The latest FMCSA burden on truck owners is the new Drug & Alcohol Clearinghouse. In an already over regulated industry this new requirement adds yet another hurdle to overcome to be compliant when operating your own FMCSA Operating Authority. All who have an FMCSA Operating Authority are required to participate in the FMCSA Drug & Alcohol Clearinghouse. The FMCSA even went out of their way to single out Independent Owner Operators such as myself.
An owner-operator (an employer who employs himself or herself as a CDL driver, typically a single-driver operation) is subject to the requirements pertaining to employers as well as those pertaining to drivers. Under the Clearinghouse final rule, an employer who employs himself or herself as a CDL driver must designate a consortium/third-party administrator (C/TPA) to comply with the employer’s Clearinghouse reporting requirements (§ 382.705(b)(6)).
Unlike the ELD mandate, there is not a way to avoid this compliance obstacle. You must participate in the Clearinghouse or face the certain consequences that are sure to follow if you do not. To avoid those consequences I strongly suggest creating your FMCSA Drug & Alcohol Clearinghouse account as soon as possible. In doing so you can continue to operate compliantly and not have a target on you for an FMCSA audit. Here is how to get it done.
The
first step is to create
an FMCSA Drug & Alcohol Clearinghouse account.
Authorized users
must register to request access to information in the Clearinghouse.
You will need to sign in with a login.gov account to begin your
Clearinghouse registration.
On the surface that seems simple enough. However, when you examine the details a little closer you’ll discover that you can’t use your FMCSA login PIN or your USDOT login PIN. In order to create a FMCSA Drug & Alcohol Clearinghouse account you must first have a login.gov account. Once you have created your login.gov account you will be able to continue. As a truck owner with an FMCSA Operating Authority you will create an “Employer Admin” account. If you are an Independent Owner Operator there will be an option to select specifically for Independent Owner Operators. As an Independent Owner Operator, once you have successfully created your Employer Admin account you will want to register as a Driver as well.
The
next is to select you Drug & Alcohol Consortium.
Designate Your C/TPA (required) As an owner-operator, you are required to work with at least one consortia/third-party administration (C/TPA) to manage your drug and alcohol testing program. You will need to designate your C/TPA(s) in the Clearinghouse before they can conduct queries and/or report violations on your behalf.
Once you have created your account as an Employer Admin, you will need to select your Drug & Alcohol Consortium provider from the FMCSA Drug & Alcohol Clearinghouse participating consortiums. This is where you can run into issues. If your Drug & Alcohol Consortium is not listed, they are NOT an approved Drug & Alcohol Consortium. You must contact your Drug & Alcohol Consortium and ask them to register with the FMCSA Drug & Alcohol Clearinghouse or you will need to choose another Drug & Alcohol Consortium provider who is approved by the FMCSA Drug & Alcohol Clearinghouse and compliant.
Lastly, you will be required to purchase a “Query Plan.”
All employers of CDL drivers must purchase a query plan in the
Clearinghouse. This query plan enables employers, and their
consortia/third-party administrators (C/TPAs), to conduct queries of
driver Clearinghouse records.
Registered employers must log into their Clearinghouse accounts
to purchase their query plan. Query plans may be purchased from the
FMCSA Clearinghouse only.
For Independent Owner Operators, I recommend purchasing the “Flat per query rate ($1.25), for limited and full queries.” It is by far the most affordable and does exactly what you need without over paying.
There are a multitude of other compliancy rules and regulations you must comply with when having your own FMCSA Operating Authority. To learn more about them read my post How to get an FMCSA Operating Authority.
Avoid an ELD at all cost! Straight from the FMCSA.
Like most everyone else who owns a truck, I have no desire to use an FMCSA mandated ELD. I was surprised to discover that not everyone will be required to use an ELD. There are a few exceptions to the ELD mandate. For over the road truck owners, there is only 1 possible exemption to avoid the FMCSA ELD mandate.
I began my research
by reading the FMCSA’s 4910-EX-P. More commonly known as the FMCSA’s
“Final Rule” for ELD’s. As a truck owner, what caught my
attention more than any other was the following paragraph.
