July 27, 2017

The FMCSA to Revise Compliance Date for Lease and Interchange Rules

FMCSA to Revise Compliance Date for Lease and Interchange Rules

The FMCSA (Federal Motor Carrier Safety Administration) released two rule-making documents on the lease and interchange of passenger vehicles last month. These publications tackled the final rule posted, last May 27, 2015, in the Federal Register entitled “Lease and Interchange of Vehicles; Motor Carriers of Passengers.”

The first notice extends the compliance date of the 2015 regulation by one year. This change now moves the new implementation period to January 1, 2019.

The FMCSA mentioned that the added twelve months give them enough time and opportunity to revise the rule. This regulation modification is due to multiple issues raised by petitioners that the agency finds important to address.

The extended period also offers carriers enough time to adjust to the new requirements set by the updated rule.

The second notice informs readers about the FMCSA’s intentions to revise the regulation. The publication details the two points that the agency plans to change. The notice also requests the public to express their thoughts and opinions on the proposed points for revision. FMCSA will be receiving comments for the suggested regulation changes only until July 31, 2017.

Overview of the Lease Mandate

In a nutshell, the Lease Mandate can be summarized into three provisions:

  1. Determine which carrier that’s operating a passenger CMV (commercial motor vehicle) is responsible for the FMCSA regulation compliance.
  2. Ascertain that the lessor relinquishes CMV control for the lease’s full term or temporary exchange duration of CMVs and drivers.
  3. Require companies to notify tour operators or passenger groups about the role of any subcontracted carriers being employed.

The FMCSA created this Lease Mandate to make sure that passenger carriers that aren’t safe can’t “evade FMCSA oversight and enforcement.” These companies enter into questionable rental agreements to function under other firms with no actual control over operations.

This rule allows accountability to be correctly assigned to companies when CMVs incur inspection violations or crash investigations.

The regulation also informs the public of the responsible carriers during the time that transportation services are provided.

ABA (American Bus Association) believes that the Lease Mandate is designed by the FMCSA to put a halt to “chameleon carrier” operations. This rule hopes for the identity transparency of CMV firms in complying with the FMCSA safety regulations.

CNBC defines these “chameleon carriers” as trucking companies that re-register with US DoT (United States Department of Transportation) to avoid problems with their safety ratings.

Key Points and Exemptions

The primary purpose of the legislation is to determine the accountable passenger carrier for the FMCSA regulation compliance during CMV exchanges.

This system includes identification of those responsible for insurance and those operating the CMV, regardless of arrangement length.

Here are some of the key points of the Lease Mandate.

  • CMVs should carry the written rental agreement and relevant receipts for the duration of the lease. These documents should be held on to for one year after the completion of the terms of the lease.
  • Exchanged or interchanged CMVs must have the lessee’s name and DOT number marked on it.
  • Movements that are subcontracted to a secondary carrier will cause the transaction to triggers the rule’s requirements.
  • Operator arrangements for obtaining additional vehicles for peak demands and replacing vehicles for emergency situations also fall under the legislation.

Also, here are some exemptions to the Lease Mandate.

  • For emergency breakdowns, carriers have up to 48 hours after transfer of possession to execute a written lease. A copy of this document should remain in the procured vehicle.
  • CMVs in pooling or interchange agreements are not required to have lease documents. However, these vehicles must be marked, and the driver must carry all relevant papers regarding the pool arrangement.
  • Commonly owned families and groups of companies do not need to have individual receipts or lease agreements. They must carry, however, a summary document that contains the DOT numbers and contact details of the corporate family members.
  • Contracting carriers have to inform travel groups within 24 hours after the establishment of a subcontracting arrangement. These individuals are mandated to know that a different carrier would be responsible for providing services.

Revisions Being Considered

Upon the publication of the 2015 final rule, multiple passenger carrier organizations reacted negatively to the mandate. These groups started flooding the FMCSA with comments asking the agency to revise the regulations.

In fact, the United Motorcoach Association (UMA) and ABA filed a joint request asking to extend the deadline for petition submissions.

The FMCSA moved the time frame for the reception of public comments hoping to contain substantial issues that justify revision consideration.

On August 31, 2016, FMCSA posted a notice of intent on the Federal Register. In this publication, they mentioned recognizing some substantive arguments from petitioners asking for revisions in the regulation.

With the points being raised by trucking associations, the agency identified four major categories that require regulatory changes.

  1. Chartering or subcontracting can be excluded from the leasing requirements. Under the 2015 mandate, carriers that hire other operators would be responsible for the second company’s regulatory compliance. Petitioners believe that making a firm accountable for the subcontractor’s operations would make most short-term agreements impossible.
  2. CMV requirements for temporary markings on leased/interchanged vehicles can be amended. Associations argued that frequent marking changes required for leases and interchanges are unnecessary and impractical. For roadside inspectors, any information regarding the agreement is noted on the driver’s RODS. Also, carriers would have to depend on their drivers to properly replace vehicle markings multiple times each day.
  3. The requirement on carriers informing customers within 24 hours of a subcontract agreement can be changed. Petitioners believe that the short deadline is impractical during emergency maintenance instances. If the issue occurs on weekends, customer offices would still be closed as most agencies start working on Mondays. This scenario means that it might not be possible to notify clients promptly.
  4. The 48-hour delay can be expanded in lease preparation to include emergencies such as times when passengers haven’t boarded the bus. Events requiring vehicle replacements can arise, such as, during times when buses are needed for the transportation of stranded passengers. Operators that are contracted for rescue service need additional drivers and vehicles at times to meet demands. Last-minute maintenance issues or driver absences might appear a few hours before the scheduled run.

The FMCSA’s Response to Petition

According to ABA, the FMCSA’s rule-making process for the revision was delayed because of the presidential election and new administration transition. However, after being urged by the association, the agency finally published two new notices to start the amendment process.

This time, however, significant changes can be seen in the two documents released last month.

Here, the FMCSA only considered two of the four revision points mentioned in the previous 2016 publication.

1. Excluding chartering or subcontracting from leasing requirements

According to the document, the FMCSA believes that regulatory requirements that are less burdensome for carriers should be considered. The agency deems subjecting companies with operating authority to the Lease Mandate’s full requirements is unnecessary.

The FMCSA, therefore, plans to revise the regulation to exclude chartering from its leasing requirements.

2. Extending the 48-hour lease preparation delay in case of emergencies

The FMCSA believes this deferral to enhance its safety oversight of carrier operations while lowering the company’s operating costs. This consideration includes removing the requirement of passengers having to be on board the bus when the extension occurs.

The changes are believed by the agency to be consistent with the 2015 final rule’s original intent. The FMCSA moved the compliance date for the 2015 final rule to January 1, 2019. This decision was made to pave the way for the integration of any revisions finalized by the agency.

The FMCSA is also asking the public for their comments regarding the proposed changes.

ABA responds by telling its readers that the issue “is a high priority for the industry and we must act now.”

You can join in the action by visiting the regulations.gov website and searching for “Docket No. FMCSA-2012-0103.”

Alternatively, you can fax your comments regarding the proposed rules to 1-202-493-2251.

What’s Next?

With so much happening in the trucking industry, it could be difficult to keep track of everything. However, this should not take away the focus from the upcoming ELD mandate. The compliance deadline is now just months away, and you start the ELD implementation process right now — in case you haven’t already.

Request a free demo of the KeepTruckin ELD solution to experience how it can dramatically reduce administrative burden, streamline operations, and maximize profits. If you have any questions, give us a call at 855-434-ELOG.

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