EX PARTE No. MC-43 LEASE AND INTERCHANGE OF VEHICLES BY MOTOR CARRIERS Decided January 6, 1961 Upon petition section 207.2(f) of the rules governing the lease and interchange of vehicles by motor carriers amended to include in the definition of "owner," a person who, as lessee, has the right to exclusive use of equipment for a period longer than 30 days. Prior reports: 51 M.C.C. 461, 52 M.C.C. 675, 64 M.C.C. 361, 68 M.C.C. 553, 79 M.C.C. 65, and 79 M.C.C. 251. Appearances as shown in prior reports, and, in addition, D. W. Markham for petitioners; Charles D. Mathews and James R. Boyd for respondents. FOURTH SUPPLEMENTAL REPORT OF THE COMMISSION BY THE COMMISSION: This proceeding has been the subject of the six prior reports cited in the syllabus hereto. On the basis thereof, rules and regulations have been prescribed governing the leasing and interchange of vehicles by and to motor carriers subject to our jurisdiction. Pursuant to a petition on behalf of North American Van Lines, Inc., a motor common carrier, and Ryder Systems, Inc., a holding company, hereinafter called North American and Ryder, respectively, or petitioners, seeking amendment of section 207.2(f) of the prescribed rules, we issued a notice of proposed rulemaking on November 9, 1959, contemplating revision of section 207.2(f) to read as follows: 207.2 Definitions : (f) Owner-A person (1) to whom title to equipment has been issued, or (2) who, as lessee, has the right to exclusive use of equipment for a period longer than 30 days, or (3) 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. No oral hearing was held in this matter, but interested parties were invited to file written statements of facts, opinions, or arguments concerning the subject matter thereof. A joint statement in opposition was filed by the Oil Field Haulers Association, Inc., and the Oil Field Haulers Conference of the American Trucking Association, Inc., hereinafter jointly referred to as the old field haulers. The matter was referred to an examiner, who concluded that the proposed amendment is reasonable and recommended that it be ap proved. On exceptions the oil field haulers point out that the laws of the State of Texas prohibit the subleasing of commercial motor vehicles. They maintain that the Texas statute is a valid exercise of the police power of that State; that the proposed amendment would defeat the purpose of the Texas statute; and that the Commission should not relieve carriers domiciled in other States of requirements imposed by the State of Texas. In reply petitioners generally answer the exceptions raised by the oil field haulers and contend that the proposed amendment should be adopted. The examiner's recommendation, the exceptions, and the reply thereto have been considered. We find the examiner's statement of facts to be complete and accurate, and we adopt it as our own. Section 207.4(a)(1) of the leasing regulations provides that an authorized motor carrier is permitted to lease equipment only from the "owner" thereof. The term "owner" is defined by section 207.2(f) as: 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. Petitioners desire that the regulations be modified so that a lessee may be considered an owner without the necessity of registering vehicles in its own name. The proposed change is sought to enable owner-operators from whom North American leases vehicles to obtain their vehicles under long-term leases from Ryder rather than having to purchase them on their own account. Because of its own financing arrangements, Ryder must register and license the equipment itself. Thus an operator leasing equipment from Ryder could not register and license the equipment in his own name as is now required by rule 207.2(f) if he is to be considered an "owner" for the purpose of the leasing regulations. The lease into which Ryder proposes to enter with the operators would be a lease for a period of years, corresponding with the estimated useful life of the vehicle, and would provide that Ryder would service and maintain the vehicle, provide fuel, oil, lubricants, tires and tubes, and other supplies necessary for the operation of the vehicle, procure and maintain a limited amount of publicliability and property-damage insurance, and provide State motor vehicle licenses for the State in which the vehicle is domiciled. The lessee would have the option of terminating the lease but only by purchasing the equipment, for cash, at its then value. Petitioners point out that approximately 20 States permit a longterm lessee of equipment to register and license it in its own name and that certain other States permit a lessee to register equipment if it holds it under a lease containing the right to purchase upon fulfillment of stated conditions. North American conducts a substantial portion of its operations with equipment leased from owner-operators, and it is willing to guarantee the performance of the lease if the proposed amendment is approved. It believes that such an arrangement would afford the owner-operators the opportunity of acquiring more modern and expensive equipment than they otherwise could afford. The fundamental problem arising out of the leasing of motorvehicle equipment is the owner-operator trip lease. Such leasing practices lead to difficulty in insuring that the carrier leasing an owneroperator's vehicle assumes its proper responsibility to the public for its operations and for keeping vehicles in compliance with our safety regulations. They also create a situation, inimical to the purposes of sound regulation, in which owner-operators may be exploited, with a resultant adverse effect not only on the individual owner-operators concerned but on other carriers for hire. We must