[Federal Register Volume 80, Number 101 (Wednesday, May 27, 2015)]
[Rules and Regulations]
[Pages 30164-30180]
[FR Doc No: 2015-12644]

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DEPARTMENT OF TRANSPORTATION

Federal Motor Carrier Safety Administration

49 CFR Part 390

[Docket No. FMCSA-2012-0103]
RIN 2126-AB44

Lease and Interchange of Vehicles; Motor Carriers of Passengers

AGENCY: Federal Motor Carrier Safety Administration (FMCSA), DOT.

ACTION: Final rule.

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SUMMARY: FMCSA adopts regulations governing the lease and interchange
of passenger-carrying commercial motor vehicles (CMVs) to: Identify the
motor carrier operating a passenger-carrying CMV that is responsible
for compliance with the Federal Motor Carrier Safety Regulations
(FMCSRs); and ensure that a lessor surrenders control of the CMV for
the full term of the lease or temporary exchange of CMVs and drivers.
This action is necessary to ensure that unsafe passenger carriers
cannot evade FMCSA oversight and enforcement by entering into a
questionable lease arrangement to operate under the authority of
another carrier that exercises no actual control over those operations.
This rule will enable the FMCSA, the National Transportation Safety
Board (NTSB), and our Federal and State partners to identify motor
carriers transporting passengers in interstate commerce and correctly
assign responsibility to these entities for regulatory violations
during inspections, compliance investigations, and crash
investigations. It also provides the general public with the means to
identify the responsible motor carrier at the time transportation
services are provided.

DATES: Effective date: July 27, 2015. Compliance date: Motor carriers
of passengers operating CMVs under a lease or interchange agreement are
subject to this rule on or after January 1, 2017.
    Petitions for reconsideration must be received by June 26, 2015 and
must be filed in accordance with 49 CFR 389.35.

FOR FURTHER INFORMATION CONTACT: Ms. Loretta Bitner,<PHONE_NUMBER>,
<EMAIL_ADDRESS>Office of Enforcement and Compliance. FMCSA
office hours are from 9 a.m. to 5 p.m., Monday through Friday, except
Federal holidays.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Acronyms and Abbreviations
II. Executive Summary
    A. Purpose of the Final Rule
    B. Summary of the Major Provisions
    C. Costs and Benefits
III. Legal Basis for the Rulemaking
IV. Proposal
V. Discussion of Comments to NPRM
    Impact on Safety
    Exception for Replacement Vehicles
    Financial v. Operational Leases
    Revenue Pooling Agreements
    Cost of the Rule
    Common Ownership and Control
    Passenger Carriers Chartering Other Passenger Carriers
    Penalties
    Lease Disclosure on Tickets
    Out-of-Service Carriers
    Miscellaneous Comments
    MCSAP State Enforcement Plans
VI. Section-By-Section Description of Final Rule
VII. Regulatory Analyses
    A. Regulatory Planning and Review
    Passenger Carriers Subject to This Final Rule
    Estimated Costs of the Final Rule
    Estimated Benefits and Threshold Analysis Results
    B. Regulatory Flexibility Act
    Assistance for Small Entities
    C. Federalism (Executive Order 13132)
    D. Unfunded Mandates Reform Act of 1995
    E. Executive Order 12988 (Civil Justice Reform)
    F. Executive Order 13045 (Protection of Children)
    G. Executive Order 12630 (Taking of Private Property)
    H. Privacy Impact Assessment
    I. Executive Order 12372 (Intergovernmental Review)
    J. Paperwork Reduction Act
    Lease Preparation Information Collection Analysis
    Passenger-Carrying CMV Marking Information Collection Analysis
    K. National Environmental Policy Act and Clean Air Act
    L. Executive Order 13211 (Energy Effects)
The Final Rule

I. Acronyms and Abbreviations

1935 Act Motor Carrier Act of 1935
1984 Act Motor Carrier Safety Act of 1984
Advocates Advocates for Highway and Auto Safety
ABA American Bus Association
BASICs Behavioral Analysis and Safety Improvement Categories
CDL Commercial Driver's License
CMV Commercial Motor Vehicle
CSA Compliance, Safety, Accountability
DOT United States Department of Transportation
FMCSA Federal Motor Carrier Safety Administration
FMCSRs Federal Motor Carrier Safety Regulations, 49 CFR parts 350
through 399
FR Federal Register
FRFA Final Regulatory Flexibility Analysis
Gobbell Gobbell Transportation Services
LLCs Limited Liability Companies
MCMIS Motor Carrier Management Information System
MCSAP Motor Carrier Safety Assistance Program
MAP-21 Moving Ahead for Progress in the 21st Century Act
NPRM Notice of Proposed Rulemaking
NTSB National Transportation Safety Board
OMB Office of Management and Budget
OOIDA Owner-Operator Independent Drivers Association
OOS Out of Service
PRA Paperwork Reduction Act of 1995
QALY Quality-Adjusted Life-Year
RFA Regulatory Flexibility Act
SMS Safety Measurement System
SBA Small Business Administration
STB Surface Transportation Board
UMA United Motorcoach Association
VSL Value of a Statistical Life
VMT Vehicle Miles Traveled
VIN Vehicle Identification Number

II. Executive Summary

A. Purpose of the Final Rule

    FMCSA adopts regulations governing the lease and interchange of
passenger-carrying CMVs to ensure that passenger carriers cannot evade
FMCSA oversight and enforcement by entering into questionable lease
arrangements to operate under the authority \1\ of another carrier that
exercises no actual control over these operations. The rule is based on
the broad authority of the Motor Carrier Safety Act of 1984 as amended

(49 U.S.C. 31136) and the Motor Carrier Act of 1935 (49 U.S.C. 31502).
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    \1\ While this statement refers to the operating authority
issued to for-hire motor carriers by FMCSA, the rule would also
apply to private carriers, which are not required to have operating
authority. If a private carrier leased a bus from another private
carrier, the parties would be required to complete a lease, and the
lessee would be responsible for safety and regulatory compliance.
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B. Summary of the Major Provisions

    The rule (1) identifies the motor carrier operating a passenger-
carrying CMV that is responsible for compliance with the Federal Motor
Carrier Safety Regulations (FMCSRs), and (2) ensures that a lessor
surrenders control of the CMV for the full term of the lease or
temporary exchange of CMVs and drivers; and (3) requires motor carriers
originally hired to provide charter transportation of passengers that
subcontract this work to another motor carrier of passengers to notify
the tour operator or group of passengers about the role of, and certain
information about, the subcontracted motor carrier of passengers.

C. Costs and Benefits

    The Agency has revised some of its cost calculations from the NPRM
based on comments received. The estimated costs of the final rule
consist of the following: (1) Trip- or longer-term lease negotiation;
(2) lease documentation; (3) lease copying; (4) receipt documentation;
(5) vehicle marking; and (6) documentation as per the common ownership
and control and revenue pooling exceptions, in place of a copy of the
lease. The analysis also provides a cost estimate of the notification
requirement described in the previous paragraph. The analysis
considered a no-action alternative (Option 1). It also considered two
regulatory options (Options 2 and 3), each with three rates of leasing
frequency--low, medium, and high. Other cost elements were considered
but eliminated because of their insignificance or because they had
already been incurred in the normal course of business. These costs
include document storage and disposal of discarded CMV marking
materials.
    The annualized costs of the Agency-selected option (Option 2,
hereafter ``the rule'' or ``final rule'') (at a seven-percent discount
rate) from 2017 through 2026 are summarized in Table 1 below. The
annualized cost of the final rule at the low-leasing frequency is $4.1
million, at the medium-leasing frequency it is $8.0 million, and at the
high-leasing frequency it is $15.7 million.\2\
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    \2\ On a strictly unrounded basis, the costs associated with the
low-, medium-, and high-frequency lease scenarios would be even
multiples of each other (e.g., the medium-frequency cost = 2 times
the low-frequency cost, while the high-frequency cost = 2 times the
medium-frequency cost). Tables 12 and 13 of the Regulatory
Evaluation document in the rulemaking docket detail the 10-year
costs of this rule. For presentation purposes, the values in Tables
12 and 13 of the Regulatory Evaluation are rounded to the nearest
$1,000. The sums of these rounded costs serve as the basis for
calculating the annualized values shown in Table 1 above. The use of
rounding accounts for the slight variations in the annualized values
relative to the use of unrounded data.

   Table 1--Annualized Costs (7% Discount Rate) of the Rule From 2017
                              Through 2026
                         [In millions of 2013$]
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                                                                Selected
                       Lease frequency                           option
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Low..........................................................       $4.1
Medium.......................................................        8.0
High.........................................................       15.7
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    The anticipated motorcoach-related fatality reductions over the
ten-year period from 2017 through 2026 as a result of the rule are
presented in Table 2 below for each of the three lease frequencies.

             Table 2--Threshold Analysis: Safety Benefits Necessary To Offset the Costs of the Rule
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                                                                Prevented fatal crashes    Prevented fatalities
                                                                 necessary over 10 year   necessary over 10 year
                        Lease frequency                          period of 2017 to 2026   period of 2017 to 2026
                                                                  for cost-neutrality      for cost-neutrality
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Low...........................................................                     1.65                     3.46
Medium........................................................                     3.24                     6.78
High..........................................................                     6.41                    13.42
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    In order for the final rule to achieve cost neutrality across the
range of leasing frequencies considered, the rule must prevent between
4 and 14 (determined as 3.46 and 13.42 rounded up to whole numbers)
motorcoach-related fatalities, respectively, between 2017 and 2026.
    Therefore the plausible range of crash reductions from 2017 to 2026
necessary to achieve cost neutrality with respect to this rule is
between 2 and 7 (rounding up to whole numbers and based on 2.09413
statistical fatalities per fatal motorcoach crash, documented in detail
in Appendix A of the Regulatory Evaluation). Given the Agency's central
assumption of a medium-leasing frequency, the FMCSA analysis shows that
the prevention of 4 fatal crashes (3.24 rounded up)--approximately
equivalent to the prevention of 7 fatalities (6.78 rounded up) over the
ten years from 2017 through 2026 will be sufficient to offset the costs
of the rule.

III. Legal Basis for the Rulemaking

    This rule is based on the authority of the Motor Carrier Act of
1935 (1935 Act) and the Motor Carrier Safety Act of 1984 (1984 Act), as
amended.
    The 1935 Act authorizes DOT to ``prescribe requirements for--(1)
qualifications and maximum hours of service of employees of, and safety
of operation and equipment of, a motor carrier; and (2) qualifications
and maximum hours of service of employees of, and standards of
equipment of, a motor private carrier, when needed to promote safety of
operation'' (49 U.S.C. 31502(b)).\3\
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    \3\ See http://www.gpo.gov/fdsys/pkg/USCODE-2013-title49/pdf/USCODE-2013-title49-subtitleVI-partB-chap315.pdf.
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    The 1984 Act confers on DOT authority to regulate drivers, motor
carriers, and vehicle equipment. ``At a minimum, the regulations shall
ensure that--(1) commercial motor vehicles are maintained, equipped,
loaded, and operated safely; (2) the responsibilities imposed on
operators of commercial motor vehicles do not impair their ability to
operate the vehicles safely; (3) the physical condition of operators of
commercial motor vehicles is adequate to enable them to operate the
vehicles safely . . .; and (4) the operation of commercial motor
vehicles does not have a deleterious effect on the physical condition
of the operators'' (49 U.S.C. 31136(a)). Section 32911 of the Moving
Ahead for Progress in the 21st Century Act (MAP-21) [Pub. L. 112-141,
126 Stat. 405, 818, July 6, 2012] enacted a fifth requirement, i.e., to
ensure that ``(5) an operator of a commercial motor vehicle is not
coerced by a motor carrier, shipper, receiver, or transportation
intermediary to operate a commercial motor vehicle in violation of a
regulation promulgated under this

section, or chapter 51 or chapter 313 of this title'' [49 U.S.C.
31136(a)(5)].\4\
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    \4\ See http://www.gpo.gov/fdsys/pkg/USCODE-2013-title49/pdf/USCODE-2013-title49-subtitleVI-partB-chap311-subchapIII-sec31136.pdf.
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    The 1984 Act also includes more general authority to ``(8)
prescribe recordkeeping . . . requirements; . . . and (10) perform
other acts the Secretary considers appropriate'' (49 U.S.C.
31133(a)).\5\
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    \5\ See http://www.gpo.gov/fdsys/pkg/USCODE-2013-title49/pdf/USCODE-2013-title49-subtitleVI-partB-chap311-subchapIII-sec31133.pdf.
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    This rule imposes legal and recordkeeping requirements consistent
with the 1935 and 1984 Acts on for-hire and private passenger carriers
that operate CMVs, in order to enable investigators and the general
public to identify the passenger carrier responsible for safety.
Currently, passenger-carrying CMVs and drivers are frequently rented,
loaned, leased, interchanged, assigned, and reassigned with few records
and little formality, thus obscuring the operational safety
responsibility of many industry participants. Because this rule has
only indirect and minimal application to drivers of passenger-carrying
CMVs--at most, their employers might require them to pick up a lease
document and place it on the vehicle, though that task could also be
assigned to other employees--FMCSA believes that coercion of drivers to
violate the rule will not occur.
    Before prescribing any regulations, FMCSA must also consider their
``costs and benefits'' (49 U.S.C. 31136(c)(2)(A) and 31502(d)). Those
factors are also discussed in this final rule.

