How to Become a Licensed Motor Carrier in Pennsylvania
Looking to become a motor carrier in Pennsylvania? The process is complex because you will need to comply with the regulations of the Pennsylvania Public Utility Commission (“Commission”). Whether you want to transport passengers or property, your business will have to comply with regulations addressing such topics as insurance and vehicle maintenance to name a few.
Why the “Utility” Commission? My business isn’t electricity, water, or natural gas!
The Commission regulates not only electricity, natural gas, water/wastewater, and telecommunications, but also transportation businesses as “utility” services. Under the Pennsylvania Public Utility Code, Title 52 Subpart B Carriers of Passengers or Property, in order to operate as a Motor Carrier of goods or passengers you must have a Commission issued certificate of public convenience. This is to ensure proper safety, consumer protections, and other factors of a motor carrier.
How do I get a certificate of public convenience?
The steps for your business to receive a certificate of public convenience may be complicated and having someone on your side can help your business through the regulatory forest of the Public Utility Code. Below is a general overview of the steps that must be taken in pursuing a Commission issued Certificate to operate.
Make a business plan and form an appropriate business entity.
You would like to start a new company that either transports passengers or property between points in Pennsylvania for compensation. You’ve compiled your thoughts, ran the numbers, and have an idea of what you want your motor carrier business to be.
It is important to set up an appropriate business entity with the Pennsylvania Department of State. Typically, motor carriers take the form of an LLC, but other options may be more appropriate in your circumstances. Having a discussion with an attorney about your business plan can ensure the best entity is formed for your motor carrier business.
After you decide how to legally structure your business, it is important to determine where your business’s operations fit within the types of motor carriers provided by the Commission. In Pennsylvania, there are many different types of passenger carriers including, in no particular order: Airport Transfer Carrier; Contract Carrier; Emergency Temporary Carrier; Experimental Passenger Carrier; Group and Party Carrier (either between 11 and 15 persons or greater than 15 persons); Limousine Carrier; Paratransit Carrier; Scheduled Route Carrier; and Taxi Carrier. Each of these types of carriers have a specific legal definition under the Code and knowing under which category your business best fits will help you apply for approval and stay compliant during your operations.
As for the types of property carriers Pennsylvania, the Commission lumps these together under the generic Household Goods in Use Carrier category. This includes moving companies and other companies which haul household goods for compensation.
Each category of motor carrier has its own unique regulations, insurance requirements, application requirements, vehicle requirements, reporting requirements… you get the drift!
Once you determine what type of motor carrier business you plan to operate, the next step is to file an application.
Filing an Application with the Commission.
The Commission provides standard Motor Carrier Online Forms and Applications for your application online. These forms provide the framework for a successful application, but careful drafting is needed to have the greatest likelihood of approval. After completion, your application can be filed by you or your attorney along with the associated filing fee.
When filling out an application, it is important to be very descriptive, thorough, and honest when answering each section. The more details you provide about your business, the easier it is for the Commission to determine whether or not your business should be granted a certificate of public convenience. To avoid complications discussed below, it is important to have someone with the experience and knowledge either assist you in preparing your application or review it for completion to ensure that your application meets the standards of the Commission’s regulations.
Each section of your application will be reviewed by not only the Commission, but by any interested party in Pennsylvania as a notice of the filing of your application will be published in the Pennsylvania Bulletin. This provides the public the opportunity to comment on the application, the applicant’s fitness, and any other aspects relevant to your business. Because your application will be publicly available, it will be accessible to your customers and competitors. Your competitors may intervene in your application process and you will need to hire an attorney, if you haven’t already, to defend your position (as discussed below).
- What happens after filing an application?
After filing an application, there are two pathways which your application can take. One track for your application would be:
- your application is reviewed by a Commission official and the official will either approve your applications, work with you to amend your application if needed, or deny your application as insufficient to be issued a certification of public convenience.
The second track for your application would occur if:
- a member of the public, whether that be a concerned individual or a possible rival business, files a protest. When a protest is filed, the Commission will not grant your application until the protest is resolved.
A protest can happen in any motor carrier application and can cause serious delays in your application process. Most importantly, a protest becomes a full legal proceeding that will go before an Administrative Law Judge to be resolved. Likely, if someone is filing a protest, they will be represented by an attorney, and the resolution of the process can be both time intensive and resource intensive. The Judge will set a procedural schedule for discovery, conferences, the in-person hearing, and briefing schedule. After the hearing, the Judge will write an opinion either granting or denying your application based on the evidence presented on your application at the hearing.
It is important to keep in mind that the Judges at the Commission have extensive workloads, and it may take months for them to issue their opinion, ultimately delaying your application and business startup even further. Once the Judge does issue an opinion, the parties have the opportunity to file exceptions which can argue for or against the decisions and findings of the Judge’s initial decision. These exceptions and the Judge’s initial decision will then go before the Public Utility Commissioners themselves for approval. The Commissioners can either agree with the Judges decision, grant or deny exceptions filed by the parties, or deny the Judges decision on some ground.
As in any legal matter, settlement can occur, but an applicant may have to agree to terms which are not ideal to avoid the prospect of a full-blown litigation process discussed above. In motor carrier application protests, these settlements often take the form of a restrictive amendment to your application which results in certain terms being added to your application which restrict or alter the original plan you had when filing your application. The Commission encourages such settlements to avoid the burdensome litigation process discussed above.
Do not let the concern of a protest deter you from your business ideas! With the right help and attorneys on your side, you can rest assured that your application will have the best chance of approval.
My application was approved, and my business was granted a certificate of public convenience! Now what?
After your application is approved by one of the pathways discussed above, the Commission will require you to file a tariff and proof of insurance. In some cases, the Commission may also conduct safety inspections and require other approvals before your business can fully operate.
A tariff is a public document which establishes the Rules and Regulations of your business as well as your business’s Schedule of Rates. Typically, a tariff is drafted by either an attorney or tariff drafting company and the Commission’s tariff officer will work with you after you file to have an acceptable tariff for your business.
Your business must follow the contents of its tariff precisely, otherwise a customer may take action by filing a complaint leading to the Commission starting an investigation. The Rules and Regulations lay out the definitions and terms of your business in compliance with the Commission’s regulations, while the Schedule of Rates provides the rates your business can charge for providing service. Once your tariff is approved by a Commission’s compliance officer, you will be bound by the terms of the tariff until you seek to amended it at a future time.
Depending on the business, your insurance requirements may vary. The exact insurance coverage you will need will be described by the Commission when granting your Application, though the statutory minimum requirements can be found on the Commission’s website. Your insurance company will have to file either a Form E or Form H directly to the Commission and should be able to guide you through that process.
Finally, your motor carrier business will have to submit quarterly or yearly filings to the Commission, comply with all safety standards and insurances, and all other aspects of operating a safe and viable motor carrier business.
For further guidance and to learn more about becoming a licensed Motor Carrier in Pennsylvania, call us at 717.236.1300