with a Federal regulation. Therefore, a broker or 
carrier is legally in possession of such information and does not 
violate the DTSA when it handles such information pursuant to the 
regulation. Parties are also permitted to include confidentiality 
clauses in their contracts that limit further disclosure of such 
information.
    Moreover, while a pricing formula could be a trade secret as a type 
of business information with independent economic value, the record of 
an individual transaction covered by Sec.  371.3(a), without more, is 
not likely to be covered as a trade secret. Brokers are not required to 
disclose additional information or documentation beyond the scope of 
what is covered in Sec.  371.3(a). Further, Sec.  371.3(c) does not 
require the type of public disclosure that would be economically 
damaging to a party. Instead, it only requires that brokers give the 
parties to a transaction access to a limited amount of information 
pertaining to that transaction.
8. Applicability of Other Statutes
    Several comments argued that any rule preventing the waiver of 
Sec.  371.3(c) would be contrary to 49 U.S.C. 14101. Those commenters 
argue that 49 U.S.C. 14101 should be interpreted to cover brokers and 
therefore permits brokers to include waiver provisions in contracts 
with motor carriers that waive the broker's obligations to the motor 
carrier under Sec.  371.3. In support of this claim, several commenters 
cited the Dixie Midwest \8\ ICC decision for the proposition that a 
broker is a shipper in relation to a carrier.
---------------------------------------------------------------------------

    \8\ Dixie Midwest Express, Inc., Extension--General Commodities, 
No. MC-125038 (Sub-No. 24), 132 M.C.C. 794 (Feb. 3, 1982).
---------------------------------------------------------------------------

    FMCSA response: The language of 49 U.S.C. 14101 refers to shippers 
and motor carriers, not brokers. The Agency does not interpret that 
statute to apply to brokers, and the proposed rule therefore would not 
conflict with the statute. Motor carriers or shippers would not use 49 
U.S.C. 14101 to contract out of their rights under Sec.  371.3(c), 
because 49 U.S.C. 14101 is premised on a contract between a carrier and 
a shipper, not a brokered freight transaction, while Sec.  371.3 is 
focused solely on a brokered freight transaction. It is unreasonable to 
say that a broker could rely on 49 U.S.C. 14101, which on its face does 
not apply to brokered freight transactions, in order to waive a right 
that applies only to brokered freight transactions.
    Regarding the Dixie Midwest decision, in that case the ICC was 
determining whether a broker could be considered a shipper in the 
context of supporting an application for contract carrier authority. 
That situation has limited bearing on the interpretation of 49 U.S.C. 
14101. Most federal courts that have addressed the issue of whether 49 
U.S.C. 14101(b) applies to brokers in more recent years have held it 
does not.\9\
---------------------------------------------------------------------------

    \9\ See, e.g., Exel, Inc. v. S. Refrigerated Transp., Inc., 807 
F.3d 140, 148-49 (6th Cir. 2015); Supreme Auto Transp., Inc. v. JBL 
Logistics, LLC, 2017 WL 4334064, at *4 (D. Colo. Mar. 8, 2017); 
United Rd. Logistics LLC v. Alpha Transportation Grp. LLC, 2017 WL 
1755825, at *2 (E.D. Mich. May 5, 2017). See also TransCorr Nat'l 
Logistics, 2008 WL 5272895 at *4 and REI Transp., Inc. v. C.H. 
Robinson Worldwide, Inc., 519 F.3d 693, 694 (7th Cir. 2008) (both 
recognizing that brokers are not shippers, but allowing for the 
possibility that a broker could step into a shipper's shoes to 
assert claims against motor carriers).
---------------------------------------------------------------------------

    The Agency is aware that some courts have determined, after a fact-
specific analysis, that a broker acted as a shipper under the 
particular conditions present in those transactions.\10\ However, the 
Agency does not consider all brokers to be shippers in relation to 
motor carriers or for that to be the standard by which

[[Page 91660]]

broadly applicable regulations are formulated. In circumstances where 
the broker does, in fact, act as the shipper, 49 U.S.C. 14101(b) limits 
the circumstances under which the Agency may prohibit waivers in 
contracts. However, the Agency believes that in most brokered 
transactions, the broker is not the shipper, and 49 U.S.C. 14101(b) 
does not apply.
---------------------------------------------------------------------------

    \10\ See, e.g., Jackson Rapid Delivery Serv., Inc. v. Thomson 
Consumer Elecs., Inc., 210 F. Supp. 2d 949, 954 (N.D. Ill. 2001).
---------------------------------------------------------------------------

    The proposed amendments to Sec.  371.3(c) would also render this 
objection largely moot by clarifying that access to records is not a 
right belonging to motor carriers or shippers that can be contracted 
away, but instead is a regulatory compliance requirement that brokers 
must meet in order to operate in the interstate transportation 
industry.
9. Context and Impact of the COVID-19 National Emergency
    The SBTC rulemaking petition, which was filed in May 2020, referred 
to the COVID-19 national emergency and its negative impact on freight 
rates. The OOIDA petition, also filed in May 2020, noted that freight 
rates had reached historic lows but did not reference the COVID-19 
national emergency specifically. SBTC's petition raised concerns that 
brokers were taking advantage of the situation to obtain high margins, 
and several comments on the petitions expressed similar concerns. These 
concerns were not based on systematic data, but on personal 
experiences, beliefs, and anecdotes about broker margins during that 
time; however, motor carriers also noted the difficulty in providing 
supporting data because they rarely obtain information about broker 
margins. Several motor carriers made the related point that they 
provided essential transportation services during the COVID-19 national 
emergency and should be compensated accordingly.
    The comments received from brokers disagree with the motor 
carriers' claims. These comments state that the COVID-19 national 
emergency did not provide brokers with high margins; instead, brokers 
claim they experienced the same weak freight market and had difficulty 
finding loads to broker. Several brokers characterized the rulemaking 
proposed in the petitions as a reaction to short-term economic forces 
and opposed the petitions because they believed that such a reaction 
was inappropriate. These brokers noted that freight rates were already 
rebounding at the time they filed their comments, which was later in 
2020. Some commenters referenced freight market indices to support this 
point.
    Returning to the carrier point of view, the OOIDA petition did not 
directly tie its proposed rulemaking to COVID-19 and stated that 
``OOIDA has long pushed for greater transparency in transactions with 
brokers.'' In 2021, at a time when the freight market was stronger than 
when the petitions were filed, SBTC submitted a letter to DOT 
expressing continued interest in a broker transparency rulemaking. As 
described previously, FMCSA held a listening session at MATS in March 
2023 on the topic of property brokers. During this session the Agency 
heard from several motor carriers expressing their support for a broker 
transparency rulemaking.
    FMCSA response: The COVID-19 national emergency had a drastic 
negative impact on the freight market in 2020, but the market began to 
recover later that year. Subsequently the market has continued to 
fluctuate, reaching notable highs in 2021 and 2022 but dropping off 
significantly in the last few years. Though the Agency is aware of 
economic conditions in the industry, the proposed rulemaking is not 
intended to address those conditions. The circumstances of the COVID-19 
national emergency may have increased the interest in broker 
transparency regulation, but the Agency believes the proposed 
rulemaking serves a purpose beyond the context of that emergency, a 
conclusion supported by the continued engagement of motor carriers on 
the issue of broker transparency.
10. Automatic Disclosure and Retaliation
    The OOIDA petition sought a provision making disclosure of the 
records automatic. OOIDA stated the automatic disclosure was necessary 
to prevent selective retaliation, i.e., blacklisting, against motor 
carriers who exercise their option to review the transaction records. 
The SBTC petition did not seek an automatic disclosure provision. Many 
commenters expressed the same concern with retaliation as OOIDA.
    FMCSA Response: The proposed rule does not include an automatic 
disclosure provision. Instead, as in the current regulation, parties to 
the transaction would have the ability to review the records upon 
request. The Agency believes that an automatic disclosure provision is 
unnecessary at this time and could be excessively burdensome to 
brokers. Though the concerns regarding retaliation appear plausible, 
the Agency cannot determine how frequently retaliation would take place 
or its potential effect on the motor carrier transportation industry. 
The Agency seeks further comment on this issue.