IV. Proposal

    On September 20, 2013, FMCSA published a notice of proposed
rulemaking (NPRM) (78 FR 57822). The NPRM discussed the National
Transportation Safety Board's (NTSB) recommendation that FMCSA regulate
the leasing of passenger carriers in much the same way as it regulates
the leasing of for-hire property carriers.

V. Discussion of Comments to NPRM

    Twelve submissions were received from the following parties:
American Bus Association (ABA), United Motorcoach Association (UMA),
Owner-Operator Independent Drivers Association (OOIDA), Greyhound
Lines, Peter Pan Bus Lines, Coach USA, Adirondack Trailways, GE
Capital, Dawson Bus Service, Advocates for Highway and Auto Safety
(Advocates), NTSB, and Gobbell Transportation Services (Gobbell) on
behalf of the Tennessee Motor Coach Association, and the motor coach
operators that belong to the National Association of Small Trucking
Companies.

Impact on Safety

    UMA, ABA, Greyhound, Coach USA, and Gobbell argued that the crashes
discussed in the NPRM would not have been prevented by the proposed
rule, had it been in effect; that the Agency has not demonstrated that
the rule will improve safety; and that the rule has no clear safety
benefits.

FMCSA Response

    As the NPRM said, ``this action is necessary to ensure that unsafe
passenger carriers cannot evade FMCSA oversight and enforcement . . .
This action will enable the FMCSA, the National Transportation Safety
Board (NTSB), and our Federal and State partners to identify motor
carriers transporting passengers in interstate commerce and correctly
assign responsibility to those entities for regulatory violations . .
.'' [78 FR at 57822].
    Unlike rules that require specific actions that would help to
prevent crashes, such as the requirement for properly-adjusted brakes
or rest opportunities for drivers, this final rule improves safety less
directly and immediately by imposing new requirements to ensure the
proper identity of the motor carrier responsible for the operation of
the passenger-carrying vehicle. Through the proper identification of
the entity, FMCSA and its State partners are in a better position to
monitor the safety performance of the entity and remove from service
unsafe passenger carriers. Therefore, the rule will improve safety,
although not in the same manner as rules concerning vehicle maintenance
and hours of service for drivers.
    The USDOT identification number allows the Agency to track the
safety records of hundreds of thousands of different motor carriers and
to assign to each of them the appropriate inspection and violation
information. These data in turn feed the Agency's Safety Measurement
System (SMS) and Pre-Employment Screening (PSP) programs. Similarly,
the leasing requirements of this rule improve the ability of the Agency
to attribute the inspection, compliance, and enforcement data collected
by the Agency and its State partners to the correct carrier and driver,
allowing FMCSA more accurately to identify unsafe and high risk
carriers and initiate appropriate interventions.

Exception for Replacement Vehicles

    ABA, UMA, Greyhound, and Coach USA noted that mechanical failures
can unexpectedly strand passengers at places where safe accommodations
may not exist. The commenters argued that, in order to minimize the
resulting inconvenience and possible danger to passengers, the carrier
must obtain a replacement vehicle as quickly as possible, sometimes
from an unknown lessor, and without waiting to negotiate and exchange
written lease documents. These commenters requested an exception to the
proposed leasing requirements for emergency situations. ABA requested
an exemption for leased operation of another carrier's vehicle for a
period of less than 30 days as a result of ``a mechanical breakdown or
accident while a passenger-carrying commercial vehicle was en-route.''

FMCSA Response

    FMCSA agrees that negotiating and writing a lease for a replacement
vehicle (perhaps with a driver) from a local passenger carrier and
exchanging the appropriate documents could unnecessarily prolong the
delays in acquiring alternative transportation for passengers,
especially when there are no safe accommodations at the location where
the vehicle became disabled. However, the benefits the Agency expects
to derive from this rule would be lost if the requirement for a lease
were simply waived for 30 days, as requested by ABA. To address these
situations, FMCSA has adopted an exception that gives the operating
carrier and the lessor up to 48 hours after the lessee takes possession
of the replacement vehicle to put in writing the terms of their lease
agreement [Sec.  390.303(a)(2)]. Because the replacement vehicle will
pick up the stranded passengers and resume the interrupted trip almost
immediately, a lessee may not be able to ensure that a copy of the
lease is carried on the vehicle, as required by Sec.  390.303(f)(2). In
this limited situation, a lessee that cannot transmit an electronic
copy of the executed lease to the driver's wireless device (either
because no such device is carried on the vehicle or no wireless
connectivity is available) may carry a statement signed by the driver
or any available company official that ``[Carrier A] has leased this
vehicle to [Carrier B] pursuant to 49 CFR 390.303(a)(2).'' The Agency
believes the 48-hour window provides ample time for the parties to
document the transaction, given that it is unlikely the driver would
have difficulty receiving

electronic information for more than 2 calendar days.
    This exception should be helpful to the many small companies that
comprise most of the passenger carrier industry. This exception could
also be used when a passenger vehicle is placed out-of-service (OOS)
under the North American Standard OOS Criteria and a replacement
vehicle is needed to resume the trip.

Financial v. Operational Leases

    GE Capital, UMA, and Coach USA disagreed with proposed Sec.
390.301(b), which would have excluded from the scope of the rule any
lease-financing arrangement with a duration of 5 years or longer. GE
Capital--``on behalf of GE Capital business units that engage in lease-
financing of passenger-carrying commercial motor vehicles''--said that
``the proposed draft is not clear enough to also exclude leases in the
nature of a lease-financing of CMVs provided by independent and captive
leasing and finance companies, banks, financial services corporations,
broker/packagers and investment banks. . . . Financing Lessors are . .
. not motor carriers . . . but passive owners/lessors of CMVs for the
purpose of providing lease-financing of CMVs for the CMV industry
without assuming any operational control, responsibility or oversight
of the lease-financed CMVs . . .'' UMA said that ``Commercial
institution leasing is certainly dominant; however, leasing by private
investors, limited liability corporations, and limited partnerships
remain commonplace. . . . Currently, it is routine practice for bus
manufacturers or dealers to loan, rent, and lease buses for periods as
short as a day.'' Coach USA stated that all of its buses are leased.

FMCSA Response

    The Agency never intended the proposed rule to be applicable to
leases with non-carrier financial entities. The definition of a Lease
in proposed Sec.  390.5 was ``a contract or arrangement in which a
motor carrier grants the use of a passenger-carrying commercial motor
vehicle to another motor carrier . . .'' [emphasis added]. To reinforce
the point that the rule does not apply unless both parties to the lease
are motor carriers, the text of the NPRM's Sec.  390.301(b) has been
slightly modified to make it clear that the new requirements do not
apply to a contract (however designated, e.g., lease, closed-end lease,
hire purchase, lease purchase, purchase agreement, installment plan,
etc.) between a motor carrier and a manufacturer or dealer of
passenger-carrying commercial motor vehicles, provided the financial
organization, manufacturer or dealer is not itself a motor carrier.
Assuming that GE Capital, banks, private investors, etc., are not
themselves motor carriers, their lease-financing contracts with
passenger carriers will not be subject to this rule. And even if bus
manufacturers or dealers operate as passenger motor carriers, their
leasing activity may well be managed by separately incorporated non-
carrier financial subsidiaries whose lease contracts would not be
subject to this rule.
    The NPRM limited the lease-financing exception in Sec.  390.301(b)
to leases with a period of 5 years or longer, but in view of UMA's
comment that financial leases may have very short terms, FMCSA has
removed the 5-year limit; Sec.  390.301(b)(1) applies to a financial
lease of any duration.

Revenue Pooling Agreements

    ABA pointed out that ``[u]nder 49 U.S.C. 14302(b), an agreement to
pool or divide services and earnings may be approved if the carrier
participants assent and if the United States Surface Transportation
Board finds that the agreement will be in the interest of better
service to the public or of economy of operations and will not
unreasonably restrain competition. . . . The proposal in the NPRM does
not reference the STB, Section 14302 or any provision of the ICC
Termination Act. Thus, there is a substantial issue as to whether and
how any pooling agreement can be viewed or interpreted in connection
with the NPRM.''
    Adirondack Trailways indicated that it is ``party to long-standing
agreements for Through Service and Revenue Pooling (approved by the
Surface Transportation Board) which account for tens of thousands of
additional interchanges between and among other well-established and
safe passenger carriers who are long-standing parties to such
agreements.'' Adirondack argued that these agreements ``do not, and
arguably cannot, contain all of the elements required by the newly
proposed rules, e.g., to `specify the time and date when, and the
location where the lease, interchange or other agreement begins and
ends.' The nature of the interchanges under all of these agreements is
such that interchanges often occur in remote locations, with a
frequency that is both scheduled and unscheduled (often with no prior
notice at all) for durations that are incapable of being predicted in
advance due to spontaneous, ever-changing and unpredictable passenger
demands.''
    Greyhound wrote that, in 2012, it ``operated a total of 8,089 trips
with buses leased on an interchange basis from its pool or interline
partners.'' It provided no details about these pool agreements.

FMCSA Response

    Although the NPRM would have exempted parties to a revenue pooling
agreement approved by the Surface Transportation Board (STB) or an
interline agreement from the requirement to provide receipts [Sec.
390.303(d)(4)], the commenters almost unanimously recommended a broader
exemption.\6\ FMCSA agrees that operations under revenue pooling
agreements approved by the STB should be exempt from the lease and
receipt requirements of this rule. Revenue pooling allows separate
passenger carriers to offer essentially the same service as a single
carrier on approved routes. Because the number of carriers in a pool is
small, and the parties to the pool typically run the same trips on a
daily basis (or even more frequently), the carrier responsible for
safety on a particular trip can be narrowed to several carriers at most
and often only two carriers. The final rule therefore imposes only a
few requirements to enable the agency to track the safety performance
of all members of the pool and specifically identify the carrier
responsible for safety. Each vehicle must have available, either in
hard copy or electronically, the number and date of the STB decision
approving the pool and the names of the pool members. In addition, each
vehicle must have available a list of (1) all routes covered by the
pooling agreement, (2) the carrier or carriers authorized to operate on
each route or portion of a route, and (3) all points of origin,
destination, or interchange (should interchanges be part of the
agreement). This list avoids the time, date, and location information
to which Adirondack objected in its comments. However, all members of
the revenue pool must mark the vehicles with the name of the operating
carrier, as required by Sec.  390.21(f). The advantage of this
exception is that the parties to a pooling agreement need not exchange
lease documents and receipts.
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    \6\ It should be noted that the NPRM's references to ``interline
agreements,'' usually paired with a discussion of ``revenue pooling
agreements,'' were erroneous and have been removed from this final
rule. Since ``interline agreements'' involve the transfer of
passengers between motor carriers, but not the exchange of vehicles
between those carriers, this rule does not apply to ``interline
agreements.''
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Cost of the Rule

    Greyhound was critical of the NPRM's cost estimates. It commented,
among other things, that:

    ``FMCSA has estimated annual recurring costs implementing all of
the rules for 6,328 carriers to be $4,422,513 or an average cost per
carrier of $698.88. Greyhound's estimate of the recurring costs of
just the rules that would require new activities for Greyhound would
be up to 336 times the average cost per carrier estimated by FMCSA.
Even given that Greyhound is substantially larger than the average
carrier, there clearly is a disconnect somewhere. The primary
difference appears to be the very minimal personnel cost FMCSA
attributes to preparing the detailed information required in the
leases or in the trip information sheet required in the interchange
situations in lieu of master lease agreements, and then tying that
information directly to the receipts.''
    Greyhound also stated that: ``In addition, FMCSA attributes zero
cost to the preparation, affixing and removal of the required bus
signage and to the preparation, signing and storage of the receipts
and the supervision of these activities. Clearly, both costs are far
from negligible.''
    ``Greyhound estimates that to complete all of these activities
for each trip will require an average of 15-30 minutes per trip,''
and given the number of leased trips Greyhound made in 2012, its
labor costs to comply with the new requirements would be $98,000 to
$196,000. Adding 20% for supervision, supplies, filing and storage
would bring those figures up to $118,000 to $235,000 per year.

    In short, Greyhound argued that ``FMCSA severely underestimates the
costs through miscalculation of some costs and disregard of others.''
    Peter Pan supplied no details, but said that, ``[g]iven our level
of leasing, even if we could comply, we have estimated our cost of
compliance at over $100,000 annually.''

