On May 14, 2026, the U.S. Supreme Court held in Montgomery v. Caribe Transport II, LLC, 608 U.S. 219 (2026), that freight brokers may be sued under state law on claims that they negligently hired a motor carrier posing a danger to motor vehicle safety. The case turned on the Federal Aviation Administration Authorization Act of 1994 (FAAAA), which bars states from enforcing laws “related to a price, route, or service” of motor carriers, brokers, and freight forwarders “with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1). That bar has several exceptions. One of them, known as the safety exception, provides that the preemption provision “shall not restrict the safety regulatory authority of a State with respect to motor vehicles.” Id. § 14501(c)(2)(A). The Supreme Court held that a claim alleging that a broker negligently hired a carrier likely to cause highway accidents falls within that exception and is therefore not preempted.
Brokers handle roughly a third of all freight moved in the United States, so a decision that changes the rules for brokers may ripple through much of the supply chain. But is Montgomery broad enough to reshape the industry, or is it more limited than it first appears? Five months on, lower courts are applying Montgomery and testing those limits. This article examines the decision itself and then analyzes how the lower courts have approached its reach: whether it saves claims arising from cargo theft and loss, and whether it extends to claims other than negligent hiring and to defendants other than brokers, such as shippers.
I. Background
In Montgomery, a truck driver was hauling a load of plastic pots through Illinois when his truck veered off course. It struck a tractor-trailer that was stopped on the side of the road. The driver of the stopped tractor-trailer was seriously hurt: he lost his leg and suffered other permanent injuries.
Behind the shipment was a chain of contracts. A customer had hired a transportation broker to arrange delivery of the pots. A broker does not move goods itself; it chooses a trucking company to carry them. Here, the broker hired a trucking company, and the driver hauling the pots was driving for that company.
The injured driver sued the driver hauling the pots, the trucking company, and the broker. His claim against the broker was not that it caused the crash. He argued instead that the broker was liable for his injuries because it negligently hired the trucking company and its driver. When the broker hired it, the Federal Motor Carrier Safety Administration had rated the company only “conditional.” The regulator had found problems related to qualifications of drivers, hours of service of drivers, inspection, repair, and maintenance, recordable crash rate, and more. In the injured driver’s view, the broker knew, or should have known, that hiring such a company was reasonably likely to lead to crashes that would injure others.
The broker responded that federal law barred this kind of state-law claim against a broker. The district court sided with the broker. Following the Seventh Circuit’s decision in Ye v. GlobalTranz Enterprises, Inc., 74 F.4th 453 (7th Cir. 2023),1Ye has since been abrogated by the Supreme Court’s decision in Montgomery v. Caribe Transport II, LLC, 608 U.S. 219 (2026). it held that the FAAAA preempted the negligent-hiring claim and that the statute’s safety exception did not apply. The Seventh Circuit affirmed.
The Supreme Court unanimously reversed.
II. “[The injured driver] argues that even if the FAAAA otherwise preempts his negligent-hiring claim against [the broker], the safety exception saves it. We agree.”
The FAAAA provides that a state “may not enact or enforce a law, regulation, or other provision having the force and effect of law related to a price, route, or service of any motor carrier … or any motor private carrier, broker, or freight forwarder with respect to the transportation of property.” 49 U.S.C. § 14501(c)(1).
The FAAAA’s preemption provision is subject to several exceptions. The one at issue here, often called the safety exception, provides that the preemption provision “shall not restrict the safety regulatory authority of a State with respect to motor vehicles.” 49 U.S.C. § 14501(c)(2)(A).
The Supreme Court did not decide whether the preemption provision covered the claim. Instead, it assumed that it did and held that the safety exception saved the claim anyway.
