Obtaining DOT Authority 

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.

 

1. Deciding what type of authority is needed.

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:

  • Property for-hire carriers transport items that are owned by others for compensation.
  • Passenger for hire carriers transport people for compensation. The compensation can either be direct – like a fare to ride, or indirect where the transportation fee is included as part of the overall service – such as a hotel shuttle.
  • Household goods for-hire carriers are often referred to as movers. They transport household goods for the general public in exchange for payment.
  • Property brokers receive payments for arranging the transportation of property belonging to others. A broker brings a buyer and a seller (a shipper and a carrier) together. A broker does not assume responsibility for the property and never takes possession of it.
  • Freight forwarders provide transportation of property for compensation and in the ordinary course of its business assembles and consolidates shipments and performs the distribution of the shipments – often using multiple carriers and modes. However, a freight forwarder assumes the responsibility for the transportation from the place of receipt to the destination.

 

2. Applying for authority.

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.

  • New carriers apply for authority at the same time as apply for a USDOT number. The application is completed online. The application process will determine the types of authority that are required.
  • Existing carriers apply for authority using an FMCSA form designated as the OP-1 series. The FMCSA’s preferred method of application is to submit the form electronically.

 

3. Demonstrate financial responsibility.

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.

 

4. Designate Process Agents.

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.

 

5. Wait.

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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