C. Issues on Which the Agency Seeks Further Comment

    While the Agency invites comment on all aspects of the NPRM, we are 
particularly interested in comments that address the following issues. 
In addressing topics, FMCSA requests that commenters number their 
remarks to correspond with the list below:
    1. What impact, if any, would the proposed rule have on freight 
rates? Please provide support for your position.
    2. How common is electronic recordkeeping among household goods 
brokers? What burden, if any, would be imposed if electronic 
recordkeeping was required?
    3. How much time would a broker spend creating an electronic record 
from paper documents for the record mandated by Sec.  371.3? What would 
be the costs for a broker to create an electronic record per 
transaction?
    4. Do you believe that the 48-hour timeframe proposed for Sec.  
371.3(c) would create a substantial burden for brokers? Why or why not? 
If you disagree with the proposed 48-hour timeframe, what timeframe 
would best balance the objectives of transparency while minimizing the 
burden on brokers?
    5. If this proposal effectively reduced instances of illegal 
brokering, through carrier policing with transparency information, 
would the brokers engaged in illegal practices exit the market, 
resulting in the transfer of illicit profits to legally operating motor 
carriers and/or brokers?
    6. Should freight brokers and household goods brokers be subject to 
the same recordkeeping requirements under Sec.  371.3? If your answer 
is ``no,'' why should they be subject to different requirements?
    7. Should parties requesting records under Sec.  371.3(c) be 
required to submit their request in writing? Should parties requesting 
records under Sec.  371.3(c) be required to submit their request 
electronically? Would requiring a specific format for submitted 
requests impose a cost on the parties or otherwise deter requests for 
transparency? Please provide support for your position.
    8. Would the proposal that records be provided electronically under 
Sec.  371.3(c) make broker transparency more likely, as compared to not 
specifying a method of provided the records? Should the Agency be more 
specific in requiring a particular format for records provided under 
Sec.  371.3(c), and if so, what method and/or format is preferrable? 
Please provide support for your position.

[[Page 91661]]

VII. Section-by-Section Analysis

    Part 371, entitled, ``Brokers of Property,'' provides requirements 
for entities or individuals brokering the transportation of property by 
authorized motor carriers. FMCSA proposes to amend Sec. Sec.  371.2, 
``Definitions,'' and 371.3, ``Records to be kept by brokers.''

A. Section 371.2 Definitions

    Section 371.2 defines terms used in part 371 and includes a 
definition for ``non-brokerage service,'' which is used only in Sec.  
371.3. FMCSA's proposed amendments to Sec.  371.3 would remove the term 
``non-brokerage service'' from the section, and FMCSA therefore 
proposes a corresponding amendment to Sec.  371.2 to remove the 
definition, which would no longer be used.

B. Section 371.3 Records To Be Kept by Brokers

    In Sec.  371.3 the Agency proposes modernizing the language of the 
regulation by replacing the word ``shall'' with the word ``must.'' 
These words have the same meaning in the FMCSRs, as explained in Sec.  
390.7(b). Further, the addition of the electronic format in accordance 
with Sec.  390.32(d) has been proposed to align with FMCSA's electronic 
records requirements elsewhere in the FMCSRs and to make records 
readily available to all parties. Paragraph (a)(4) would be revised to 
include the amount of compensation received by the broker for each 
service performed in connection with each shipment, including, but not 
limited to, freight charges, surcharges, and accessorial fees; the date 
of payment; and the name of the payer, including any business aliases, 
if known. Paragraph (a)(5) would be revised to require broker records 
to include any penalties assessed in connection with each shipment and 
to delete reference to ``non-brokerage service.'' Paragraph (a)(6) 
would be removed, as FMCSA proposes incorporating its language into 
paragraph (a)(4). FMCSA proposes revising paragraph (b) to replace 
``three'' with ``3,'' to align with the U.S. Government Publishing 
Office guidelines on numeral styling, and to add ``must'' to confirm 
that records are required to be kept for 3 years. Finally, FMCSA would 
revise paragraph (c) to include the requirement that brokers must 
provide records electronically within 48 hours of request to any party 
to the brokered transaction.

VIII. Regulatory Analyses

A. Executive Order (E.O.) 12866 (Regulatory Planning and Review), E.O. 
13563 (Improving Regulation and Regulatory Review), E.O. 14094 
(Modernizing Regulatory Review), and DOT Regulatory Policies and 
Procedures

    The Office of Information and Regulatory Affairs (OIRA) determined 
that this proposed rule is not a significant regulatory action under 
section 3(f) of E.O. 12866 (58 FR 51735, Oct. 4, 1993), Regulatory 
Planning and Review, as supplemented by E.O. 13563 (76 FR 3821, Jan. 
21, 2011), Improving Regulation and Regulatory Review, and amended by 
E.O. 14094 (88 FR 21879, Apr. 11, 2023), Modernizing Regulatory Review, 
and does not require an assessment of potential costs and benefits 
under section 6(a)(3) of that Order. This rule is also not significant 
within the meaning of DOT Order 2100.6A, ``Rulemaking and Guidance 
Procedures'' (June 7, 2021). Accordingly, OMB has not reviewed it under 
these Orders.
1. Need for the Regulation
    This proposal would amend the requirements of Sec.  371.3 to 
further improve transparency in brokered freight transactions between 
brokers, motor carriers, and shippers. The Agency seeks to increase 
transparency and reduce information asymmetry so that the freight 
brokerage market operates in a more ethical, fair, and efficient 
manner. Information asymmetry is a term describing a situation where 
one or more parties to a transaction have additional material 
information on a transaction not available to another party. 
Information asymmetry may give brokers a strategic advantage in 
contract negotiations, potentially enabling them to secure more 
favorable contractual terms. Information asymmetry is generally 
undesirable, and the Agency believes it creates inefficient outcomes in 
brokered freight transactions. Based on comments to the OOIDA and SBTC 
petition for rulemakings, the Agency understands that information 
asymmetry hinders motor carriers in their negotiations with brokers. 
Furthermore, motor carriers may not be able effectively to defend 
themselves against potential abuses, such as unfounded claims. The 
OOIDA petition argued that the prevalence of waiver clauses and 
instances of retaliation by brokers against motor carriers seeking to 
exercise their rights under Sec.  371.3(c) undercut the transparency 
envisioned by Sec.  371.3. The SBTC petition similarly highlighted the 
issue of waiver clauses and reported instances of ``profiteering, price 
gouging and low-balling tactics.''
2. Summary of the Requirements
    As described above, the purpose of this NPRM is to reduce 
information asymmetry among parties to brokered freight transactions, 
i.e., brokers, shippers, and motor carriers. The NPRM proposes to do so 
by improving transparency. To accomplish these goals, the Agency 
proposes the following substantive amendments to Sec.  371.3:
    1. Amend Sec.  371.3(a) to require that brokers keep the required 
records in an electronic format;
    2. Amend Sec.  371.3(a) to revise the required contents of brokers' 
records;
    3. Amend Sec.  371.3(c) to clarify that brokers must provide 
records upon request; and
    4. Amend Sec.  371.3(c) to require that records must be provided 
electronically within 48 hours of request.
    The following analysis provides a discussion and overview of the 
impacts likely to result from the proposed changes. The analysis 
discusses the effects of these proposed changes qualitatively due to 
the limitations of available data, which preclude the Agency from 
making quantitative estimates.
3. Costs
    The Agency provides the following cost analysis for each change in 
the proposed rulemaking.
Brokers Must Keep Records in an Electronic Format
    The Agency is aware of brokers avoiding meaningful compliance with 
Sec.  371.3(c) by making the required records available for inspection 
only at their principal place of business. The Agency believes this 
behavior may allow brokers to avoid their duty to provide the Sec.  
371.3 transaction records to the transacting parties. Brokers are 
already required to maintain a record of each transaction under Sec.  
371.3. The Agency also believes that most, if not all, brokers are 
currently maintaining records of their transactions in an electronic 
format, as electronic recordkeeping is a standard practice in many 
business transactions. Electronic recordkeeping also offers several 
advantages over paper records:
    1. Information can be easily searched and retrieved, eliminating 
the need to search through physical documents;
    2. Electronic records are less susceptible to loss or damage, as 
data can be backed up to prevent permanent data loss; and

[[Page 91662]]

    3. Electronic records offer a significant cost advantage over paper 
records. According to a study by MCC Innovations, creating and 
maintaining paper records can be up to 141 times more expensive 
compared to electronic records.\11\
---------------------------------------------------------------------------

