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Q. What is a Level One Inspection?
A. This is an official (not to mention
extensive) USDOT safety inspection often conducted by state law
enforcement on the side of the road. During a Level One, authorities
look at both the truck driver’s compliance with FMCSA Safety
Regulations and the vehicle’s fitness in terms of
maintenance. They will examine your CDL, medical card and ask to see
your driver’s log to check to see that you are not driving, for
instance, more than 11 hours, following 10 consecutive hours of
off-duty time and not driving after having been on duty for 14
hours. They will also check the equipment against CVSA
“out-of-service” criteria and make sure the vehicle is safe to
continue on its way. According to the most recent FMCSA data (for
2003) published at
www.safersys.org, about 23% of all vehicles stopped are not safe
and are placed “out-of-service”. The most toned-down version of this
is a Level Three, in which only the driver is examined. Similarly,
about 8% of all truck drivers are not in compliance to the point
that they, too, are shut down. My favorite was when I would do a
Level Three Inspection and the driver of an 80,000 pound semi that
would pull into the weigh station was 19 years old with no CDL,
medical card or driver’s log. Then we had some real fun!
Wanna learn more about Safety Inspections? Call
Vanessa in my office toll free at (888) 414-1874 and sign up for a
trucking success safety workshop.
Q Do I need authority if I operate only a
cargo van interstate?
A. Well, as a practitioner, I have never been
able to find a federal statute that enables FMCSA to require
MC registration for vehicles under 10,000 pounds. In fact, a reading
of federal law suggests the exact opposite. FMCSA acknowledges they
cannot require a USDOT Number for vehicles under 10,000 pounds but
their licensing application system does require van-sized carriers
to get authority. They tell carrier applicants to just secure
$300,000 in vehicle insurance to protect the public against bodily
injury and property damage instead of the usual $750,000 commercial
transportation liability insurance.
Incidentally, I wrote FMCSA’s Legal Department
some time ago inquiring as to their position on their legal
authority to regulate vehicles under 10,000 and they did not
respond. My position is they do not have the authority. But they
advise the public they have the authority to regulate and that motor
carrier authority is required to transport regulated, non-hazmat
commodities for-hire across state lines in cargo vans. This is
something that apparently will not be resolved until and unless a
carrier takes the FMCSA to court. So, if you operate cargo vans or
very small straight trucks, call DOTAuthority.com toll free at (888)
414-1874 and we’ll help you get your authority.
Q. What is a tax id number?
A. Much like we each have a Social Security
number issued by the government, which is used, in part, to keep
track of our income tax payments to the Internal Revenue Service
(“IRS”), businesses, too, need to have a tax account with the IRS. A
“Tax ID Number”, also commonly referred to as an “EIN” or “FEIN”, is
a number that is needed for a motor carrier or freight brokerage
that operates under the legal structure of corporation or limited
liability company. You must tell FMCSA your EIN at the time you make
application for authority or a freight broker’s license, along with
the exact legal name of your business entity. DOTAuthority.com can
help you secure an EIN in just 10-15 minutes. Call our tax unit toll
free: (800) 450-7516.
Q. What is a Trust Fund Agreement?
A. This pertains to the financial security of
freight brokers. Freight brokers, because they are third party
intermediaries in between shippers and carriers—matchmaker
middlemen, if you will, do not need insurance to get a license from
FMCSA (some shippers ask brokers for contingency cargo insurance but
we’ll save that for another day…or better yet, come to my 1 day
freight broker training seminar offered nationwide—call Lori in my
office toll free at 888-414-1874 to sign up!); that is, freight
brokers do not take possession of the freight so they are not
normally liable for the freight. However, they do have a financial
security requirement imposed on them to ensure they meet their
obligations and financial responsibilities to shippers and carriers.
They have to have either a surety bond or trust fund agreement in
place to get licensed. If the shipper pays the broker but he keeps
the money rather than pay his carrier, the carrier can seek recourse
through the broker’s bond. By the way, legally, brokers have to pay
carriers they hire regardless of whether they collect from shippers
or not!
The trust fund is an alternative to the
traditional bond. We recommend the trust fund option to our freight
broker clients and we endorse the financial institution Pacific
Financial Association, Inc. because of their flexible cash and
credit plans, their policy of allowing brokers to dispute claims,
and their practice of returning collateral at the end of the
broker’s business within 30-60 days rather than make him or her wait
6 months. To fill out a PFAI Trust Fund Agreement quote request
form, click here.
Q. I’m an owner-operator. How much insurance
will I need if I get my ICC rights?
A. There are actually two answers to this
question; that is, what the government requires and what the
Industry expects. In order to transport regulated commodities
for-hire across state lines under federal authority, you must
maintain a minimum of $750,000 commercial trucking liability
insurance. You probably have bobtail now so you will have to
upgrade. This assumes you are not transporting hazmat. If you do,
then the requirement is $1mm or $5mm, depending on the nature of the
hazmat you will haul. Turpentine, for instance, would be the former
and explosives, the latter.
Now, that doesn’t mean that you should run out
and procure only $750,000. In fact, the Industry usually requires
that you maintain $1mm. So, if you will do business with “Fortune
500” shippers and/or freight brokers then be prepared to present
evidence of the full $1mm. Also, freight brokers and some shippers
will usually want to see $100,000 in cargo insurance for general
commodities even though the government requirement for common
carriers is less. Expect to be asked for even higher cargo insurance
if the commodity being transported is of high value like, say, Rolls
Royces and Bentleys. I gotta get me one of them.
By the way, if you do get the $1mm, make sure
your insurance broker properly files the full $1mm with FMCSA --not
just the bare minimum of $750,000-- or freight brokers may think you
are underinsured for their purposes and may pass on calling you,
which will cost you business!
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