FMCSA also includes an exception for to those drivers operating CMVs older than model year 2000, as identified by the vehicle identification number (VIN) of the CMV. Comments have indicated and FMCSA’s research has confirmed that pre-2000 model year trucks may not allow the ELD to connect easily to the engine. While the Agency has confirmed that there are ways of equipping older vehicles to use an ELD consistent with today’s rule technical specifications, these are not always cost beneficial or practical. Further, the Agency lacks confidence that the technology will be available to address this entire segment of the market (pre-2000 model years) at a reasonable cost.
“CMV” is an
abbreviation for “Commercial Motor Vehicle.” The FMCSA realized
the challenges for pre-2000 model year trucks to meet the ELD
mandate. While that in itself didn’t surprise me, what did is that
the FMCSA is not requiring the costly retrofitting of ELD’s to
pre-2000 model year trucks.
For all of us who
already operate a pre-2000 model year truck, it will be in our best
interests to keep our trucks on the road for as long as we possibly
can. When the time comes, I plan to have my 1999 9900i International
completely reconditioned. Everything including removing, stripping
and painting the frame rails, replacing all wiring, gutting,
customizing and detailing the interior, rebuild the entire drive
line, a fresh paint job and anything else that needs done. While that
all sounds expensive, it is far more affordable than a new truck that
sells for around $150,000.00. Plus you can still depreciate
rebuilding your truck over a 3 year period just as if you would by
purchasing a truck.
I plan to keep my truck on the road for many years to come. In doing so, I will avoid the FMCSA ELD mandate until the FMCSA changes the rules again or until I buy a newer truck. Read more on how I keep my pre-2000 truck on the road in my other posts After Market Truck Parts and Junk Yard Truck Parts.
Deciding
to get your own FMCSA operating authority and DOT number is a big
step. Most use agents to help them get started. Unfortunately they
cost a lot of money. I’m going to share with you all the different
regulating agencies and how to contact them. By doing so, I’m giving
you the ability to get set up with all of them so you can avoid
paying an agent more than necessary. What better way to start your
business than by saving money and learning compliancy requirements at
the same time! Here are the basic Federal requirements (there are
more and I’ll discuss them soon).
1.
FMCSA Operating
Authority “MC”
“FF” or “MX” number
2.
Department of Transportation (DOT) number
3.
Commercial Insurance
4.
*Unified Carrier Registration (UCR)
5.
*International Fuel Tax Agreement (IFTA)
6.
*International Registration Plan (IRP)
7.
BOC-3
*
These 3 are frequently done at the same time at your state or
jurisdiction office. In most cases you can apply, pay and receive all
of them in person and on the same day. It is wise to verify in
advance what types of payments your state or jurisdiction will accept
as they are all different.
FMCSA
Operating
Authority “MC”
number
The
FMCSA website states…
“In
general, companies that do the following are required to have
interstate Operating Authority (MC number) in addition to a DOT
number:
Operate
as for-hire carriers (for a fee or other compensation)”
Since
the one time fee is only $300.00, I recommend every “For-Hire”
carrier to not take any chances or run the risk of operating without
having their MC (Motor Carrier) number. It
is a fairly simple process and can be done through the SaferSys
website (an FMCSA website).
Department
of Transportation (DOT) number
I
have never seen a truck or met a truck owner that wasn’t required to
have a USDOT number. The FMCSA’s website states…
“You
are required to obtain a USDOT number if you have a vehicle that:
Is
used in transporting material found by the Secretary of
Transportation to be hazardous and transported in a quantity
requiring placarding (whether interstate or intrastate).
OR
Has
a gross vehicle weight rating or gross combination weight rating, or
gross vehicle weight or gross combination weight, of 4,536 kg (10,001
pounds) or more, whichever is greater”
and
goes on to state…
“AND
is involved in Interstate commerce:
Trade,
traffic, or transportation in the United States—
Between
a place in a State and a place outside of such State (including a
place outside of the United States);
Between
two places in a State through another State or a place outside of the
United States; or
Between
two places in a State as part of trade, traffic, or transportation
originating or terminating outside the State or the United States.
You
are required by FMCSA to obtain USDOT Number and comply with the
Federal Regulations.”