    \11\ MCCi. ``The Dollars and Cents of Paper vs. Digital.'' 2024. 
https://mccinnovations.com/insights/blog/the-cost-of-paper-vs-
digital/
#:~:text=Comparing%20%240.0159%20to%20store%20a,storage%20costs%2057.
6%20times%20more (accessed Apr. 25, 2024).
---------------------------------------------------------------------------

    Given the advantages of electronic recordkeeping, it is likely that 
brokers have already transitioned to electronic recordkeeping. 
Therefore, the Agency concludes that this requirement would not 
constitute a burden for most brokers. FMCSA recognizes that a small 
number of brokers may still maintain records solely in paper format. 
However, the Agency does not know how many brokers do not have records 
of their transactions in an electronic format, nor the number of 
transactions those brokers conduct relative to the overall number of 
broker transactions and is therefore unable to quantify a total cost 
for this proposal.
    The Agency has instead attempted to quantify the cost of creating 
an electronic copy of a record on a per transaction basis. FMCSA 
believes that brokers who are not creating electronic versions of their 
transaction records currently have access to the technology needed to 
do so (e.g., document scanners, digital cameras, document management 
software, etc.). FMCSA anticipates that these tasks can be completed by 
an office clerk in 5 minutes per transaction as these records are 
currently stored by transaction and should be easily accessible to the 
broker. The Agency is reinforced in this belief based on comments 
submitted in response to the OOIDA and SBTC petition for this 
rulemaking but requests further comment from the public on this 
assumption.
    The burden hours associated with this task are monetized using an 
hourly wage for an office clerk adjusted for fringe benefits and broker 
overhead. The Bureau of Labor Statistics (BLS) median wage for an 
office clerk is $19.46 (SOC 43-9061). The hourly wage is increased by 
fringe benefits and broker overhead, which results in a $32.93 wage 
($32.93 = $19.46 + ($19.46 x 48.2%) + ($19.46 x 21%)). The fringe 
benefits rate used was 48.2 percent \12\ and relies on data published 
by BLS. Overhead costs are business expenses that are not directly tied 
to the production of goods or services. These may include rent for 
office space, payroll administration costs, and employee training 
costs. FMCSA relies on publicly available Service Annual Survey (SAS) 
data from the Census Bureau in the truck transportation industry 
(subsector 484) and transit and ground passenger transportation 
industry (subsector 485) to estimate a composite overhead rate.\13\ 
After reviewing SAS data from 2013 through 2021, FMCSA found 2015 to be 
the most appropriate baseline from which to estimate industry overhead 
rates because it is the most complete year of pre-COVID data. FMCSA 
first summed the seven overhead expense categories most focused on firm 
fixed price expenses for both subsectors 485 and 484 including (1) 
expensed purchases of software, (2) data processing and other purchased 
computer services, (3) purchased repairs and maintenance to buildings, 
structures, and offices, (4) lease and rental payments for land, 
buildings, structures, store spaces, and offices, (5) purchased 
advertising and promotional services, (6) purchased professional and 
technical services, (7) cost of insurance, and then divided the sum of 
the overhead expense categories by gross annual payroll to calculate an 
average industry overhead rate of 21 percent (21 percent = $16 billion 
/ $75 billion) for use in this analysis.
---------------------------------------------------------------------------

    \12\ DOL, BLS, Employer Costs for Employee Compensation. Mar. 
17, 2023. Available at: https://www.bls.gov/news.release/archives/ecec_03132024.htm (accessed Apr. 22. 2024). Rate is calculated by 
dividing ``wages and salaries'' by ``total benefits'' for the 
transportation and warehousing industry.
    \13\ U.S. Department of Commerce, U.S. Census Bureau. Service 
Annual Survey Historical Data (NAICS-basis): 2015. SAS Table 5. Jan. 
28, 2016. Available at: https://www.census.gov/programs-surveys/sas/data/tables.html (accessed Apr. 22, 2024).
---------------------------------------------------------------------------

    FMCSA estimates a $2.75 cost per record to create an electronic 
copy of a transaction record. As stated above, FMCSA finds it is likely 
that brokers have already transitioned to electronic recordkeeping, 
which would mitigate the impact of the potential burden. The Agency has 
no data that would allow it to quantify the overall size of the 
additional burden.

                                                          Table 1--Wage, Time, and Labor Costs
                                                                        [In 2023]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                                             Median base
                                                   BLS                                                               Fringe                    wage +
                 Occupation                    occupation        NAICS occupational designation      Median base    benefits     Overhead      fringe
                                                  code                                                   wage       rate (%)     rate (%)    benefits +
                                                                                                                                              overhead
--------------------------------------------------------------------------------------------------------------------------------------------------------
Office Clerks, General \1\..................      43-9061   Cross-industry.........................      $19.46         48.2           21           $33
--------------------------------------------------------------------------------------------------------------------------------------------------------
FMCSA estimates that an office clerk could spend up to 5 minutes per document to create an electronic copy of that transaction record, at an hourly wage
  rate of $33. Therefore, the cost to create an electronic copy of each document would be up to $2.75 (5 / 60 x $33) per record.
Note: Industry wage with benefits and overhead is hourly and has been rounded to the nearest dollar.
\1\ DOL, BLS. Occupational Employment and Wage Statistics (OEWS). National. May 2023. 43-9061 Office Clerks, General. Available at: https://www.bls.gov/oes/current/oes439061.htm (accessed Apr. 18, 2024).

Revisions to the Required Contents of Brokers' Records
    The Agency proposes updating the content of records under Sec.  
371.3(a) to include the date of payment for brokered services. The 
Agency believes this proposal would impose a minimal burden as most 
brokers likely already retain payment dates for brokered services as 
part of their standard transaction and accounting processes. Under this 
proposal, brokers would be required to update the contents of records 
kept under Sec.  371.3 to include dates of payment. While the Agency 
cannot quantify the cost impact to include payment dates in records 
kept under Sec.  371.3, due to the limitations of available data, FMCSA 
expects it would be de minimis due to the minor adjustments that would 
be required to comply with this proposal, as discussed previously. 
FMCSA proposes this requirement in response to comments both to the 
OOIDA and SBTC petitions and to an FMCSA Broker Listening Session at 
MATS in March 2023, where

[[Page 91663]]

multiple commenters discussed charge backs and claims after loads were 
delivered. The Agency believes the inclusion of a date of payment would 
provide additional information to motor carriers that they may use to 
counter any inaccurate claims. For example, date of payment information 
may aid a carrier to establish a timeline of events, such as payments 
to the broker by the shipper, and possibly aid in rectifying 
discrepancies and spurious charge backs with brokered freight 
contracts. The Agency lacks data to quantify the amount of fraudulent 
or inaccurate charge backs imposed on motor carriers but concludes that 
there would be some cost savings for motor carriers if they are able 
more readily to contest these charges with the increased transparency 
information.
    The Agency also proposes to eliminate the distinction between 
brokerage services and non-brokerage services in Sec.  371.3(a) by 
removing paragraph (5) and revising paragraph (4). The rationale for 
the distinction was initially set out in the brokers of property rule 
promulgated by the ICC in 1949, as detailed earlier in this NPRM in 
section V.A. History of Property Broker Regulations. In the past, the 
ICC attempted to regulate broker fees by setting a cap, but this relied 
on differentiating between brokerage and non-brokerage services. 
However, the broker fee cap was never adopted. With the current focus 
on transparency in broker transactions, the distinction between these 
service types is no longer necessary. The Agency, therefore, proposes 
to require that the records contain all charges and payments connected 
to the shipment. This proposed change is consistent with the obligation 
imposed on federal agencies by the Plain Writing Act of 2010. This law 
requires that federal agencies use, ``clear Government communication 
that the public can understand and use.'' \14\ As this proposed 
amendment does not change the contents of records under Sec.  371.3, 
the Agency finds that there would be no economic impact associated with 
the modernization of this language.
---------------------------------------------------------------------------

    \14\ Plain Writing Act of 2020. GovInfo.gov. Oct. 2020. 
Available at: https://www.govinfo.gov/content/pkg/PLAW-111publ274/html/PLAW-111publ274.htm (accessed May 24, 2024).
---------------------------------------------------------------------------

