ARGUMENTS IN FAVOR OF TRIP LEASING The arguments which have been made in favor of trip leasing are largely economic. The motor vehicles of exempt-commodity haulers, itinerant owner-operators, and private carriers provide a pool of equipment available to regulated carriers during periods of emergency and peak demand, for which no investment is required and for which no maintenance facilities need be provided by the regulated carriers. The leasing of such equipment for return loads reduces the empty mileage of motor carriers and, therefore, reduces their costs and enables lower rates and charges to shippers than would otherwise be the case. ARGUMENTS AGAINST TRIP LEASING The arguments which have been made against permitting trip leasing of owner-operated equipment are: Careful inspection and examination of leased equipment and of drivers' logs, physical condition, and qualification are almost impossible when equipment is leased for a single trip because such inspection and examination consumes too much time. Control over drivers of such equipment is lax, and such drivers are careless in observing company operating requirements, schedules, and routes. When there is an overabundance of agricultural haulers and owner-operators competing for return loads, it is impossible to prevent their exploitation by regulated carriers, and affords an opportunity to beat down the rate structure to the detriment of the carriers which do not utilize such equipment. Conversely, when the supply of such equipment is short, carriers which depend on it are at the mercy of the owners and may find themselves unable to meet the demands of their customers. Enforcement of the Commission's safety rules and hours of service is much more difficult in the case of drivers hired for a single trip. You will note that I have endeavored to give the arguments in favor of trip leasing and the arguments against trip leasing, to the end that the issues with respect to this legislation may be made plain and distinct to the members of the committee as well as to those who will appear and give their testimony. Now, at his point, in the record, I would also like to include a copy of the ICC order on trip leasing. (The order referred to is as follows:) I. C. C. ORDER ON TRIP LEASING TITLE 49-TRANSPORTATION Chapter I-Interstate Commerce Commission Part 207-Lease and Interchange of Vehicles EX PARTE No. MC-43 LEASE AND INTERCHANGE OF VEHICLES BY MOTOR CARRIERS At a General Session of the INTERSTATE COMMERCE COMMISSION held at its office in Washington, D. C., on the 8th day of May, A. D. 1951 It appearing, That subsequent to an investigation into the lawfulness of the practices of motor common and contract carriers of property, the Commission, division 5, by order dated June 26, 1950, prescribed rules and regulations governing the practices of such carriers in the performance of transportation with motor vehicles owned by others, the interchange of vehicles between such common carriers, and the lease of vehicles by any such carriers to private motor carriers and shippers (15 F. R. 4339, July 8, 1950); It further appearing, That by order entered September 5, 1950 (15 F. R. 6125, Sept. 12, 1950), the effectiveness of said regulations was postponed indefinitely; And it further appearing, That pursuant to order dated September 22, 1950, reopening the proceeding and setting it down for oral argument, such oral argument has been held, and, that after reconsideration by the entire Commission, the Commission, on the date hereof, has made and filed a report on oral argument containing its findings of fact and conclusions thereon, which report is hereby made a part hereof; It is ordered, That the following rules and regulations are hereby prescribed to become effective on August 1, 1951; 207.5 207.6 Exemptions. Augmenting equipment. Interchange of equipment. Rental of equipment to private carriers and shippers. AUTHORITY: §§ 207.1 to 207.6 issued under 49 Stat. 546, as amended; 49 U. S. C. 304. § 207.1 Applicability. The rules and regulations in this part apply to the augmenting of equipment by common and contract carriers of property by motor vehicle in interstate or foreign commerce subject to Part II of the Interstate Commerce Act, 49 U. S. C. 301, et seq.; to the interchange of equipment between such common carriers of property by motor vehicle, and to the lease of equipment by common and contract carriers of property by motor vehicle, with or without drivers, to private motor carriers and shippers. § 207.2 Definitions. (a) Authorized carrier.-A person or persons authorized to engage in the transportation of property as a common or contract carrier under the provisions of Sections 206, 207, or 209 of the Interstate Commerce Act, 49 U. S. C. 306, 307, or 309. (b) Equipment.-A motor vehicle, straight truck, tractor, semi-trailer, full trailer, combination tractor-and-semi-trailer combination straight truck and full trailer, and any other type of equipment used by authorized carriers in the transportation of property for hire. (c) Interchange of equipment.-The physical exchange of equipment between motor common carriers or the receipt by one such carrier of equipment from another such carrier, in furtherance of a through movement of traffic, at a point or points which such carriers are authorized to serve. (d) Regular employee.-A person not merely an agent but regularly in exclusive full-time employment. (e) Agent.-A person duly authorized to act for and on behalf of an authorized carrier. (f) Non-carrier.-A person other than an authorized carrier. (g) Owner.