Law Alert: Congress Moves A Step Closer to Examining Truck Lease-Purchase Agreements
June 17, 2021
While much of the highway reauthorization debate has been focused on how large and how it’s paid for, yesterday, the Senate Commerce Committee passed on a bipartisan basis its contribution to a surface transportation reauthorization bill that includes a threat to lease-purchase agreements in the trucking industry. Among its many provisions is a directive for the Secretary of Transportation, in consultation with the Secretary of Labor, to establish a Truck Leasing Task Force. This action comes on the heels of the earlier passage of a similar directive by the House Transportation and Infrastructure Committee in its version of a reauthorization bill. Both the Senate and House versions direct the newly created Truck Leasing Task Force to examine common truck leasing agreements, including lease-purchase agreements, and whether their terms are (in terms used by the legislation) “inequitable” or “predatory.” Having placed the thumb on the scale in favor of a jaundiced view of lease-purchase agreements, these provisions portend increased scrutiny of lease-purchase agreements.
Although there are slight differences in terms of the size and composition of the task force, both provide for members to be appointed by the Secretary of Transportation. The House version specifically directs the task force to examine the classification of drivers under lease-purchase agreements, in addition to the “prevalence of predatory leasing agreements.” The Senate version hews a little more closely to the Secretary of Transportation’s jurisdiction by directing an examination of the “existence of inequitable leasing agreements” and how “inequitable terms” affect maintenance and safe operation of vehicles. In a perfunctory gesture to a balanced review, only the Senate version also directs the task force to look at the opportunities “equitable leasing agreements” provide for drivers to start or expand businesses and the history of motor carriers that started as owner-operators.
Ultimately, the task force is to issue a report with its findings, recommendations on best practices, and recommendations on changes to laws at the Federal, State, or local level to promote “fair leasing agreements” that allow drivers to “earn a living wage.” With inclusion in both the House and the Senate committee versions of a reauthorization bill that must get done at some point, it is likely that Congress will authorize a review of lease-purchase agreements with a pre-conceived, skeptical view.
We continue to monitor legislative developments. If you have any questions, contact Scopelitis Partners Greg Feary, Shannon Cohen, Kelli Block, Allyson Feary, Ryan Wright, or Prasad Sharma.