Brokers Must Provide Records Upon Request
    FMCSA is proposing to amend the language of Sec.  371.3(c) to state 
that brokers have an obligation to disclose records within 48 hours of 
request. The prevalence of waivers may be reduced through the framing 
of this regulatory obligation. Broker transparency is intended as a 
mechanism to allow parties to a brokered freight transaction to self-
police the performance of the transaction. A free market in the 
brokered freight industry would represent a scenario where the demand, 
supply, and prices of brokered transportation of property are 
determined by the parties to these brokered transactions, i.e., 
shippers, brokers, and motor carriers. However, free markets require 
transparency to operate efficiently. When parties to a brokered 
transaction have unequal access to relevant information, known as 
information asymmetry, that could lead to an inefficient allocation of 
resources and therefore a sub-optimal outcome for society. Since 
waivers of Sec.  371.3 inhibit the sharing of information in brokered 
freight transactions, these waivers may create some degree of market 
failure or inefficiency.
    A party to a brokered transaction may seek records under Sec.  
371.3(c) for various reasons, including, but not limited to the 
following:
     Motor carriers may seek transaction records in furtherance 
of a remedy against potential charge back abuses or other erroneous 
charges on completed loads. For example, if the broker made a 
concession to the owner of a brokered load and attempted to recapture 
these funds from the carrier, this could be verified by the carrier 
through transaction records requested under Sec.  371.3. It is evident 
from the comments received that some motor carriers believe spurious 
charge backs can be identified if motor carriers have access to 
transparency information.
     Shippers may use transaction records to verify that the 
services that they were billed for by the broker were provided. This 
can help to prevent fraud or errors in billing.
     Motor carriers and shippers may seek transparency on 
broker margins. Although a party to a brokered contract would have 
access to transaction records under Sec.  371.3 only after the 
contractual service has been completed, carrier and shippers could use 
this information determine whether the margins are commensurate with 
the service provided, and potentially to negotiate for better rates or 
turn to other brokers for future loads. If many motor carriers and 
shippers were to make a similar decision, some brokers might find it 
difficult to contract out loads and therefore would face pressure to 
offer better rates and therefore improved margins for motor carriers.
     Motor carriers and shippers may use transaction 
information to identify instances where loads have been brokered 
without authority and to report such instances to FMCSA.
     Motor carriers believe less time would be spent resolving 
disputes if transaction information is readily available. Several 
reports submitted to FMCSA indicate that motor carriers have spent 
considerable time seeking such information or resolving issues stemming 
from its absence.
    FMCSA does not regulate freight rates or broker margins. The 
proposed rule would reframe the existing regulation that requires the 
broker to provide a record of the transaction to the motor carrier on 
request after the transaction is complete, but it would not regulate 
rates or margins. The Agency believes that this transparency could have 
some impact on rates and margins, and the current prevalence of waivers 
suggests that brokers likely derive some benefit from not providing 
transaction records to motor carriers. However, the Agency also 
believes that the proposed rule may have only a minimal impact on rates 
and margins, and other factors may still predominate in the setting of 
rates and margins. The possibility of a minimal impact is supported by 
the wide availability of rate information and the fact that carriers 
would only receive the transparency information after a transaction is 
completed, i.e., after the rate is negotiated. Due to the limitations 
of available data, FMCSA cannot judge the likely impact and the Agency 
seeks further information to determine the degree of impact.
    To gain a clearer understanding of the impact of clarifying 
brokers' obligations to provide records under Sec.  371.3, the Agency 
examined market conditions in the freight brokerage industry over the 
past few years. According to data from the U.S. Census Bureau, revenues 
for freight brokers increased, in aggregate, from 2019 to 2021.\15\ 
While the Census Bureau data shows a decrease in motor carrier revenues 
from 2019 to 2020, it also shows a rebound in motor carrier's revenue 
in 2021. Truck driver wages also showed continuous growth during 2019 
to 2021. A study conducted by the American Trucking Associations also 
shows average wage increased for truck drivers by 18% between 2019 and 
2021.\16\ The COVID-19 emergency also

[[Page 91664]]

resulted in reduced costs for motor carriers. According to a report 
published by The Trucker, motor carriers benefitted from reduced costs 
in fuel and increased fuel economy due to lower traffic levels. Motor 
carriers' marginal operating costs per mile correspondingly decreased 
by approximately 5 cents.\17\ These cost savings would have helped to 
offset the reduction in revenues for the industry during the COVID-19 
national emergency.
---------------------------------------------------------------------------

    \15\ U.S. Census Bureau. Impact of COVID-19 on Passenger and 
Freight Transportation (census.gov). Sept. 2023. Available at: 
https://www.census.gov/library/stories/2023/09/air-transportation-pandemic-impact.html (accessed Apr. 18, 2024).
    \16\ Fisher, Josh. ``Truckload driver wages up 18% over past two 
years.'' Fleet Owner. Aug. 2022. Available at: https://www.fleetowner.com/operations/article/21248550/truckload-driver-wages-up-18-over-past-two-years (accessed May 7, 2024).
    \17\ ``Study details COVID-19's impact on trucking industry.'' 
The Trucker. Dec. 2021. https://www.thetrucker.com/trucking-news/the-nation/study-details-covid-19s-impact-on-trucking-industry 
(accessed Apr. 18, 2024).
---------------------------------------------------------------------------

    The number of brokers with operating authority grew by 20.90 
percent from 2020 to 2021. Similarly, the number of motor carriers with 
operating authority grew by 18.81 percent from 2020 to 2021. Public 
industry data shows that rates for brokered freight loads rebounded 
from their COVID-19 downturn in late 2020 and peaked in 2022.\18\ 
Figure 1 provides a visual display of the relative change in brokered 
freight rates over time. The Agency finds that the rapid entry of new 
motor carriers into the market during 2022 was driven by a surge in 
freight demand beginning in 2021, with new brokers and motor carriers 
intending to capitalize on unprecedented market conditions. These 
conditions included government subsidies such as the COVID-19 economic 
impact payments, the Paycheck Protection Program (PPP), lower marginal 
costs and relatively high rates for trucking loads as seen in Figure 1.
---------------------------------------------------------------------------

    \18\ Spot Market Insights. Truckstop. Available at: https://truckstop.com/product/spot-market-insights/ (accessed Apr. 18, 
2024).
---------------------------------------------------------------------------

    By 2023, however, as a market correction emerged, brokers and motor 
carriers began leaving the market. As the initial pandemic response 
waned, demand began to normalize which led to an oversupply of capacity 
and subsequent broker and carrier exits. Freight rates also came down 
from their 2022 peak. Such rapid expansion, as seen in 2021, was 
unlikely to be sustainable, and a natural correction towards a new 
equilibrium was anticipated. However, the Agency finds that the average 
rate for a brokered load and the total number of motor carriers and 
brokers holding active authority remain at levels higher than their 
pre-pandemic numbers, indicative of a freight industry more robust than 
when OOIDA and SBTC submitted their petitions. This, combined with a 
study published in January 2024, indicating average broker margins of 
approximately 13.47 percent to 15.4 percent, depending on the 
configuration of the truck, suggests a period of favorable margins for 
both brokers and motor carriers.\19\
---------------------------------------------------------------------------

    \19\ Lockie, Alex. ``How much money are brokers really making 
from owner-operator's hauls?'' Overdrive Online. Feb. 16, 2024. 
Available at: https://www.overdriveonline.com/business/article/15661579/how-much-money-are-freight-brokers-really-making-from-truckers (accessed Apr. 18, 2024).
---------------------------------------------------------------------------

    In conclusion, analysis of available data suggests that brokerage 
margins generally align with the self-reported industry averages of 
approximately 15 percent. The Agency posits that isolated instances of 
higher margins are not indicative of broader trends within the 
industry. Instead, the Agency maintains that pricing trends in the 
brokerage industry are tied to market factors.
BILLING CODE 4910-EX-P
[GRAPHIC] [TIFF OMITTED] TP20NO24.106

BILLING CODE 4910-EX-C

[[Page 91665]]



                    Table 2--Year-Over-Year Changes of Active Brokers and Motor Carriers \1\
----------------------------------------------------------------------------------------------------------------
                                Total brokers      Total brokers      Total motor carriers   Carrier percentage
             Year                 registered     percentage change         registered              change
----------------------------------------------------------------------------------------------------------------
2015.........................           16,745  ...................                551,150
2016.........................           17,764                 6.09                524,058                 -4.92
2017.........................           18,637                 4.91                543,061                  3.63
2018.........................           20,154                 8.14                586,720                  8.04
2019.........................           21,770                 8.02                602,542                  2.70
2020.........................           24,138                10.88                637,721                  5.84
2021.........................           29,184                20.90                757,652                 18.81
2022.........................           31,885                 9.26                813,844                  7.42
2023.........................           28,773                -9.76                787,189                 -3.28
----------------------------------------------------------------------------------------------------------------
\1\ Pocket Guide to Large Truck and Bus Statistics, FMCSA. Available at: https://www.fmcsa.dot.gov/safety/data-and-statistics/commercial-motor-vehicle-facts (accessed Jun. 10, 2024). Data for each year is captured at year
  end.