To decide whether the claim fell within the safety exception, the Court examined two of its key phrases: “the safety regulatory authority of a State” and “with respect to motor vehicles.” On the first, all parties agreed that common-law duties of care form part of a state’s authority to regulate safety. In interpreting the duty of care in negligent-hiring claims, the Court relied on Restatement (Second) of Torts § 4112Section 411 of the Restatement (Second) of Torts, titled “Negligence in Selection of Contractor,” reads:
An employer is subject to liability for physical harm to third persons caused by his failure to exercise reasonable care to employ a competent and careful contractor
(a) to do work which will involve a risk of physical harm unless it is skillfully and carefully done, or
(b) to perform any duty which the employer owes to third persons. and found that such claims impose a duty of reasonable care in employing a contractor for work carrying a risk of physical harm. On the second, the Court gave the phrase “with respect to” its ordinary meaning of “concerning” or “regarding.” A claim is therefore “with respect to motor vehicles” if it concerns the vehicles used in transportation.
The Court then applied this reading to the facts. The injured driver alleged that the broker failed to exercise reasonable care when it hired a trucking company with a poor safety rating and that the broker knew, or should have known, that choosing this company was reasonably likely to cause an accident. A duty to exercise reasonable care in selecting a carrier, the Court reasoned, concerns motor vehicles, most obviously the trucks that will carry the goods. Because the claim satisfied both requirements, the injured driver’s negligent-hiring claim against the broker fell within the safety exception and was saved from preemption.
III. How Are Courts Reading Montgomery?
The Supreme Court signaled the limits of its holding: “[t]he safety exception saves only a subset of preempted claims: those involving regulations concerning motor vehicle safety.” Montgomery, 608 U.S. at 227. Given that limit, does Montgomery reach claims arising from the theft or loss of cargo? And does it extend to claims other than negligent hiring, or to defendants other than brokers, such as shippers? In the five months since the decision, lower courts have begun to test these limits. On cargo claims, a clear majority view has emerged, though not without exception; on claims beyond negligent hiring and defendants other than brokers, the answers are still emerging.
1. Does Montgomery Reach Cargo Theft and Loss?
Montgomery involved a highway collision and a seriously injured motorist. Many disputes involving brokers, however, arise not from accidents but from cargo that is stolen, lost, or damaged in transit. When that happens, the owner of the goods or its insurer often looks to the broker that arranged the shipment. Such plaintiffs have long tried to bring their tort claims within the safety exception. Montgomery has given that argument new force. The question for the courts is whether a claim concerning the fate of the cargo, rather than the safety of motor vehicles, can fall within the exception. So far, most courts have said no.
In S.A.M. Pantaenius Monaco v. Save On Transport Enterprises, LLC, No. 1:25-CV-140-MRD-PAS, 2026 WL 2364280 (D.R.I. Aug. 14, 2026), a vessel owner hired a broker to arrange for its catamaran to be trucked from Rhode Island to California. The broker engaged a carrier, but that carrier could not take on the job, and it passed to another trucking company. Shortly after the trip began, that company’s driver left the truck and the vessel unattended overnight, and a fire of unknown origin destroyed the catamaran.
The owner’s insurer paid about $1 million for the loss and then sued the brokers and carriers involved, asserting a range of federal and state-law claims. As relevant here, it brought state-law tort claims against the brokers. To avoid FAAAA preemption, it invoked the safety exception, arguing that the claims were, at their core, claims for negligent hiring of whichever carrier was responsible for the fire. In its view, the claims fell within the state’s authority to regulate safety because the brokers were obliged to ensure that the carriers they chose would transport the vessel safely across the country.
The U.S. District Court for the District of Rhode Island rejected the argument. The court emphasized the limited reach of Montgomery’s holding: “A careful reading of Montgomery indicates that not all negligent hiring claims against brokers inherently fall within the safety exception. The Supreme Court identified the preemption question as being whether negligent-hiring claims of the type Montgomery presses are claims with respect to motor vehicles.” Pantaenius, 2026 WL 2364280, at *6 (citation modified). In Montgomery, the broker allegedly hired an unsafe carrier that was likely to cause a highway accident. The insurer in Pantaenius, by contrast, alleged only that the carriers were not “trustworthy” or “competent to transport” the vessel, that they were not “sufficiently insured,” and that they failed to care for the property entrusted to them. Because these allegations concerned the protection of the cargo rather than motor vehicle safety, the court held that the FAAAA preempted the state-law tort claims against the brokers.
