FMCSA published final guidance on interpretations of the definitions of “broker” and “bona fide agents” and the extent to which “dispatch services,” which are undefined under federal law, fall within the definition of “broker” or “bona fide agent.” 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. A “broker” must obtain authority from FMCSA, whereas a “bona fide agent” is not required to obtain authority. FMCSA is finalizing interim guidance it issued in November 2022. Because it is guidance, the interpretation does not have the force and effect of law but notifies the public of how FMCSA views the distinctions.

The guidance notes that a “bona fide” agent must perform its duties pursuant to a preexisting agreement with the motor carrier it represents. FMCSA further clarified that a “bona fide agent” cannot allocate traffic, which means “any exercise of discretion … when assigning a load to a motor carrier. Therefore, although a “bona fide agent” can represent multiple motor carriers, to avoid having to register as a broker, it must structure the relationship to avoid allocating traffic between the carriers. Examples provided include:

1. Where an agent only sources loads from specific geographic areas for a particular carrier and a different geographic area for another carrier such that there is no overlap between the two geographies, and therefore, no discretion as to which carrier would receive the load; or
2. Where an agent solicits only non-hazmat loads for one carrier and only hazmat loads for another.

The guidance does not define “dispatch services” but does provide factors that are indicative of whether a “dispatch service” is acting as a “broker” or a “bona fide agent.” The determination is based on a totality of the circumstances but assessed through the extent of control a motor carrier has over a “dispatch service’s” actions. The greater the control, the less likely the “dispatch service” needs broker authority. For example, a “dispatch service” that is not involved in the financial transaction and is paid solely by the motor carrier, and that only solicits freight for the carrier from brokers and not shippers is among the several factors indicating the “dispatch service” is acting as a “bona fide agent” and does not require broker authority. Other factors in support of this outcome include but are not limited to the “dispatch service” disclosing they are working for a particular carrier and the “dispatch service” not soliciting a load and then subsequently assigning it to a different motor carrier. On the other hand, a “dispatch service” that solicits or negotiates freight directly with shippers or is operating without a written contract with the motor carrier are factors that indicate the “dispatch service” is acting as a “broker” and requires authority. Other factors indicating authority would be required include but are not limited to the “dispatch service” solicits shipments in the open market or the “dispatch service” solicits a shipment without a carrier in mind and then finding a carrier to transport the shipment.

For more information, please contact Nathaniel Saylor or Prasad Sharma.