FMCSA Response

    The Agency has revised some of its cost calculations based on
comments from Greyhound and others. The Agency updated the time frame
of this analysis to consider the 10 year span of 2017 to 2026, which
led to increases in certain components of the rule's costs and
benefits. Projected growth in the motor carrier industry led to an
increased number of affected carriers, thereby increasing the rule's
costs. Similarly, inclusion of estimated lease counts provided by
Greyhound raised the number of projected leases, adding to the rule's
costs. Application of the most recent guidance from the Office of the
Secretary of Transportation regarding the value of a statistical life
(VSL) in future years increased the monetized benefit resulting from
reductions in fatal crashes. A summary of the new estimates contained
in the separate Regulatory Evaluation for this rule is presented below
in Section VII.A. The cost of this rule depends primarily on the number
of lease transactions subject to its requirements. That number is not
precisely known, either by FMCSA or--it would appear--by the passenger
carrier industry. Greyhound and Peter Pan provided information about
their own operations (which cannot be extrapolated to the rest of the
industry, given the unusually large size of these two companies), but
no commenter took issue with the Agency's three-tier estimates of
leasing volume. The final rule, therefore, retains the NPRM's
assumptions about low-, medium-, and high-frequency leasing. Our cost
analysis assigns a completion time for each separate task needed to
comply with the rule. We believe that these times are conservative,
especially after repetition makes the requirements familiar to carrier
employees, and that the corresponding costs are also conservatively
high. Nonetheless, the Agency's threshold analysis, discussed in
Section VII.A., shows that the rule would be cost-neutral if it
prevented approximately 4 fatal passenger carrier crashes (3.24 rounded
up) between 2017 and 2026. This is mathematically equivalent to the
prevention of one fatal passenger carrier crash every 3.09 years (3.09
years = 1 crash / (3.24 crashes / 10 years)). In other words, the
annual cost of the rule is approximately one-quarter of the cost of a
single passenger carrier crash. FMCSA believes that enhanced monitoring
of passenger carrier leasing, and of the carriers involved in such
leasing, will have beneficial effects that readily cover these costs.

Common Ownership and Control

    Coach USA, a non-carrier that controls many passenger carriers,
requested ``an exemption from the requirements of proposed section
390.303 for vehicle exchanges between affiliated companies. By
`affiliated companies,' Coach USA means companies that share a common
parent company.''
    Coach USA described the situations that it believes demand and
justify an exemption.

    For example, Megabus Southeast LLC . . . and Megabus Northeast
LLC . . . currently engage in an interline-type arrangement for
transporting passengers between Atlanta, Georgia and Washington, DC.
Under this arrangement, Megabus Southeast transports passengers from
Atlanta to Christiansburg, Virginia. In Christiansburg, a Megabus
Northeast driver assumes control of the vehicle and the vehicle is
leased to Megabus Northeast for the trip from Christiansburg to
Washington and back to Christiansburg. This leasing of vehicles from
Megabus Southeast to Megabus Northeast occurs 14 times per week (7
times in each direction). Coach USA expects to set up similar
interline arrangements among its Megabus companies in the near
future. In addition, the issue of leases among affiliated Coach USA
companies arises on a regular basis in situations where a carrier
providing scheduled service needs to add extra sections to
accommodate higher than normal volume of passengers. This typically
occurs around weekends and holidays. In such situations, the
provider of scheduled service will lease a bus from an affiliated
provider of charter service. In a typical week, approximately 40
buses are leased by Coach USA companies from an affiliated company
for this purpose. On holidays, it can be as many as 50 buses a day.
Attempting to comply with the proposed regulations in the situations
described above would create an enormous administrative and
paperwork burden on the Coach USA companies while serving no useful
purpose.

    Similar comments were submitted by Adirondack Trailways, which is
commonly owned and controlled with two other carriers, Pine Hill
Trailways and New York Trailways. Adirondack stated that:

    [t]hese three companies interchange buses and drivers on a
regular basis every single day. On a slow day there are about two
dozen such instances, and on weekends and holidays that number is
much greater. In other words, these three commonly owned passenger
carriers interchange buses and drivers more than ten thousand times
every year. The proposed regulations do not appear to consider this
in the analysis or in the regulations. . . . These agreement[s] (for
commonly owned and controlled carriers, through service, revenue
pooling, etc.) do not, and arguably cannot, contain all of the
elements required by the newly proposed rules, e.g., to `specify the
time and date when, and the location where the lease, interchange or
other agreement begins and ends.' The nature of the interchanges
under all of these agreements is such that interchanges often occur
in remote locations, with a frequency that is both scheduled and
unscheduled (often with no prior notice at all) for durations that
are incapable of being predicted in advance due to spontaneous,
ever-changing and unpredictable passenger demands. These pre-
existing agreements among commonly owned and controlled passenger
carriers and other well established safe passenger carriers are not
the problem FMCSA is attempting to solve and should not be affected
by the proposed regulations.

FMCSA Response

    FMCSA agrees that there is no need for individual leases and
receipts when vehicles are interchanged between or among commonly owned
and controlled passenger carriers. Such a requirement would add nothing
to these carriers' standard business practices and impose unnecessary
paperwork. It is likely that all of the ``family'' members are
operating according to the same administrative procedures and safety
standards. However, FMCSA is imposing a few limits on this exception

to ensure the Agency's ability to identify the carrier responsible for
safety and regulatory compliance. This is necessary because large
holding companies seek to minimize their regulatory and tort exposure
by dividing their motor carrier business into multiple limited
liability companies (LLCs) while operating them very much like a single
corporation. Therefore, each driver in a group of commonly owned and
controlled motor carriers must carry a summary document listing all
members of the corporate family, along with their USDOT numbers,
business addresses, and contact telephone numbers. The document must
also identify the operating carrier, the trip (by charter number, run
number, or some other identifier), the vehicle (by at least the last 6
digits of the Vehicle Identification Number (VIN) \7\), and the date of
the trip. This document is subject to the record retention requirements
of Sec.  390.303(d). Like the parties to a pooling agreement, however,
commonly owned and controlled carriers need not prepare leases or
receipts when they exchange vehicles.
---------------------------------------------------------------------------

    \7\ The vehicle identification number (VIN) is a series of
Arabic numbers and Roman letters that is assigned by a motor vehicle
manufacturer to a motor vehicle for identification purposes in
accordance with 49 CFR part 565, Vehicle Identification Number (VIN)
Requirements.
---------------------------------------------------------------------------

Passenger Carriers Chartering Other Passenger Carriers

    ABA said that the NPRM ``does not define, or even mention, the term
`charter,' which is how motorcoach carriers of passengers view the
hiring or interchange of vehicles. Therefore, there is a substantial
issue as to the relation of `charter' to `lease' and how these terms
will be interpreted for purposes of the regulation.''
    UMA commented that:

    Interstate passenger carriers routinely charter the services of
other passenger carriers for emergencies or capacity reasons. Once
the compensatory amounts and arrangements are confirmed, a charter
contract is often executed, and an insurance certificate is
obtained. It is generally considered that the chartered company
assumes all responsibilities for regulatory compliance. Thousands of
buses and motorcoaches are inspected annually operating under a
charter contract from another passenger carrier while the chartered
carrier assumes responsibility for their bus and driver regulatory
compliance. This system is so effective, FMCSA should completely
evaluate the positive attributes of these charter arrangements
versus the possibilities that a lease may actually reduce an
otherwise compliant chartered passenger carrier's responsibilities
and motives; thereby reducing their safety and compliance concerns.

FMCSA Response

    The NPRM did not specifically discuss ``passenger carriers
chartering other passenger carriers'' because the Agency believed it
was sufficiently clear that such arrangements, depending on their
specific terms, either would not be subject to the proposed rule at all
because they involved no leases, or would be subject to the rule
because the ``chartered'' carrier was leasing vehicles and drivers to
another passenger carrier. Based upon the comments received, it is
apparent that clarification is needed.
    A passenger carrier that agrees to transport a tour or travel group
on a particular trip may find itself without the capacity to
accommodate the group. In that case, the carrier might transfer the
contract to a second carrier that has the necessary capacity. The
second carrier may or may not pay a fee to the transferring passenger
carrier. In any case, this rule would not apply to that transaction
because the first carrier has not leased equipment from the second. The
contract has been reassigned and the second carrier has undertaken the
trip in its own name on its own authority with its own vehicle(s), and
is therefore responsible for compliance with the FMCSRs. As a good
business practice, the transferring passenger carrier should of course
immediately notify the tour or travel group that another carrier will
provide the transportation. Disgruntled customers have occasionally
contacted FMCSA when such notification does not occur and an unknown
carrier arrives unexpectedly to pick up a group of passengers. While
the final rule does not address communication when a passenger
transportation contract is completely transferred to another carrier,
the industry should note that the interests of tour operators and their
customers are not adequately protected when such contracts are
transferred among carriers without prior notice to the passengers
affected by the change.
    On the other hand, a passenger carrier that needs one or more
additional vehicles may subcontract with another carrier to supply the
vehicle(s) and possibly also driver(s) while still nominally performing
the contract with the tour or travel group. When a passenger carrier
hires or charters (i.e., contracts for) the services of another
passenger carrier to help perform a contract, it has leased vehicles
and services from that carrier. In these circumstances, a lease must be
prepared and receipts exchanged in compliance with this rule to
indicate that the prime contractor is responsible for the lessor's
(i.e., subcontractor's) regulatory compliance. A copy of the lease or
written agreement must be on the vehicle obtained from the
subcontracted lessor, and the hiring passenger carrier's legal name and
USDOT number must be marked on the vehicle as prescribed in 49 CFR
390.21. While the prime contractor (i.e., the lessee carrier) may
require the subcontractor to comply with all applicable provisions of
the FMCSRs and to indemnify it for any civil penalties assessed for
violations of those provisions by the subcontracted lessor, FMCSA and
its State partners will hold both the prime contractor and its
subcontractor responsible for completion of the lease described in this
final rule.
    In this situation described above, the lessee carrier is fully
responsible for the regulatory compliance of the lessor carrier and
must mark the vehicles leased from the lessor with the information
required by 49 CFR 390.21(f). However, because the name and/or logo of
the chartered or hired passenger carrier is likely to be displayed
prominently on the vehicles, passengers might overlook the smaller
placard required by Sec.  390.21(f)(2) and assume that a different
carrier was providing the transportation. To reduce the possibility of
confusion, FMCSA has added a provision to the rule that requires a
passenger carrier that subcontracts all or a portion of a
transportation service to notify the tour or travel group within 24
hours of establishing the subcontracting arrangement that all or some
of the transportation will be performed by a lessor subcontractor.
    This rule holds the lessee carrier directly responsible for
violations of the FMCSRs. While UMA asserted that the chartered
passenger carrier generally assumes all responsibilities for regulatory
compliance, this final rule does not prevent the two carriers from
including in the charter (i.e., lease) contract a provision making the
chartered carrier responsible for such compliance, with appropriate
indemnification language for penalties imposed by regulatory agencies.
The relationship between the two parties remains that of a lessor and
lessee. The ``charter contract'' described by UMA appears to involve
negotiation and paperwork burdens similar to those associated with a
lease. The net burden imposed by this rule therefore should be minor.

Penalties

    Advocates generally supported the NPRM, but argued that ``because
of the seriousness of the abuses that the provisions are intended to
prevent,

including, potentially, willful misconduct that attempts to evade FMCSA
out-of-service orders, . . . specific criminal and civil penalties
should be referenced as applicable to the more serious violations of
the lease/interchange restrictions.''

FMCSA Response

    FMCSA does not believe that the regulatory language in subpart F of
part 390 should include the maximum applicable statutory penalties. The
penalties available to the Agency are adequately described in subpart G
and appendices A and B of part 386. However, while considering this
comment, it became apparent that the NPRM was not sufficiently explicit
in assigning responsibility for violations of the proposed rule. We
have therefore added paragraph (c) to Sec.  390.301 to clarify that
both the lessor and lessee are liable for civil penalties if they
exchange vehicles without the required documentation, or prepare a
lease, interchange agreement, or other agreement that fails to meet the
requirements of subpart F.

Lease Disclosure on Tickets

    Advocates argued that the vehicle marking required by the NPRM is
insufficient to provide notice of the arrangement to the public prior
to the purchase of tickets. Advocates stated:

    At the very least, the public must be given notice of the lease/
interchange arrangements at the point of sale including locations
such as terminals and passenger-carrying motor carrier and
associated broker Web sites where tickets are available for sale, as
soon as the lease/interchange agreement is signed. This will allow
consumers at the point of sale the opportunity to decide whether to
purchase tickets for that trip. Similar to online disclosure by
airlines that certain flights will be crewed and operated by another
airline, or using equipment provided by another airline, motorcoach
riders should have the same notice and opportunity to decide whether
to nevertheless purchase tickets for that bus ride or to make other
travel arrangements. Moreover, consumers who purchased tickets and
were not provided with disclosure of the lease/interchange
arrangement, or were unaware of the lease/interchange arrangement
until arrival at the departure location, at the time of boarding,
should be afforded the option of a refund if they decide at that
point not to travel on the leased CMV.