Tapia Enterprises, Inc. v. Star Logistics, Inc., No. 2:26-CV-01254-SB-MAA, 2026 WL 2262180 (C.D. Cal. Aug. 5, 2026), reinforced the point that the safety exception saves only claims concerning motor vehicle safety. There, a broker hired what it believed was a legitimate carrier to haul a load of beef from Kansas to California. The “carrier” was in fact an impostor, and the beef never reached California. The cargo interest sued the broker for negligent hiring. The court held that the claim fell outside the FAAAA’s safety exception and was preempted by the FAAAA. The claim alleged only that the broker chose a carrier that did not perform interstate deliveries to California and had no refrigerated trucks and that the broker’s failure to exercise due diligence allowed an impostor to take the load. Unlike the claim in Montgomery, it did not allege that the broker hired a carrier likely to cause an accident or to endanger anyone on the road. Because the claim concerned the theft of cargo rather than motor vehicle safety, the court found that FAAAA preempted it.
Other courts have similarly distinguished Montgomery in cases where state-law tort claims were not based on allegations concerning motor vehicle safety. See, e.g., Glencore Ltd. v. Schneider National Carriers, Inc., No. 25-1627, 2026 WL 2883265 (E.D. La. Sept. 25, 2026) (holding that the FAAAA preempted negligence claims tied not to motor vehicle safety but to the defendant’s alleged failure to exercise due diligence to prevent an impostor from obtaining the shipping instructions and absconding with the cargo); Oneport Global Logistics LLC v. Amerigo Logistics LLC, No. 25-CV-18588 (KSH) (AME), 2026 WL 1734971 (D.N.J. June 16, 2026) (holding that fraud and negligent misrepresentation claims based on a broker’s false confirmation of delivery were preempted because they related to its “services” as a broker); Grupo Gusi S. de P.R. de R.L. de C.V. v. Select Transport Partners, LLC, No. CV H-26-120, 2026 WL 1804233 (S.D. Tex. June 23, 2026) (“An allegation that a broker negligently hired a fraudulent carrier is different from an allegation that the broker negligently hired an unsafe carrier.”); Zurich American Insurance Co. v. TForce Worldwide, Inc., No. 2:26-CV-02925-MCS-MBK, 2026 WL 2140233 (C.D. Cal. July 22, 2026) (“The cargo theft at issue in this action does not bear the same connection to the safety of individuals and motor vehicles on the road as in Montgomery, Miller, and California Tow Truck Association. Plaintiff does not allege that carriers who have stolen cargo drive dangerously, endanger the safety of other motorists, or pose any other kind of risk while on the road. Although theft of cargo is a crime, it is not apparent to the Court that negligently hiring a carrier that steals cargo is an act that is reasonably likely to cause a motor vehicle accident … or poses a danger to other motorists who interact with the carrier while on the road.”).
Not every court, however, has read Montgomery’s holding as limited to claims concerning motor vehicle safety. On facts closely resembling those discussed above, the U.S. District Court for the Central District of California reached the opposite conclusion in Continental Insurance Co. v. HPT Trucking, Inc., No. 5:25-CV-03036-HDV-AYP, 2026 WL 2140240 (C.D. Cal. June 17, 2026). There, a broker arranged for a container of garments to be trucked from California to Idaho, but it handed the load to impostors posing as a legitimate carrier, and the goods were never delivered. The cargo owner’s insurer sued the broker for negligence, alleging that it had ignored several warning signs: the impostors used mismatched email addresses, calls to the carrier’s listed phone number went unanswered, and the truck that arrived to collect the cargo did not match the one the broker had been told to expect. The court held that the safety exception saved the claim from preemption. In its view, those warning signs, like the poor safety rating in Montgomery, put the broker on notice that the goods were unlikely to be delivered “safely.”