-A person to whom title to equipment has been issued, or who has lawful possession of equipment, and has the same registered and licensed in any State or States or the District of Columbia in his or its name. § 207.3 Exemptions. Other than § 207.4 (c) and (d), relative to inspection and identification of equipment these rules shall not apply (a) To equipment leased by one authorized carrier operating over regular routes to another authorized carrier operating over regular routes and operated between points and over routes which both lessor and lessee are authorized to serve, and to equipment leased by one authorized carrier operating over irregular routes to another such carrier and operated between points and within territory which both lessor and lessee are authorized to serve; (b) To equipment utilized wholly or in part in the transportation of railway express traffic, or in substituted motor-for-rail transportation of railroad freight moving between points that are railroad stations on railroad billing; (c) To equipment utilized in transportation performed solely and exclusively within any municipality, contiguous municipalities, or commercial zone, as defined by the Commission; (d) To equipment utilized by an authorized carrier in transportation performed pursuant to any plan of operation approved by the Commission in a proceeding arising under section 5 of the Interstate Commerce Act, or (e) To equipment without drivers leased by an authorized carrier from an individual, copartnership or corporation, whose principal business is the leasing of equipment without drivers for compensation. § 207.4 Augmenting equipment. Other than equipment exchanged between motor common carriers in interchange service as defined in § 207.5 of these rules, authorized carriers may perform authorized transportation in or with equipment which they do not own only under the following conditions: (a) The contract, lease, or other arrangement for the use of such equipment(1) Shall be made between the authorized carrier and the owner of the equipment; (2) Shall be in writing and signed by the parties thereto, or their regular employees or agents duly authorized to act for them in the execution of contracts, leases, or other arrangements; (3) Shall specify the period for which it applies, which shall be not less than 30 days when the equipment is to be operated for the authorized carrier by the owner or employees of the owner; provided, that for six months from the date these rules become effective, equipment specified in section 203 (b) (6) of the Act 49 U. S. C. 303 (b) (6) may be utilized by authorized carriers under contracts, leases or other arrangements applying for less than 30 days, only under the following condition: (i) The equipment is being returned over reasonably direct routes from the destinations of shipments of the commodities specified in section 203 (b) (6) of the Act 49 U. S. C. 303 (b) (6) or points intermediate thereto, or the commercial zones of such destinations and intermediate points, as defined by the Commission, to the origins of such shipments, or points intermediate thereto, or the commercial zones of such origins and intermediate points, as defined by the Commission; (4) Shall provide for the exclusive possession, control and use of the equipment, and for the complete assumption of responsibility in respect thereto, by the authorized carrier, as follows: (i) When entered into by parties other than authorized carriers of household goods, as defined by the Commission, for the duration of the said contract, lease or other arrangement, and the equipment shall not be further leased or sublet to any other authorized carrier or noncarrier for such duration; (ii) When entered into by authorized carriers of household goods, as defined by the Commission, during the period the equipment is operated by or for the authorized carrier, lessee; (5) Shall specify the compensation to be paid by the lessee for the rental of the leased equipment; provided, however, that such compensation shall not be computed on the basis of any division or percentage of any applicable rate or rates on any commodity or commodities transported in said vehicle or on a division or percentage of any revenue earned by said vehicle during the period for which the lease is effective; (6) Shall specify the time and date or the circumstance on which the contract, lease, or other arrangement begins, and the time or the circumstance on which it ends. The duration of the contract, lease or other arrangement shall coincide with the time for the giving of receipts for the equipment, as required by paragraph (b) of this section; and (7) Shall be executed in triplicate; the original shall be retained by the authorized carrier in whose service the equipment is to be operated, one copy shall be retained by the owner of the equipment, one copy shall be carried on the equipment specified therein during the entire period of the contract, lease, or other arrangement, unless a certificate as provided in paragraph (d) (2) of this section is carried in lieu thereof. (b) Receipts.-When possession of the equipment is taken by the authorized carrier or its regular employee or agent duly authorized to act for it, said carrier, employee, or agent shall give to the owner of the equipment, or the owner's employee or agent a receipt specifically identifying the equipment and stating the date and the time of day possession thereto is taken; and when the possession by the authorized carrier ends, it or its employee or agent shall obtain from the owner of the equipment, or its regular employee or agent duly authorized to act for it, a receipt specifically identifying the equipment and stating therein the date and the time of day possession thereof is taken. (c) Inspection of equipment.-It shall be the duty of the authorized carrier, before taking possession of equipment, to inspect the same or to have the same inspected by a person who is competent and qualified to make such inspection and has been duly authorized by such carrier to make such inspection as a representative of the carrier, in order to insure that the said equipment complies with parts 193 and 196 of the Motor Carrier Safety Regulations (Rev.), pertaining to "Parts and Accessories Necessary for Safe Operation," and "Inspection and Maintenance," and if explosives or other dangerous articles are to be transported thereon, further to inspect and check such vehicles or equipment to insure that they or it complies with Part 197 of the said safety regulations pertaining to "Safe Transportation of Explosives." The person making the inspection shall certify the results thereof on a report in the form hereinafter set forth, which report shall be retained and preserved by the authorized carrier, and if his inspection discloses that the equipment does not comply with the requirements of the said safety regulations, possession thereof shall not be