The
FMCSA concludes with…
“Apart
from federal regulations, some states require commercial motor
vehicle registrants to obtain a USDOT Number. These
states include:
Alabama,
Alaska, Arizona, Colorado, Connecticut, Florida, Georgia, Indiana,
Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Minnesota,
Missouri, Montana, New Jersey, New York, Nebraska, North Carolina,
Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee,
Texas, Utah, Washington, West Virginia, Wisconsin, Wyoming”
Obtaining
a USDOT number is free. The
FMCSA made it convenient to apply for a USDOT number at the same time
you apply for a MC number
by
using
the SaferSys website. You
will be required to complete and submit the MCS -150 form which
defines your business to the USDOT before
they will issue you a USDOT number.
Commercial
Insurance
Once
you have applied for your FMCSA operating authority you will need
commercial insurance before your MC number is ready to be used
legally. Your insurance company is required to notify the FMCSA once
you have purchased your insurance. This process of the insurance
company notifying the FMCSA of your policy and the FMCSA updating
your MC number with the insurance does take time. Your insurance
agent and/or company will be able to provide you with the coverage
requirements from the FMCSA.
Unified
Carrier Registration (UCR)
The
Unified
Carrier Registration (UCR) is
a registration based on the number of vehicles (trucks) you operate.
You can complete your UCR either through the UCR website or many
times through your state you operate from. UCR
is paid annually.
International
Fuel Tax Agreement (IFTA)
IFTA
accounts are free and depending on your state or jurisdiction you may
or may not pay for the IFTA stickers that are required for each truck
in your fleet. I normally start my IFTA account and receive my
stickers on the same day I pay for and receive my IRP plates (which I
will discuss next). Renewal each year is typically done either on a
state or jurisdiction website or by mail. Filing
your IFTA taxes is a quarterly requirement.
International
Registration Plan (IRP)
The
International
Registration Plan (IRP) is
the registration and license plates for all your vehicles. It
is an apportioned registration. Meaning you will pay a portion of
each states registration fee based on the percentage of miles you
operate in each state or jurisdiction. When you apply for your first
IRP you will be required to use “estimated miles.” This does not
mean you get to estimate your miles. The estimated miles are provided
to you by your state or jurisdiction. In most cases it will be your
responsibility
to put the correct estimated miles for each state or jurisdiction in
the correct field. If it is not correct the IRP official (in most
cases) will not fix the mistakes but rather give it back to you and
have you fix them. That means going back to the end of the line. I
failed to get the correct estimated mileage one time and it took me 3
hours to get back to the IRP official so I could pay my bill and
complete my registration.
BOC-3
The
BOC-3 is one of the most overlooked requirements by the FMCSA. The
reason is simple. There is not a “check and balance” or
verification process before being allowed to operate using your new
authority. The purpose of the BOC-3 is to provide the FMCSA with a
list of agents from the states or jurisdictions you operate in that
will receive legal documents. The FMCSA describes it’s purpose this
way…
“A
process agent is a representative upon whom court papers may be
served in any proceeding brought against a motor carrier, broker, or
freight forwarder. Every motor carrier (of property or passengers)
shall make a designation for each State in which it is authorized to
operate and for each State traversed during such operations.”
Now
I don’t normally recommend using an agent for much of anything.
However, in this case it is best. Otherwise you will need to locate
representatives for every state or jurisdiction and continually
verify that the representative is still in business. Personally, I
have enough to do without calling 50+ representatives every week or 2
to verify they are still in business. Through an agent, a BOC-3 will
cost you a 1 time fee of normally no more than $50.00. A list of
agents is provided by the FMCSA on their website.
Deciding
to get your own FMCSA operating authority and DOT number is a big
step. Most use agents to help them get started. Unfortunately they
cost a lot of money. I’m going to share with you all the different
regulating agencies and how to contact them. By doing so, I’m giving
you the ability to get set up with all of them so you can avoid
paying an agent more than necessary. What better way to start your
business than by saving money and learning compliancy requirements at
the same time! Here are the basic Federal requirements (there are
more and I’ll discuss them soon).
1.
FMCSA Operating
Authority “MC”
“FF” or “MX” number
2.
Department of Transportation (DOT) number
3.
Commercial Insurance
4.
*Unified Carrier Registration (UCR)
5.
*International Fuel Tax Agreement (IFTA)
6.
*International Registration Plan (IRP)
7.
BOC-3
*
These 3 are frequently done at the same time at your state or
jurisdiction office. In most cases you can apply, pay and receive all
of them in person and on the same day. It is wise to verify in
advance what types of payments your state or jurisdiction will accept
as they are all different.