Continental thus applied the safety exception to a cargo theft claim, shifting Montgomery’s focus from the risk of a highway accident to the risk that cargo would not arrive safely. Within weeks, two other judges of the same court reached the opposite conclusion on similar facts in Zurich and Tapia, discussed above, and neither cited Continental. See Zurich, 2026 WL 2140233; Tapia, 2026 WL 2262180. The result is a split within the Central District of California.
Whether Continental will attract followers is uncertain. The Supreme Court emphasized that “[t]he safety exception saves only a subset of preempted claims: those involving regulations concerning motor vehicle safety.” Montgomery, 608 U.S. at 227 (emphasis added). The Court did not address cargo safety, but its emphasis on motor vehicle safety raises doubts about extending the exception to the safe arrival of goods.
2. Does Montgomery Reach Beyond Brokers and Negligent Hiring?
Where the facts closely resemble those of Montgomery, the path is relatively straightforward. A plaintiff who alleges injury in a highway accident caused by the driver of a trucking company that a broker hired may sue the broker for negligent hiring, and the safety exception will save that claim from preemption. Not every case, however, fits that scenario. A plaintiff may bring not only a negligent-hiring claim but also claims for negligent entrustment or vicarious liability under the doctrine of respondeat superior, none of which were at issue in Montgomery. Do these claims also fall within the safety exception? And does the exception save state-law tort claims brought against a shipper rather than a broker? Here is how the courts have answered so far.
In Haney v. Ismatov, No. 1:25-cv-00503, 2026 WL 2983707 (E.D. Tex. Oct. 2, 2026), a tractor-trailer struck the plaintiff’s car on a Texas highway. The truck was hauling Amazon cargo in an Amazon-owned trailer: under Amazon’s “power-only” arrangement, the trucking company supplied the tractor and driver, and Amazon supplied the pre-loaded trailer. The plaintiff sued Amazon for respondeat superior, negligent hiring, training, and supervision, and negligent entrustment. Amazon argued that the FAAAA preempted all of these claims.
The court analyzed the question in two steps. First, it asked whether the claims fell within the FAAAA’s preemption provision. The plaintiff argued that they did not, as the provision lists motor carriers, brokers, and freight forwarders, but not shippers. The court disagreed. It reasoned that the provision preempts state laws “related to” a motor carrier’s prices, routes, or services, so what matters is not the identity of the defendant but the connection between the claim and those services. Claims faulting a shipper’s choice and oversight of the carriers and drivers who move its freight, in the court’s view, have that connection.
Second, the court asked whether the safety exception nevertheless saved the claims, and it concluded that it saved every one of them. As to the respondeat superior claim, the court found that it “clearly relates to motor vehicles.” It reasoned that, under the facts as pleaded, any negligence of the trucking companies or the driver in causing the collision would be attributable to Amazon, and it concluded that the claim therefore involved “the safety regulatory authority of a State with respect to motor vehicles.” As to the claims for negligent hiring, training, and supervision, the court found that they paralleled the claim in Montgomery, as they rested on Amazon’s alleged failure to use ordinary care in selecting and overseeing the trucking companies and the driver. In the court’s view, that failure “necessarily ‘concerns’ or ‘regards’ the safety of motor vehicles.” As to the negligent entrustment claim, the court relied on the allegation that Amazon had entrusted its trailer, which the FAAAA defines as a “motor vehicle,” to a driver it knew or should have known was unfit, and it concluded that the claim concerned the safe operation of motor vehicles. Accordingly, the court held that none of the claims was preempted.
