Law Alert: FMCSA Announces Final Guidance on Definition of “Broker” and “Bona Fide Agent” as well as on Role of Dispatch Services

Today, 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.

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