DOT Proposes Broker Transparency Rule and Delays Financial Responsibility Compliance
A recent DOT proposal and an extension to a final rule put property brokers back into the news. Brokers, shippers, and carriers will be impacted.
Broker transparency
The first is a new proposal to 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 amend the format and content of the records.
The petitioners for the rule change requested that the Federal Motor Carrier Safety Administration (FMCSA):
- Require 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. The agency’s proposal stopped short of the full request.
Current regulations already stipulate the parties to a brokered freight transaction have a right to review the broker's record of the transaction. This right, however, is often waived by contracts that are typically written by the broker or the brokers’ agent. Carriers and drivers, particularly small carriers, and independent drivers support this change. The FMCSA held listening sessions on the issue where the agency learned that broker transparency is rare in practice. The agency’s desired outcome for a rule change will make it more likely that brokers comply with their regulatory duty to provide information.
Interested parties on either side can submit comments to the FMCSA on or before January 21, 2025.
Financial responsibility rule delay
In the later part of 2023, the FMCSA published a “Broker and Freight Forwarder Financial Responsibility” rule. The rule will eventually make it easier for the FMCSA to suspend broker and freight forwarder operating authority when the entity’s demonstration of financial responsibility becomes in doubt.
The initial final rule’s compliance date for the provision regarding immediate suspension, financial failure or insolvency, and enforcement authority was slated to be January 16, 2025. The compliance date will likely be pushed back one year to January 16, 2026.
The delayed compliance is because the FMCSA determined that its updated online registration system, which will be used to accept filings and track notifications, will not be available before January 16, 2025. The later compliance date will provide regulated entities time to begin using and familiarizing themselves with the system before compliance is required.
Key to remember
Small changes to regulatory text and compliance dates updates often carry ripple effects across the supply chain. Carriers, brokers, shippers, and drivers need to stay informed.