Conditional statements are a staple of computer programmers. The statements allow data to flow through logic checks. Fleet legalization questions can follow similar logic or decision trees. A simple conditional statement usually will contain an “if” statement containing what is being tested and whether the statement is true or false, followed by a then statement when true. Whenever the “if” statement is true, the “then” statement is also true. If there is only one other possible option, there will be only the “then” statement. Otherwise, there may be multiple “else” and “if” statements until a true conclusion is reached. Complex fleet legalization questions of intrastate vs interstate or private vs for-hire can be simplified using conditional statements. Let’s illustrate some fleet legalization conditional statements.
If an entity operates commercial motor vehicles, then the entity is considered a carrier and must have a USDOT number.
The general commercial motor vehicle definition has two preconditions. The vehicle is operated on a highway which essentially means anywhere a car can go without restrictive gates or prohibitive signs, and the vehicle is furthering interstate commerce (more on that below). The vehicle types are then are broken into three categories – by weight, number of passengers, and if placardable amounts of hazardous materials are onboard:
- By weight the vehicle or vehicle combination has a weight of 10,001 pounds or more – rated or actual.
- Regardless of weight if a placardable amount of hazardous materials is onboard.
- The vehicle is designed to carry more than 8 passengers (including the driver) for compensation or more than 15 (including the driver) regardless of compensation.
A USDOT number is obtained by completing an MCSA-1 and is maintained by submitting an MCS-150 at least every other year.
If a carrier ever transports people or product belonging to someone else for compensation, then they are for-hire, else they are private.
That statement is much more to the point than the FMCSA’s guidance statements:
The agency defines a for-hire carrier as: “An authorized for-hire motor carrier transports passengers, regulated property or household goods owned by others for compensation.
A private carrier is defined by the FMCSA as: “A private motor carrier transports its own cargo, usually as a part of a business that produces, uses, sells and/or buys the cargo that is being hauled. A private motor carrier transports its own goods.
While a carrier may seem to be “mostly private,” if they engage in any for-hire activities the FMCSA considers the carrier for-hire. The agency does not hyphenate the status as “private-for hire.”
If a carrier is for-hire, then the carrier must have for-hire authority, demonstrate financial responsibility, and designate process agents.
While private and for-hire carriers follow the same safety rules in Parts 390-399, for-hire carriers have additional commerce rules to follow.
Having for-hire authority is often referred to as having an MC Number. To move property or people that belongs to somebody else for compensation, the authority is required. Two of the most common types of authority are property for-hire and passenger for-hire. If an entity never operates CMVs, it is possible to have authority, but not have a USDOT number.
A process agent is the carrier’s “statutory agent.” The agents must be sourced and named in each state of operation. The agent functions as a conduit between the legal system and the regulated entity.
For-hire property carriers must have a minimum of $750,000 in financial responsibility. The coverage is usually met through bodily injury and property damage insurance policies. When the carrier also carries hazardous materials, they need additional coverage, from $1,000,000 to $5,000,000. Passenger carriers are required to have either $1,500,000 or $5,000,000 of demonstrated financial responsibility with the greater amount reserved for larger vehicles capable of transporting more than 15 passengers.
If a carrier engages in a single movement that furthers interstate commerce, then the carrier is an interstate carrier, else the carrier is an intrastate carrier.
A vehicle never needs to leave the state to be engaged in interstate commerce. At the time of shipment if the intent is interstate, then the entire movement of product or passengers is considered interstate. Including the first mile and the last mile. It does not matter how many vehicles or carriers are involved. The FMCSA defines a movement as interstate if the trade, traffic, or transportation is between one of the following:
- A place in a state and a place outside of the state,
- Two places in a state through another state or a through a place outside of the United States, or
- Two places in a state as part of trade, traffic, or transportation originating or terminating outside the state or the United States.
Drivers and carriers that participate in interstate commerce in a CMV must follow the federal safety rules.
The FMCSA has their own conditional statement regarding intrastate commerce, “If you perform trade, traffic, or transportation exclusively in your business’s domicile state, this is considered intrastate commerce.” The else would be if trade, traffic, or transportation is performed in more than one state, then the entity is engaged in interstate commerce.”
Using conditional statements can help simplify the complex fleet legalization process. However, if the process leaves you clear on what needs to be done, but not sure how to proceed, then consider getting help from a professional that knows the what and how.