Rick Malchow, Industry Business Advisor
October 18, 2021
In this article we’ll discuss the steps to obtain DOT authority. Before we do though, let’s define what “having ‘authority’ means.”
To some, having or getting authority means to obtain an interstate USDOT number. That’s not necessarily incorrect. The usage goes back to the Interstate Commerce Commission (ICC) before deregulation when a carrier needed to register with the ICC and get “authority” to run certain commodities on particular lanes. While that need went away with the deregulation of interstate trucking, the commodities carried are still required fields when applying for a USDOT number or updating the carrier’s registration with the Federal Motor Carrier Safety Administration or FMCSA.
The “authority” that this article is exploring, however, is for-hire authority. For-hire authority means engaging in interstate transportation for compensation. Having authority is often referred to as having an MC Number. There are several steps that are required to obtain for-hire authority.
The most common types of authority are property for-hire, passenger for-hire, household goods, broker, and freight forwarder. The following is a brief description of each:
Authorities are not all-inclusive. Separate authority is needed for each type of service offered. For instance, a for-hire over-the-road carrier that also wants to be able to resell its extra demand will need both for-hire and brokerage authorities. The method to apply for authority is different for brand new carriers than for existing carriers that have decided to engage in transportation to generate revenue.
All for hire carriers must demonstrate financial responsibility. Carriers that engage in the actual transportation usually use bodily injury and property damage (BIPD) liability insurance to meet this requirement. The insurance company provides the FMCSA and the carrier with documentation of coverage. The required coverage ranges from $750,000 to $5,000,000 depending on what is being transported and in what quantity. Freight forwarders and brokers have additional surety bond requirements and household goods carriers must obtain cargo insurance.
A process agent is the carriers “statutory agent.” The agents must be sourced and named in each state of operation. The process agents receive claims against a carrier on behalf of the carrier. The agent functions as a conduit between the legal system and the regulated entity. This enables court actions to be served in the jurisdiction in which the event occurred eliminating the need to search for the location of a motor carrier that may be domiciled in another jurisdiction.
It can take many weeks for the authority to be issued by the FMCSA. Every error or missing piece of information will delay the process. No for-hire entity can engage in the activity applied for until the authority is granted.
Because of the number of ‘i’s to dot and ‘t’s to cross, many companies and individuals seek the help of a professional to walk them through the process. The good news is that unless the authority is surrendered or revoked (typically due to the cancellation of insurance or loss of process agents), once you have authority it doesn’t go away and does not need to be renewed.
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This free, 14-page e-book gives you an easy-to-understand summary of the requirements you must comply with before hitting the road.
You'll learn... What type of business you run (interstate or intrastate, private or for-hire, CMV or non-CMV, etc.) What operating authority you need (USDOT number, MCS-150, UCR, etc.) What vehicle credentials you must have (CMV registration, IRP, IFTA, etc.) How your trucking company will be help accountable (new entrant safety audit, CSA, etc.)