APPENDIXES

APPENDIX I

STATEMENT OF ROBERT J. CORBER, NATIONAL ASSOCIATION OF MOTOR BUS OWNERS

My name is Robert J. Corber. I am a partner in the law firm of Steptoe & Johnson, 1100 Shoreham Building, Washington, D.C., which is general counsel for the National Association of Motor Bus Owners (NAMBO). My appearance today is as counsel for NAMBO.

NAMBO is the national trade association for the intercity motor bus industry. It represents approximately 1,000 carriers accounting for three-fourths of the intercity motor bus transportation. Its members engage in the transportation by bus of passengers and small package express.

Our testimony relates to S. 1727 and S. 1733. We urge amendment of the former so that it would make the legislation expressly applicable to authorized self-insurer as well as carriers covered by insurance. We are opposed to S. 1733 insofar as it applies to safety violations.

S. 1727

Section 2 of this bill would amend section 202 of the Interstate Commerce Act to bring about uniformity in State requirements applicable to interstate motor carriers. The national organization of State commissions would, under the review of the Interstate Commerce Commission, formulate for promulgation by the Commission uniform requirements for evidencing (1) ICC authority, (2) vehicles employed under ICC authority, (3) currently effective insurance, and (4) local agents for service of process.

The need for uniformity in State requirements on these subjects has long been manifest. A multitude of dissimilar requirements by the States has impeded interstate motor carrier operations and created unnecessary financial, as well as administrative, burdens.

Of particular concern and burden to interstate operators has been divergent insurance prescriptions among the several States. Pursuant to section 215 of the act (49 U.S.C.A. 315) the Commission issues regulations governing personal injury and property damage insurance which must be maintained by carriers engaged in interstate commerce subject to its jurisdiction. The minimium insurance coverage required is $25,000 for bodily injuries or death of one person and $10,000 for damage to property, excluding cargo for which there are separate requirements (49 CFR 174.2(a)). In addition, minimum limits for bodily injuries or death in any one accident are $100,000 for buses seating 7 or less. $150,000 for buses seating 12 or less, $200,000 for buses seating 20 or less, $250,000 for buses seating 30 or less, and $300,000 for buses seating 31 or more passengers (ibid).

The Commission's regulations allow carriers meeting certain rigid standards to qualify as self-insurers. Each self-insurer must, on application to the Commission for approval as a self-insurer, convincingly show its ability "to satisfy its obligations for bodily injury liability, property damage liability, or cargo liability without affecting the stability or permanency of the business of such motor carriers" (49 CFR 174.5(a)). Our research further indicates that all but 11 of the States allow some form of self-insurance.

Since self-insurance is a safe and widely used substitute for commercial insurance this legislation should include provisions for self-insurance among its specifications of forms and procedure evidencing lawfulness of operations. For this purpose NAMBO respectfully urges the committee to amend item (c) of section 2 appearing at line 3 of page 3 of the bill by adding the phrase "or qualifications as a self-insurer under rules and regulations of the Commission." The proposed amendment would cause item (c) to read—

“*** (c) filing and maintaining evidence of currently effective insurance or qualifications as a self-insurer under rules and regulations of the Commission *

The effect of this proposal would be to authorize a requirement that States accept self-insurance qualifications approved by the Commission for interstate operations. States could also be required to accept insurance approved by the Commission.

This proposal was made to the House Committee on Interstate and Foreign Commerce in regard to H.R. 5401, the companion bill for S. 1727, and it was adopted by the committee. See House Report No. 253, 89th Congress, 1st session, page 9. It has the support of the National Association of Railroad and Utilities Commissioners, the American Trucking Associations, Transportation Association of America, and others.

A survey just completed by NAMBO indicates that 22 States declined to accept ICC approved self-insurance or commercial insurance for interstate operations. Only 12 States abide by ICC regulations for interstate carriers. Fifteen States have no insurance regulations for interstate charter operations within their boundaries.

These variegated State insurance regulations are particularly burdensome when applied to interstate charters. Any certificated motor carrier is authorized to engage in the transportation of special chartered parties under section 208(e) of the act, 49 U.S.C.A. 308 (c), to any place in the United States. This business is important to intercity buses, accounting for about 8 percent of total industry revenues each year. It involves multistate operations, however, and these can be seriously burdened by State laws that change from State to State. A single special or chartered party frequently requires operation in several States outside the regular route territory of the carrier. Thus, the operations traverse States not regularly or continuously served. Under these circumstances, compliance with special State laws in addition to Commission requirements creates financial and administrative waste which reduce needed charter revenues. In many instances, special insurance policies or substantial deposits up to $50,000 may be required even though the carrier operates only a few charters each year into the States imposing these extra requirements. It has been reported to NAMBO that on a number of occasions charter trips have been interrupted and delayed while carriers satisfy State filing prescriptions.