Not every court has been willing to extend Montgomery this far. In Fruge v. Integrity Express Logistics, LLC, No. 2024-CA-1106-MR, 2026 WL 2065759 (Ky. Ct. App. July 17, 2026), a tractor-trailer collided with the plaintiff’s pickup truck, and the plaintiff brought various common-law and statutory claims against the parties involved, including claims of negligent hiring and vicarious liability against the logistics company that had arranged the transport. The Kentucky Court of Appeals held that, under Montgomery, the negligent-hiring claim was not preempted. As to the other claims, the court said that it was bound only by Montgomery’s “narrow holding” concerning negligent-hiring claims, and it declined to decide whether the decision also saves other tort claims.
Montgomery’s reasoning does not appear to be confined to negligent hiring. The Court rested its holding on the broad proposition that “common-law duties and standards of care form part of a State’s authority to regulate safety.” Montgomery, 608 U.S. at 226. Nothing in that proposition is specific to negligent hiring. Montgomery’s analysis suggests that whether a particular claim is saved from preemption depends on two conditions found in the exception’s text. First, the state-law duty underlying the claim must form part of “the safety regulatory authority of a State.” Second, the claim must be “with respect to motor vehicles,” meaning that it concerns the vehicles used in transportation. Taken together, the two conditions confine the exception to what the Court described as “only a subset of preempted claims: those involving regulations concerning motor vehicle safety.” If a state-law tort claim, whether for negligent hiring or another theory, meets these conditions, it may fall within the safety exception. It remains to be seen whether appellate courts will extend Montgomery beyond negligent hiring.
IV. The Mystery Montgomery Left Behind
Montgomery revealed a puzzle in the statute’s design that may ultimately call for Congress’s attention. It concerns the relationship between subsections (b) and (c) of § 14501, both of which preempt state laws relating to brokers’ rates, routes, and services.
Subsection (b) applies only to freight forwarders and brokers, and it covers their intrastate services, meaning shipments that begin and end within a single state. It preempts state laws relating to those services and contains no safety exception. Subsection (c), the provision at issue in Montgomery, applies more broadly to motor carriers, brokers, and freight forwarders, and it does contain the safety exception. As the issue was framed in Montgomery, subsection (b) governs brokers’ intrastate services (transportation that begins and ends within a single state), while subsection (c) governs their interstate services (transportation that crosses state lines).
The result is a curious mismatch. Suppose a broker carelessly hires an unsafe carrier, and the carrier’s truck causes an accident. If the shipment crossed state lines, subsection (c) applies, the safety exception saves the injured person’s negligent-hiring claim, and the claim may proceed. If the shipment stayed within one state, subsection (b) applies, there is no safety exception, and the same claim is preempted.
The brokers, joined by the United States, relied on this mismatch to argue that the safety exception should be read to exclude brokers, so that the two subsections would treat them consistently. The Court rejected the argument. It acknowledged that “[i]t is not obvious why Congress included a safety exception in (c) but not in (b),” but held that the text of the safety exception controls, concluding that it is “[b]etter to live with the mystery than to rewrite the statute.” Montgomery, 608 U.S. at 228–29.
Justice Kavanaugh, concurring, called the result “exactly backwards.” Why, he asked, would Congress permit state tort suits against brokers for arranging interstate trips but preempt such suits for arranging intrastate trips? Nevertheless, he concluded that other features of the statute outweighed this anomaly. He noted that the brokers and their amici may ask Congress and the President to change federal law. For now, the mismatch remains.
V. Takeaways
Under Montgomery, a state-law claim alleging that a broker negligently hired a carrier likely to cause highway accidents falls within the FAAAA’s safety exception and is therefore not preempted. The decision does not, however, make brokers liable. It only allows such claims to proceed, and plaintiffs must still prove duty, breach, causation, and damages under state law. Because the standard of care is set by state law, which can vary from state to state, brokers may face pressure to review their carrier-selection processes in light of the laws of the states where they do business. Closer carrier vetting, greater exposure to lawsuits, and rising insurance premiums may all add to brokers’ costs.
