Section 1235.7 - Leased Vehicles(a) Applicability. Unless otherwise specified, the regulations in this Section apply to the following actions by intrastate motor carriers: (1) The leasing of equipment in order to perform transportation in vehicles regulated by the department.(2) The leasing of equipment to motor carriers or shippers.(b) Definitions. (1) Addendum. A supplement to an existing lease which is not effective until signed by the lessor and lessee.(2) Authorized carrier. A person or persons authorized to engage in the transportation of property as a motor carrier under the provisions of Vehicle Code Division 14.85.(3) Detention. The holding by a consignor or consignee of a trailer, with or without power unit and driver, beyond the free time allocated for the shipment, under circumstances not attributable to the performance of the carrier.(4) Equipment. A commercial motor vehicle listed in Vehicle Code Section 34601.(5) Lease. A contract or arrangement in which the owner grants the use of equipment, with or without driver, for a specified period to an authorized carrier for use in the transportation of property for which a Motor Carrier of Property (MCP) permit is required, pursuant to 34620 VC.(6) Lessee. In a lease, the party acquiring the use of equipment with or without driver, from another person.(7) Lessor. In a lease, the party granting the use of equipment, with or without driver, to an authorized carrier.(8) Owner. A person (A) to whom title to equipment has been issued, or (B) who, without title, has the right to exclusive use of equipment, or (C) who has lawful possession of equipment, registered and licensed in any State in the name of that person.(9) Shipper. A person who sends or receives property.(10) Sublease. A written contract in which the lessee grants the use of leased equipment, with or without driver, to another.(c) General Leasing Requirements. Other than under the exemptions set forth in subsections (e) and (f), the authorized carrier may perform authorized transportation in equipment it does not own only under the following conditions:(1) Lease. There shall be a written lease granting the use of the equipment and meeting the requirements contained in subsection (d).(2) Receipts for Equipment. Receipts, specifically identifying the equipment to be leased, including the vehicle identification number (VIN), and stating the date and time of day possession is transferred, shall be given as follows:(A) When possession of the equipment is taken by the authorized carrier, it shall give the owner of the equipment a receipt. The receipt identified in this section may be transmitted by mail, telegraph, or other similar means of communications.(B) When possession of the equipment by the authorized carrier ends, a receipt shall be given in accordance with the terms of the lease agreement if the lease agreement requires a receipt.(C) Authorized representatives of the carrier and the owner may take possession of leased equipment and give and receive the receipts required under this subsection.(3) Identification of Equipment. The authorized carrier acquiring the use of equipment under this section shall identify the equipment as being in its service as follows:(A) During the period of the lease, the carrier shall identify the equipment in accordance with Section 1256 of this chapter (Identification of Vehicles) and Vehicle Code Section 34507.5.(B) Unless a copy of the lease is carried on the equipment, the authorized carrier shall keep a statement with the equipment during the period of the lease certifying that the equipment is being operated by it. The statement shall also specify the name of the owner, the date and length of the lease, any restrictions in the lease relative to the commodities to be transported, and the address at which the original lease is kept by the authorized carrier. This statement shall be prepared by the authorized carrier or its authorized representative.(4) Records of Equipment. The authorized carrier using equipment leased under this section shall keep records of the equipment as follows:(A) The authorized carrier shall prepare and keep documents covering each trip for which the equipment is used in its service.(B) These documents shall contain the name and address of the owner of the equipment, the point of origin, the time and date of departure, and the point of final destination. Also, the authorized carrier shall carry papers with the leased equipment during its operation containing this information and identifying the lading and clearly indicating that the transportation is under its responsibility.(C) These papers shall be preserved by the authorized carrier as part of its transportation records. Leases which contain the information required by the provisions in this subsection may be used and retained instead of such documents or papers.(D) As to lease agreements negotiated under a master lease, this provision is complied with by having a copy of a master lease in the unit of equipment in question and where the balance of documentation called for by this subsection is included in the freight documents prepared for the specific movement.