taken. In all instances in which the inspection required by this rule is made, the authorized carrier, if an individual, or a member of the copartnership if the authorized carrier is a copartnership, or one of the officials thereof if the authorized carrier is a corporation, shall certify on the inspection report that the person who made the inspection, whether an employee or person other than an employee, is competent and qualified to make such inspection and has been duly authorized by such carrier to make such inspection as a representative of such authorized carrier: Indicate in the proper column the result of the inspection of each item listed: day of I hereby certify that on the I carefully inspected the equipment described above and that this is a true and correct report of the result of such inspection. (Signature of person making inspection) I hereby certify that on the date stated above the person who made the inspection covered by this report was competent and qualified to make such inspection and was duly authorized to make such inspection as a representative of Date (Name of authorized carrier) (d) Identification of equipment.-The authorized carrier acquiring the use of equipment under this rule shall properly and correctly identify such equipment as operated by it when such equipment is operated by or for such carrier, during the period of the lease, contract or other arrangement, in accordance with the Commission's requirements in Ex Parte No. MC-41; Part 166, Identification of Motor-Carrier Vehicles. If a removable device is used to identify the authorized carrier as the operating carrier, such device shall be on durable material such as wood, plastic, or metal, and bear a serial number in the authorized carrier's own series so as to keep proper record of each of the identification devices in use. (1) The authorized carrier operating equipment under these rules shall remove any legend, showing it as the operating carrier, displayed on such equipment, and shall remove any removable device showing it as the operating carrier, before relinquishing possession of the equipment. (2) Unless a copy of the lease, contract, or other arrangement is carried on the equipment, as provided in paragraph (a) (7) of this section, the authorized carrier or its regular employee or agent shall prepare a statement certifying that the equipment is being operated by it, which shall specify the name of the owner, the date of the lease, contract, or other arrangement, the period thereof, any restrictions therein relative to the commodities to be transported, and the location of the premises where the original of the lease, contract, or other arrangement is kept by the authorized carrier, which certificate shall be carried with the equipment at all times during the entire period of the lease, contract, or other arrangement. (e) Driver of equipment.-Before any person other than a regular employee of the authorized carrier is assigned to drive equipment operated under these rules, it shall be the duty of the authorized carrier to make certain that such driver is familiar with, and that his employment as a driver will not result in, violation of any provision of Parts 192, 193, 195, and 196 of the Motor Carrier Safety Regulations (Rev.) pertaining to "Driving of Motor Vehicles," "Parts and Accessories Necessary for Safe Operation," "Hours of Service of Drivers," and "Inspection and Maintenance," and to require such driver to furnish a certificate of physical examination in accordance with Part 191 of the Motor Carrier Safety Regulations (Rev.) pertaining to "Qualifications of Drivers," or, in lieu thereof, a photostatic copy of the original certificate of physical examination, which shall be retained in the authorized carrier's file. (f) Record of use of equipment.-The authorized carrier utilizing equipment operated under these rules shall prepare and keep a manifest covering each trip for which the equipment is used in its service, containing the name and address of the owner of such equipment, the make, model, year, serial number, and the State registration number of the equipment, and the name and address of the driver operating the equipment, point of origin, the time and date of departure, the point of final destination, and the authorized carrier's serial number of any identification device affixed to the equipment. During the time that equipment subject to these regulations is operated there shall be carried with the equipment, bills of lading, waybills, freight bills, manifests, or other papers identifying the lading, which shall clearly indicate that the transportation of the property carried is under the responsibility of the authorized carrier, which papers, together with the truck manifest, shall be preserved by the authorized carrier. § 207.5 Interchange of equipment. Authorized common carriers may by contract, lease, or other arrangement, interchange any equipment defined in § 207.2 of these rules with one or more other such common carriers, or one of such carriers may receive from another such carrier, any of such equipment, in connection with any through movement of traffic, under the following conditions: (a) Agreement providing for interchange.-The contract, lease, or other arrangement providing for interchange shall specifically describe the equipment to be interchanged; the specific points of interchange; the use to be made of the equipment and the consideration for such use; and shall be signed by the parties to the contract, lease or other arrangement, or their regular employees or agents duly authorized to act for them, in the execution of such contracts, leases, or other arrangements; (b) Authority of carriers participating in interchange.-The certificates of public convenience and necessity held by the carriers participating in the interchange arrangement must authorize the transportation of the commodities proposed to be transported in the through movement, and service from and to the point where the physical interchange occurs. (c) Driver of interchanged equipment.-Each carrier must assign its own driver to operate the equipment that is proposed to be operated from and to the point or points of interchange and over the route or routes or within the territory |