The early decisions applying Montgomery show that it has limits. Its holding rests on the connection between a broker’s choice of carrier and the safety of motor vehicles. Where that connection is missing, most courts have held that state-law tort claims remain preempted. This has been true of claims arising from cargo theft, cargo loss, and misrepresentations about delivery, which concern the protection of goods rather than motor vehicle safety. One court, in Continental, took a broader view, holding that a claim alleging that a broker’s carelessness allowed impostors to steal cargo fell within the safety exception. That decision created a split within the Central District of California that the Ninth Circuit may eventually resolve.
Even where the connection to motor vehicle safety is present, a further question arises: whether Montgomery reaches claims and defendants that the Supreme Court did not address. In Haney, the court held that the safety exception saves claims against a shipper, not just a broker, for negligent hiring, training, and supervision, negligent entrustment, and vicarious liability, where those claims arise from a highway collision. The Kentucky Court of Appeals in Fruge, by contrast, confined itself to Montgomery’s “narrow holding” on negligent hiring and declined to decide whether other claims, such as vicarious liability, fall within the exception. Montgomery’s reasoning suggests that a state-law tort claim may be saved if it meets two conditions: the duty underlying it forms part of “the safety regulatory authority of a State,” and the claim is “with respect to motor vehicles.” Whether appellate courts will extend Montgomery beyond negligent hiring on that basis remains to be seen.
Finally, Montgomery left one puzzle unsolved: why the FAAAA preempts state regulation of brokers’ intrastate services without any safety exception while preserving that exception for interstate transportation. The Court chose to “live with the mystery.” For now, a negligent-hiring claim alleging that a broker selected a carrier likely to endanger motor vehicle safety may proceed where the shipment crosses state lines, but it would be preempted where the shipment stays within one state.
The Story Behind the Law
How Did Motor Carriers End Up in an Aviation Statute?
The short title of the statute discussed in this article, the “Federal Aviation Administration Authorization Act of 1994,” suggests that it concerns only aviation. So why does it include provisions on motor carriers? And how did brokers and freight forwarders join them? A turn to legislative history may shed light on this.
I. FedEx, UPS, and an Uneven Playing Field
In 1978, Congress enacted the Airline Deregulation Act (ADA) “to achieve the economic deregulation of the airline industry and to promote maximum reliance on competitive market forces.” National Federation of the Blind v. United Airlines Inc., 813 F.3d 718, 726 (9th Cir. 2016) (citation modified). To keep the states from undoing federal deregulation with regulation of their own, the ADA included a preemption provision barring states from enforcing any law “relating to rates, routes, or services of any air carrier having authority … to provide air transportation.” 49 U.S.C. app. § 1305(a)(1) (1982).
The ADA’s preemption provision was not confined to state economic regulation of air transportation. In Federal Express Corp. v. California Public Utilities Commission, 936 F.2d 1075 (9th Cir. 1991), the Ninth Circuit applied it to state economic regulation of motor carriers because that regulation affected the operations of an air carrier.
In that case, Federal Express (now FedEx), an air carrier that uses trucks to collect and deliver packages, challenged California’s attempt to subject its trucking operations to the state’s rules for motor carriers, including requirements on tariffs, public inspection, and carrier documents. The Ninth Circuit held that the ADA preempted these rules as applied to Federal Express’s trucking operations. It reasoned that, because Federal Express was an air carrier and its trucking operations were an integral part of its air carrier business, those operations fell within the ADA’s protection. California’s economic regulation of them therefore entered the area the ADA had closed to the states.
Federal Express’s status as an air carrier was what allowed the ADA to shield its trucking operations from state regulation. Its competitors whose trucking was conducted by motor carriers, however, still faced economic regulation from the states. UPS was the most prominent example: its ground delivery business operated as a motor carrier and could not take advantage of the ADA’s preemption provision, which applied only to air carriers. The two giants competed in the same market, yet under different rules.