(E) Records required by subsection (c) shall be retained by the authorized carrier for the duration of the lease and for six months thereafter. All record shall be made available, upon request, to any authorized representative of the department.(d) Written Lease Requirements. Except as provided in the exemptions set forth in subsections (e) and (f), the written lease required under subsection (c) shall contain the following provisions. The required lease provisions shall be adhered to and performed by the authorized carrier.(1) Parties. The lease shall be made between the authorized carrier and the owner of the equipment. The lease shall be signed by these parties or by their authorized representatives.(2) Duration to be Specific. The lease shall specify the time and date or the circumstances on which the lease begins and ends. These times or circumstances shall coincide with the times for the giving of receipts required by subsection (c)(2).(3) Exclusive Possession and Responsibilities. (A) The lease shall provide that the authorized carrier lessee shall have exclusive possession, control, and use of the equipment for the duration of the lease. The lease shall further provide that the authorized carrier lessee shall assume complete responsibility for the operation of the equipment for the duration of the lease.(B) Provision may be made in the lease for considering the authorized carrier lessee as the owner of the equipment for the purpose of subleasing it under these regulations to other authorized carriers during the lease.(C) Nothing in the provisions required by subsection (3) of this section is intended to affect whether the driver provided by the lessor is an independent contractor or an employee of the authorized carrier lessee.(4) Compensation to be Specified. The amount to be paid by the authorized carrier for equipment and driver's services shall be clearly stated on the face of the lease or in an addendum which is attached to the lease. Such lease or addendum shall be delivered to the lessor prior to the commencement of any trip in the service of the authorized carrier. An authorized representative of the lessor may accept these documents. The amount to be paid may be expressed as a percentage of gross revenue, a flat rate per mile, a variable rate depending on the direction traveled or the type of commodity transported, or by any other method of compensation mutually agreed upon by the parties to the lease. The compensation stated on the lease or in the attached addendum may apply to equipment and driver's services either separately or as a combined amount.(5) Items Specified in Lease. The lease shall clearly specify which party is responsible for removing identification devices from the equipment upon the termination of the lease and when and how these devices, other than those painted directly on the equipment, will be returned to the carrier.(6) Copies of freight bill or other form of freight documentation. When a lessor's revenue is based on a percentage of the gross revenue for a shipment, the lease must specify that the authorized carrier will give the lessor, before or at the time of settlement, a copy of the rated freight bill or a computer-generated document containing the same information, or, in the case of contract carriers, any other form of documentation actually used for a shipment containing the same information that would appear on a rated freight bill. When a computer-generated document is provided, the lease will permit lessor to view, during normal business hours, a copy of any actual document underlying the computer-generated document.(7) Charge-back Items. The lease shall clearly specify all items that may be initially paid for by the authorized carrier, but ultimately deducted from the lessor's compensation at time of payment or settlement, together with a recitation as to how the amount of each item is to be computed. The lessor shall be afforded copies of those documents which are necessary to determine the validity of the charge.(8) Insurance. (A) The lease shall clearly specify the legal obligation of the authorized carrier to maintain insurance coverage for the protection of the public pursuant to Section 34631.5 VC. The lease shall further specify who is responsible for providing any other insurance coverage for the operation of the leased equipment, such as bobtail insurance. If the authorized carrier will make a charge back to the lessor for any of this insurance, the lease shall specify the amount which will be charged-back to the lessor.(B) If the lessor purchases any insurance coverage for the operation of the leased equipment from or through the authorized carrier, the lease shall specify that the authorized carrier will provide the lessor with a copy of each policy upon the request of the lessor. Also, where the lessor purchases such insurance in this manner, the lease shall specify that the authorized carrier will provide the lessor with a certificate of insurance for each such policy. Each certificate of insurance shall include the name of the insurer, the policy number, the effective dates of the policy, the amounts and types of coverage, the cost to the lessor for each type of coverage, and the deductible amount for each type of coverage for which the lessor may be liable.