Think you have taken all steps necessary to insure that the companies you are dealing with as a broker will be treated by FMCSA as independent trucking companies for which you do not have direct safety responsibility under the Federal Motor Carrier Safety Regulations (FMCSRs)? THINK AGAIN. In an order of the FMCSA issued September 10, 2007 in a proceeding entitled In the Matter of Bill's Trucking, Inc., the FMCSA Assistant Administrator opined that situations may exist where a trucking company that brokers loads to other carriers might involuntarily be held responsible as the carrier for safety compliance for the trucking companies physically transporting the brokered loads, even though the companies to whom loads were brokered had their own FMCSA authority and DOT number. The FMCSA's order in Bill's Trucking can be viewed here.

The FMCSA's order in Bill's Trucking arose out of an FMCSA Compliance Review (an on-site examination by FMCSA of a motor carrier's operations) completed in July, 2007 that resulted in the assignment to Bill's Trucking of an "Unsatisfactory" safety rating. Bill's Trucking subsequently petitioned for administrative review of the proposed "Unsatisfactory" rating. In its petition, Bill's Trucking argued it had incorrectly been assigned the "Unsatisfactory" rating because various violations attributed to it by the FMCSA Safety Investigator who conducted the Compliance Review were actually committed by other motor carriers with whom Bill's Trucking maintained "contractual relationships" and to whom it had brokered loads. Documentation submitted by Bill's Trucking in support of its petition established that all of the other motor carriers to whom Bill's Trucking made reference had their own FMCSA operating authority and DOT number.

In her order, the Assistant Administrator concluded she did not have enough information to decide the case at this time, and she set a schedule for submission of additional information by Bill's Trucking and by the Field Administrator for the FMCSA's Eastern Service Center. However, of concern is this statement from Page 3 of the order:

"The mere fact that the other motor carriers each had valid operating authority is not dispositive of the question of under what operating authority any specific movement was made. If the relationship between Petitioner and the other motor carriers was more akin to a lease situation than to brokerage, movements by the other motor carriers may have been made under Petitioner's operating authority." (Emphasis supplied).

"Petitioner may wish to submit shipping documents such as bills of lading into the record to bolster its claim that the other carriers operated under their own authority".

It is noteworthy that prior to the time of its Compliance Review, Bill's Trucking did not have an FMCSA broker's license. However, the Assistant Administrator apparently did not consider the absence of a broker's license to be dispositive of the issue of the identity of the carrier under whose authority a particular load was transported.

Other than suggesting that copies of Bill's Trucking's contracts with other carriers and copies of shipping documents could be relevant to a final determination, the Assistant Administrator provided very little in the way of guidance as to circumstances which would lead the FMCSA to hold a trucking company brokering loads to other companies to be considered a carrier for safety compliance purposes with respect to the brokered loads. Presumably a further order ruling on Bill's Trucking's petition will be issued at some point following submission of additional evidence by Bill's Trucking and the FMCSA Field Administrator. Hopefully, any subsequent order in the Bill's Trucking proceeding will provide additional guidance and clarification as to when a carrier/broker will be held responsible as the carrier by FMCSA for compliance with the FMCSRs by companies to whom it had purported to broker loads.

Meanwhile however, trucking companies which also engage in brokerage operations should at least be aware that circumstances may exist where FMCSA will consider them to be the carrier for safety compliance purposes with respect to loads for which they had intended only to act as a broker. Such trucking companies should at a minimum make an effort to insure that their contracts used in connection with their broker operations do not purport to establish a relationship "more akin to a lease situation than to brokerage". Additionally, and however impracticable or undesirable it may be, the prudent course of action would clearly be to insure that all bills of lading and any other shipping documents are issued in the name of the company physically transporting the load, rather than in the name of the carrier/broker.

by Bradford E. Kistler
Kinsey Rowe Becker & Kistler, LLP
Lincoln, Nebraska

The Fine Print
This article is not intended to provide legal advice. It is intended to alert you to new and developing issues and to provide some common sense answers to complex legal questions. Consult your own legal counsel or the author of this article if you wish to obtain a specific legal opinion regarding how these legal standards may apply to your particular circumstances.