FMCSA’s Bus Lease & Interchange Rule

FMCSA's Bus Lease & Interchange Rule

The primary purpose of this rule is to identify which motor carrier entity is responsible for regulatory compliance with the FMCSRs when an exchange or interchange of vehicles occurs between carriers involved in passenger-carrying operations. This includes determination of who is responsible for insurance and compliance with the FMCSRS, and who is operating the vehicle (including tort liability), regardless of the length of the arrangement.

• This Rule’s date of compliance is January 1, 2017.
• A written lease agreement and appropriate receipts need to be carried in the vehicle throughout the duration of the lease and retained for one year beyond the completion of the lease’s terms.
• Vehicles exchanged or interchanged must be marked with lessee’s (operator's) name and DOT number: e.g. Operated by XXX Bus Company USDOT 1234567.
• Typical charters, where a single carrier using its own vehicles and drivers interacts with a chartered customer, are not impacted by this rule.  However, when a movement is subcontracted or partially farmed out to a second carrier, the transaction will fall under or trigger the requirements of the rule.  If the contract is entirely reassigned to another carrier, then the charter will be exempt from the rule requirements.
• Operator arrangements for the purpose of obtaining additional vehicles to meet peak demand periods, also fall within the rule and are subject to the lease requirements.  Arrangements for replacement vehicles obtained in emergency situations, also fall under the rule.   

Key Exemptions

• In the event of an emergency breakdown, where a replacement vehicle must be procured, the operating carrier and the lessor still must execute a written lease, but they have up to 48 hours after a transfer of possession to do so and to ensure a copy of the lease remains with the procured vehicle.
• Vehicles in pooling or interchange arrangements do not need lease documents but must be marked with the name of the operating carrier, and the driver/vehicle must carry a list of all entities that are part of the pool, all routes operated by the pool, and all points of origin/destination/interchange.
• Commonly owned and controlled carriers (families of companies) do not need to possess individual receipts or lease agreements but must carry a summary document listing all members of the corporate family with the appropriate DOT numbers and contact details for each company. The document must also include trip-specific information such as operating carrier, trip identifier, VIN, and the trip’s date. This new document must be retained for one year after the completion of the trip.
• If a trip is subcontracted (or partially farmed out) to secure additional vehicles, the contracting carrier must notify the tour or travel group within 24 hours of establishing the subcontracting arrangement that a different carrier will also be providing the service, and the additional vehicles will need to be marked with the “owned by and leased by” convention.
• Vehicles leased under financial lease agreements, from manufacturers or dealers, or financial institutions, are not subject to the rule unless the lessor is a motor carrier.
• Under a different rulemaking, FMCSA will address notification requirements related to carriers who have been placed out of service. They may be required to notify FMCSA before transferring control of their vehicles to other carriers.

FMCSA is currently considering a number of petitions requesting them to change and reconsider the rule, including a submission from ABA (click here).  FMCSA is under no deadline to respond to these petitions.