How to get an FMCSA Operating Authority

Letter of Authority

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.

How IFTA Works

IFTA rates available from the International Fuel Tax Association, Inc.

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.

Drug & Alcohol Clearinghouse

What Every Truck Owner Needs to Know

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 the FMCSA ELD Mandate

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.