USDOT numbers and registration
It is often assumed that an acquiring entity will continue to use the name and USDOT number of the acquired carrier, but this is not always possible. A common process is that the acquired entity receives a new Federal Employer Identification Number (FEIN). When this occurs, the entity is considered new, although much of the operation may seem the same. The new entity will need a new USDOT number since USDOT numbers are not transferable.
The FMCSA has guidance regarding this stance in a frequently asked question (FAQ), “Do I need a new USDOT number if I am changing my company’s legal name or form of business?”
Answer: The FMCSA’s policy is to assign a unique USDOT identification number to each person required to identify themselves with FMCSA … USDOT numbers are not transferable and are assigned to only one person and remain assigned to that person forever. A person includes an individual, corporation, partnership, or other business organization as authorized by state law. Each separate and distinct person must have separate registration.
For this same reason, in an asset-only acquisition where the acquired company will cease to exist as their own entity, the USDOT number will also cease to exist. All drivers and vehicles will need to operate under the new owner’s USDOT number. The purchased vehicle and human assets needed to be added to the gaining carrier’s MCS-150 registration. If no USDOT number exists, the entity will need to register with the Federal Motor Carrier Safety Administration (FMCSA) using an MCSA-1 to obtain one. Whenever a new interstate USDOT number is received, the carrier will go through the new entrant process.
Unlike USDOT numbers, for-hire authorities are transferable. Before the deregulation of the trucking industry in 1980, acquiring other carriers for their authority, ICC number, or motor carrier (MC) number was a principle way carriers grew. Obtaining for-hire authority is much easier now than before deregulation. Carriers no longer need to acquire lanes and allowed commodities from other entities, but the practice of transferring authority from one carrier to another is still allowed and the FMCSA has a process for doing so.
Intrastate authority is somewhat different than interstate authority because some states require authority to move even a single intrastate move – even if the carrier already has an interstate USDOT number and for-hire authority. An easy way to think of it is as state to state cabotage rules. You can bring a movement into the state, and complete a move out of the state, but you need to be registered with the state to move goods from one location in the state to another location in the state when that move is not part of an interstate movement. The authority rules, including transferability, vary considerably from state to state.
Title and registration are two separate things, although many think they are one. In some cases, retitling of vehicles is required, and the deadline to do so is state dependent. There is no grace period, however, on remarking vehicles; that must be done instantly.
Differing time allotments for different steps can create confusion, especially at a roadside inspection during a transition period. Sharing a lease agreement or acquisition/merger document with drivers to keep in cab is a useful tool during this transition period. This process has been further confused by COVID-19 shutdowns and process slowdowns at state license agencies.
If there is no break in employment, meaning that the drivers do not need to apply for a role at the new company, driver qualification files do not need to be built from scratch. The file from the previous DOT number can be accepted.
A note should be put into the file designating the date of the acquisition or merger to indicate why the files have a different motor carrier identified. The new carrier should be aware though that the file is brought in, warts and all. Any deficiencies in the existing files will be transferred to the new DOT number. As a best practice, the transferred files should be audited by a trained compliance specialist.
If the driver hire is not automatic, and the driver needs to apply for a role, then the driver qualification needs to start at the beginning of the process with a full safety performance history completed.
Carriers cannot operate without an active USDOT number. Getting one can take time, particularly if for-hire authority is also required. In addition, the necessary filings, proof of insurance, and process agent designations need to be in place.
It takes time to repaint vehicles indicating the new responsible carrier’s name and USDOT number, transfer registrations, obtain state specific registrations, ensure the drivers are qualified, update insurance, and create ELD accounts.
As a best practice, whenever possible, transition drivers and equipment over a period of weeks or months to put some flexibility into the timeline. Timing needs to be part of the merger or acquisition agreement and may include temporary leases of drivers and equipment. Trained and motivated DOT authority associates can help expedite the process.