    FMCSA understands that several factors influence freight brokerage 
pricing including, but not limited to:
    1. Costs of fulfilling contractual obligations e.g., fuel, labor, 
depreciation of equipment, licensing, insurance, taxes;
    2. Market rate information;
    3. Demand by motor carriers for brokered loads;
    4. The supply of brokered load contracts on the market;
    5. Seasonal demand, i.e., the changes in demand for brokered loads 
depending on the time of year;
    6. Type of commodity; and
    7. Existing economic conditions, e.g., COVID-19 national emergency, 
recession.
    The Agency believes that these factors, rather than the 
availability of additional information concerning broker margins, are 
likely dominant for pricing brokered loads. Through comments submitted 
by industry stakeholders, FMCSA understands that broker records would 
be of limited utility in negotiating contracts due to the effect of the 
pricing factors listed above, as such records are provided only upon 
request and after the completion of the contractual obligations. 
Therefore, the records may only be useful for negotiating pricing for 
future loads. However, a broker may refuse such negotiations by 
claiming that all the pricing factors for the load are not the same.
    Any shift in pricing in the brokered freight industry would take 
the form of transfers. A transfer in this context would be a shift in 
revenue from one party to another, specifically from brokers to motor 
carriers. FMCSA cannot predict the magnitude or frequency of any 
transfers between parties to brokered transactions but believes 
transfers could occur because of this proposed rule.
    The Agency is unable to quantitatively estimate the magnitude or 
frequency of any transfers due to lack of data on:
    1. How many transactions under Sec.  371.3 are waived;
    2. The number of transactions in the brokered freight industry;
    3. The margins of brokers and motor carriers throughout the 
industry; and
    4. The degree to which those margins are impacted by waivers to the 
current regulation.
    The Agency believes transfers may occur based on the following 
factors:
    1. A significant number of motor carriers have said they intend to 
use transparency information to negotiate for better rates. However, as 
discussed previously, FMCSA believes the content of records under Sec.  
371.3 would be of limited utility in negotiating rates;
    2. Brokers who currently use Sec.  371.3 waivers may relinquish 
some degree of competitive advantage if the proposed rule is effective 
at reducing the frequency at which these brokers use waivers to the 
regulation. If brokers currently price the value of this competitive 
advantage into their brokerage contracts, their ability to maintain 
current margins could be weakened; and
    3. If this proposal were to effectively reduce the prevalence of 
waivers then carriers may be better able to detect unauthorized 
brokering by examining transparency data to identify the parties 
involved in the brokered transaction. Carriers could then report 
suspected unauthorized brokering to FMCSA for enforcement action. If 
these measures successfully reduce unauthorized brokering, then those 
profits could potentially be redirected to motor carriers and brokers 
with the appropriate authority.
    FMCSA also acknowledges that transfers need not be large, as a 
percentage of total industry revenue, to meet the economically 
significant threshold of $200 million, under E.O. 14094. The Agency 
estimates the actual revenues specific to the broker entities subject 
to this regulation range from $11.6 billion \20\ to $65 billion \21\ 
per year. Additional revenue estimates for the entire industry also 
include $16.58 billion.\22\ The Agency has no industry revenue 
information specific to brokers that would be impacted by this 
rulemaking. Due to limitations in available data, it is not possible to 
isolate revenue estimates specifically for brokers subject to this 
proposed rulemaking. Since these brokers represent a subset of the 
overall U.S. brokerage industry, their revenue is unlikely to be at the 
upper end of this range.
---------------------------------------------------------------------------

    \20\ Freight Brokerage Market Size & Share, Growth Trends. 
Global Market Insights (GMI). Feb. 2024. Available at: https://www.gminsights.com/industry-analysis/freight-brokerage-market 
(accessed May 10, 2024).
    \21\ 2017 Economic Census. Table EC1700SIZEREVFIRM--Selected 
Sectors: Sales, Value of Shipments, or Revenue Size of Firms for the 
U.S.: 2017. U.S. Census Bureau. Available at: https://data.census.gov/table/ECNSIZE2017.EC1700SIZEREVFIRM?t=Receipt%20Size&n=488510 (accessed 
Apr. 18, 2024).
    \22\ Global News Wire. ``United States Freight Brokerage Market 
Revenues to Reach USD 24.75 billion by 2028.'' Mordor Intelligence. 
July 2023. Available at: https://www.globenewswire.com/en/news-release/2023/07/06/2700461/0/en/United-States-Freight-Brokerage-Market-Revenues-to-Reach-USD-24-75-billion-by-2028-Market-Size-Share-Forecasts-Trends-Analysis-Report-by-Mordor-Intelligence.html 
(accessed Apr. 18, 2024).
---------------------------------------------------------------------------

    The maximum percentage of transfers that could occur in response to 
this rulemaking without reaching the economically significant threshold 
of $200 million of impacts in any 1 year ranges from 1.7 percent \23\ 
to 0.3 percent.\24\ As discussed, the Agency believes the economic 
threshold for significance is likely closer to 1.7 percent than to 0.3 
percent, as the broker entities subject to this regulation represent a 
subset of the total number of transportation brokers operating in the 
United States. The Agency requests comment on the frequency and

[[Page 91666]]

magnitude of transfers that may occur as a result of this rulemaking 
and invites all interested parties to submit relevant data and 
information.
---------------------------------------------------------------------------

    \23\ $200 million / $11.6 billion = 1.7%.
    \24\ $200 million / $65 billion = 0.3%.
---------------------------------------------------------------------------

    It is important to note that any shift away from the current 
practice of including waivers of Sec.  371.3(c) may present economic 
disadvantages to brokers. The Agency acknowledges England Logistics' 
comment that inappropriate solicitation of freight to owners of 
brokered loads presents a business risk to them. The Agency recognizes 
that a broker's role extends beyond matching shippers with motor 
carriers. Brokers act as an extension of the shipper's team, managing 
and overseeing cargo transportation with the carrier and handling 
varying documentation. The Agency does not believe that this proposal 
would materially alter the value proposition offered by brokers to 
shippers or make brokers less competitive as compared to working 
directly with motor carriers. Although the proposed rule clarifies that 
brokers have a regulatory obligation to disclose records upon request, 
it does not prevent them from including confidentiality clauses in 
their contracts with motor carriers or shippers.
    The proposed amendments to paragraph (c) would not impose any duty 
on motor carriers. They clarify that the broker has a duty to provide 
records to the motor carrier upon request, as intended by the current 
regulation, but the motor carrier is not obligated to request the 
records. The Agency does not believe that the proposed amendments will 
impose a cost on motor carriers.
Records Must Be Provided Within 48 Hours of Request
    The current regulation lacks a defined timeframe within which 
brokers must fulfill information requests. The Agency has received 
reports of motor carriers experiencing lengthy delays in obtaining 
required information from brokers. The Agency has heard from at least 
one carrier claiming that a broker asserted that Sec.  371.3, ``does 
not state how long they have, to comply with that request and we can 
wait 10 years before we give you those records.'' \25\ A defined 48-
hour compliance period for brokers to respond to transparency requests 
under Sec.  371.3 would directly address industry stakeholder concerns 
about excessive delays.
---------------------------------------------------------------------------

    \25\ Complaint reported to FMCSA's National Consumer Complaint 
Database in January 2022.
---------------------------------------------------------------------------

