Carriers No Longer Need FMCSA OK Prior to Operating Authority Transfers

This story appears in the Sept. 2 print edition of Transport Topics.

The Federal Motor Carrier Safety Administration said carriers will have to notify the agency only when a transfer of operating authority occurs, rather than having to apply ahead of time.

Although a 1995 law removed a requirement that FMCSA approve requests for operating authority transfers, the agency still has asked that fleets submit the applications for review. However, a Federal Register notice on Aug. 23 has officially ended that practice.

Currently, operating authority is transferred only when a trucking company is sold, the agency said. The authority is tied to a U.S. Department of Transportation number, and the two cannot be transferred independently.

Since DOT numbers are used to track safety, FMCSA prohibits transfers that are designed to mask a poor safety record and said receiving a notice of transfer helps it find “chameleon” carriers. “We believe it is in the public interest, and a necessary feature of our commercial and safety oversight roles, to record information about the resulting ownership and control consequences when [carriers] merge, transfer or lease their operating rights,” FMCSA said.

Ira Lipsius, president of the Central Analysis Bureau Inc., said FMCSA’s change will have little effect on the industry because the agency did not normally reject transfer requests.

“In practicality, the DOT review process is a very cursory review process, and only if someone had a real safety issue would they object,” he told Transport Topics. “I’d say there are very few annually.”

The Central Analysis Bureau tracks data for insurance companies.

Some carriers do try to transfer operating authority to mask a poor safety record, but FMCSA has systems in place — and is developing others — to detect chameleon carriers, Lipsius said.

“They don’t need to buy someone’s operating authority if DOT will just give them authority for a new operation. Today I have a bad safety record, but tomorrow I transfer my truck to a new carrier and get a DOT number,” Lipsius said.

He added: “FMCSA’s cracking down on that process.”

FMCSA said that before the industry was deregulated three decades ago, operating authority was a valuable asset. But with those restrictions ended and the agency’s duties centered on safety, operating authority transfers are not as valuable as they once were.