FMCSA Response

    The Agency does not agree that advance notice of lease and
interchange arrangements must be provided to customers. Many of the
motorcoach services that have expanded significantly in recent years
are so-called curbside operations that do not require, and sometimes do
not allow, advance ticketing. Because demand for service cannot always
be predicted, these carriers may need to obtain additional vehicles
from other carriers on short notice. This rule requires lessors and
lessees to document these arrangements and mark the vehicles
appropriately, but changing the curbside, on-demand business model is
not within the rule's scope or purpose. These carriers may not know
until shortly before a trip whether they will need to operate leased
vehicles on that trip and therefore cannot give potential customers
advance notice of the lease arrangement. Such notice may be more
compatible with other types of motorcoach operation, especially those
involving commonly owned and controlled carriers and revenue pooling
agreements, but even a segment-specific notice requirement would
involve significant changes in operating practices. This issue was not
raised in the NPRM and, given its far-reaching implications for the
industry, cannot be included in today's final rule because the public
was not provided with an opportunity to comment on a regulatory
proposal to address the issue. The Agency does not find it advisable to
delay this rule, and thus defer its benefits, while considering whether
to expand its reach as recommended by Advocates.

Out-of-Service Carriers

    NTSB supported the NPRM but said that

the FMCSA should do more to protect passenger safety. The FMCSA
should require passenger carriers that have been prohibited from
operating in interstate commerce for any reason and that intend to
lease, rent, interchange, or otherwise convey the control of any of
their vehicles to another carrier to obtain written authorization
from the FMCSA to conduct such transactions. This will enable the
FMCSA to research the safety history of the prospective lessee and
determine if it has demonstrated adequate safety practices for its
vehicles and drivers.

FMCSA Response

    Section 390.305 of the NPRM proposed to require passenger carriers
that had been placed out of service to notify FMCSA by email or U.S.
Mail, either 3 or 5 business days, respectively, before transferring
control of its vehicles to another passenger carrier. The FMCSA has
decided that notification and related issues would be best addressed in
another rulemaking. Therefore, the language of Sec.  390.305 proposed
in the NPRM has been removed.

Miscellaneous Comments

    OOIDA asked several questions and provided comments about the NPRM:
(1) Why did the Agency limit the rule to motor carrier lessors rather
than all lessors of passenger vehicles? (2) Proposed Sec.
390.303(f)(3) said that nothing required by paragraph (f) was
``intended to affect whether the lessor of the passenger-carrying
commercial motor vehicle or a driver provided by the lessor is an
independent contractor or an employee of the motor carrier lessee.''
OOIDA asserted that paragraph (f)(3) had no legal effect. (3) ``FMCSA
should clarify that the Lessee's responsibility to maintain public
liability insurance required by federal law means that it cannot
delegate such responsibility, including delegating the cost of such
insurance, to any other party, including the Lessor. . . . OOIDA
believes FMCSA does not need to revise the proposed language, but
should explain that it means that by having the responsibility to
maintain public liability insurance, the Lessee may not avoid
responsibility for the cost of the insurance by passing it on to
another party, directly or indirectly.''

FMCSA Response

    (1) The 1984 Act (49 U.S.C. 31136) gives the Agency jurisdiction
over operators of commercial motor vehicles, but not over equipment
lessors generally. The rule is therefore limited to motor carrier
lessors. (2) Section 390.303(f)(3) did not claim to have legal effect.
On the contrary, it was and is a disclaimer of any such effect. The
provision has been re-designated as Sec.  390.303(b)(4)(iii) in the
final rule. (3) While the lessee must maintain the evidence of
financial responsibility required by 49 CFR part 387, FMCSA has no
authority to change a contractual term that obligates the lessor to pay
the cost of the insurance the lessee is required to maintain.

MCSAP State Enforcement Plans

    No comments were received about the Agency's intention to require
our State and local partners to adopt this final rule pursuant to the
Motor Carrier Safety Assistance Program (MCSAP) (49 CFR part 350).
Therefore, as proposed, State and local agencies participating in MCSAP
will be required to include the passenger-carrying CMV lease and
marking requirements of this rule in their annual enforcement plans. As
mentioned in the NPRM, our MCSAP partners are not required to enforce
the CMV leasing regulations in part 376. However, the focus of this
final rule is safety, and FMCSA believes that States

must adopt and enforce compatible leasing and marking regulations for
all motor carriers operating passenger-carrying CMVs in interstate
commerce.

VI. Section-by-Section Description of Final Rule

    Section 390.5 is amended to add definitions for lease, lessee, and
lessor, all of which are based (with changes) on the same definitions
in part 376--Lease and Interchange of Vehicles. Because both parties to
the lease required by subpart F of part 390 are motor carriers of
passengers, rather than owners of equipment (as in part 376), the terms
lease, lessee, and lessor here apply specifically to motor carriers of
passengers and are applicable only to Sec. Sec.  390.21(f) and 390.301
through 390.305. All three terms are amended to include interchange of
passenger-carrying CMVs. In Sec.  390.5, interchange is currently
defined as the tendering of intermodal chassis to a motor carrier; that
meaning is retained as paragraph (1), and paragraph (2) is added to
describe the exchange of passenger-carrying CMVs between motor carriers
continuing a through movement on a particular route. We have also
included a cross-reference to Sec.  376.2, where the same terms are
defined for purposes of the lease and interchange of property-carrying
vehicles.
    Section 390.21(e), dealing with the marking of rented CMVs for
periods of 30 calendar days or less, is amended to limit its
application to ``property-carrying CMVs,'' as intended when this
paragraph was adopted in 1990 in response to a petition from the Truck
Rental and Leasing Association. The Federal Highway Administration
noted in the preamble to the final rule that ``[t]he petition
articulated compliance problems with a segment of the trucking industry
that had not been considered during the promulgation of the marking
requirement.'' Paragraph (e) was added to provide an alternative method
for compliance with the previous marking requirements in Sec.  390.21
(55 FR 6991, February 28, 1990). Under today's rule, that alternative
method is not available in the case of rented passenger-carrying CMVs.
    Instead, current paragraphs (f) and (g) of Sec.  390.21 are
redesignated as paragraphs (g) and (h), and a new paragraph (f) is
added to cover the marking of Leased and interchanged passenger-
carrying commercial motor vehicles. The marking in new paragraph (f)
must meet the requirements of Sec.  390.21(b) Nature of marking, (c)
Size, shape, location, and color of marking, except that marking is
required only on the right (curb) side of the vehicle on or near the
front passenger door, and (d) Construction and durability. Carriers
operating leased or interchanged passenger-carrying CMVs as defined in
Sec.  390.5 must also display a placard, sign, or other permanent or
removable device on the right (curb) side of the passenger-carrying CMV
on or near the front passenger door. The device must show the name and
USDOT number of the carrier operating the vehicle, preceded by the
words ``operated by,'' e.g., ``Operated by ABC Motorcoach, Inc., USDOT
12345678.''
    The final rule adds to part 390 a new subpart F entitled ``Lease
and Interchange of Passenger-Carrying Commercial Motor Vehicles.'' The
``Applicability'' statement in Sec.  390.301(a) makes clear that--with
the exceptions noted--the subpart applies to all leases or interchanges
of passenger-carrying CMVs between motor carriers, no matter how brief.
Paragraph (b), however, explains (1) that the rule does not cover
leases between carriers and vehicle manufacturers or dealers (providing
they are not themselves motor carriers) because most of these contracts
are likely to be in the nature of purchase agreements, unlike the
routine or casual transfers of vehicles between passenger carriers to
meet temporary fluctuations in demand; (2) that leases and receipts are
not required when passenger vehicles are exchanged between or among
commonly owned and controlled motor carriers; and (3) that leases and
receipts are not required when passenger carriers that are party to a
revenue pooling agreement approved by the Surface Transportation Board
exchange or interchange passenger vehicles between or among themselves
on routes subject to the pooling agreement and mark the vehicle
appropriately. Paragraph (c) provides that if the use of a passenger-
carrying commercial motor vehicle requires a lease, but the motor
carriers fail to make the lease or fail to meet all applicable
requirements of subpart F, both motor carriers shall be subject to a
civil penalty specified in 49 CFR part 386, Appendix B, paragraphs
(a)(1) or (a)(3).
    Section 390.303 specifies the contents of lease and interchange
documents. Paragraph (a)(1) requires a written lease or interchange
document, or a written agreement covering any less formal temporary
transfer of a passenger-carrying CMV.
    Paragraph (a)(2) creates an exception to the requirement that the
lease or interchange agreement be signed before the vehicle is operated
under the terms of the agreement. When a passenger vehicle is disabled
during a trip, the lessor and lessee of the replacement vehicle may
postpone the completion of a written lease for up to 48 hours.
    Paragraph (b) requires the lease, interchange agreement, or other
agreement to contain: (1) The name of the vehicle manufacturer, the
year of manufacture, and the last 6 digits of the Vehicle
Identification Number; (2) the legal names, contact information, and
signatures of both parties; (3) the time and date when the lease begins
and ends and other specific information; (4) a statement that the
lessee has exclusive possession and control of the leased vehicle and
is responsible for regulatory compliance; and (5) a statement that the
lessee is responsible for compliance with the insurance requirements of
49 CFR part 387.
    Paragraph (c) requires an original and two copies of each lease,
etc., with one copy to be kept on the leased passenger vehicle. The
parties may prepare, sign, exchange, and maintain the lease (and any
other documents required by this rule) in electronic \8\ or paper
format. Leases generated, exchanged, or maintained using electronic
methods do not satisfy FMCSA requirements unless they are legible and
capable of being retained and accurately reproduced for reference by
any party entitled to access them.
---------------------------------------------------------------------------

    \8\ Electronic Signatures in Global and National Commerce Act
(Pub. L. 106-229, 114 Stat. 464, 15 U.S.C. 7001-7031) was signed
into law on June 30, 2000. This act promotes the use of electronic
contract formation, signatures, and recordkeeping in private
commerce by establishing legal equivalence between traditional
paper-based methods and electronic methods. See 76 FR 411 (January
4, 2011) for FMCSA regulatory guidance concerning electronic
signatures and documents.
---------------------------------------------------------------------------

    Paragraph (d) requires that copies of each lease or other agreement
or statement must be retained for one year after expiration of the
lease or agreement.
    Paragraph (e) includes detailed requirements for the preparation of
receipts when vehicles are surrendered to the lessee and returned to
the lessor.
    Paragraph (f) specifies how the leased equipment is to be marked
and identified in leases or other agreements.
    Section 390.305 requires that, when a passenger carrier with an
original charter contract leases vehicles from a subcontractor carrier
to perform the charter, it must notify the charter party within 24
hours after hiring the subcontractor that the transportation will be
provided by the subcontractor.

VII. Regulatory Analyses

A. Regulatory Planning and Review

    FMCSA has determined that this action is a non-significant
regulatory

action under Executive Order 12866, as supplemented by Executive Order
13563 (76 FR 3821, January 18, 2011), and DOT regulatory policies and
procedures (44 FR 1103, February 26, 1979). The estimated economic
costs of the rule do not exceed the $100 million annual threshold.
Moreover, the Agency does not expect the rule to generate substantial
congressional or public interest. This rule has not been reviewed
formally by the Office of Management and Budget (OMB).
    Due to the lack of data that would enable FMCSA to quantify the
safety benefits of this final rule, the separate Regulatory Evaluation
in the docket relies upon a threshold analysis. There are no
statistical or empirical studies that directly link the written
documentation of a vehicle lease agreement to enhanced motor carrier
safety. And though the Agency has described above the many practical,
informational, and administrative benefits of this final rule, it is
unable to quantify its safety benefits, typically measured in terms of
avoided crashes. In accordance with OMB guidance (Circular A-4),\9\ a
Federal regulatory agency has the option to conduct a threshold
analysis in lieu of a cost-benefit analysis in cases in which either
the benefits (as in this case) or the costs are unquantifiable, or
difficult to quantify. A threshold analysis estimates the quantified
costs of a rule in terms of the non-quantified benefits (in this
instance, the number of passenger-carrier crashes that would have to be
prevented by the rule to equal its costs). The rule is expected to
provide safety benefits that are not directly or easily quantifiable.
Hence, the estimated costs of the regulatory options in this final rule
are compared to the number of passenger-carrier-related fatalities,
currently estimated at $20.3 million per crash \10\ during calendar
year 2017 \11\ that would have to be avoided to make the rule cost-
neutral.
---------------------------------------------------------------------------

    \9\ www.whitehouse.gov/omb/circulars_a004_a-4.
    \10\ The FMCSA estimate for calendar year 2013 is $19.5 million.
The fatal crash estimate is based on the current VSL of $9.2
million, plus other cost elements, such as injuries, medical,
emergency services, property damage, pollution, and delay. See
Appendix A--Motorcoach Crash Cost Estimation Methodology at the end
of the final Regulatory Evaluation for a detailed analysis of this
estimate. Source: Zaloshnja, E. and Miller, T. (2006). ``Unit Costs
of Medium and Heavy Truck Crashes,'' Final Report for FMCSA, Federal
Highway Administration. Accessed December 16, 2013, at: http://mcsac.fmcsa.dot.gov/documents/Dec09/UnitCostsTruck%20Crashes2007.pdf.
    \11\ The first full year during which the rule is expected to be
in effect is 2017.
---------------------------------------------------------------------------

