In no less than one occasion, the Federal Motor Service Security Administration in 2023 explicitly informed mega dealer TQL to offer dealer transparency documentation as required beneath the rules. What’s extra, new paperwork present the company advised TQL’s waiver clause in its service contract, forcing carriers to waive rights beneath 49 CFR 371.3, may very well be a violation of U.S. Code.
That is in accordance with an e mail correspondence not too long ago revealed through the Freedom of Data Act. The correspondence additionally raises the query of simply what may occur to related contract waiver language utilized by brokers ought to the FMCSA’s transparency proposed rulemaking get throughout the end line.
The whole saga kicked off in January of 2023 when Dakota Springfields, a reefer hauler and proprietor of Pink Cheetah Categorical, delivered a load of ice cream, and, she mentioned, TQL was combating her on detention pay. Springfields doubled down and invoked her proper to assessment the brokers‘ transaction information, aka dealer transparency, beneath 49 Code of Federal Rules 371.3.
[Related: FMCSA investigates TQL as fight over broker transparency rages]
Although Springfields had signed TQL’s service contract waiving her 371.3 rights, she took the case to the FMCSA through the Nationwide Shopper Criticism Database. By November that yr, FMCSA appeared to have totally taken her aspect.
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“Please guarantee compliance with the federal motor service rules,” wrote an FMCSA consultant who then instructed TQL to take away the waiver from the Dealer/Service Agreements.
The language FMCSA particularly objected to from TQL’s still-in-use service contract is as follows:
Dealer isn’t required to reveal its expenses to prospects, commissions, or brokerage income and Service waives its proper to obtain, audit, and/or assessment info and paperwork to be saved as supplied in 49 CFR 371.3.
That language, in accordance with FMCSA on the time, “could also be a violation” of 49 U.S. Code 14906 — Evasion of regulation of carriers and brokers. That a part of the U.S. Code states {that a} „individual, or an officer, worker, or agent of that individual, that by any means tries to evade regulation supplied beneath this half for carriers or brokers is liable to the USA for a civil penalty of no less than $2,000 for the primary violation and no less than $5,000 for a subsequent violation, and could also be topic to felony penalties.“
Subsequent, the FMCSA rep informed TQL to „guarantee compliance“ with 371.3 „and supply transaction information to any service when requested,“ together with the textual content of 371.3 with the ultimate clause bolded: „Every occasion to a brokered transaction has the correct to assessment the document of the transaction required to be saved by these guidelines.“
Since that e mail from FMCSA in November of 2023, TQL did certainly present the documentation to Springfields, who mentioned it revealed the dealer saved a whopping 44% of the shipper’s fee on the load. This kicked off a big debate about dealer margins and the trustworthiness of revealed charges indices primarily based on averages that depend on broker- and carrier-submitted knowledge.
Notably, the intervening interval additionally noticed FMCSA put out a discover of proposed rulemaking [NPRM] looking for to alter 371.3, elevating dealer transparency from a „proper“ of carriers to a „regulatory responsibility“ for brokers to offer. That kicked off additional debate over whether or not charges may enhance with carriers‘ elevated entry to shipper price knowledge.
Brokers, individually and through their main commerce group the Transportation Intermediaries Affiliation, got here out in opposition to transparency enforcement, firing again at owner-operators, 8 in each 10 of whom predicted optimistic charges outcomes if FMCSA’s proposal was applied. TIA, reasonably, mentioned the transparency proposal would not impression charges, or may even decrease charges. It is a view shared by simply 15% of of truckers in Overdrive’s viewers, who predicted both unfavorable (13%) or impartial (2%) charges impacts.
On Tuesday, Feb. 18, FMCSA reopened the remark interval on the proposed rulemaking.
[Related: FMCSA’s broker transparency comment period reopened]
What is going to occur to brokers‘ transparency-waiver contract clauses if the rule goes into impact?
The Springfields/TQL transparency saga might have resulted in TQL handing over the transaction information for the load she hauled, but it would not appear to have budged in any respect on the contract clause requiring carriers waive their rights to information beneath 371.3.
Overdrive reviewed a latest TQL Dealer/Service Settlement, and it options the very same clause, nonetheless in drive. Overdrive contacted TQL and TIA for touch upon this story, and didn’t hear again.
In FMCSA’s transparency proposal, the company mentioned it did not imagine it had the authority to cease TQL or any dealer from asking carriers to waive their rights in contract clauses, regardless of receiving two separate petitions to place an finish to those waivers.
„Events are permitted to waive any proper except Congress, by statute, particularly makes a proper non-waivable,“ FMCSA wrote within the transparency NPRM. „The Company has not recognized any statutory provision during which Congress expressly barred waivers on this context, and due to this fact the Company has not included the requested language within the revised regulation.“
FMCSA appeared to side-step the power of brokers to insert waivers in contracts by altering transparency from a „proper“ of carriers (and shippers, for that matter) to a „regulatory obligation“ of brokers.
„The proposed amendments to 371.3(c) would make clear that brokers keep a unbroken responsibility to behave pretty and actually, and that visibility into the transaction information is the mechanism by which shippers and carriers can be certain that brokers are complying with this responsibility,“ FMCSA wrote within the NPRM. „The requirement to offer the information upon request would thus be made express as a regulatory obligation.“
Why in 2023 did the company try to do one thing within the TQL/Springfields case that in 2024 it mentioned it did not have the authority to do? Overdrive reached out to FMCSA to confirm the authenticity of the correspondence between itself and TQL and likewise to ask concerning the discrepancy.
„The connected doc shared as a part of your inquiry was supplied by FMCSA to Dakota Springfields of Pink Cheetah Categorical, LLC in response to a Freedom of Data Act (FOIA) request to the company,“ an FMCSA spokesperson mentioned.
Quite than providing an outright rationalization, FMCSA merely pointed to the dates.
The e-mail trade displayed within the FOIA doc highlights correspondence that occurred in November 2023. Extra not too long ago, nonetheless, FMCSA issued proposed revisions to present rules associated to dealer transparency by way of a Discover of Proposed Rulemaking revealed in November 2024.
The dates may certainly clarify the change in FMCSA’s posture. Since November 2023, FMCSA has had three totally different political appointees function Chief Counsel, and every new lawyer brings their very own interpretation. Now, the Trump administration has initiated a regulatory freeze and assessment, and newly appointed FMCSA Chief Counsel Jesse Elison should take a look at the transparency situation for himself.
Anticipate some indication of the place the transparency battle is headed within the DOT’s Spring agenda replace.
[Related: Broker transparency: 8 in 10 owner-operators predict positive outcomes for rates]
