What Happens If You Fail the FMCSA New Entrant Safety Audit?

If you fail the FMCSA new entrant safety audit, FMCSA sends a written notice that your new entrant registration will be revoked unless you correct the problems, and most carriers get 60 days to do it. If you do not, your registration is revoked and you are placed out of service on day 61. Sixteen specific violations fail the audit automatically, and one of them is operating without the insurance your authority requires.

Every new interstate carrier goes through this audit, and most go in without knowing exactly what is being checked. Here is how the program works under federal rules, what fails it, what happens next, and what FMCSA is now considering changing.

What is the New Entrant Safety Assurance Program?

When a U.S. or Canadian carrier registers for interstate operations, it enters an 18-month new entrant monitoring period under 49 CFR Part 385, Subpart D. During that period, FMCSA watches roadside inspection results and conducts a safety audit once the carrier has been operating long enough to have records to review, which the regulation says will generally be at least three months (385.307). FMCSA's program page says the audit will occur within 12 months after a carrier begins operations.

The audit reviews your safety management systems and a sample of required records (385.311), including:

• Driver qualification files
• Driver duty status records
• Vehicle maintenance records
• Your accident register
• Drug and alcohol testing program records

The audit generally takes place at your business premises (385.315). It does not produce a safety rating (385.317). If you pass and nothing else goes wrong, FMCSA removes the new entrant designation at the end of the 18 months and your registration becomes permanent (385.333).

Which violations fail the audit automatically?

Section 385.321 lists 16 regulations that cause an automatic failure. Most require only a single occurrence. Grouped by area:

• Drug and alcohol. No testing program, no random testing program, using a driver with an alcohol concentration of 0.04 or greater, using a driver who refused a required test, or using a driver known to have tested positive.
• Drivers. Knowingly using a driver without a valid CDL, a driver whose license is disqualified, a disqualified driver, or a physically unqualified driver.
• Insurance. Operating without the required minimum levels of financial responsibility (387.7(a)), or the passenger carrier equivalent (387.31(a)).
• Hours of service. Failing to require drivers to make a record of duty status. This one needs a violation in 51 percent or more of the records examined.
• Vehicles. Operating a vehicle declared out of service before it is repaired, failing to correct out-of-service defects a driver listed on an inspection report, or using a vehicle that has not been periodically inspected. The periodic inspection item also needs a 51 percent threshold.

What happens if you fail?

The timeline is set by regulation:

1. Notice. FMCSA must send written notice no later than 45 days after the audit that your registration will be revoked and operations placed out of service unless you take the actions specified (385.319(c)).
2. Corrective action. Most carriers have 60 days from the notice date. Passenger carriers and hazardous materials carriers have 45 days (385.319(c)).
3. Extension. FMCSA may extend the 60-day period by up to 60 more days if you are making a good faith effort (385.323).
4. Revocation. If you do not submit acceptable corrective action in time, FMCSA revokes your new entrant registration and issues an out-of-service order effective day 61 (day 46 for the 45-day group). You may not operate in interstate commerce after that (385.325).
5. Administrative review. If you think FMCSA got it wrong, you can request review. To make sure a decision comes before the out-of-service order takes effect, the request has to be in within 15 days of the notice (385.327(d)).
6. Reapplying. A revoked carrier can reapply no sooner than 30 days after revocation and starts the 18-month cycle over (385.329).

Some carriers never get to a scheduled audit. A new entrant can be pulled into an expedited audit or compliance review for things like using a driver who tests positive, operating without required insurance, or an out-of-service rate of 50 percent or more over at least three inspections in 90 days (385.308). Refusing an audit leads to revocation on the 11th day after notice unless you agree in writing within 10 days (385.337).

Why does the audit matter to your insurance program?

Three reasons.

A lapse fails the audit on its own. Operating without the required financial responsibility is on the automatic-fail list. A missed premium payment or a filing that drops off is not just a billing problem for a new carrier.

Revocation stops the trucks. A policy cannot keep a carrier running once FMCSA has issued an out-of-service order. Contracts, cash flow and the next renewal all depend on staying in service.

The audit checks the same records that show how you manage risk. Driver files, testing records and maintenance logs are what an auditor reviews, and they are the same documents that describe your operation to anyone else evaluating it. We covered how carriers screen drivers in How to Hire a Truck Driver Your Insurance Carrier Will Approve, and how this year's rule changes reach the driver qualification file in FMCSA Rewrote Four Rules This Year.

What is FMCSA considering changing?

Today, a new carrier gets authority first and is audited after it starts running. FMCSA has a long-running rulemaking, RIN 2126-AB17, that would consider ways to make sure an applicant knows the safety rules before it is granted new entrant authority, including a possible proficiency examination. The original advance notice was published on August 25, 2009. FMCSA's current regulatory agenda lists a supplemental proposed rule for November 2026 (reginfo.gov entry).

Nothing has been proposed yet, and agenda dates often move. The audit process described above is the one in effect. If a proposal is published, carriers will be able to comment before any change is final.

How should a new carrier prepare?

• Enroll in a drug and alcohol testing program with a random pool before your first driver is dispatched.
• Build a complete qualification file for every driver, including a current medical certificate and license check.
• Keep hours-of-service records for every trip and review them.
• Complete periodic inspections and keep proof, and do not run a vehicle with an unrepaired out-of-service defect.
• Start an accident register on day one, even if it stays empty.
• Keep your insurance filing in force and know when payments are due.

If you are still deciding how to set up the company, start with What Insurance Do You Need to Start a Trucking Company in Texas?

Frequently asked questions

When will FMCSA schedule my new entrant audit?

FMCSA says within 12 months after you begin operations. If an audit has not happened by the end of the 18-month period through no fault of yours, you can keep operating as a new entrant until one is done (385.333(d)).

Does passing the audit give me a safety rating?

No. A safety audit does not result in a safety fitness determination. Ratings follow compliance reviews.

How long do I have to fix a failed audit?

Sixty days from the notice for most carriers, with a possible extension of up to 60 more days. Passenger and hazardous materials carriers have 45 days.

Can I appeal a failed audit?

You can request an administrative review. File within 15 days of the notice if you want a decision before the out-of-service order takes effect.

Does a lapse in insurance fail the audit?

Yes. Operating without the required minimum financial responsibility is one of the 16 automatic failures.

Will FMCSA require a test before granting authority?

It is considering one. The agenda lists a supplemental proposed rule for November 2026, but no requirement exists today.

Does the federal audit apply to Texas intrastate carriers?

Subpart D applies to carriers beginning interstate operations. Texas intrastate carriers have separate TxDMV requirements, which we covered in our startup guide.

Get ready before the auditor calls

Donegan Transportation pairs insurance placement with driver kits and audit preparation, so the records your audit checks are in order before anyone asks for them. Call 830-303-8300 or visit our trucking and transportation insurance page.