FMCSA announces guidance on definition of “Broker” and “Bona Fide Agent” as well as on role of dispatch services

Legal Alert from the Scopelitis Law Firm.

On November 16, 2022, FMCSA will issue guidance regarding the definition of what constitutes a “broker” and a “bona fide agent” of a broker. The guidance is not a rulemaking and will be effective immediately. However, FMCSA has nevertheless requested comment on the guidance and may issue updated guidance based on comments received. The comment period will be open for 60 days.

The guidance is issued pursuant to a mandate of the Infrastructure Investment and Jobs Act (“IIJA”), which directed FMCSA to consider the role of so-called “dispatch services” in transportation and whether such services, which often purport to “represent” multiple motor carriers, can be considered a “bona fide agent” of a motor carrier. The question of whether a dispatch service can be a bona fide agent of a motor carrier is important because bona fide agents of motor carriers are not required to hold broker authority when acting in the capacity of an agent of the motor carrier.

Under existing regulations, a bona fide agent of a motor carrier is defined as “persons who are part of the normal organization of a motor carrier and perform duties under the carrier’s directions pursuant to a preexisting agreement which provides for a continuing relationship, precluding the exercise of discretion on the part of the agent in allocating traffic between the carrier and others.” 49 C.F.R. 371.2(b).

Moving to the actual guidance proffered by the FMCSA, one issue that was apparently raised by numerous commenters, with comment on both sides, was whether and to what extent handling of monies paid by shippers for motor carrier transportation is determinative of whether one acts as a broker. According to FMCSA, “handling money exchanged between shippers and motor carriers is a factor that strongly suggests the need for broker authority, but it is not an absolute requirement for one to be considered a broker.” Electronic load boards that do more than match loads may want to assess their status.

See the complete text of the alert from the Scopelitis firm online.