    The Agency acknowledges that the requirement for broker records to 
be provided within 48 hours may present some costs for brokers. Brokers 
may need to restructure their processes, invest in IT systems, or 
develop new IT systems altogether to meet this requirement. Through 
comments to the OOIDA and SBTC petitions, the Agency understands that 
not every broker may have pertinent transaction records in the same 
database, filing system, or transport management system.
    Under this proposal, brokers would not be required to produce or 
create new information. However, some brokers may need to increase 
total available staffing hours or invest in technology upgrades to meet 
the 48-hour timeframe. The Agency lacks data to estimate these costs.
    The Agency believes that most, if not all, brokers are complying 
with the current regulation to maintain a record of each transaction in 
accordance with Sec.  371.3. The Agency is unable to quantify the costs 
to brokers of providing transparency information within 48 hours due to 
limited available data on:
    1. The total number of transactions processed by brokers that would 
be subject to the proposed regulation in any given time;
    2. The anticipated volume of requests for transaction-specific 
information under Sec.  371.3; and
    3. The technological readiness of brokers to fulfill these requests 
within the proposed 48-hour timeframe.
    However, the Agency believes that some of these costs could be 
minimally offset by cost savings from having to respond to repeated 
inquiries from motor carriers for the content of records under Sec.  
371.3. The Agency acknowledges that currently motor carriers may, in 
some instances, submit repeated requests for records under Sec.  371.3, 
extending over long periods, potentially lasting months. A defined 48-
hour compliance period for brokers to respond to transparency requests 
under Sec.  371.3 would directly address delays in receiving 
transparency information and therefore mitigate the need for repeated 
inquiries.
4. Benefits
    The primary purpose of this proposed rule is to modernize FMCSA's 
existing recordkeeping requirements and transparency provisions for 
brokers and clarify the obligation imposed on brokers to respond to 
requests for transaction records and the process parties must follow 
when requesting and supplying such records. The electronic 
recordkeeping requirement would offer several advantages over paper 
records. Information can be easily searched and retrieved, eliminating 
the need to search through physical documents. Electronic records are 
also less susceptible to loss or damage, as data can be backed up to 
prevent permanent data loss. A lack of transparency in freight 
brokerage contracts has been linked to excessive and inappropriate 
charge backs by brokers. Motor carriers argue that access to broker 
information mandated by Sec.  371.3 is essential for them to 
effectively challenge or even verify the legitimacy of charge backs. 
Without this information, they claim their ability to defend themselves 
against potentially inaccurate charges is significantly hampered.
    The Agency believes the inclusion of the date of payments with the 
contents of records would provide additional information a carrier may 
use to counter any inaccurate claims, or spurious charge backs. The 
intent of the current regulations in Sec.  371.3 is, in part, to enable 
self-policing of freight-brokered contracts in the absence of more 
restrictive regulation. The proposed rule would help improve self-
policing of freight-brokered contracts on issues such as charge back 
abuses and unauthorized brokering.
    Some motor carriers allege that broker information would enable 
them to negotiate for better rates. The Agency has not been able to 
determine the frequency or magnitude of any possible transfers 
resulting from this rulemaking but acknowledges that motor carriers and 
shippers may be able to negotiate better rates over time using such 
information due to a decrease in the information asymmetry present in 
the brokerage industry. Any resulting shift in revenues between the 
entities that would be subject to this rulemaking would take the form 
of transfers. Transfers are not considered to be economic benefits or 
costs at the societal level.
    The Agency believes that broker information would offer limited 
utility in securing more favorable rates. This belief is based on a few 
key considerations. First, the pricing of brokered contracts is 
primarily driven by prevailing market forces. Factors such as the 
overall economic climate, supply and demand dynamics within the 
brokerage industry, and other relevant market conditions, as discussed 
in Section VIII.A.3. Costs, exert a great influence on brokered 
contract pricing. Second, the information itself would become available 
only after the contractual obligations have been fulfilled. Because 
brokered contracts are highly specific, with variation in terms, 
length, and conditions, information on past contracts would be only 
minimally applicable for direct comparison in

[[Page 91667]]

future contract negotiations. However, the reduction in information 
asymmetry due to increased transparency should enable a more efficient 
market by reducing charge back abuses.
5. Alternatives Considered
    The Agency explored alternative approaches, such as a phased 
implementation, automatic disclosure of the content of records under 
Sec.  371.3, prohibiting waivers, and a longer timeframe for providing 
transparency information than the proposed 48 hours. FMCSA decided 
against these alternative approaches. The Agency finds that a phased 
implementation would not reduce potential burdens imposed by this 
proposed rule for the following reasons:
    1. Brokers are already obligated to maintain records under Sec.  
371.3. Therefore, they possess the information necessary to comply with 
the proposed 48-hour turnaround for information requests;
    2. The Agency believes that most brokers are maintaining a record 
of their transactions in an electronic format; and
    3. Brokers likely capture the date of payment for brokered services 
as part of their standard transaction and accounting processes.
    The OOIDA petition sought a provision making disclosure of the 
records automatic. OOIDA stated the automatic disclosure was necessary 
to prevent selective retaliation, i.e., blacklisting, against motor 
carriers that exercise their right to review the transaction records. 
The proposed rule does not include an automatic disclosure provision; 
instead, parties to the transaction would continue to have the ability 
to review the records upon request. The Agency believes that an 
automatic disclosure provision would be excessively burdensome to 
brokers. Though the concerns regarding retaliation appear plausible, 
the Agency cannot determine how frequently that retaliation would take 
place. This is, in part, because motor carriers have frequently waived 
their right to review, which makes it difficult for the Agency to 
determine if retaliation would be a common problem if the proposed 
regulation is implemented.
    Automatic disclosure would provide the content of records under 
Sec.  371.3 to all motor carriers, but many motor carriers may choose 
not to utilize this information. A request-based system ensures that 
motor carriers who value access to the content of records under Sec.  
371.3 receive it, while minimizing the burden for brokers who, under an 
automatic disclosure requirement, would need to distribute the content 
of records to all parties, whether or not they wanted to receive it. 
The Agency is unable to develop quantitative cost estimate comparisons 
for this alternative due to lack of data on the number of transactions 
per broker, how many of these transactions include waiver clauses, and 
how many parties request access to the content of records under Sec.  
371.3.
    As previously discussed, FMCSA considered whether to include an 
explicit ban on waivers, as suggested by SBTC and OOIDA, in the 
regulation and decided against it.
    The proposed timeframe of 48 hours to provide requested records 
would benefit motor carriers by ensuring timely access to information 
and would produce cost savings for brokers by reducing the frequency at 
which brokers would need to respond to or consider repeated inquiries 
under Sec.  371.3. A longer timeframe than 48 hours would diminish 
these cost savings. The Agency views 48 hours as a balanced approach, 
promoting both industry efficiency and manageable burdens for brokers. 
The Agency seeks comment on the 48-hour proposed timeframe to provide 
requested records.

B. Advance Notice of Proposed Rulemaking

    Under 49 U.S.C. 31136(g), FMCSA is required to publish an advance 
notice of proposed rulemaking (ANPRM) or proceed with a negotiated 
rulemaking if a proposed safety rule ``under this part'' is likely to 
lead to the promulgation of a major rule. ``This part'' is Part B of 
Subtitle VI of Title 49, United States Code, i.e., 49 U.S.C. chapters 
311-317. The statutory authority for this rule, however, is derived 
from the Agency's commercial authorities in Part B of Subtitle IV of 
Title 49, United States Code, i.e., 49 U.S.C. chapters 131-149. 
Therefore, the Agency is not required to publish an ANPRM or proceed 
with a negotiated rulemaking.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.), as amended 
by the Small Business Regulatory Enforcement Fairness Act of 1996,\26\ 
requires Federal agencies to consider the effects of the regulatory 
action on small business and other small entities and to minimize any 
significant economic impact. The term small entities comprises small 
businesses and not-for-profit organizations that are independently 
owned and operated and are not dominant in their fields, and 
governmental jurisdictions with populations of less than 50,000 (5 
U.S.C. 601(6)). Accordingly, DOT policy requires an analysis of the 
impact of all regulations on small entities, and mandates that agencies 
strive to lessen any adverse effects on these businesses.
---------------------------------------------------------------------------

    \26\ Public Law 104-121, 110 Stat. 857, (Mar. 29, 1996).
---------------------------------------------------------------------------

