what we have been discussing as the authority in determining its preliminary business function?

Mr. FAYLE. Yes, sir.

Senator LAUSCHE. Now, then, on the whole, what is your position with respect to the bill? There are phases of it which you do not agree with but generally do you feel the bill

Mr. KELLER. May I speak on that? We have only a position on section 4 as far as the conference is concerned.

I would like to make one little additional statement, if I may. Senator LAUSCHE. Yes.

Mr. KELLER. This is the first time, Mr. Chairman, that we have ever had this right of injunction where anybody could go and sue somebody in a district court on a violation of the Interstate Commerce Act. It is most novel and unusual and we think dangerous.

We feel that if we were going to do this sort of thing, we ought not to do it in a spirit or atmosphere of crisis and to move slowly in this direction.

Suppose, for example, we have a shipper and they had been having a lot of their traffic done by for-hire carriers and for good reasons of their own they decide they will now put some trucks in of their own, and the for-hire carrier who doesn't get the business is disturbed about this.

He can take action and bring injunctive relief and try to prevent that. He may not prevail but he could bring that action. I don't, as a lawyer, view that the language about clear and patent-it is only clear and patent when you decide what it is.

"Clear and patent" doesn't exist in the air so that you can identify it immediately. You have to bring it to the facts each time. Also, the fact that you have to put a bond-I agree completely with the witness before. It is not a protection at all in these particular cases.

I think again the element of harassment is a very important one. I would like to give you a very real example of what happened under the present law where the for-hire carriers filed nearly 60 complaints against shipper associations almost simultaneously with the Interstate Commerce Commission. This is a matter of fact and it was done within a matter of months.

Now suppose all of those 60 complaints could have been filed in 60 different district courts over the United States. It would have been an intolerable burden to any person and it ought not to be an instrument in the hands of persons who would harass private carriers.

We are primarily shippers. We use prodigious amounts of for-hire carriers. We are not against them and we are more interested in illegal for-hire carriage because if there is any transportation that is illegal, it is not private transportation. It is illegal for-hire transportation.

It can't be a legal private because if it is illegal it isn't private transportation and we appreciate very much the opportunity to present these views to the committee and if you have any questions, we would certainly try to answer them for you."

Mr. SENDER. I have just one question. In what States does Burlington Industries operate? Many or few?

49-278 65--13

Mr. FAYLE. Many. To the best of my knowledge, I believe the figure is 27 States; 86 geographical locations and 127 manufacturing plants, I believe-Textile people.

Senator LAUSCHE. Thank you very much for your help.

Mr. FAYLE. Thank you for hearing us.

Senator LAUSCHE. I want to say now that I recognize that this matter of investing injured parties with the right to bring action must be approached with caution because it is fraught with hazards and likely to be used in an abusive manner.

That is all I can say to you at this time.

Mr. FAYLE. Thank you.

Mr. KELLER. Thank you, sir.

(Whereupon, at 12:50 p.m., the committee was recessed, to reconvene at 9 a.m., Thursday, May 20, 1965.)

INTERSTATE COMMERCE ACT AMENDMENTS

THURSDAY, MAY 20, 1965

U.S. SENATE,

COMMITTEE ON COMMERCE,

SUBCOMMITTEE ON SURFACE TRANSPORTATION,

Washington, D.C.

The subcommittee met, pursuant to notice, at 9 a.m., in room 457, Old Senate Office Building, Hon. Frank J. Lausche presiding. Senator LAUSCHE. The meeting will come to order.

The first witness this morning is scheduled to be Mr. John A. O'Connor, general traffic manager of J. C. Penney Co., National Retail Merchants Association, Transportation Committee, chairman, of New York.

Mr. O'Connor.

STATEMENT OF JOHN A. O'CONNOR, CHAIRMAN, TRANSPORTATION COMMITTEE OF THE NATIONAL RETAIL MERCHANTS ASSOCIATION; ACCOMPANIED BY LEONARD MONGEON, MANAGER, TRAFFIC GROUP

Mr. O'CONNOR. Good morning. I would like to introduce my colleague, Mr. Leonard Mongeon, manager of the traffic group of the National Retail Merchants Association, 100 West 31st Street, New York, N.Y.

Senator LAUSCHE. Mr. O'Connor, the preliminaries of your statement will be printed in the record together with the whole document and I would suggest that you go right to the substance of the bill in making your discussion. Do you understand?