    Additionally, the final rule is expected to provide many practical
benefits to the public and to FMCSA. These benefits include more
effective oversight and enforcement, through proper identification of
passenger carriers and proper documentation of lease agreements--both
of which help ensure accurate identification of the carrier responsible
and liable for operation of the leased vehicle. Additionally, the
proper marking of vehicles provides useful information to the traveling
public and State and Federal enforcement personnel.
Passenger Carriers Subject to This Final Rule
    Passenger carriers provide many types of service, including
transit, school, charter, tour, sightseeing, airport shuttle, commuter,
and scheduled intercity routes. The motorcoach industry, which largely
provides scheduled service, charter, tour and sightseeing services,
provided more than 637 million passenger trips in 2012. FMCSA has
jurisdiction over 29,000 passenger carriers of various types,
including, but not limited to, carriers that are authorized for-hire,
exempt for-hire, private (business), and private (non-business).
    The carrier population impacted by this rule consists of motor
carriers transporting passengers in interstate commerce in CMVs that
either (1) have a gross vehicle weight rating or gross vehicle weight
of at least 10,001 pounds, whichever is greater; (2) are designed or
used to transport more than 8 passengers (including the driver) for
compensation; or (3) are designed or used to transport more than 15
passengers (including the driver) and are not used to transport
passengers for compensation [49 U.S.C. 31132(1)(A)-(C)]. For purposes
of the Regulatory Evaluation the total number of private carriers that
meet the terms of Sec.  31132(1)(C) (16+ passengers) was reduced by 90
percent because private passenger carriers do not lease vehicles to a
significant degree.
    Table 3 below shows the number of passenger carriers considered for
such inclusion, based on the carrier population in FMCSA's Motor
Carrier Management Information System as of June, 2014. Passenger motor
carriers of five types are listed in Table 3 below: (1) For-hire motor
carrier,\12\ authorized by FMCSA under 49 U.S.C. chapter 135; (2) For-
hire motor carrier, exempt under 49 U.S.C. chapter 135, but subject to
chapters 311, 313, and 315, and using CMVs designed to transport 9 or
more passengers (including the driver); (3) For-hire motor carrier,
exempt under 49 U.S.C. chapter 135, but subject to chapters 311, 313,
and 315, and using CMVs designed to transport 16 or more passengers
(including the driver); (4) Private motor carrier of passengers
(business); \13\ and (5) Private motor carrier of passengers (non-
business).\14\ The private passenger carriers in categories (4) and (5)
are reduced by 90 percent, as referred to in the previous paragraph and
in the final rule's Regulatory Evaluation.\15\
---------------------------------------------------------------------------

    \12\ Defined at 49 CFR 390.5.
    \13\ Defined at 49 CFR 390.5.
    \14\ Defined at 49 CFR 390.5.
    \15\ See the final rule's Regulatory Evaluation in the docket.
    \16\ The count of passenger carriers in the first row of Table 3
is 12,699. This count is greater than the count of the unique number
of passenger carriers (11,183, based on the same source data)
because carriers operating in more than one of the roles presented
in Table 3 are counted here as distinct carriers for each role. This
approach potentially overstates the number of affected carriers,
depending on the degree to which carriers engaged in multiple roles
divide driver and vehicle time between roles.

  Table 3--Estimated Number of Passenger Carriers Fully Subject to Final Rule Based on Carrier Population as of
                                                    June 2014
----------------------------------------------------------------------------------------------------------------
                                                     For hire                     Private (not for compensation)
                                 -------------------------------------------------------------------------------
                                                     Exempt 9+      Exempt 16+
                                    Authorized      passengers      passengers       Business      Non-business
----------------------------------------------------------------------------------------------------------------
Carriers in 2014 \16\...........           5,945             296             180           2,605           3,673
Percentage Excluded.............             n/a             n/a             n/a             90%             90%
Carriers Affected by the Rule...           5,945             296             180             261             367
                                 -------------------------------------------------------------------------------
    Total Affected..............                                       7,049
----------------------------------------------------------------------------------------------------------------

    The Regulatory Evaluation in the docket estimates that 7,049
passenger carriers will be affected by this rule in 2017: (1) 5,945
authorized for-hire (they have operating authority from FMCSA), (2) 296
exempt 9+ for-hire motor carriers, (3) 180 exempt 16+ for-hire motor
carriers, (4) 261 private business motor carriers, and (5) 367 private
non-business motor carriers.
    The Regulatory Evaluation considers a baseline no-action
alternative (Option 1) and two regulatory options (Options 2 and 3).
The threshold analysis considers three scenarios \17\ intended to
capture the possible variations in leasing frequency. The scenarios are
based on the frequency with which the average passenger carrier with
6.6 power units \18\ leases other passenger-carrying power units. The
rates are: (1) Low frequency, (2) medium frequency, and (3) high
frequency. No commenter took issue with the Agency's three-tier
estimates of leasing volume. The final rule, therefore, retains the
NPRM's assumptions about low-, medium-, and high-frequency leasing. The
frequency assumptions are listed below in Table 4.
---------------------------------------------------------------------------

    \17\ Scenarios determined by FMCSA experts and contacts with
industry.
    \18\ See Section 2.3 of this final rule's Regulatory Evaluation
for detail; the estimate of average passenger carriers operating of
6.6 power units is derived from MCMIS and SMS snapshots as of June
20, 2014.

                                         Table 4--Total Leases Per Year
----------------------------------------------------------------------------------------------------------------
                                                  Lease frequency
                                      ---------------------------------------                Notes
                                           Low         Medium        High
----------------------------------------------------------------------------------------------------------------
Peak Leases Per Month................            4            8           16  ..................................
Peak Months..........................            4            4            4  May-August.
Off-Peak Leases Per Month............            2            4            8  ..................................
Off-Peak Months......................            8            8            8  September-April.
                                      --------------------------------------------------------------------------
    ,s,s,nTotal......................           32           64          128  (8 x 4) + (4 x 8).
----------------------------------------------------------------------------------------------------------------
Source: FMCSA Commercial Passenger Carrier Safety Division staff experience and contacts with industry.

Estimated Costs of the Final Rule
    The estimated costs of the final rule are presented in three parts:
(1) The annual cost to active passenger carriers; (2) the one-time cost
in year one; and (3) the annual cost for passenger carriers with
original charter contracts to notify the charter party within 24 hours
after hiring a subcontractor. The first part is an estimate of the four
cost components mentioned above--(a) lease documentation, (b) lease
copying, (c) lease receipt documentation, and (d) vehicle marking.
Table 5 below \19\ summarizes the costs.
---------------------------------------------------------------------------

    \19\ Costs, benefits, and net benefits are not shown for the no-
action (Option 1) alternative, as they are zero in all instances.

                                  Table 5-Breakout of Costs of the Rule in 2017
----------------------------------------------------------------------------------------------------------------
                                                           Option 3
                                       ------------------------------------------------           Notes
                                              Low           Medium           High
----------------------------------------------------------------------------------------------------------------
Lease Documentation...................      $1,648,000      $3,221,000      $6,368,000  $6.54 x 492,578.
Lease Copying.........................          76,000         148,000         292,000  0.30 x 492,578.
Lease Receipt Copy....................         151,000         296,000         584,000  0.60 x 492,578.
Vehicle Marking.......................          10,000          20,000          39,000  0.04 x 492,578.
Cost to All Carriers in 2017..........       1,885,000       3,685,000       7,283,000  Sum of the above 4.
One-Time Cost to All-Carriers.........       9,889,000      19,329,000      38,209,000  Lease Negotiation.
Annual Cost to Notify Charter Parties.         401,000         795,000       1,581,000  Charter Party
                                                                                Notification.
----------------------------------------------------------------------------------------------------------------

                                                           Option 3
                                       ------------------------------------------------           Notes
                                              Low           Medium           High
----------------------------------------------------------------------------------------------------------------
Lease Documentation...................      $1,648,000      $3,221,000      $6,368,000  $6.54 x 492,578.
Lease Copying.........................          76,000         148,000         292,000  0.30 x 492,578.
Lease Receipt Copy....................         151,000         296,000         584,000  0.60 x 492,578.
Vehicle Marking.......................       2,016,000       3,941,000       7,790,000  8.00 x 492,578.
Cost to All Carriers in 2017..........       3,891,000       7,606,000      15,034,000  Sum of the above 4.
One-Time Cost to All-Carriers.........       9,889,000      19,329,000      38,209,000  Lease Negotiation.
Annual Cost to Notify Charter Parties.         401,000         795,000       1,581,000  Charter Party
                                                                                Notification.
----------------------------------------------------------------------------------------------------------------

    The second part is the one-time cost of lease negotiation (from
Tables 7, 8, and 9 in the final rule's Regulatory Evaluation).\20\ The
third part is an estimate of the cost to passenger carriers to notify
contracted passenger groups (from Table 10 in the final rule's
Regulatory Evaluation).\21\ As mentioned above, this cost applies to a
small proportion of the impacted population of passenger carriers. The
estimated cost of the final rule is thus the sum of these three parts.
---------------------------------------------------------------------------

    \20\ See the final rule's Regulatory Evaluation in the docket.
    \21\ Ibid.
---------------------------------------------------------------------------

    The annualized costs of the rule discounted at seven percent for
Options 2 and 3 for low-, medium-, and high-leasing frequency for the
period from 2017 through 2026 are given in Table 1 of the Executive
Summary above. For preferred Option 2 given medium-leasing frequency,
the annualized cost over the period is $8.0 million.
    The ten-year estimated costs of Option 2 are summarized in Table 12
of

the final rule's Regulatory Evaluation (a set of nine tables).\22\ The
costs are calculated for each of the three leasing frequency scenarios
(low, medium, high), at zero-percent (not discounted), three-percent,
and seven-percent discount rates (9 = 3 x 3). The total estimated ten-
year cost for the low-frequency scenario, not discounted, is $35.1
million. The total estimated ten-year cost for the low-frequency
scenario, at the three-percent discount rate is $31.9 million, and at a
seven-percent discount rate is $28.6 million. Under the medium-
frequency scenario, not discounted, the ten-year cost is $68.8 million.
Under the medium-frequency scenario, at the three-percent discount rate
the ten-year cost is $62.5 million, and at a seven percent discount
rate is $56.0 million. Under the high-frequency scenario, not
discounted, it is $136.0 million, at the three percent discount rate it
is $123.5 million, and at a seven percent discount rate is $110.6
million. Table 12 of the final rule's Regulatory Evaluation provides a
full breakdown by year for all components of the costs for the nine
scenarios at low, medium, and high lease and subcontract agreement
frequencies, and on not discounted, three-percent discounted, and
seven-percent discounted bases.
---------------------------------------------------------------------------

    \22\ Ibid.
---------------------------------------------------------------------------

Estimated Benefits and Threshold Analysis Results
    The Regulatory Evaluation develops a threshold analysis. Fatal
motorcoach crashes are valued at different amounts for each year from
2017 through 2026 because the VSL, the key component of the cost of a
fatal crash, increases at a rate of 1.18 percent annually.
    The average cost of a fatal motorcoach crash, which has an average
of 2.09413 equivalent statistical lives lost,\23\ is estimated at
$19,500,000 (in 2013 dollars), $19,266,000 of which is the monetized
quality-adjusted life-year (QALY). The remaining $234,000 is comprised
of medical costs, emergency services, property damages, lost
productivity from roadway congestion, and environmental costs. It is
assumed that the VSL--and thus the QALY component--increases at a rate
of 1.18 percent annually. By 2017, the QALY component (in 2013 dollars)
increases from $19,266,000 to $20,192,000 ($20,192,000 = $19,266,000 x
(1.0118\4\)). Together with the remaining $234,000 in costs, the cost
of a fatal crash in 2017 is estimated to be $20,426,000 in 2013 dollars
($20,426,000 = $20,192,000 + $234,000). This cost increases analogously
for the next nine years from 2018 through 2026. For example, in 2018,
the cost is $20,664,000, which is $20,192,000 (the QALY costs in 2017)
times 1.0118, then adding on the $234,000.
---------------------------------------------------------------------------

    \23\ For an explanation of how the average equivalent
statistical lives lost and average cost of a fatal motorcoach crash
were calculated, see Appendix A of the Regulatory Evaluation for
this final rule in the docket.
---------------------------------------------------------------------------

    For each year, the cost of the rule that year is divided by the
cost of a fatal crash in that year. For example, in 2017, for Option 2,
not discounted and at low-leasing frequency, the cost is estimated at
$12,175,000 (from Table 12 of the final rule's Regulatory Evaluation,
for 2017, second column, last row of the first part of the table), and
the cost of a crash is estimated at $20,426,000 (from the previous
paragraph), so for 2017, a reduction of 0.597 fatal crashes (about
sixty percent of a fatal crash, or alternately 1.25 fatalities) is
necessary for the costs of the rule to be covered (0.597 crashes =
$12,175,000 cost / $20,426,000 cost per fatal crash; 1.25 fatalities =
2.09413 fatalities per fatal crash x 0.597 fatal crashes). For 2018,
the cost is estimated at $2,335,000 (from Table 12 of the final rule's
Regulatory Evaluation, for 2018, third column, last row of the first
part of the table), and the cost of a crash at $20,664,000 (from the
last paragraph), so for 2018, 0.1130 fatal crashes, equivalent to 0.24
fatalities, must be prevented to offset the costs of the rule (0.1130
crashes = $2,335,000 cost / $20,664,000 cost per fatal crash; 0.24
fatalities = 2.09413 fatalities per fatal crash x 0.1130 fatal
crashes). Remember, there is a large decrease after the first year
because the one-time cost of negotiation is no longer in effect. This
process is analogous for the remaining eight years of the projection.
The ten individual annual fatal crash reductions (and corresponding
number of fatalities prevented) that are necessary to achieve cost
neutrality in each year are then summed up to arrive at the total crash
reduction needed to achieve cost neutrality over the ten-year period
spanning 2017 through 2026. In the case of Option 2 at medium-leasing
frequency, this amounts to 3.24 crashes over ten years, which the
Agency rounds up to 4 in the summary discussion following Table 2
above. This process is independent of the discount rate as discounting
adjusts costs and benefits by equal proportions, leaving the ratio of
the two unchanged. Table 6 below summarizes these necessary crash
reductions and corresponding number of statistical fatalities
prevented, similarly to as in Table 2 above, with an added column
showing the corresponding ten-year cost estimates under each scenario.

