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Owner-Operator Permitting Requirements
This explanation is divided into two parts: 1) owner-operators as independent motor carriers, and 2) owner-operators leased to a motor carrier.
1. Owner-operators as independent motor carriers
If you wish to operate as an independent motor carrier, there are credentialing requirements you must be aware of on both the federal and state levels.
The federal requirements are:
You must have interstate operating authority before operating interstate as a for-hire carrier. Operating authority/MC Numbers are obtained from the Federal Motor Carrier Safety Administration (FMCSA) by submitting an OP-1 application, a $300 filing fee, and proof of the minimum amount of bodily injury/property damage (BI&PD) and cargo insurance required in §387.9.
"Exempt" for hire motor carriage
If you transport goods listed as "exempt" from Federal economic regulation under 49 USC 13506 and 49 CFR 372.115, (generally unprocessed agricultural products) you do not have to obtain federal operating authority from the FMCSA. However, most states have registration requirements for operation by interstate and intrastate exempt carriers. Commodities considered "exempt" from Federal economic regulation may not be considered exempt in intrastate transportation. "Exempt" applies only to federal operating authority; all carriers of exempt commodities are fully subject to U.S. DOT safety regulations, size and weight limits, vehicle licensing, and fuel tax requirements.
US DOT number
You will need a USDOT number if your vehicle has a GVWR or GCWR of 10,001 pounds or more, or if you will be transporting hazardous materials at any weight. Your USDOT number must be displayed on both sides of the vehicle along with your legal company name (as shown on your MCS-150). The USDOT number is issued at no fee. The information on your MCS-150 must be updated every two years according to the schedule outlined in §390.19.
Hazardous Materials Safety Permit
The FMCSA has established a national safety permit program for motor carriers transporting any of the hazardous materials listed in §385.403 in interstate or intrastate commerce. If you transport these hazardous materials, you will need the FMCSA Hazardous Materials Safety Permit. There is no fee for this permit.
Applications for authority (OP-1), the US DOT number (MCS-150), and the Hazardous Materials Safety Permit (MCS-150B) may be made online at http://www.safersys.org/.
The state requirements are:
Unified Carrier Registration Agreement (UCR)
The Unified Carrier Registration Agreement (UCRA) was mandated by SAFETY-LU as the “replacement” program for the Single State Registration System (SSRS). However, the UCR requires compliance by “exempt” for-hire carriers, regulated for-hire carriers, and private carriers as well as freight forwarders, leasing companies and brokers. The UCR was implemented on September 10, 2007.
The UCR fee structure is a bracket system, with the per-carrier fees based on the number of vehicles the carrier operates. UCR fees are not imposed per vehicle, and are uniform across the country for all entities of a given size, no matter where they are based.
The fee is based on the number of commercial vehicles, including trailers, owned and/or leased (term of lease for more than 30 days) as reported on the last MCS-150, or the total number of vehicles owned and operated for the 12-month period ending June 30 of the year immediately prior to the year for which the UCR registration is made.
No. of CMVs (including trailers)
Thirty-four states are participating in the UCR for the 2007 registration year. The list is shown below.
Registration is required for carriers based in non-participating states.
Additional states may decide to participate in UCR beginning in 2008.
The UCR Board of Directors has established a National UCR System at www.ucr.in.gov. All UCR registrants may use this online system, regardless of base state. Applications may also be submitted to the base state for processing.
The UCR does not issue a paper credential to be carried in the vehicle. Proof of registration under the UCR is available to enforcement via FMCSA electronic information systems.
Solely intrastate carriers (never crossing state lines, never engaging in interstate commerce) are not subject to the UCR. Intrastate carriers also engaged in interstate motor carriage must comply with the state requirements for initial application for intrastate authority and submit any necessary fees. Such carriers are subject to the UCR and will not be subject to annual renewal of the intrastate authority.
Vehicle licensing and fuel use tax
Fuel use tax and vehicle licensing are governed by the states. To be in compliance as an interstate carrier, you must register your "qualified" vehicles with the International Fuel Tax Agreement (IFTA) and the International Registration Plan (IRP) in your base jurisdiction (the jurisdiction where your principal place of business is located).
Under IFTA and IRP, aQualified" vehicle means any vehicle with two axles and a gross vehicle weight or registered gross vehicle weightexceeding 26,000 pounds (11,797 kilograms); or vehicles with three or more axles regardless of weight; or a combination, when the weight of the combination exceeds 26,000 pounds (11,797 kilograms) GVW.
- International Fuel Tax Agreement (IFTA): When you register with IFTA, your base jurisdiction will issue an IFTA license and decals to display on your vehicle. All states and provinces belong to IFTA, so the decals on your vehicle qualify you to travel in all jurisdictions; no additional fuel use tax credentials are needed. Some jurisdictions assess a fee for the IFTA license; most jurisdictions require a fee for the decals, which must be renewed annually. You will be required to submit fuel tax reports to your base jurisdiction.
- International Registration Plan (IRP): "Apportioned" registration under the IRP means you pay vehicle registration fees to your base jurisdiction based upon the miles you travel in each jurisdiction. Proof of payment of the Federal Heavy Vehicle Use Tax (HVUT) will be required to register your vehicle. You will receive an apportioned license plate and cab card listing jurisdictions for which fees have been paid, which must be carried in the vehicle.
IRP registration qualifies you for both interstate and intrastate operation in the jurisdictions for which you pay fees.
