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5 things to understand about new entrant audits


If you're starting up a new trucking business, you undoubtedly have a lot on your plate! But some things you can't afford to ignore are your compliance-related obligations under the Federal Motor Carrier Safety Regulations (FMCSRs) and any applicable state regulations. Indeed, most newly registered motor carriers end up going out of business within the first year of operations, and too often, noncompliance is the culprit.


Highway transportation remains one of the most heavily regulated industries in the U.S., at least when it comes to safety. Unsurprisingly, the federal and state governments periodically audit regulated carriers to ensure they are following the rules. And for newly-registered interstate motor carriers, they must undergo a mandatory "new entrant audit." In this article, we'll explore the top 5 things that fleets should understand about these types of audits.



All newly registered interstate carriers must undergo a new entrant audit

In 2003, the Federal Motor Carrier Safety Administration (FMCSA) established its New Entrant Safety Assurance Program, designed to place additional regulatory scrutiny on first-time applicants for interstate USDOT numbers and motor carrier operating authority. For the first 18 months after applying for an interstate USDOT number, a motor carrier is considered a "new entrant" and is more closely monitored by the FMCSA to ensure that it has effective safety management controls in place. Within the first 12 months of operation, the carrier will be notified of, and must submit to, a new entrant audit.


Within the first 12 months of operation, new entrant carriers will receive correspondence from an FMCSA investigator (typically by mail) to schedule the new entrant audit. Audits can be conducted on-site at the carrier's principal place of business or offsite via electronic records submission. Offsite new entrant audits have become more prevalent than on-site audits over the past five years.

Sample New Entrant Audit Letter

New entrant audits are fairly cursory in nature

New entrant safety audits are fundamentally distinct from the other types of compliance investigations that the FMCSA conducts. Whereas compliance investigations typically involve a more in-depth review of a sample of documents, new entrant audits typically involve a more cursory review of only a handful of records.


Specifically, once a carrier receives the new entrant audit correspondence, it will need to follow the directions it provides for how to get in touch with the agency to either schedule the audit or submit the requested documents. If the audit is offsite, the correspondence will provide instructions for logging into your SMS account, viewing any outstanding document requests, and uploading the requested documents.


Ultimately, carriers will be required to provide/upload the following documents as part of the new entrant audit:

  1. A list of all drivers that have operated for the carrier within the prior 12 months, including names, dates of birth, dates of hire, and license numbers/states

  2. A list of all vehicles (power units and trailers) operated by the carrier, including unit numbers, VINs, and plate numbers

  3. Proof of adequate levels of commercial auto liability insurance (e.g., an MCS-90)

  4. A sample driver medical card

  5. A sample Motor Vehicle Record (MVR) for one driver

  6. A sample driver's license and/or CDL

  7. 30 days' worth of driver logs (electronic, if applicable) for a single driver (or time cards for short-haul drivers), plus supporting documents

  8. A sample annual vehicle inspection report

  9. The carrier's accident register (if it has had any since commencing operations)

  10. A sample pre-employment drug screen result (if carrier is subject to drug/alcohol testing rules)

  11. Proof of a random testing program (if carrier is subject to drug/alcohol testing rules), and list of drivers enrolled

  12. Hazmat shipping paper samples (if carrier hauls hazmat)

Once the investigator receives the documents, which generally must be provided within 20 days of the request, he/she will review them for potential violations, and may ask the carrier a series of follow-up questions or ask for additional documents.


Certain violations will lead a carrier to automatically fail a new entrant audit

The FMCSA has developed a list of 16 specific regulatory violations which, if discovered during the new entrant audit, will cause the carrier to automatically fail. The 16 violations are:

  1. Failing to implement a drug/alcohol testing program (when required);

  2. Using a driver known to have tested positive for alcohol;

  3. Using a driver who has refused to submit to a drug or alcohol test (when required);

  4. Using a driver known to have tested positive for drugs;

  5. Failing to implement a random drug/alcohol testing program (when required);

  6. Knowingly using a driver who does not possess a valid CDL (when required);

  7. Knowingly allowing a driver to operate a CMV with a suspended or revoked license;

  8. Knowingly allowing a driver who is disqualified to drive a CMV;

  9. Operating a CMV without having in effect the required minimum level of auto-liability insurance;

  10. Operating a passenger carrying vehicle without the necessary level of auto-liability insurance;

  11. Knowingly using a disqualified driver;

  12. Knowingly using a physically unqualified driver;

  13. Failing to require a driver to complete a log or other record of duty status;

  14. Requiring or permitting the operation of a CMV that has been declared out of service before repairs are made;

  15. Failing to correct out of service defects listed by a driver on a driver vehicle inspection report before the CMV is operated again; or

  16. Using a CMV that is not periodically inspected.

During the course of the new entrant audit, the agency will note other violations that aren't listed here, but those generally won't result in the carrier failing the audit.


New entrant audits will not result in a Safety Fitness Determination

Unlike more comprehensive FMCSA compliance reviews, new entrant audits will not result in the issuance of a Safety Fitness Determination a/k/a safety rating, meaning that new entrant carriers will not have a Satisfactory, Conditional, or Unsatisfactory rating stemming from a new entrant review. That said, violations discovered during a new entrant audit can lead to civil penalties and revocation of the carrier's USDOT registration.


Carriers who fail a new entrant audit have options

New entrant audits are pass/fail, and carriers will be notified of their results within 45 days after the completion of the audit. Carriers who fail their new entrant audit will receive a list of violations that caused the failure and instructions for developing and submitting a corrective action plan (CAP). CAPs must be submitted within the time frame set forth in the notification, and if they are accepted, the carrier will move out of the new entrant program. If the CAP is not accepted (or if the carrier fails to submit one), the FMCSA will revoke the carrier's USDOT registration and operating authority (if applicable). Carriers who fail the new entrant audit cannot re-apply for DOT registration until 30 days after the revocation date. Once they do, they will once again be placed in the new entrant program and will be subject to another audit within the first 12 months.


Conclusion

Newly-registered interstate motor carriers should take care to ensure they build out their safety management controls early on. Without a firm safety-minded foundation on which to build, carriers often have difficulty meeting their compliance obligations, which can lead to enforcement action and out-of-service orders.


Be sure to check out our other article with practical tips for passing a new entrant audit. Also, if you're interested in better understanding your compliance obligations in key areas like hours-of-service, driver qualification, vehicle maintenance, drug/alcohol testing, and more, be sure to check out our innovative online compliance courses for safety managers and drivers at www.trucksafeacademy.com.

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