             Table 6--Threshold Analysis: Safety Benefits Necessary To Offset the Costs of the Rule
----------------------------------------------------------------------------------------------------------------
                                                           Ten-year costs    Prevented fatal       Prevented
                                                          (in millions of   crashes necessary      fatalities
              Option                  Lease frequency        2013$, not         for cost-        necessary for
                                                            discounted)         neutrality      cost-neutrality
----------------------------------------------------------------------------------------------------------------
2 (Agency-Selected Option).......  Low.................              $35.1               1.65               3.46
                                   Medium..............               68.8               3.24               6.78
                                   High................              136.0               6.41              13.42
3................................  Low.................               57.3               2.68               5.61
                                   Medium..............              112.0               5.25              10.99
                                   High................              221.6              10.38              21.74
----------------------------------------------------------------------------------------------------------------

    Please review the final rule's Regulatory Evaluation in docket
FMCSA-2012-0103 for a thorough discussion of the assumptions the Agency
made, the public comments the Agency considered, the options/
alternatives considered in developing this final rule, the analysis
conducted, and the details for the estimates presented here.

B. Regulatory Flexibility Act

    Section 603 of the Regulatory Flexibility Act (RFA), as amended by
the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub.

L. 104-121, 110 Stat. 857, March 29, 1996) and the Small Business Jobs
Act of 2010 (Pub. L. 111-240, September 27, 2010), requires FMCSA to
perform a detailed analysis of the potential impact of the final rule
on small entities. Accordingly, DOT policy requires that agencies shall
strive to lessen any adverse effects on these businesses and other
entities. Each final regulatory flexibility analysis \24\ required
under this section must contain the following:
---------------------------------------------------------------------------

    \24\ ``A Guide for Government Agencies: How to Comply with the
Regulatory Flexibility Act, May 2012'' at http://www.sba.gov/sites/default/files/rfaguide_0512_0.pdf.
---------------------------------------------------------------------------

Final Regulatory Flexibility Analysis (FRFA)
    (1) A statement of the need for, and objectives of, the rule.
    Passenger carriers lease, rent, interchange, and loan passenger-
carrying CMVs to each other with great frequency, on short notice, and
often for short periods of time and with minimal legal formality. As a
result, it is difficult for the general public and enforcement
personnel to determine which carrier is actually operating the
passenger-carrying CMV and responsible for compliance with safety
regulations. The written lease required by this final rule for most
transactions involving the renting, leasing, interchanging, and loaning
of passenger carrying CMVs would eliminate any confusion about who is
responsible for crashes and enable the Agency to identify the
appropriate motor carrier operating the vehicle and thus responsible
for its safe operation. Similarly, the notification requirement for
subcontracted passenger charter service would promote passenger
awareness of the lessor/lessee relationship in the event that an
original charter contract holder subcontracts some or all of a charter
group's service to another carrier.
    This action is necessary to ensure that unsafe passenger carriers
cannot evade FMCSA oversight and enforcement by operating under the
authority of another carrier that exercises no actual control over
those operations. For FMCSA's authority to take this action, see the
section earlier in this final rule titled, ``III. Legal Basis for the
Rulemaking.''
    (2) A statement of the significant issues raised by the public
comments in response to the IRFA, a statement of the assessment of the
agency of such issues, and a statement of any changes made in the
proposed rule as a result of such comments.
    The public comments raised no significant issues in response to the
IRFA.
    (3) The response of the agency to any comments filed by the Chief
Counsel for Advocacy of the Small Business Administration in response
to the proposed rule, and a detailed statement of any change made to
the proposed rule in the final rule as a result of the comments.
    The Chief Counsel for Advocacy of the Small Business Administration
filed no comments to the proposed rule. Thus, FMCSA has nothing to
respond to from the Chief Counsel for Advocacy of the Small Business
Administration.
    (4) A description of and an estimate of the number of small
entities to which the rule will apply or an explanation of why no such
estimate is available.
    Generally, motor carriers are not required to report their annual
revenue to the Agency, but all carriers are required to provide the
Agency with the number of power units they operate when they apply for
operating authority and to update this figure biennially. Because FMCSA
does not have direct revenue figures, power units serve as a proxy to
determine the carrier size that would qualify as a small business,
given the Small Business Administration's (SBA) prescribed revenue
threshold of $15 million (See the U.S. Small Business Administration's
``Table of Small Business Size Standards Matched to North American
Industry Classification Codes'' for Subsector 485, Transit and Ground
Transportation). In order to produce this estimate, it is necessary to
determine the average annual revenue generated by a single power unit.
    With regard to passenger-carrying vehicles, the Agency conducted an
analysis to estimate the average number of power units for a small
entity earning $15 million annually, based on an assumption that
passenger carriers generate annual revenues of $161,000 per power unit.
This estimate compares reasonably to the estimated average annual
revenue per power unit for the trucking industry ($186,000). A lower
estimate was used because passenger-carrying CMVs generally do not
accumulate as many vehicle miles traveled (VMT) per year as trucks,\25\
and it is therefore assumed that they would generate less revenue per
power unit on average. The analysis concluded that passenger carriers
with 93 power units or fewer ($15,000,000 divided by $161,000/power-
unit = 93.2 power units) would be considered small entities. The Agency
then looked at the number and percentage of passenger carriers
registered with FMCSA that have no more than 93 power units. The
results show that about 97% of active passenger carriers have 93 power
units or less.\26\ Therefore, the overwhelming majority of passenger
carriers would be considered small entities to which this final rule
would apply.
---------------------------------------------------------------------------

    \25\ FMCSA Commercial Motor Vehicle Facts--March 2013.
    \26\ MCMIS snapshot as of January 23, 2015.
---------------------------------------------------------------------------

    (5) A description of the reporting, recordkeeping and other
compliance requirements of the final rule, including an estimate of the
classes of small entities subject to the requirements and the type of
professional skills necessary for preparation of the report or record.
    The exact regulatory burden of this final rule is difficult to
estimate considering the lack of specific information on the prevalence
and frequency of vehicle leasing among passenger carriers. There is
also the added complexity of the wide variation in size, business
model, and fleet vehicle configuration. The Agency, however, believes
that the practical regulatory burden of this final rule will be
relatively small. Written documentation of business transactions and
retention and availability of work documents (i.e., lease agreements
and receipts) are hallmarks of professional management. Additionally,
businesses are required to prepare, retain, and submit receipts of
various business transactions to the Internal Revenue Service and other
agencies. Furthermore, the practical requirements of the final rule
(i.e., lease and receipt preparation, copying, storage, and vehicle
marking) are easily satisfied through a wide array of flexible options.
The Agency estimates that the financial burden of the final rule, per
carrier (per leased power unit), is not significant. As stated above,
the estimated per unit cost of a lease agreement, in terms of the
lessee and the lessor, is $7.48, which is the sum of 4 cost components:
(1) Lease documentation ($6.54), (2) Lease copying ($0.30), (3) Receipt
documentation ($0.60) and (4) Leased vehicle marking ($0.04). FMCSA
does not believe this per-unit cost to be significant. Furthermore,
this per-unit cost may effectively be lower, if a durable marking sign
were to be re-used multiple times, a receipt were combined with a
lease, and/or the preparation time for a lease were reduced through the
use of generic or master-type lease forms. In addition, and as stated
above, the analysis assumes a one-time lease negotiation cost, which
the Agency believes is minimal, considering that several leases can be
combined and negotiated as one (master) lease and many lease forms are
available online and do not require legal assistance.

    The final rule also includes a notification requirement for
passenger carriers with original charter contracts that lease vehicles
from a subcontractor carrier to perform the charter. In such instances,
the original charter contract holder must notify the charter party
within 24 hours after hiring the subcontractor that the transportation
will be provided by the subcontractor. The primary purpose of this
notification provision is to further reduce the chance of confusion
among passengers as to the carrier responsible for regulatory
compliance (the lessee). While the marking requirement included in this
rule aids in this purpose, passengers may overlook the smaller placard
required by Sec.  390.21(f)(2) and assume that a different carrier is
providing the transportation. The requirement included in this final
rule helps ensure that the charter group's representative will be
informed of the nature of the subcontract agreement, thereby promoting
passenger awareness should passengers overlook the placard on the
vehicle. Compliance with this requirement is projected to involve
minimal time and cost on a per-subcontracted-charter basis,
constituting 5 minutes of office staff time to send an email
notification. Carriers which routinely utilize such subcontract
agreements (that is, at the medium assumed frequency involving 64
charter group notifications per year) are projected to incur a 5.33
hour annual compliance burden (5.33 hours = 64 notifications per year x
5 minutes per notification / 60 minutes per hour). Charter service is a
relatively greater component of fleet VMT for the smallest carriers
than that of the larger carriers.\27\ Therefore while the analysis
presented in Table 10 of this final rule's Regulatory Evaluation
assumes that half of passenger carriers subject to the final rule
utilize subcontract agreements, it is estimated that approximately 75
percent of small entities subject to this final rule will incur this
5.33 hour burden (76.7 percent is the average percentage of motorcoach
service mileage categorized as charter, tour, and sightseeing in Figure
2.5 of the ABA's Motorcoach Census 2013 among fleet sizes 99 and fewer
(the closest proxy to the group constituting carriers with 93 or fewer
PUs), weighted by the vehicle mileage according to respective fleet
size as shown in Table 2-4 of the same ABA publication).\28\ The Agency
considers it a conservatively high estimate that 75 percent of small
entities subject to this final rule will incur this 5.33 hour burden
for the following reasons: (1) It is assumed that all charter, tour,
and sightseeing VMT are incurred in the course of subcontracted service
agreements; (2) it assumes one vehicle per subcontract agreement.
---------------------------------------------------------------------------

    \27\ Motorcoach Census 2013, ABA, http://www.buses.org/files/Foundation/Census2013.pdf (accessed February 13, 2015). ``Fixed-
route services' share of motorcoach service mileage increases with
fleet-size category, accounting for only 10.4% of mileage for the
smallest carriers to 79.5% for the largest carriers.''
    \28\ The full calculation of the 76.7 percent value is
documented in this final rule's Regulatory Evaluation.
---------------------------------------------------------------------------

    (6) A description of the steps the agency has taken to minimize the
significant economic impact on small entities consistent with the
stated objectives of applicable statutes, including a statement of the
factual, policy, and legal reasons for selecting the alternative
adopted in the final rule and why each of the other significant
alternatives to the rule considered by the agency which affect the
impact on small entities was rejected.
    The Agency did not identify any significant alternatives to the
rule that could lessen the burden on small entities without
compromising the goals of the rule or the Agency's statutory safety
mandate. Because small businesses are such a large part of the
demographic the Agency regulates, providing alternatives to small
business to permit noncompliance with FMCSA regulations is not feasible
and not consistent with sound public policy.
Assistance for Small Entities
    In accordance with section 213(a) of the Small Business Regulatory
Enforcement Fairness Act of 1996, FMCSA wants to assist small entities
in understanding this rule so that they can better evaluate its effects
on themselves. If the rule would affect your small business,
organization, or governmental jurisdiction and you have questions
concerning its provisions or options for compliance, please consult the
FMCSA point of contact, Loretta Bitner, listed in the FOR FURTHER
INFORMATION CONTACT section of this rule.
    Small businesses may send comments on the actions of Federal
employees who enforce or otherwise determine compliance with Federal
regulations to the SBA's Small Business and Agriculture Regulatory
Enforcement Ombudsman and the Regional Small Business Regulatory
Fairness Boards. The Ombudsman evaluates these actions annually and
rates each agency's responsiveness to small business. If you wish to
comment on actions by employees of FMCSA, call 1-888-REG-FAIR (1-888-
734-3247). DOT has a policy ensuring the rights of small entities to
regulatory enforcement fairness and an explicit policy against
retaliation for exercising these rights.