These added State requirements cannot be justified on any theory of safety. The Commission standards have proved in many years of operation to be more than adequate to meet safety considerations.

In view of the unnecessary burdens encountered by interstate operators in meeting State filing requirements, it is the position of NAMBO that the best solution would be to make ICC standards exclusive so that no interstate operator qualified under ICC requirements would be compelled to meet additional standards for States. The proposed legislation does not go that far. It would enable the Commission to approve requirements for States that are different and in addition to the standards it presently applies to interstate operators. Nevertheless, section 2 of S. 1727 will result in uniformity and for this reason it is an improvement which is supported by NAMBO provided it is broadened, as previously suggested, to explicitly include self-insurance under the provisions for evidencing insurance.

8. 1733

The forfeitures prescribed by S. 1733 for failures or refusals to preserve, keep and file certain records and for failures or refusals to comply with safety regulations, appear to NAMBO to be unduly severe insofar as safety regulations under section 204 of the Act (49 U.S.C.A. 204) are concerned. Intercity bus operators have an extraordinarily good safety record and it is being improved each year. Passenger deaths in bus accidents have averaged less than 0.13 per 100 million passenger-miles each year since 1956. All deaths connected with bus operations have been less than 1.2 per 100 million passenger-miles each year since 1949 and the rate has been declining in most years. The passenger fatality rate for buses is currently about one twenty-fifth of that for automobiles, and is less than the rates for railroads and airlines.

The record of bus operator compliance with Commission safety regulations is high, higher than other regulated carriers. In the light of bus carrier safety

1 See ICC Docket No. MC-40, Sub. 1, Safety Regulations.

achievements there is no need for further enforcement powers for the Commission. On the other hand, there is danger that further enforcement measures would unduly burden complying carriers in areas of the safety regulations which are not entirely clear in their meaning and application.

Inadvertent and minor violations of the safety regulations could occur without intention or knowledge of the carriers. The meaning of "on duty" time logged by drivers under the Commission's regulations is not always clear. The requirement in the Commission's regulations that all accidents be reported raises difficult questions in connection with such minor passenger incidents as jamming a finger in a window, tripping over a piece of luggage, and so forth. Exposing the carrier to forfeitures of $200, plus $100 for continuing violations in areas of uncertainty such as these could be grossly unfair and unnecessary for safety.

APPENDIX II

STATEMENT OF RONALD N. COBERT, GENERAL COUNSEL, AMERICAN INSTITUTE FOR SHIPPERS' ASSOCIATIONS, INC.

My name is Ronald N. Cobert. I appear in behalf of the American Institute for Shippers' Associations, Inc., of which I am general counsel. AISA is a national trade organization doing business in the District of Columbia. Its members include both shippers' associations and individual manufacturers and retailers who use and benefit by cooperative shipping. We object to section 5(b) of H.R. 5401 in its entirety.

In addition to my representation of AISA, I have appeared before the Interstate Commerce Commission and the Federal courts in behalf of numerous individual shippers' associations who have been the objects of formal complaints filed at the Interstate Commerce Commission by three conferences of the American Trucking Associations, Inc. Thus, I have firsthand knowledge of the rash of legal attacks against cooperative shipping during the past 4 years. Section 402 (c) of the Interstate Commerce Act permits shippers to join together for their mutual shipping benefit without Government regulation. This section reads in part:

"The provisions of this part shall not be construed to apply (1) to the operations of a shipper, or a group or association of shippers, in consolidating or distributing freight for themselves or for the members thereof, on a nonprofit basis, for the purpose of securing the benefits of carload, truckload, or other volume rates."

Section 402 (c) evinces a strong congressional policy that regulation envisioned by the Freight Forwarder Act shall not encroach upon or restrict the right of shippers which they always had to join together to gain for themselves the benefits of volume transportation rates. Atlanta Shippers Association, Investi

gation (322 I.C.C. 273 (1964)).

Under existing law, section 417 of the Interstate Commerce Act permits the Commission or the Attorney General to seek a Federal court injunction for failure to comply with part IV of the act. Thus, the Commission and the Attorney General now have the power to do what H.R. 5401 is permitting “any person" to accomplish. To my knowledge, this power has never been used by the Government against shippers' associations or organizations which gain their status by virtue of section 402 (c) of the Interstate Commerce Act.