II. An Aviation Bill’s Detour into Trucking
The bill that became the FAAAA gave Congress a vehicle to address the uneven treatment of air carriers and motor carriers. The FAAAA began as a House bill, H.R. 2739, introduced on July 26, 1993, under the title “Aviation Infrastructure Investment Act of 1993.” H.R. 2739, 103d Cong. (1993). As introduced and passed by the House, it dealt solely with aviation and contained no provisions on trucking.
On June 16, 1994, the Senate passed H.R. 2739 with an amendment that struck all of the House text after the enacting clause and inserted the text of the Senate’s own aviation bill, S. 1491. H.R. 2739, 103d Cong. (as passed by Senate, June 16, 1994). The Senate’s substitute gave the bill the short title by which the statute is known today: the “Federal Aviation Administration Authorization Act of 1994.” Id. § 1. Section 211 of that substitute addressed trucking, but only for carriers engaged in or closely tied to air cargo transportation. Id. § 211. It created a new category of “intermodal all-cargo air carriers,” covering air carriers (including indirect cargo air carriers) that transported property by aircraft or by motor vehicle, as well as other carriers that were either affiliated with such an air carrier through common ownership or used the services of such an air carrier at least 15,000 times a year. Id. For these carriers, § 211 preempted state laws relating to rates, routes, or services, whether the property moved by aircraft or by motor vehicle and whether it traveled between states or within a single state. Id.
The provision responded to the competitive imbalance illustrated by the Ninth Circuit’s Federal Express decision, discussed above. Federal Express, recognized as an air carrier, had won freedom from state economic regulation of its trucking operations, while UPS, its direct competitor in the package delivery business, was treated as a trucking company and remained subject to state regulation. Section 211 aimed to level the playing field between “these two giants” by extending preemption to “motor carriers with aircraft like UPS.” 140 Cong. Rec. 20,208 (1994) (statement of Sen. Hollings). Trucking companies that were neither affiliated with an air carrier nor heavy users of air carrier services, however, fell outside the scope of § 211 and remained subject to state economic regulation.
This gap troubled the House. In its view, the Senate’s provision that preempted state regulation “for only some carriers” “would have created considerable inequities within the motor carrier industry.” 140 Cong. Rec. 20,252 (statement of Rep. Mineta). When the two chambers met in conference to resolve their differences, the House conferees therefore proposed a broader provision covering all motor carriers. Id. at 20,253. The Senate conferees “receded to the House on this matter.” Id. at 20,207 (statement of Sen. Ford).
As the conference report put it, Congress sought “to as completely as possible level the playing field between air carriers on the one hand and motor carriers on the other with respect to intrastate economic trucking regulation.” H.R. Rep. No. 103-677, at 82 (1994) (Conf. Rep.).3See also 140 Cong. Rec. 20,255 (statement of Rep. Petri) (“[O]ne of our major purposes in crafting the language included in this conference report was to be sure that all carriers were treated equally and that no type or class of carrier had a competitive advantage over another.”). With the issue of state economic regulation of motor carriers now before it, Congress also pointed to a second problem: the burden of varied state regulation. At the time, 41 jurisdictions regulated the intrastate prices, routes, and services of motor carriers. H.R. Rep. No. 103-677, at 86. According to Congress, this patchwork of rules “cause[d] significant inefficiencies, increased costs, reduction of competition, inhibition of innovation and technology and curtail[ed] the expansion of markets.” Id.4Elaborating on this, Congress noted numerous examples in which shipments within a single state were priced higher than shipments of comparable distance across state lines. In the small package delivery business, companies frequently shipped goods out of the state and back again to avoid the higher rates charged for purely intrastate shipments. Congress concluded that lifting these outdated controls would allow transportation companies to compete freely and efficiently and to provide better service to their customers. See H.R. Rep. No. 103-677, at 87–88.