C. Federalism (Executive Order 13132)

    A rule has federalism implications if it has a substantial direct
effect on State or local governments and would either preempt State law
or impose a substantial direct cost of compliance on the States. FMCSA
analyzed this rule under E.O. 13132 and has determined that it has no
federalism implications.

D. Unfunded Mandates Reform Act of 1995

    This final rule does not impose an unfunded Federal mandate, as
defined by the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532 et
seq.), that would result in the expenditure by State, local, and tribal
governments, in the aggregate, or by the private sector, of $151.1
million (which is the value of $100 million in 2012 after adjusting for
inflation) or more in any 1 year.

E. Executive Order 12988 (Civil Justice Reform)

    This final rule meets applicable standards in sections 3(a) and
3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize
litigation, eliminate ambiguity, and reduce burden.

F. Executive Order 13045 (Protection of Children)

    FMCSA analyzed this action under Executive Order 13045, Protection
of Children from Environmental Health Risks and Safety Risks. The
Agency has determined that this rule does not create an environmental
risk to health or safety that would disproportionately affect children.

G. Executive Order 12630 (Taking of Private Property)

    FMCSA reviewed this final rule in accordance with Executive Order
12630, Governmental Actions and Interference with Constitutionally
Protected Property Rights, and has determined it would not effect a
taking of private property or otherwise have taking implications.

H. Privacy Impact Assessment

    Section 522 of title I of division H of the Consolidated
Appropriations Act, 2005, enacted December 8, 2004 (Pub. L. 108-447,
118 Stat. 2809, 3268, 5 U.S.C. 552a note), requires the Agency to
conduct a privacy impact assessment (PIA) of a regulation that will
affect the privacy of individuals. This final rule does not require the
collection of any personally identifiable information.

    The Privacy Act (5 U.S.C. 552a) applies only to Federal agencies
and any non-Federal agency which receives records contained in a system
of records from a Federal agency for use in a matching program. FMCSA
has determined this final rule does not result in a new or revised
Privacy Act System of Records for FMCSA.

I. Executive Order 12372 (Intergovernmental Review)

    The regulations implementing Executive Order 12372 regarding
intergovernmental consultation on Federal programs and activities do
not apply to this program.

J. Paperwork Reduction Act

    Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501 et
seq.), Federal agencies must obtain approval from the OMB for each
collection of information they conduct, sponsor, or require through
regulations. This final rule amends two OMB approved information
collections titled ``Commercial Motor Vehicle Marking Requirements,''
OMB No. 2126-0054, and ``Lease and Interchange of Motor Vehicles,'' OMB
No. 2126-0056. The annual burdens for these information collections are
estimated to be about 14,000 hours (rounded up to the next higher
thousand from the 13,543 hour value shown in the CMV Marking PRA
supporting statement) and 602,500 hours (rounded up to the nearest
hundred from the 602,435 hour value shown in the Lease and Interchange
of Vehicles PRA supporting statement).
Lease Preparation Information Collection Analysis
    For lease preparation, the Agency estimates the cost of obtaining
and preparing a standard generic template that is freely available on
the Internet, or through trade organizations or existing passenger
carriers. The total number of pages of one such template is two, which
is the number used in the Agency's estimate. The estimated annual
number of burden hours depends on the estimated annual frequency of
leasing. Assuming lease frequency is medium, the Agency assumes that
the average passenger carrier (6.6 power units) will engage in 64 lease
agreements per year. This estimate consists of 8 leases per peak month
(May through August) and 4 leases per off-peak month (September through
April). The total annual number of leases estimated in 2017 is
492,578--that is, 64 lease agreements for each the 7,518 carriers
estimated to be affected by this rule in 2017 (492,578 = 64 x 7,518
plus 11,426 leases for Greyhound). The Agency assumes 5 minutes of
documentation time per lease agreement. This amounts to 5 and \1/3\
hours per carrier per year (5\1/3\ = 64 x 5 / 60) and amounts to an
industry total of about 41,048 hours (41,048.2 = 492,578 x (5 / 60).
This total is multiplied by two, since the cost burden applies to both
the lessees and the lessors. Thus, the total is 82,096 hours (82,096 =
41,048.2 x 2). Table 2 of the final rule's supporting statement for OMB
Control Number 2126-0056, ``Lease and Interchange of Vehicles''
presents these calculations.
    Regarding documentation of receipts, the Agency estimates the cost
of their transcription, but does not assign burden hours to the task.
The receipts do not have to adhere to a certain format, length, or
complexity, as long as they meet the requirements of the rule. The
receipts are sometimes replicas or portion of ``master leases,'' which
make for easy and quick documentation.
Notification
    Under the final rule, when a passenger carrier with a charter
contract leases vehicles from a subcontractor carrier to perform the
charter, it must notify the charter party within 24 hours after hiring
the subcontractor that the transportation will be provided by the
subcontractor.
    The estimated annual number of passenger carriers that lease
vehicles from a subcontractor to perform a charter is estimated to be
3,759 in 2017, the first year of the rule. It is assumed that virtually
all of those carriers will elect to use the electronic notification
option, since it is the most convenient, quickest, and least costly.
The average number of notifications per year is 242,996 (3,759 carriers
x 64 notifications per carrier + 2,420 notifications specific to
Greyhound). Given the 5 minutes needed to complete the notification,
this amounts to 5.33 hours per carrier per year (excluding Greyhound
from this average as it is an outlier) for the 3,759 carriers and an
industry total of 20,250 hours (20,250 = 242,996 notifications x 5
minutes per notification / 60 minutes per hour).

OMB No. 2126-0056, New IC-2 Summary
    Annual Burden Hours (in 2017): 602,500 [602,435 = 7,518 (master
lease) + 492,572 (negotiation) + 82,095 (documentation) + 20,250
(charter group notification)]
    Annual Number of Respondents (in 2017): 2,887,000 [2,886,912 =
7,518 carriers x up to 6 people per lease x 64 leases annually per
carrier]
    Annual Number of Responses (in 2017): 2,706,000 [2,705,796 =
492,572 (leases) + 985,144 (transcription of lease agreements) +
985,144 (transcription of receipts) + 242,996 (charter group
notification)]
OMB No. 2126-0056, Total for Both IC-1 and New IC-2
    Estimated Average Total Annual Burden Hours (in 2017): 677,000 [=
74,500 + 602,500]
    Estimated Annual Number of Respondents (in 2017): 2,923,000 [=
36,000 + 2,887,000]
    Estimated Annual Number of Responses (in 2017): 3,384,000 [=
678,000 + 2,706,000]
Passenger-Carrying CMV Marking Information Collection Analysis
    The final rule requires every leased passenger vehicle to be
properly marked with the name of the carrier prefaced with ``operated
by'' and the carrier's USDOT number. The proposed rule requires a
marking which would be affixed on one side of the passenger vehicle.
The markings are presumed to be temporary and removable, though some
may be permanent or re-usable, depending on the preferences of the
carrier. The Agency assumed that carriers will use a paper marking
option, i.e., two letter-size sheets or one legal-size sheet affixed
with adhesive tape to the vehicle. The burden hours of writing the
signage and affixing it are negligible. Therefore, none are attributed
to this rulemaking.

OMB No. 2126-0054, New IC-2 Summary
    Annual Burden Hours (in 2017): 14,000
    Annual Number of Respondents (in 2017): 5,000
    Annual Number of Responses (in 2017): 36,000
OMB No. 2126-0054, Total for Both IC-1, New IC-2, and IC-3
    Estimated Average Total Annual Burden Hours: 851,000
    Estimated Annual Number of Respondents: 287,000
    Estimated Annual Number of Responses: 1,928,000

    We particularly request your comments on whether the collection of
information is necessary for the FMCSA to meet the goal of this
proposed rule to inform the traveling public and Federal, State, and
local law enforcement officers to identify the passenger carrier
responsible for safety, including: (1) Whether the information is
useful to this goal; (2) the accuracy of the estimate of the burden of
the information collection; (3) ways to enhance the quality, utility,
and clarity of the information collected; and (4) ways to minimize the
burden of the

collection of information on respondents, including the use of
automated collection techniques or other forms of information
technology. You may submit comments on the information collection
burden addressed by this final rule to OMB. The OMB must receive your
comments by June 26, 2015. You must mail or hand deliver your comments
to: Attention: Desk Officer for the Department of Transportation,
Docket Library, Office of Information and Regulatory Affairs, Office of
Management and Budget, Room 10102, 725 17th Street NW., Washington, DC
20503. Please also provide a copy of your comments on the information
collection burden addressed by this proposed rule to docket FMCSA-2012-
0103 in www.regulations.gov by one of the four ways shown above under
the ADDRESSES heading.

K. National Environmental Policy Act and Clean Air Act

    FMCSA analyzed this final rule in accordance with the National
Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321 et seq.). The
Agency has determined under its environmental procedures Order 5610.1,
published March 1, 2004, in the Federal Register (69 FR 9680), that
this action is categorically excluded from further environmental
documentation under Appendix 2, Paragraphs y(2) and y(7) of the Order
(69 FR 9702). These categorical exclusions relate to:
     y(2) Regulations implementing motor carrier identification
and registration reports; and
     y(7) Regulations implementing prohibitions on motor
carriers, agents, officers, representatives, and employees from making
fraudulent or intentionally false statements on any application,
certificate, report, or record required by FMCSA.
    Thus, the final action will not require an environmental assessment
or an environmental impact statement.
    FMCSA also analyzed this proposed rule under the Clean Air Act, as
amended (CAA), section 176(c) (42 U.S.C. 7401 et seq.), and
implementing regulations promulgated by the Environmental Protection
Agency. Approval of this action is exempt from the CAA's general
conformity requirement since it does not affect direct or indirect
emissions of criteria pollutants.

L. Executive Order 13211 (Energy Effects)

    FMCSA has analyzed this rule under Executive Order 13211, Actions
Concerning Regulations That Significantly Affect Energy Supply,
Distribution, or Use. The Agency has determined that it is not a
``significant energy action'' under that Executive Order because it is
not economically significant and is not likely to have a significant
adverse effect on the supply, distribution, or use of energy.

List of Subjects in 49 CFR Part 390

    Highway safety, Intermodal transportation, Motor carriers, Motor
vehicle safety, Reporting and recordkeeping requirements.

The Final Rule

    For the reasons stated in the preamble, FMCSA amends 49 CFR part
390 in title 49, Code of Federal Regulations, chapter III, subchapter
B, as follows:

PART 390--FEDERAL MOTOR CARRIER SAFETY REGULATIONS; GENERAL

0
1. The authority citation for part 390 continues to read as follows:

    Authority: 49 U.S.C. 504, 508, 31132, 31133, 31136, 31151,
31502; sec. 114, Pub. L. 103-311, 108 Stat. 1673, 1677-1678; sec.
212, 217, 229, Pub. L. 106-159, 113 Stat. 1748, 1766, 1767; sec.
4136, Pub. L. 109-59, 119 Stat. 1144, 1745; sections 32101(d) and
32934, Pub. L. 112-141, 126 Stat. 405, 778, 830; sec. 2, Pub. L.
113-125, 128 Stat. 1388; and 49 CFR 1.87.

0
2. Amend Sec.  390.5 by revising the definition of ``Interchange'' and
adding definitions of ``Lease,'' ``Lessee,'' and ``Lessor'' in
alphabetical order to read as follows:

Sec.  390.5  Definitions.