The proposed legislation is fraught with serious dangers to legitimate shippers' associations. Its passage would place a powerful tool of harassment in the hands of affluent motor carrier and freight forwarder interests to the detriment of cooperative shipping groups who for the most part represent the small businessman.

The history of the past 4 years bears out our convictions that harassment will result. In early 1961, three motor carrier conferences of the American Trucking Associations filed a host of formal complaints at the Interstate Commerce Commission attacking cooperative shipping groups. These complaints, now 37 in number, charged shippers' associations with various violations of the Interstate Commerce Act including section 410 of that act. At the same time there has appeared a rash of newspaper articles condemning cooperative shipping.

As a result some associations lost-but others won-and still others could not afford to fight the powerful motor carrier groups and thus dropped out of existence. These associations were faced with tremendous expenses which some could not afford in order to defend their operations and the principles embodied in section 402 (c) of the Interstate Commerce Act. This per se is perhaps insufficient justification to defeat legislation, but when coupled with definite evidence of harassment, we feel that the Congress should not increase so substantially the ability to harass shippers' associations.

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To corroborate our concern of harassment, I represented two shippers' associations in a complaint case before the Commission wherein the trial examiner after hearing the evidence made this specific finding:

"The Examiner concludes, on the basis of the evidence adduced, that the defendants' allegations of harassment in these two proceedings have some basis in fact, and that the complaints should be dismissed forthwith."

The dismissal of these complaints was affirmed by the Commission and the cases are administratively final. National Motor Freight Traffic Association, Inc., et al. v. Southern Michigan Shippers Cooperative Association and Detroit Shippers Cooperative Association (M-C-C 3192, Subs. 11 and 32).

We take the position that the intended safeguards in section 5(b) of H.R. 5401 will not prevent possible harassment. The bond provisions are inadequate since no bond would appear to be necessary if the plaintiffs seek only a permanent injunction. Thus, an association may ultimately prevail, but it would be injured immeasurably both in reputation and financially. The provision permitting reasonable attorney's fees to the loser is only discretionary.

The fact that the proposed legislation uses the words "clear and patent" does not help to protect legitimate shippers' associations from possible harassment. The House report which accompanies H.R. 5401 makes it plain that the words "clear and patent" are used and are intended as a standard of jurisdiction rather than as a measure of the required burden of proof. In other words no court is to entertain any action except where the acts complained of are openly and obviously freight forwarder operations without appropriate authority.

This provides the legitimate shippers' association with no protection since an association lawfully may operate in the same physical manner as a regulated freight forwarder. In order to determine the legality of an operation, one must look behind the physical operations and into intricate matters of substance. These matters should be left to the administrative agency and not the courts.

The amendment to section 5(b) of H.R. 5401 introduced by Chairman Oren Harris on the floor of the House not only recognizes to some extent the inequities in the legislation, but provides no help to the shippers' association. The floor amendment simply permits the Interstate Commerce Commission to take the case out of the hands of the court. The proposed legislation, however, spells out no criteria to guide the Commission in determining which case it will have remanded. Section 5(b) of H.R. 5401 snatches legislative functions with quasijudicial overtones out of the administrative agency and throws these transportation responsibilities into the courts.

Congress has given the Interstate Commerce Commission the right to administer to transportation. This legislation will for all practical purposes yield this right to the courts. The Interstate Commerce Commission is the only body equipped to handle the very complex and difficult issues of surface transportation.

The law says that a shippers' association can physically perform the same operations as a freight forwarder holding a permit under section 410 of the Interstate Commerce Act. The difference between the two lies in the determination of numerous issues such as

(1) Whether the association is nonprofit;

(2) Whether the association is properly organized;

(3) Whether the association holds itself out to the general public;

(4) Whether the association is controlled by its members;

(5) Whether the association serves bona fide members; and

(6) Whether the association is using proper transportation carriers in carrying out its functions.

These are issues which should properly remain with an expert transportation agency and not be placed in the hands of a Federal court.

Finally, section 5(b) of H.R. 5401 is discriminatory in that its purpose is only confined to the elimination of illegal, unregulated transportation. The proposed legislation does not permit injunctive suits for all violations of part IV, but only violations of section 410, the licensing provisions. This legislation is aimed directly at shippers' associations and, ironically, H.R. 5401 was designed to curb illegal "trucking." Section 5(b) of H.R. 5401 was simply an afterthought, and under this philosophy, parts I and III of the Interstate Commerce Act should also have been made applicable to direct injunctive suits by any person.