FMCSA
Operating
Authority “MC”
number
The
FMCSA website states…
“In
general, companies that do the following are required to have
interstate Operating Authority (MC number) in addition to a DOT
number:
Operate
as for-hire carriers (for a fee or other compensation)”
Since
the one time fee is only $300.00, I recommend every “For-Hire”
carrier to not take any chances or run the risk of operating without
having their MC (Motor Carrier) number. It
is a fairly simple process and can be done through the SaferSys
website (an FMCSA website).
Department
of Transportation (DOT) number
I
have never seen a truck or met a truck owner that wasn’t required to
have a USDOT number. The FMCSA’s website states…
“You
are required to obtain a USDOT number if you have a vehicle that:
Is
used in transporting material found by the Secretary of
Transportation to be hazardous and transported in a quantity
requiring placarding (whether interstate or intrastate).
OR
Has
a gross vehicle weight rating or gross combination weight rating, or
gross vehicle weight or gross combination weight, of 4,536 kg (10,001
pounds) or more, whichever is greater”
and
goes on to state…
“AND
is involved in Interstate commerce:
Trade,
traffic, or transportation in the United States—
Between
a place in a State and a place outside of such State (including a
place outside of the United States);
Between
two places in a State through another State or a place outside of the
United States; or
Between
two places in a State as part of trade, traffic, or transportation
originating or terminating outside the State or the United States.
You
are required by FMCSA to obtain USDOT Number and comply with the
Federal Regulations.”
The
FMCSA concludes with…
“Apart
from federal regulations, some states require commercial motor
vehicle registrants to obtain a USDOT Number. These
states include:
Alabama,
Alaska, Arizona, Colorado, Connecticut, Florida, Georgia, Indiana,
Iowa, Kansas, Kentucky, Maine, Maryland, Michigan, Minnesota,
Missouri, Montana, New Jersey, New York, Nebraska, North Carolina,
Ohio, Oklahoma, Oregon, Pennsylvania, South Carolina, Tennessee,
Texas, Utah, Washington, West Virginia, Wisconsin, Wyoming”
Obtaining
a USDOT number is free. The
FMCSA made it convenient to apply for a USDOT number at the same time
you apply for a MC number
by
using
the SaferSys website. You
will be required to complete and submit the MCS -150 form which
defines your business to the USDOT before
they will issue you a USDOT number.
Commercial
Insurance
Once
you have applied for your FMCSA operating authority you will need
commercial insurance before your MC number is ready to be used
legally. Your insurance company is required to notify the FMCSA once
you have purchased your insurance. This process of the insurance
company notifying the FMCSA of your policy and the FMCSA updating
your MC number with the insurance does take time. Your insurance
agent and/or company will be able to provide you with the coverage
requirements from the FMCSA.
Unified
Carrier Registration (UCR)
The
Unified
Carrier Registration (UCR) is
a registration based on the number of vehicles (trucks) you operate.
You can complete your UCR either through the UCR website or many
times through your state you operate from. UCR
is paid annually.
International
Fuel Tax Agreement (IFTA)
IFTA
accounts are free and depending on your state or jurisdiction you may
or may not pay for the IFTA stickers that are required for each truck
in your fleet. I normally start my IFTA account and receive my
stickers on the same day I pay for and receive my IRP plates (which I
will discuss next). Renewal each year is typically done either on a
state or jurisdiction website or by mail. Filing
your IFTA taxes is a quarterly requirement.
International
Registration Plan (IRP)
The
International
Registration Plan (IRP) is
the registration and license plates for all your vehicles. It
is an apportioned registration. Meaning you will pay a portion of
each states registration fee based on the percentage of miles you
operate in each state or jurisdiction. When you apply for your first
IRP you will be required to use “estimated miles.” This does not
mean you get to estimate your miles. The estimated miles are provided
to you by your state or jurisdiction. In most cases it will be your
responsibility
to put the correct estimated miles for each state or jurisdiction in
the correct field. If it is not correct the IRP official (in most
cases) will not fix the mistakes but rather give it back to you and
have you fix them. That means going back to the end of the line. I
failed to get the correct estimated mileage one time and it took me 3
hours to get back to the IRP official so I could pay my bill and
complete my registration.
