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Legal Updates

FMCSA Seeks Comments on Freight Broker Transparency Proposed Rule

Transportation Update


Key Notes:


    On November 20, 2024, the Federal Motor Carrier Safety Administration (FMCSA) published a Notice of Proposed Rulemaking aimed at enhancing transparency in brokered motor-carriage transactions (NPRM). The NPRM would strengthen arcane and seldom used regulatory obligations of truck freight brokers to disclose information to shippers and carriers about brokered transactions, including the pricing between the broker, shipper, and carrier. This information could impact broker pricing, alter commercial relationships between brokers, carriers, and shippers in brokered transactions, and lead to disclosure of a shipper’s proprietary pricing. Comments are due January 21.

    The FMCSA’s Proposal

    The NPRM proposes several key amendments to the broker records regulation under 49 C.F.R. § 371.3, which mandates that brokers maintain records of their transactions with shippers and motor carriers while granting the transacting parties the right to review these records. The primary changes include:

      The Concerns Prompting the NPRM

      This proposed rule responds to petitions from trade associations representing small truckers seeking to require that brokers provide motor carriers with greater access to information about the amounts brokers charge shippers and pay carriers for freight transactions. The rule also reflects FMCSA’s assessment of comments filed in response to an FMCSA request for comments related to the petitions.

      The FMCSA argues that access to information about a brokered transaction is necessary to address the “asymmetry of information” between the transaction’s parties, where the brokers typically possess more information about the transaction than the motor carrier or shipper. The agency further claims that this imbalance can limit the parties’ ability to negotiate effectively, resolve disputes efficiently and avoid unfair practices.

      Although the broker records rule at 49 C.F.R. § 371.3 requires brokers to keep records of each transaction and gives the transaction parties a right to review the records, the FMCSA identified four key concerns about the rule’s effectiveness:

        Impacts on Stakeholders

        The proposed rule could fundamentally reshape the relationships among shippers, carriers, and brokers in brokered transactions, altering their interactions and key contractual terms at the heart of their relationships. By requiring the disclosure of transaction information, the proposed rule risks impacting broker and carrier pricing and exposing shippers’ proprietary transportation rates without any safeguards regarding the use of disclosed confidential contract information. Brokers are particularly concerned that carriers might exploit this information to gain a competitive marketplace advantage.

        Opposition is Likely

        The broker industry and other stakeholders are likely to strongly oppose the rule as unnecessary and contrary to the robustly competitive and largely deregulated trucking industry. In 2020, a leading trade association for the broker industry petitioned FMCSA to eliminate the clause in the broker records rule that gives parties to a brokered transaction the right to review the broker’s transaction records. The petition explained that the clause originated over 40 years ago, during the early stages of extensive deregulation in the trucking industry. It also noted that the clause emerged in a bygone era when motor carriers paid broker commissions, and the parties involved in a brokered transaction needed to verify that these commissions were paid.

        At least one shipper group expressed concerns with the petitions leading to the NPRM, contending that disclosure of shipper-broker transaction information to carriers could interfere with the fluidity of the freight market and reveal proprietary pricing information.

        Action Items for Stakeholders

        FMCSA seeks comment from stakeholders on the NPRM. The agency is particularly interested in feedback on the following:

          We encourage all stakeholders to review the proposed rule and consider submitting comments to the FMCSA. For assistance with comments, please contact the authors if this Transportation Update.

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