Affected Small Entities
    This rule has the potential to impact shippers, brokers, and motor 
carriers. The Small Business Administration's (SBA) size standard for a 
small entity (13 CFR 121.201) differs by industry code. The entities 
affected by this rule fall into many different industry codes. In order 
to determine the number of affected small entities, FMCSA examined the 
2012 and 2017 Economic Census data for two different North American 
Industry Classification System (NAICS) subsectors: Truck Transportation 
(subsector 484) and Transit and Ground Transportation (subsector 485).
    As shown in Table 3 below, the SBA size standards for subsectors 
484 and 485 range from $19.0 million to $43.0 million in revenue per 
year. To determine the percentage of firms that have revenue at or 
below SBA's thresholds within each of the NAICS national industries, 
FMCSA examined data from the 2017 Economic Census.\27\ The Census 
Bureau will suppress (omit) data in Economic Census tables if the data, 
were it to be known, would allow one contributor's value to be too 
closely estimated. This can occur when there are very few contributors, 
or when there are one or two large contributors that dominate the 
aggregate statistic.\28\ In instances where 2017 data were suppressed, 
the Agency imputed 2017 levels using data from the 2012 Economic 
Census.\29\ Boundaries for the revenue categories used in the Economic 
Census do not exactly coincide with the SBA thresholds. Instead, the 
SBA threshold generally falls between two different revenue categories. 
However, FMCSA was able

[[Page 91668]]

to estimate the percentage of small entities within each NAICS code.
---------------------------------------------------------------------------

    \27\ U.S. Census Bureau. 2017 Economic Census. Table 
EC1700SIZEEMPFIRM--Selected Sectors: Employment Size of Firms for 
the U.S.: 2017. Available at: https://www.census.gov/data/tables/2017/econ/economic-census/naics-sector-48-49.html (accessed Feb. 3, 
2023).
    \28\ U.S. Census Bureau. Disclosure: Cell Suppression. Available 
at: https://www.census.gov/programs-surveys/economic-census/technical-documentation/methodology/disclosure.html (accessed Jun. 
14, 2024).
    \29\ U.S. Census Bureau. 2012 Economic Census. Table 
EC1248SSSZ4--Transportation and Warehousing: Subject Series--Estab & 
Firm Size: Summary Statistics by Revenue Size of Firms for the U.S.: 
2012. Available at: https://www.census.gov/data/tables/2012/econ/census/transportation-warehousing.html (accessed Feb. 3, 2023).
---------------------------------------------------------------------------

    The percentages of entities with annual revenue less than the SBA's 
threshold, and therefore considered small, ranged from 93.1 percent to 
99.5 percent. Specifically, approximately 93.1 percent of the firms in 
the category representing brokers, Freight Transportation Arrangement 
(national industry 488510), had annual revenue less than the SBA's 
revenue threshold of $20.0 million and would be considered small 
entities.\30\ FMCSA estimates 99.5 percent of firms in the General 
Freight Trucking, Local (national industry 484110) had annual revenue 
less than the corresponding SBA's revenue threshold of $34.0 million 
and would be considered small entities.
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    \30\ All national industries under this subsector have an SBA 
size threshold of $34 million with the exception of General Freight 
Trucking, Long Distance, Less Than Truckload (484122), which has a 
revenue threshold of $43 million.
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    The Agency believes that the burden to small brokers would be de 
minimis. The proposed rule would not impose any burdens on small motor 
carriers. Small brokers would be required to maintain transparency 
records electronically, include the date of payment for each service 
performed in connection with each shipment, and would be permitted to 
include confidentiality clauses in their contracts. The Agency believes 
that most, if not all, small brokers are currently maintaining records 
of their transactions in an electronic format. For brokers who are not 
maintaining their records electronically, the Agency estimates that 
these records can be made available electronically at a per transaction 
cost of $2.75, based on the assumption that it would take an office 
clerk approximately 5 minutes to create an electronic record of each 
transaction. The Agency also believes that small brokers likely already 
retain payment dates for brokered services as part of their standard 
transaction and accounting processes. The Agency finds that including 
date of payments with records requested under Sec.  371.3 would 
constitute a minimal burden. Small brokers could incur some loss in 
revenues through transfers if the proposed regulation is effective in 
increasing transparency between brokers, shippers, and carriers. 
However, the Agency is unable to quantify the frequency and magnitude 
of possible transfers but believes it would be small based on the 
following factors:
    1. Pricing for brokered contracts is nuanced, and the economic 
conditions affecting any given brokered contract are unlikely to be 
identical to those affecting any future brokered contracts. This limits 
and may possibly negate the effectiveness of using broker information 
to negotiate for better rates on future contracts;
    2. The willingness of motor carriers to accept brokered freight 
contracts are based on several factors, such that increased 
transparency may have minimal to no impact on carrier preferences. 
These factors include costs of fulfilling the contractual obligations, 
market rate information, existing economic conditions, the type of 
commodity, and the time of year; and
    3. Brokers may find that they can retain current margins due to the 
relatively strong demand for brokered freight contracts.
    Table 3 below shows the complete estimates of the number of small 
entities within the industries that may be affected by this rule.

                                 Table 3--Estimates of Number of Small Entities
----------------------------------------------------------------------------------------------------------------
                                                     SBA size
         NAICS code               Description        standard      Total number      Number of    Percent of all
                                                    (millions)       of firms     small entities       firms
----------------------------------------------------------------------------------------------------------------
484110......................  General Freight              $34.0          22,066          21,950            99.5
                               Trucking, Local.
484121......................  General Freight               34.0          23,557          23,045            97.8
                               Trucking, Long
                               Distance,
                               Truckload.
484122......................  General Freight               43.0           3,138           3,050            97.2
                               Trucking, Long
                               Distance, Less
                               Than Truckload.
484210......................  Used Household and            34.0           6,097           6,041            99.1
                               Office Goods
                               Moving.
484220......................  Specialized                   34.0          22,797          22,631            99.3
                               Freight (except
                               Used Goods)
                               Trucking, Local.
484230......................  Specialized                   34.0           7,310           7,042            96.3
                               Freight (except
                               Used Goods)
                               Trucking, Long
                               Distance.
488510......................  Freight                       20.0          13,252          12,332            93.1
                               Transportation
                               Arrangement.
----------------------------------------------------------------------------------------------------------------

    Consequently, I certify that the proposed action would not have a 
significant economic impact on a substantial number of small entities.

D. Assistance for Small Entities

    In accordance with section 213(a) of the Small Business Regulatory 
Enforcement Fairness Act of 1996 (Pub. L. 104-121, 110 Stat. 857), 
FMCSA wants to assist small entities in understanding this proposed 
rule so they can better evaluate its effects on themselves and 
participate in the rulemaking initiative. If the proposed rule would 
affect your small business, organization, or governmental jurisdiction 
and you have questions concerning its provisions or options for 
compliance, please consult the person listed under FOR FURTHER 
INFORMATION CONTACT.
    Small businesses may send comments on the actions of Federal 
employees who enforce or otherwise determine compliance with Federal 
regulations to the Small Business Administration's Small Business and 
Agriculture Regulatory Enforcement Ombudsman (Office of the National 
Ombudsman, see https://www.sba.gov/about-sba/oversight-advocacy/office-national-ombudsman) and the Regional Small Business Regulatory Fairness 
Boards. The Ombudsman evaluates these actions annually and rates each 
agency's responsiveness to small business. If you wish to comment on 
actions by employees of FMCSA, call 1-888-REG-FAIR (1-888-734-3247). 
DOT has a policy regarding the rights of small entities to regulatory 
enforcement fairness and an explicit policy against retaliation for 
exercising these rights.

E. Unfunded Mandates Reform Act of 1995

    The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) 
(UMRA) requires Federal agencies to assess the effects of their 
discretionary regulatory actions. The Act addresses actions that may 
result in the expenditure by a State, local, or Tribal government, in 
the

[[Page 91669]]

aggregate, or by the private sector of $200 million (which is the value 
equivalent of $100 million in 1995, adjusted for inflation to 2023 
levels) or more in any one year. Though this NPRM would not result in 
such an expenditure, and the analytical requirements of UMRA do not 
apply as a result, the Agency discusses the effects of this rule 
elsewhere in this preamble.

