CHP Lease Regulations
New CHP Lease Regulations Effective This Thursday 11/11/2010.
CLICK HERE TO VIEW THE NEW LEASING REGULATIONS
Summary: The California Highway Patrol has adopted regulatory language that will affect motor carriers who use equipment they do not own. The language closely mirrors the federal 49 CFR 376 "Lease and Interchange of Vehicles" to Title 13. Essentially, all intrastatecarriers using owner-operators on a non-temporary basis would have a new regulatory obligation, and CHP may now enforce the provisions of CFR 376 "Lease and Interchange of Vehicles" on interstate carriers. This includes the authority to examine your lease agreements to determine which entity (overlying motor carrier or underlying independent contractor) is responsible for vehicle safety and maintenance during BIT inspections.
For those unfamiliar with federal leasing provision, a summary of their required content is below. Please note that this is for informational purposes only. Leases are business contracts which should be drafted in accordance with statute to meet your individual company's needs:
Carriers leasing equipment from lessor w/o a Motor Carrier Permit
1) Requires written lease granting use of equipment
2) Requires receipts for equipment specifically stating the date and time when equipment is received then released from possession by the lessee.
3) Requires lessee (overlying carrier) to add a "leased by (insert overlying carrier name)" and overlying carrier's CA number to the door of the lessor (independent contractor or I/C) during the period where the lessee takes possession of equipment.
4) Requires records to be retained for six months after termination of lease.
5) Written lease must include:
a) Lease must be signed by authorized carrier and owner of equipment
b) Must specify date and time when lease begins and ends
c) Lease shall provide that authorized carrier has "exclusive possession, control, and use of equipment for the duration of the lease". Authorized carrier lessee shall assume complete responsibility for the operation of the equipment for the duration of the lease.
d) Amount paid to lessor must be clearly stated on lease.
e) Carrier will assume fines for overweight trailers when pre-loaded.
f) Overlying carrier must pay I/C within 15 days. Carrier cannot withhold payment if required delivery documents are not provided by I/C.
g) If compensation to I/C is based on percentage of gross revenue for a shipment, I/C must be provided copy of rated freight bill.
h) Any chargeback items to overlying carrier will later deduct from I/C's payment must be clearly specified and a recitation as to how the amount of each item is to be computed must be given. I/C can review copies of documentation to determine validity of chargebacks.
j) Insurance requirements.
k) Requires that a copy of lease be placed in equipment.
6) Exempts equipment leased without drivers from rental companies.
Carriers Leasing Equipment from Lessor with Motor Carrier Permit
1) Must have signed written agreement.
2) Must provide that "control and responsibility for the operation of equipment shall be that of the lessee from the time possession is taken by the lessee" until dispensed by receipt.
3) Copy of agreement must be held in vehicle.
CLICK HERE TO VIEW THE NEW LEASING REGULATIONS
Summary: The California Highway Patrol has adopted regulatory language that will affect motor carriers who use equipment they do not own. The language closely mirrors the federal 49 CFR 376 "Lease and Interchange of Vehicles" to Title 13. Essentially, all intrastatecarriers using owner-operators on a non-temporary basis would have a new regulatory obligation, and CHP may now enforce the provisions of CFR 376 "Lease and Interchange of Vehicles" on interstate carriers. This includes the authority to examine your lease agreements to determine which entity (overlying motor carrier or underlying independent contractor) is responsible for vehicle safety and maintenance during BIT inspections.
For those unfamiliar with federal leasing provision, a summary of their required content is below. Please note that this is for informational purposes only. Leases are business contracts which should be drafted in accordance with statute to meet your individual company's needs:
Carriers leasing equipment from lessor w/o a Motor Carrier Permit
1) Requires written lease granting use of equipment
2) Requires receipts for equipment specifically stating the date and time when equipment is received then released from possession by the lessee.
3) Requires lessee (overlying carrier) to add a "leased by (insert overlying carrier name)" and overlying carrier's CA number to the door of the lessor (independent contractor or I/C) during the period where the lessee takes possession of equipment.
4) Requires records to be retained for six months after termination of lease.
5) Written lease must include:
a) Lease must be signed by authorized carrier and owner of equipment
b) Must specify date and time when lease begins and ends
c) Lease shall provide that authorized carrier has "exclusive possession, control, and use of equipment for the duration of the lease". Authorized carrier lessee shall assume complete responsibility for the operation of the equipment for the duration of the lease.
d) Amount paid to lessor must be clearly stated on lease.
e) Carrier will assume fines for overweight trailers when pre-loaded.
f) Overlying carrier must pay I/C within 15 days. Carrier cannot withhold payment if required delivery documents are not provided by I/C.
g) If compensation to I/C is based on percentage of gross revenue for a shipment, I/C must be provided copy of rated freight bill.
h) Any chargeback items to overlying carrier will later deduct from I/C's payment must be clearly specified and a recitation as to how the amount of each item is to be computed must be given. I/C can review copies of documentation to determine validity of chargebacks.
j) Insurance requirements.
k) Requires that a copy of lease be placed in equipment.
6) Exempts equipment leased without drivers from rental companies.
Carriers Leasing Equipment from Lessor with Motor Carrier Permit
1) Must have signed written agreement.
2) Must provide that "control and responsibility for the operation of equipment shall be that of the lessee from the time possession is taken by the lessee" until dispensed by receipt.
3) Copy of agreement must be held in vehicle.