* * * * *
    Interchange means--
    (1) The act of providing intermodal equipment to a motor carrier
pursuant to an intermodal equipment interchange agreement for the
purpose of transporting the equipment for loading or unloading by any
person or repositioning the equipment for the benefit of the equipment
provider, but it does not include the leasing of equipment to a motor
carrier for primary use in the motor carrier's freight hauling
operations; or
    (2) The act of providing a passenger-carrying commercial motor
vehicle by one motor carrier of passengers to another such carrier, at
a point which both carriers are authorized to serve, with which to
continue a through movement.
    (3) For property-carrying vehicles, see Sec.  376.2 of this
subchapter.
* * * * *
    Lease, as used in Sec.  390.21(f) and subpart F of this part, means
a contract or arrangement in which a motor carrier grants the use of a
passenger-carrying commercial motor vehicle to another motor carrier,
with or without a driver, for a specified period for the transportation
of passengers, in exchange for compensation. The term lease includes an
interchange, as defined in this section, or other agreement granting
the use of a passenger-carrying commercial motor vehicle for a
specified period, with or without a driver, whether or not compensation
for such use is specified or required. For a definition of lease in the
context of property-carrying vehicles, see Sec.  376.2 of this
subchapter.
    Lessee, as used in subpart F this part, means the motor carrier
obtaining the use of a passenger-carrying commercial motor vehicle,
with or without the driver, from another motor carrier. The term lessee
includes a motor carrier obtaining the use of a passenger-carrying
commercial motor vehicle from another motor carrier under an
interchange or other agreement, with or without a driver, whether or
not compensation for such use is specified. For a definition of lessee
in the context of property-carrying vehicles, see Sec.  376.2 of this
subchapter.
    Lessor, as used in subpart F of this part, means the motor carrier
granting the use of a passenger-carrying commercial motor vehicle, with
or without a driver, to another motor carrier. The term lessor includes
a motor carrier granting the use of a passenger-carrying commercial
motor vehicle to another motor carrier under an interchange or other
agreement, with or without a driver, whether or not compensation for
such use is specified. For a definition of lessor in the context of
property-carrying vehicles, see Sec.  376.2 of this subchapter.
* * * * *

0
3. Amend Sec.  390.21 by revising paragraph (e) introductory text;
redesignating paragraphs (f) and (g) as paragraphs (g) and (h); and
adding new paragraph (f) to read as follows:

Sec.  390.21  Marking of self-propelled CMVs and intermodal equipment.

* * * * *
    (e) Rented property-carrying commercial motor vehicles. A motor
carrier operating a self-propelled property-carrying commercial motor
vehicle under a rental agreement having a term not in excess of 30
calendar days meets the requirements of this section if:
* * * * *
    (f) Leased and interchanged passenger-carrying commercial motor
vehicles. A motor carrier operating a

leased or interchanged passenger-carrying commercial motor vehicle
meets the requirements of this section if:
    (1) The passenger-carrying CMV is marked in accordance with the
provisions of paragraphs (b) through (d) of this section, except that
marking is required only on the right (curb) side of the vehicle; and
    (2) The passenger-carrying CMV is marked with a single placard,
sign, or other device affixed to the right (curb) side of the vehicle
on or near the front passenger door. The placard, sign or device must
display the legal name or a single trade name of the motor carrier
operating the CMV and the motor carrier's USDOT number, preceded by the
words ``Operated by.''
* * * * *

0
4. Add subpart F, consisting of Sec. Sec.  390.301 through 390.305, to
part 390 to read as follows:
Subpart F--Lease and Interchange of Passenger-Carrying Commercial Motor
Vehicles
Sec.
390.301 Applicability.
390.303 Written lease and interchange requirements.
390.305 Notification.

Subpart F--Lease and Interchange of Passenger-Carrying Commercial
Motor Vehicles

Sec.  390.301  Applicability.

    (a) General. Except as provided in paragraphs (b)(1) through (3) of
this section, this subpart applies to the following actions,
irrespective of duration, or the presence or absence of compensation,
by motor carriers operating commercial motor vehicles to transport
passengers:
    (1) The lease of passenger-carrying commercial motor vehicles; and
    (2) The interchange or loan of passenger-carrying commercial motor
vehicles or drivers between motor carriers.
    (b) Exceptions--(1) Financial leases. This subpart does not apply
to a contract (however designated, e.g., lease, closed-end lease, hire
purchase, lease purchase, purchase agreement, installment plan, etc.)
between a motor carrier and a financial organization or a manufacturer
or dealer of passenger-carrying commercial motor vehicles (provided the
financial organization, manufacturer or dealer is not itself a motor
carrier) allowing the motor carrier to use the passenger-carrying
commercial motor vehicle.
    (2) Common Ownership and Control. (i) Passenger-carrying commercial
motor vehicles may be exchanged or interchanged without leases or
receipts between or among commonly owned and controlled motor carriers,
provided the driver of each such carrier carries, and upon demand of a
Federal, State, or local law enforcement official produces, a summary
document listing:
    (A) All motor carriers subject to common ownership and control,
including their USDOT numbers, business addresses, and telephone
numbers;
    (B) The name and telephone numbers of the motor carrier operating
the vehicle for the current trip;
    (C) The vehicle used for the trip, identified by the last 6 digits
of the Vehicle Identification Number (VIN);
    (D) The trip, identified by the carrier's charter number, run
number, or other means specifically to identify the trip; and
    (E) The date of the trip.
    (ii) Each commercial motor vehicle exchanged or interchanged
pursuant to this paragraph (b)(2) must be marked as required in Sec.
390.21(f) to show the name of the responsible motor carrier operating
the vehicle.
    (3) Revenue pooling. (i) Passenger-carrying commercial motor
vehicles may be exchanged or interchanged without leases or receipts
between or among motor carriers that are party to a revenue pooling
agreement approved by the Surface Transportation Board (STB) in
accordance with 49 U.S.C. 14302, provided the driver of each vehicle
operating under the agreement carries, and upon demand of a Federal,
State, or local law enforcement official displays:
    (A) The number and date of the STB decision approving the revenue
pooling agreement and the names of the parties to the agreement; and
    (B) A summary document showing:
    (1) All routes covered by the pooling agreement;
    (2) The carrier or carriers authorized to operate on each route or
portion of a route and the telephone numbers of each carrier; and
    (3) All points of origin, destination, or interchange (if
interchanges are part of the agreement).
    (ii) Each commercial motor vehicle exchanged or interchanged
pursuant to this paragraph (b)(3) must be marked as required in Sec.
390.21(f) to show the name of the responsible motor carrier operating
the vehicle.
    (c) Penalties. If the use of a passenger-carrying commercial motor
vehicle is conferred on one motor carrier subject to this subpart by
another such motor carrier without a lease, interchange agreement, or
other agreement, or pursuant to a lease, interchange agreement, or
other agreement that fails to meet all applicable requirements of
subpart F, both motor carriers shall be subject to a civil penalty.

Sec.  390.303  Written lease and interchange requirements.

    Except as provided in Sec.  390.301(b) and paragraph (a)(2) of this
section, a motor carrier may transport passengers in a leased or
interchanged commercial motor vehicle only under the following
conditions:
    (a) In general--(1) Written lease or agreement required. There
shall be in effect either:
    (i) A written lease granting the use of the passenger-carrying
commercial motor vehicle and meeting the conditions of paragraphs (b)
through (f) of this section. The provisions of the lease shall be
adhered to and performed by the lessee;
    (ii) A written agreement meeting the conditions of paragraphs (b)
through (f) of this section and governing the interchange of passenger-
carrying commercial motor vehicles between motor carriers of passengers
conducting through service on a route or series of routes. The
provisions of the interchange agreement shall be adhered to and
performed by the lessee; or
    (iii) A written agreement meeting the conditions of paragraphs (b)
through (f) of this section and governing the renting, borrowing, or
loaning, or similar transfer of a passenger-carrying commercial motor
vehicle from another party. The provisions of the agreement shall be
adhered to and performed by the motor carrier lessee.
    (2) Exception. When an event occurs while passengers are on a
passenger-carrying commercial motor vehicle (e.g., a crash, the vehicle
is disabled, the driver is ill) that requires a motor carrier
immediately to obtain a replacement vehicle from another motor carrier,
the two carriers may postpone the writing of the lease or written
agreement for the replacement vehicle for up to 48 hours after the time
the lessee takes exclusive possession and control of the replacement
vehicle. The driver of the vehicle must carry for the duration of the
lease, and upon demand of an enforcement official produce, a document
signed and dated by the lessee's driver or available company official
stating: ``[Carrier A, USDOT number, telephone number] has leased this
vehicle to [Carrier B, USDOT number, telephone number] pursuant to 49
CFR 390.303(a)(2).'' The lessee must also mark the vehicle in
accordance with Sec.  390.21(f) before operating it.
    (b) The written lease, interchange agreement, or other agreement
required by paragraph (a)(1) of this section shall contain:

    (1) Vehicle identification information. The name of the vehicle
manufacturer, the year of manufacture, and at least the last 6 digits
of the Vehicle Identification Number (VIN) of each passenger-carrying
commercial motor vehicle transferred between motor carriers pursuant to
the lease, interchange agreement, or other agreement.
    (2) Parties. The legal name and telephone number of the motor
carrier providing passenger transportation in a commercial motor
vehicle (lessee) and the legal name and telephone number of the motor
carrier providing the equipment (lessor), and signatures of both
parties or their authorized representatives.
    (3) Specific duration. The time and date when, and the location
where, the lease, interchange agreement, or other agreement begins and
ends. These times and locations shall coincide with the times for the
providing of receipts required by paragraph (e) of this section, unless
the parties wish to end the lease, interchange agreement, or other
agreement prematurely; in that case, the receipt required by paragraph
(e) of this section showing the date, time of day, and location where
the lessor recovers possession of the passenger-carrying commercial
motor vehicle shall supersede the date, time of day, and location for
termination specified by the lease, interchange agreement, or other
agreement.
    (4) Exclusive possession and responsibilities. (i) A clear
statement that the motor carrier obtaining the passenger-carrying
commercial motor vehicle (the lessee) has exclusive possession,
control, and use of the passenger-carrying commercial motor vehicle for
the duration of the lease, interchange agreement, or other agreement.
Such lease or written agreement shall further provide that the lessee
shall assume complete responsibility for operation of the passenger-
carrying commercial motor vehicle and compliance with all applicable
Federal regulations for the duration of the lease, interchange
agreement, or other agreement.
    (ii) Provision may be made in the lease, interchange agreement, or
other agreement for considering the lessee as the owner of the
equipment for the purpose of subleasing it to other motor carriers of
passengers during the period of such lease or agreement. In the event
of a sublease, all of the requirements of this section shall apply to
the parties to the sublease.
    (iii) Nothing in the provisions required by this paragraph is
intended to affect whether the lessor of the passenger-carrying
commercial motor vehicle or a driver provided by the lessor is an
independent contractor or an employee of the motor carrier lessee.
    (5) Insurance. A clear specification of the legal obligation of the
lessee to maintain insurance coverage for the vehicle being operated
for the protection of the public pursuant to 49 CFR part 387. The
lease, interchange agreement, or other agreement shall further specify
who is responsible for providing any other insurance coverage for the
operation of the leased, interchanged, or otherwise procured equipment.
    (c) Copies of the lease. A signed original and two copies of each
lease, interchange agreement, or other agreement shall be produced. The
lessee shall keep the original and, except as otherwise permitted by
paragraph (f)(2) of this section, shall place a copy of the lease,
interchange agreement, or other agreement on the passenger-carrying
commercial motor vehicle during the period of the lease, interchange
agreement, or other agreement. The lessor shall keep the other copy of
the lease.
    (d) Record retention. Copies of each lease (including the
alternative statement required by Sec.  390.303(a)(2)), interchange
agreement, or other agreement, and the receipts required by paragraph
(e) of this section, shall be retained by the lessor and lessee for one
year after the expiration date of the lease, interchange agreement, or
other agreement. The summary documents required by Sec.  390.301(b)(2)
and (3) shall be retained by the motor carrier performing the trip
identified in each such document for one year after the final date of
such trip.
    (e) Receipts for passenger-carrying commercial motor vehicle.
Except as otherwise provided in Sec.  390.301(b)(2) and (3), receipts
specifically identifying the passenger-carrying commercial motor
vehicle to be leased or otherwise temporarily transferred and stating
the date, time of day, and location where possession is transferred,
shall be given as follows:
    (1) When the lessee takes possession of the passenger-carrying
commercial motor vehicle, it shall give the lessor a receipt. The
receipt may be transmitted by email, mail, facsimile, or other physical
or electronic means of communication.
    (2) When the lessor recovers possession of the passenger-carrying
commercial motor vehicle, it shall give the lessee a receipt. The
receipt may be transmitted by email, mail, facsimile, or other physical
or electronic means of communication.
    (3) Authorized representatives of the lessee and the lessor may
take possession of leased equipment and give and receive the receipts
required under this section.
    (f) Identification of equipment. The motor carrier lessee shall
identify the commercial motor vehicle as being in its service as
follows:
    (1) During the period of the lease, interchange agreement, or other
agreement, the lessee shall mark the passenger-carrying commercial
motor vehicle in accordance with the requirements of Sec.  390.21(f)
(Leased and interchanged passenger-carrying commercial motor vehicles).
    (2) Except as otherwise indicated in paragraph (a)(2) of this
section and in this paragraph, a copy of the lease, interchange
agreement, or other agreement shall be carried on the passenger-
carrying commercial motor vehicle.
    (i) A copy of a master lease applicable to more than one vehicle
that is carried on the passenger-carrying commercial motor vehicle
meets the requirements of this paragraph provided it complies with all
other requirements of this section.
    (ii) In lieu of a copy of an interchange agreement, a written
statement meets the requirements of this paragraph if it identifies the
parties to the agreement by company name and USDOT number, states the
use to be made of the passenger-carrying commercial motor vehicle and
the duration of the agreement, is signed by the parties' authorized
representatives, and is carried on the passenger-carrying commercial
motor vehicle.

Sec.  390.305  Notification.