F. Paperwork Reduction Act

    This proposed rule contains information collection requirements 
under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520). As 
defined in 5 CFR 1320.3(c), collection of information comprises 
reporting, recordkeeping, monitoring, posting, labeling, and other 
similar actions. The title and description of the information 
collection, a description of those who must collect the information, 
and an estimate of the total annual burden follow. The estimate covers 
the time for reviewing instructions, searching existing sources of 
data, gathering and maintaining the data needed, and completing and 
reviewing the collection.
    Title: Property Broker Recordkeeping Requirements.
    OMB Control Number: [2126-NEW].
    Summary of the Information Collection: There are two information 
collections. The first covers brokered transaction recordkeeping, 
including the requirement for brokers to keep records of their 
transactions for three years and make those records available for 
inspection by FMCSA on demand. The second covers disclosure of records 
to parties involved in a brokered transaction. A broker is obligated to 
provide transaction records, upon request, to a shipper or motor 
carrier involved in the transaction.
    Need for Information: The first collection of information is needed 
for determining whether a broker is complying with FMCSA's 
recordkeeping regulations. The second information collection is needed 
for resolving disputes between shippers, brokers, and motor carriers 
arising from brokered transactions.
    Proposed Use of Information: In the first information collection, 
FMCSA would inspect and copy records of brokered transaction, to 
confirm whether the broker is complying with FMCSA's regulations. This 
would generally occur as part of an investigation following a complaint 
about a broker's practices. In the second information collection, 
shippers and motor carriers would use the records to verify transaction 
data, answer questions regarding charges and payments made, and provide 
supporting evidence in the event of disputes.
    Description of the Respondents: The respondents are brokers of 
property, that is, persons who, for compensation, arrange, or offer to 
arrange, the transportation of property by an authorized motor carrier. 
The respondents include HHG and non-HHG brokers.
    Number of Respondents: The estimated number of respondents is 
32,362.
    Frequency of Response: For the first information collection, the 
frequency of response as it pertains to a broker's obligation to make 
records available for inspection by FMCSA on demand will depend on how 
often the Agency inspects brokers' transaction records. The Agency 
believes that this will be a relatively rare occurrence compared to the 
total number of brokered transactions. For the second information 
collection, FMCSA finds no material difference in the anticipated 
frequency of requests for information from HHG brokers and non-HHG 
brokers. The Agency estimates that 5 percent of brokered property 
transactions will result in a request for transaction records. This 
would correspond to an average of 4 requests per year for each HHG 
property broker and 630 requests per year for each non-HHG property 
broker.
    Burden of Response: The first information collection would impose 
no annual burden hours on brokers because it is an ordinary and 
customary business practice. The second information collection would 
impose an estimated burden of 2 minutes per request.
    Estimate of Total Annual Burden: There is no annual burden for the 
first information collection. For the second information collection, 
the total annual burden is estimated at 670,000 hours, which 
corresponds to an estimated $22,110,000 of labor costs. There are no 
non-labor costs associated with the second information collection.
    As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 
3507(d)), FMCSA will submit a copy of this NPRM to OMB for review. You 
are asked to comment on any aspect of this information collection, 
including: (1) Whether the proposed collection is necessary for FMCSA 
to perform its functions; (2) the accuracy of the estimated burden; (3) 
ways for FMCSA to enhance the quality, usefulness, and clarity of the 
collected information; and (4) ways that the burden could be minimized 
without reducing the quality of the collected information.

G. E.O. 13132 (Federalism)

    A rule has implications for federalism under section 1(a) of E.O. 
13132 if it has ``substantial direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.'' FMCSA has determined that this rule would not have 
substantial direct costs on or for States, nor would it limit the 
policymaking discretion of States. Nothing in this document preempts 
any State law or regulation. Therefore, this rule does not have 
sufficient federalism implications to warrant the preparation of a 
Federalism Impact Statement.

H. Privacy

    The Consolidated Appropriations Act, 2005,\31\ requires the Agency 
to assess the privacy impact of a regulation that will affect the 
privacy of individuals. This NPRM would not require the collection of 
personally identifiable information (PII).
---------------------------------------------------------------------------

    \31\ Public Law 108-447, 118 Stat. 2809, 3268, note following 5 
U.S.C. 552a (Dec. 4, 2014).
---------------------------------------------------------------------------

    The Privacy Act (5 U.S.C. 552a) applies only to Federal agencies 
and any non-Federal agency that receives records contained in a system 
of records from a Federal agency for use in a matching program.
    The E-Government Act of 2002,\32\ requires Federal agencies to 
conduct a Privacy Impact Assessment (PIA) for new or substantially 
changed technology that collects, maintains, or disseminates 
information in an identifiable form. No new or substantially changed 
technology would collect, maintain, or disseminate information as a 
result of this rule. Accordingly, FMCSA has not conducted a PIA.
---------------------------------------------------------------------------

    \32\ Public Law 107-347, sec. 208, 116 Stat. 2899, 2921 (Dec. 
17, 2002).
---------------------------------------------------------------------------

    The Agency will complete a Privacy Threshold Assessment (PTA) to 
evaluate the risks and effects the proposed rulemaking might have on 
collecting, storing, and sharing personally identifiable information. 
The PTA will be submitted to FMCSA's Privacy Officer for review and 
preliminary adjudication and to DOT's Privacy Officer for review and 
final adjudication.

I. E.O. 13175 (Indian Tribal Governments)

    This rule does not have Tribal implications under E.O. 13175, 
Consultation and Coordination with Indian Tribal Governments, because 
it does not have a substantial direct effect

[[Page 91670]]

on one or more Indian Tribes, on the relationship between the Federal 
Government and Indian Tribes, or on the distribution of power and 
responsibilities between the Federal Government and Indian Tribes.

J. National Environmental Policy Act of 1969

    FMCSA analyzed this proposed rule pursuant to the National 
Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and 
determined this action is categorically excluded from further analysis 
and documentation in an environmental assessment or environmental 
impact statement under FMCSA Order 5610.1 (69 FR 9680), Appendix 2, 
paragraphs 6(k)(1) and (2). The categorical exclusions (CEs) in 
paragraphs 6(k)(1) and (2) cover requirements pertaining to the duties 
and obligations of a broker, and the records a broker must keep. The 
proposed requirements in this rule are covered by these CEs.

K. Rulemaking Summary

    As required by 5 U.S.C. 553(b)(4), a summary of this rule can be 
found in the Abstract section of the Department's Unified Agenda entry 
for this rulemaking at https://www.reginfo.gov/public/do/eAgendaViewRule?pubId=202310&RIN=2126-AC63.

List of Subjects in 49 CFR Part 371

    Brokers, Motor carriers, Reporting and recordkeeping requirements.

    Accordingly, FMCSA proposes to amend 49 CFR part 371 as follows:

PART 371--BROKERS OF PROPERTY

0
1. The authority citation for part 371 is revised to read as follows:

    Authority:  49 U.S.C. 13301, 13501, 13904, and 14122; subtitle 
B, title IV of Pub. L. 109-59; and 49 CFR 1.87.


Sec.  371.2  [Amended]

0
2. Amend Sec.  371.2 by removing the definition of ``Non-brokerage 
service''.
0
3. Revise and republish Sec.  371.3 to read as follows:


Sec.  371.3  Records to be kept by brokers.

    (a) A broker must keep a record of each transaction. Such records 
must be maintained in an electronic format as described in Sec.  
390.32(d). For purposes of this section, brokers may keep master lists 
of consignors and the address and registration number of the carrier, 
rather than repeating this information for each transaction. The record 
must show:
    (1) The name and address of the consignor;
    (2) The name, address, and registration number of the originating 
motor carrier;
    (3) The bill of lading or freight bill number;
    (4) The amount of compensation received by the broker for each 
service performed in connection with each shipment, including freight 
charges, surcharges, and accessorial fees; the date of payment; and the 
name of the payer, including any business aliases, if known; and
    (5) Any penalties assessed in connection with each shipment.
    (b) Brokers must keep the records required by this section for a 
period of 3 years.
    (c) Brokers must provide, upon request by any party to a brokered 
transaction, a copy of the record of the transaction required to be 
kept by this section. Records must be provided electronically within 48 
hours of the broker's receipt of the request.

    Issued under authority delegated in 49 CFR 1.87.
Vincent G. White,
Deputy Administrator.
[FR Doc. 2024-27115 Filed 11-19-24; 8:45 am]
BILLING CODE 4910-EX-P