BOC-3
The
BOC-3 is one of the most overlooked requirements by the FMCSA. The
reason is simple. There is not a “check and balance” or
verification process before being allowed to operate using your new
authority. The purpose of the BOC-3 is to provide the FMCSA with a
list of agents from the states or jurisdictions you operate in that
will receive legal documents. The FMCSA describes it’s purpose this
way…
“A
process agent is a representative upon whom court papers may be
served in any proceeding brought against a motor carrier, broker, or
freight forwarder. Every motor carrier (of property or passengers)
shall make a designation for each State in which it is authorized to
operate and for each State traversed during such operations.”
Now
I don’t normally recommend using an agent for much of anything.
However, in this case it is best. Otherwise you will need to locate
representatives for every state or jurisdiction and continually
verify that the representative is still in business. Personally, I
have enough to do without calling 50+ representatives every week or 2
to verify they are still in business. Through an agent, a BOC-3 will
cost you a 1 time fee of normally no more than $50.00. A list of
agents is provided by the FMCSA on their website.
Aside
from the cost of your insurance and IRP, the entire cost to you
should not exceed around $400.00. Many agents charge thousands of
dollars. Since I’m always looking to save money and improve my
profits, it only makes sense for me to spend a little time educating
myself, complete the applications or filings, and saving money at the
same time. If
you want to learn more check out the category Business of Trucking.
Aside from the cost of your insurance and IRP, the entire cost to you should not exceed around $400.00. Many agents charge thousands of dollars. Since I’m always looking to save money and improve my profits, it only makes sense for me to spend a little time educating myself, complete the applications or filings, and saving money at the same time. If you want to learn more check out the category Business of Trucking.
One of the most frequently asked questions I get is “So how does IFTA work anyway?” Once truck owners understand IFTA they all change their fuel purchasing ways. In doing so they lower their fuel cost and improve their profits.
In the day of the original “bingo card” registration, which no longer exists, truck owners had to buy just enough fuel to drive in each state. Since then the International Fuel Tax Agreement (IFTA) was created. IFTA completely eliminated the need to buy fuel in every state. In fact, doing so all but guarantees you are paying far more for your fuel than necessary.
IFTA fuel taxes are collected in all states and jurisdictions that have a state or jurisdiction fuel tax. Oregon does not have fuel taxes but they do issue IFTA accounts. All carriers who operate an apportioned IRP are required to have an IFTA account and a list of states or jurisdictions they operate in. At the end of each quarter you will file your quarterly IFTA fuel taxes. Here is where the value of understanding IFTA turns into lower fuel cost. You owe each state it’s fuel tax based on how many gallons you used while driving in their state. Not how much you bought! What that means is when you buy fuel at the lowest cost BEFORE taxes you will almost always be due a refund at the end of the quarter. Here is how that works using 2nd quarter 2015 IFTA fuel tax rates.
Illinois
Pump Price $3.399
Missouri
Pump Price $3.259
Most
truck owners will buy Missouri because it costs less at the pump.
2015
2nd Qt. IFTA Fuel Taxes
Illinois
.4270
Missouri
.1700
Your
truck averages 5mpg
You
drive 50 miles in Illinois and 50 miles in Missouri
You
owe each state a IFTA fuel tax on 10 gallons of fuel
Buying
fuel in Missouri
You
buy 20 gallons of fuel in Missouri for $3.259
a gallon
Actual
fuel cost without tax is $3.089
You
have an IFTA tax credit of $1.70
from Missouri
You
owe Illinois an IFTA tax of $4.27
You owe a IFTA tax
Payment of $2.57
Instead,
Buy fuel in Illinois
You
buy 20 gallons of fuel in Illinois for $3.399
a gallon
Actual
fuel cost without tax is $2.972
You
have an IFTA tax credit of $4.27
from Illinois
You
owe Missouri an IFTA tax of $1.70
You have a tax credit and Refund of $2.57
In this example the answer for “How Does IFTA Work” means purchasing fuel in Illinois is a 3 month investment that lowers your fuel cost by almost $.12 a gallon! If your truck averages 5 mpg, you are increasing your profits by $.025 per mile. If you drive 175,000 miles in a year, that is a total savings of $4,375.00! Yes, understanding IFTA can save you thousands of dollars every year for each and every truck you own! Learn more ways to save money and increase profits in my After Market Truck Parts post.