(C) The lease shall clearly specify the conditions under which deductions for cargo or property damage may be made from the lessor's settlements. The lease shall further specify that the authorized carrier must provide the lessor with a written explanation and itemization of any deductions for cargo or property damage made from any compensation of money owed to the lessor. The written explanation and itemization must be delivered to the lessor before any deductions are made.(9) Copies of the Lease. An original and two copies of each lease shall be signed by the parties. The authorized carrier shall keep the original and shall place a copy of the lease on the equipment during the period of the lease unless a statement as provided for in Section (c)(3)(B) is carried on the equipment instead. The owner of the equipment shall keep the other copy of the lease.(10) Subsection (c) applies to owners who are not agents but whose equipment is used by an agent of an authorized carrier in providing transportation on behalf of that authorized carrier. In this situation, the authorized carrier is obligated to ensure that these owners receive all the rights and benefits due an owner under the leasing regulations, especially those set forth in subsections (d)(4)-(9) of this section. This is true regardless of whether the lease for the equipment is directly between the authorized carrier and its agent rather than directly between the authorized carrier and each of these owners. The lease between an authorized carrier and its agent shall specify this obligation.(e) General Exemptions. Except for subsection (c)(3)(A) which requires the identification of equipment, the leasing regulations in this part shall not apply to: (1) Equipment leased without drivers from a person who is principally engaged in such a business.(2) Any type of trailer not drawn by a power unit leased from the same lessor.(f) Leasing Between Authorized Carriers. Regardless of the leasing regulations set forth in this section, an authorized carrier may lease equipment to or from another authorized carrier under the following conditions:(1) The identification of equipment requirements in subsection (c)(3) and Section 1256 shall be complied with;(2) The lessor must own the equipment or hold it under a lease;(3) There must be a written agreement between the authorized carriers concerning the equipment as follows: (A) It must be signed by the parties or their authorized representatives.(B) It must provide that control and responsibility for the operation of the equipment shall be that of the lessee from the time possession is taken by the lessee and the receipt required under paragraph (c)(2) is given to the lessor until: 1. Possession of the equipment is returned to the lessor and the receipt required under paragraph (c)(2) is received by the authorized carrier.(C) A copy of the agreement must be carried in the equipment while it is in the possession of the lessee.(D) Nothing in this section shall prohibit the use, by authorized carriers, and all other entities conducting lease operations pursuant to this section, of a master lease if a copy of that master lease is carried in the equipment while it is in the possession of the lessee, and if the master lease complies with the provisions of this section and receipts are exchanged in accordance with subsection (c)(2), and if records of the equipment are prepared and maintained in accordance with subsection (c)(4).(4) Authorized carriers under common ownership and control may lease equipment to each other without complying with the requirements of subsection (1) pertaining to identification of equipment, and the requirements of subsections (3)(B) and (3)(D), pertaining to equipment receipts. The leasing of equipment between such carriers will be subject to all other requirements of paragraph (f).(g) Delay of Implementation. For those business entities which have engaged in some sort of vehicle leasing relationship enacted prior to the filing of these regulations, the terms of these regulations will be met no later than June 30, 2011.(h) Interstate Motor Carriers. Motor carriers engaged in interstate commerce shall comply with the federal leasing regulations contained in Title 49, Code of Federal Regulations, Part 376, as those regulations exist in the October 1, 2009 edition.(i) Referenced Regulations. Copies of Title 49, Code of Federal Regulations, can be obtained from: SUPERINTENDENT OF DOCUMENTS
UNITED STATES GOVERNMENT PRINTING OFFICE
PO BOX 371954
PITTSBURG, PA 15250-7954
(202) 512-1800
INTERNET PURCHASES: http://www.access.gpo.gov/su_docs/sale.html
(j) Federal Standards. Motor Carriers which operate in both interstate and intrastate commerce and found to be in compliance with subsection (g) shall be deemed to be in compliance with subsections (c) through (f) for the purpose of their intrastate operations.Cal. Code Regs. Tit. 13, § 1235.7
1. New section filed 10-12-2010; operative 11-11-2010 (Register 2010, No. 42). Note: Authority cited: Sections 34500 and 34501, Vehicle Code. Reference: Sections 408, 34500, 34501, 34501.2, 34501.5, 34501.12, 34505.5, 34507, 34507.5, 34507.6, 34620(a) and 34621(b)(4), Vehicle Code.
1. New section filed 10-12-2010; operative 11-11-2010 (Register 2010, No. 42).