Lessors Withstand Liability Efforts

By Daniel P. Bearth

PALM SPRINGS, Calif. - Two years after winning passage of a federal law banning state vicarious liability laws, Truck Renting and Leasing Association officials said they continue to fight efforts by trial lawyers to hold vehicle lessors responsible for financial losses in crashes caused by truck operators.

Outgoing TRALA Chairman Robert Shingle, president of Primms LP, a food distribution and equipment maintenance provider in Lisle, Ill., said trial lawyers have been trying to overturn or weaken the 2005 law without success.

"We've yet to lose a decision," Shingle said in a presentation to members at TRALA's recent annual meeting.

The 2005 federal ban on liability-without-fault laws, which Tom James, TRALA's chief lobbyist, said is "the granddaddy of all legislative victories," has resulted in lower insurance premiums for truck renting and leasing companies operating in New York, Florida and California and eight other states that had such laws on their books.

While the courts have upheld federal preemption in almost all cases, James said the industry faces additional legislative proposals in several states - and potentially in Canadian provinces - that could impose new insurance and safety requirements on renting and leasing companies.

In New York, for instance, a bill would require a truck rented for less than one year to be covered by an insurance policy with liability levels of $300,000 per person and $500,000 per accident. It also requires a rental company to purchase excess liability coverage of $2 million for each truck.

Another proposal, sponsored by New York Assemblyman Michael Gianaris, also would impose new security requirements on truck rental and leasing firms, including background checks for customers. At the same time, the legislation would prohibit discrimination based on credit scores, driving records and other data.

The New York bills create "a broad new regulatory regimen for companies" and is "an overreaching piece of legislation," James said.

TRALA would oppose any legislation that creates "tiered" levels of financial responsibility based on vehicle use, he said. "A vehicle leased is no more dangerous than a vehicle that is purchased."

In Canada, transportation officials in British Columbia and Ontario met recently with TRALA representatives to discuss insurance requirements and safety practices of rental and lease vehicles.

No specific regulatory proposals have been made and, James said, industry representatives were able to make a strong case that truck rental and leasing firms make no distinction between commercial and consumer trucks in terms of vehicle maintenance.

Industry and provincial officials have agreed to meet again and formulate a voluntary guide to best practices, he said.

Tax proposals are another issue of concern for the truck renting and leasing industry, said Charles Sommer, president of Public Service Truck Renting. Sommer succeeded Shingle as TRALA chairman.

The vehicle renting and leasing industry "was an easy target for legislators and tax officials because we didn't put up a fight," Sommer said.

A proposal in Virginia, for example, would have attached an 8% tax on rental trucks to pay for a radio upgrade for state police cruisers.

"Our industry gets pummeled by local taxes for stadiums, mass transit, you name it," said TRALA's James. "A lot of these taxes are discriminatory, but it's a difficult argument to make. It's way out of control."

By taxing rental and lease trucks, James said, officials believe they are collecting money from people who live elsewhere, but it is local businesses who rent trucks and end up paying a higher price.

Also at the meeting:

n TRALA's board of directors failed to reach a consensus on the issue of highway privatization, said Terry Young, president of Advantage Truck Leasing, Charlotte, N.C. Young said the board agreed to study the issue for 60 days and then decide whether to take a stand. American Trucking Associations opposes privatization of roadways, while federal officials support it as a way to supplement funding.

n Frank Walter of Palmer Leasing Group said truck rentals in the first two months of this year were "dead," although, he added, "It's starting to come back now."

Carriers that clamored for equipment a year ago, before the implementation of stricter engine emission standards in January, now have more than enough capacity to meet current demand.

To read more stories, see the latest issue of Light & Medium Truck. Subscribe today!