agree with the examiner, however, that there is no reason to believe that such evils and abuses would materialize as a result of the proposed amendment. Were it not for the fact that Ryder must, under the terms of its own financing arrangements, register and license in its own name the equipment which it intends to lease, petitioners would be able to effect the type of leasing arrangement contemplated under the present regulations, so long as the equipment were domiciled in a State whose laws permitted it to be registered and licensed in the lessee-operator's name. The proposed amendment would thus have the advantage of establishing a criterion conducive to uniformity. It should be noted, so as to avoid any possible confusion, that Ryder's intention to provide maintenance and a limited amount of public-liability and property-damage insurance is apparently to satisfy the terms of its agreement with whomever is financing its purchase of the equipment involved, and that North American, as the ultimate operator of the equipment, will be required by section 207.4 (a) (4) of the leasing regulations to assume complete responsibility for its use. This would include provision of insurance and maintaining the vehicle in compliance with the Commission's safety regulations. Respondents contend that Texas law in effect prohibits the operation over public highways in that State of any commercial vehicle operating under a sublease and that the proposed amendment, insofar as it envisions operation over such highways by subleased equipment, is at odds with and is an attempt to circumvent that statute. In our judgment, however, the issue presented here does not involve any question of the paramountcy of the Federal power to regulate interstate commerce or of the validity of the exercise of a State's police power as embodied in the Texas statute. We come to this conclusion for several reasons: First, although the cited portion of the Texas statute may appear in terms to prohibit subleasing in the absence of 84 M.C.C. any definitive construction of that statute, we are unwilling to concede that, in fact, is its necessary effect. Second, and apart from the question of what the Texas statute in effect ordains, the proposed amendment of our leasing regulations merely permits a sublessee to fit itself within the definition of an "owner" of equipment for the purposes of our leasing regulations. It is permissive in nature and does not contest the power of any State to impose further valid limitations or restrictions on the use of such equipment within that State. We find that the rules and regulations here under consideration require modification to read as follows: Section 207.2 Definitions: (f) Owner-A person (1) to whom title to equipment has been issued, or (2) who, as lessee, has the right to exclusive use of equipment for a period longer than 30 days, or (3) 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. And that the foregoing amendment is reasonable and necessary, and will be prescribed for observance by authorized carriers of property subject to our jurisdiction under the provisons of part II of the act. The findings in the prior reports are modified accordingly. An appropriate order will be entered. CHAIRMAN HUTCHINSON, dissenting: The modification approved by the majority would remove the titular owner of a vehicle one step further from its responsibility to the public. In my opinion, further attenuation of responsibility in this manner is not consistent with sound regulation and should not be encouraged. COMMISSIONER FREAS dissents. 84 M.C.C. No. MC-111159 (SUB-No. 88) 1 MILLER TRANSPORTERS, LTD., EXTENSION-SHELBY COUNTY, TENN. Decided January 6, 1961 1. In No. MC-111159 (Sub-No. 88), public convenience and necessity found not shown to require operation by applicant as a common carrier by motor vehicle, over irregular routes, of petroleum and petroleum products, in bulk, in tank vehicles, from points in Shelby County, Tenn., to points in Arkansas and Missouri. Application denied. 2. In No. MC-111170 (Sub-No. 55), public convenience and necessity found to require operation by applicant as a common carrier by motor vehicle, in interstate or foreign commerce, over irregular routes, of petroleum and petroleum products, with exception in bulk, in tank vehicles, from Baton Rouge, La. (except a certain plant site), to points in Arkansas, and from Memphis, Tenn., except points in Mississippi in the Memphis commercial zone, to points in a described territory in Arkansas. Phineas Stephens and H. D. Miller, Jr., for applicant in No. MC111159 (Sub-No. 88). Ewell H. Muse, Jr., for applicant in No. MC-111170 (Sub-No. 55). Tyrus C. Stewart for intervener in support in No. MC-111170 (Sub-No. 55). Harold R. Ainsworth for protestants in both proceedings. REPORT OF THE COMMISSION DIVISION 1, COMMISSIONERS MURPHY, GOFF, AND HERRING BY DIVISION 1: These applications were heard on a consolidated record, were the subject of a single report and recommended order by the examiner, involve common issues, and will be disposed of here in a single report. Exceptions were filed by each applicant in its own proceeding, and protestant separately replied. Our conclusions differ in part from these recommended in No. MC-111170 (Sub-No. 55). By application filed June 23, 1959, in No. MC-111159 (Sub-No. 88), as amended, Miller Transporters, Ltd., hereinafter called Miller, of Jackson, Miss., seeks a certificate of public convenience and necessity authorizing operation, in interstate or foreign commerce, as a common carrier by motor vehicle, over irregular routes, of petroleum and 1This report also embraces No. MC-111170 (Sub-No. 55), Wheeling Pipe Line, Inc., Extension-Shelby County, Tenn. |