Congress’s answer was § 601 of the FAAAA. It preempted state regulation of the prices, routes, and services of all motor carriers transporting property, as well as of air carriers and their affiliates when transporting property by aircraft or by motor vehicle, while preserving state authority over safety, vehicle size and weight, limitations based on the hazardous nature of the cargo, and insurance requirements. See Pub. L. No. 103-305, § 601, 108 Stat. 1569, 1606 (1994).
III. How Brokers and Freight Forwarders Entered the Statute
Section 601 did not extend to brokers or freight forwarders. Its trucking provision, codified at former 49 U.S.C. § 11501(h), covered only motor carriers and motor private carriers.
As for brokers and freight forwarders, only freight forwarders were subject to a federal preemption provision when the FAAAA was enacted. Eight years earlier, the Surface Freight Forwarder Deregulation Act of 1986 had barred states from regulating freight forwarders’ interstate rates, routes, and services, with no safety exception. Pub. L. No. 99-521, § 11(a)(2), 100 Stat. 2993, 2997 (1986) (codified at former 49 U.S.C. § 11501(g)). Brokers, by contrast, had no express statutory protection from state regulation.
A year after the FAAAA, the ICC Termination Act of 1995 revised the existing preemption rules for freight forwarders and introduced preemption rules for brokers. Pub. L. No. 104-88, § 103, 109 Stat. 803, 899 (1995). The Act moved the preemption provisions of former 49 U.S.C. § 11501 into a new section, § 14501, and made two changes relevant here. First, it replaced the 1986 freight forwarder provision with § 14501(b). Although the Senate report described the new provision as “imported from” former § 11501(g), S. Rep. No. 104-176, at 47 (1995), it was not a verbatim copy. It differed from its predecessor in two respects: it applied to freight forwarders’ intrastate, rather than interstate, rates, routes, and services, and it extended preemption to brokers. Second, the Act moved the FAAAA’s trucking provision into § 14501(c)(1) and extended it to “any … broker, or freight forwarder.”
The result was that brokers and freight forwarders became subject to two preemption provisions with different origins: subsection (b), which derived, in modified form, from the 1986 Act and contains no safety exception, and subsection (c), which derived from the FAAAA and contains one. That combination produced the asymmetry that the Supreme Court acknowledged in Montgomery but left unexplained, as the dispute before it concerned only subsection (c).
IV. Conclusion
The legislative history thus sheds light on how motor carriers ended up in the FAAAA. The FAAAA began in the House as a bill concerned solely with aviation. The Senate made changes to the bill, including a provision on motor carriers, but kept that provision within the aviation framework, proposing to preempt state economic regulation only for carriers engaged in or closely tied to air cargo transportation. That proposal exposed an inequity that could not be ignored: it would have freed some motor carriers from state economic regulation while leaving their competitors bound by it. Congress accordingly went further, extending preemption to all motor carriers transporting property. The short title, the “Federal Aviation Administration Authorization Act of 1994,” survived unchanged, and only the closing words of the long title,5The long title reads in full: “An Act To amend the Airport and Airway Improvement Act of 1982 to authorize appropriations for fiscal years 1994, 1995, and 1996, and for other purposes.” Pub. L. No. 103-305, 108 Stat. at 1569. “and for other purposes,” hint that the statute reaches beyond aviation, as indeed it does.
Brokers and freight forwarders followed a different path. They were not part of the aviation bill at all. They were added a year later by the ICC Termination Act of 1995. In moving the FAAAA’s preemption provision into the new 49 U.S.C. § 14501(c)(1), the Act extended it to brokers and freight forwarders. The same Act also placed them under § 14501(b), which covers their intrastate rates, routes, and services and, unlike subsection (c), contains no safety exception. That overlap is the source of the “mystery” the Supreme Court acknowledged in Montgomery.
The information provided in this article is intended for informational purposes only and does not constitute legal advice. It should not be relied upon or applied without consulting an attorney to address your specific circumstances. Please note that this article was published on the date indicated and may not reflect subsequent changes in the law.