Trucks having a gross vehicle weight of 26,000 pounds or less may be registered with the IRP at the option of the registrant. If you operate a vehicle weighing 26,000 lbs. GVW or less and choose not to apportion with IRP, your vehicle is subject to individual jurisdiction registration laws. Most (but not all) states allow such vehicles to travel interstate in their jurisdictions. However many jurisdictions require vehicles of 26,000 pounds or less to obtain trip permits before operating intrastate. You should always verify the vehicle licensing requirements prior to operating in a jurisdiction.
Both IRP and IFTA require recording the mileage for the actual routes traveled by each vehicle for each trip, using a daily "Individual Vehicle Mileage Report (IVMR)." IVMRs should be accurately and legibly completed; they are used to prepare monthly, quarterly, and yearly recaps or reports. The mileage information from these daily trip reports is used as a source document to verify your IRP application or fuel report for accuracy in an audit.
Additional state requirements
Interstate carriers must also comply with state tax requirements assessed in addition to fuel use tax.
- New York Highway Use Tax - HUT Sticker (18,000 lb. or more).
- Kentucky Highway Use Tax – KYU Number (60,000 lb. or more GVW).
- New Mexico Road-Use Tax (Weight-Distance Tax) – Tax ID Permit (26,000 lb. or more).
Vehicle size and weight laws
49 CFR 658 prescribes a national policy on size and weight. The federal size and weight limits apply on the roads designated as part of the National Network, and roads necessary to allow reasonable access to the network. These limits are the minimums the states must allow on their portions of the designated National Network.
Other roads within a state are under the jurisdiction of the state. The state can place any size and weight limit on these roads they wish. Many states have significantly different size and weight limits for their non-designated roads. If you are going to use a non-designated road, you will need to know that state’s size and weight limits.
Each jurisdiction has requirements for overdimensional permits, required when the vehicle exceeds the legal size and weight limits.
If you operate solely intrastate (point to point within a single state) the rules of the state of operation apply, including vehicle registration, fuel use tax, size/weight, vehicle identification, and operating authority. If you wish to operate solely within a single state as in intrastate for-hire carrier (or pick up and deliver within a single state), you will need to comply with the authority registration laws in the state of operation. If you operate as an intrastate only exempt carrier, many states require you to register before conducting exempt transportation in their state.
2. Owner-operators leased to a motor carrier
If you sign a lease agreement to operate for a motor carrier, the motor carrier is the "authorized carrier" and you must operate under the motor carrier’s operating authority, USDOT number, and public liability insurance.
The truth-in-leasing regulations require that a lease between a motor carrier (lessee) and an owner-operator (lessor) be in writing. A copy of the lease must be carried in the vehicle during the term of the lease. The contractual relationship between the lessee and the lessor is governed by 49 CFR 376, Lease and Interchange of Vehicles, and enforced by the Federal Motor Carrier Safety Administration (FMCSA).
A lease agreement must:
- Be in writing, clearly identify the parties involved, and signed by the equipment owner and the authorized carrier;
- Identify all equipment involved in the lease, including vehicle identification numbers;
- State that the carrier has exclusive possession and control of the leased vehicle, and assumes responsibility for the operation of the equipment during the term of the lease;
- Specify the carrier’s legal obligation to have and maintain cargo insurance and public liability insurance pursuant to current state and federal regulations;
- Specify the method of compensation and rate of payment to the lessor; the regulations do not prescribe the method of compensation, but require that the method is clearly stated in the lease.
- Describe terms under which loading and unloading will be performed;
- State that the contractor/lessor must operate the vehicle lawfully, and has responsibility for fines and penalties incurred due to violation of laws;
- Define who is responsible for repairing and maintaining the equipment;
- Explain any expenses or insurance costs charged back to the lessor;
- Prohibit any requirement for the lessor to purchase or rent equipment or services from the lessee as a condition of the agreement;
- Indicate the lessor (owner) is an independent contractor and not an employee and meet the basic legal standards for independent contractor status; and
- Contain terms and conditions under which operations will be performed, such as permit costs, base plates, licenses, fuel costs, fuel tax reporting, empty mileage, tolls, detention, accessorial services, and any unused value of licenses and permits.
Responsibility for certain permit credentials, such as IRP and IFTA, may belong to you (the owner-operator/lessor) or the motor carrier/lessee, depending upon what is specified in the lease agreement If you are an owner-operator leased to a carrier, and registering your truck in your own name in a PRISM state, the state will require you to file an MCS-150 and receive a DOT number before your registration will be issued. The USDOT number issued to owner-operators leased to carriers is a "registrant" number, identifying you as an entity who registers commercial motor vehicles. It does not mean you have the operating authority to function as a carrier. This "registrant" number should not be displayed on your vehicle; when you are leased to a carrier, you are operating under and must display the carrier’s USDOT number.
Some requirements of the leasing rules are not open to negotiation. The requirement of a 15-day settlement period is not negotiable. Nor is the owner operator’s right to a copy of the rated freight bill when compensation is based on a percentage of the revenue. And, the lease must specify the authorized carrier’s (lessee's) obligation to maintain insurance coverage for the protection of the public.
The lease may provide that, upon termination of the lease, you (the lessor) must remove and return all identification to the motor carrier (lessee) as a condition of payment.
The lessee/authorized carrier must furnish a written receipt recording the date and time it takes possession of the equipment. Upon termination of the lease, the lessee must provide a "release of equipment" stating the date when the lease agreement ends and possession and control is transferred back to you, the lessor.
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