Mr. O'CONNOR. You don't want me to read the whole statement? Senator LAUSCHE. I don't want you to read the preliminary introductory matter. You might begin with page 2.

Mr. O'CONNOR. I am John A. O'Connor, general traffic manager, J. C. Penney Co. I start on page 2 with the explanation that NRMA members, including the Penney Co., use all kinds of transportation to bring goods from manufacturers' plants to their stores. We are deeply interested in strengthening and improving the national transportation system due to our dependence upon its efficient and economical functioning and, therefore, we appear this morning to submit our views on S. 1727 which was designed for such purpose.

We feel strongly that illegal activities in the transportation field are injurious to the national transportation system and the economy as a whole and should be eliminated. We are very concerned, however,

that in the congressional attempt to eliminate the evils of illegal transport, innocent parties could be injured in irreparable fashion.

What we are specifically referring to is the possibility of S. 1727 being amended to include an amendment similar to the one adopted by the House in H.R. 5401, which bill we understand is also before you for consideration.

Senator, we refer at the bottom of this page here to House Report 253 of April 22 which carries the text of the amendment referred to above. This is the so-called injunctive provisions, and I won't read all of that, if it is all right with you.

These provisions permit any person to apply to any district court for an injunction against any other person operating in clear and patent violation of section 410, part IV of the Interstate Commerce Act.

This was additionally amended on the floor of the House through adding the following language:

(2) In any action brought under section (b)(2) of this section, the Commission may notify the district court of the United States in which such action is pending that it intends to consider the matter in a proceeding before the Commission. Upon the filing of such a notice, the court shall stay further action pending disposal of the proceeding before the Commission.

With all due deference to the very able chairman of the House Interstate and Foreign Commerce Committee who sponsored this further amendment, it does not prevent the possibility of injury to a perfectly bona fide shipping association.

We are very apprehensive and concerned about this injunctive provision and do not feel that it should be permitted to be part of this transportation legislation.

This provision makes it possible for a nonprofit shippers association, exempted from regulation under section 402 (c) (1) of the Interstate Commerce Act, to be prevented from operating if, in the opinion of a district court, the association was in clear and patent violation of the Interstate Commerce Act.

The Senate considered similar legislation in 1962 under S. 2560. At that time the Interstate Commerce Commission commented upon the injunctive provision and did not recommend its adoption.

The Commission specifically referred to the difficulty of defining "clear and patent" violations under part IV of the act when they stated:

One of the most difficult enforcement problems with which the Commission is faced under part IV of the act is that of coping with groups and organizations which engage in freight forwarder operations illegally under the guise of an exempt shipper association.

Such operations are usually extremely complex and are rarely of such a nature that they could be characterized as “clear and patent” violations under proposed new paragraph 417 (b) (2).

This was taken from hearings before the Surface Transportation Subcommittee, U.S. Senate, 87th Congress, 2d session on S. 2560, and S. 2764, page 102.

The situation is still basically the same today as it was then with respect to clear guidelines. In a case decided subsequent to 1962; namely, Atlanta Shippers Association, Inc., Atlanta, Ga., investigation of operations 322 Î.C.C. 273, the Commission stated that:

Whether any particular transportation function is, in substance, a forwarding service, the unauthorized sale of which is prohibited by the statute, can be deter

mined only after careful and complete analysis of all the facts and circumstances surrounding the performance of such transportation.

At the present time the Interstate Commerce Commission has at least 45 cases before it affecting shippers associations. Certainly it is premature to offer an injunctive process at this time when the Interstate Commerce Commission has yet to decide what constitutes violations.

If they cannot clearly define guidelines, how can we expect a district court to decide what constitutes a clear and patent violation?

It seems to us that the very complexity of a part IV violation makes the provision unwise since we are asking a district court to decide that which the Interstate Commerce Commission is striving hard to adjudicate in at least 45 cases now before it.

Under existing laws both the Interstate Commerce Commission and Attorney General have the power to file for an injunction. We strongly support the continuance of such a procedure.

NRMA members participate in nonprofit shipping associations exempted from Interstate Commerce Commission regulation through section 402(c) (1) of the Interstate Commerce Commission Act.

These shipping associations are usually used for merchandise procured from large markets such as New York City, Philadelphia, Chicago, Los Angeles, St. Louis, and some others.

The members of these associations instruct their manufacturers to deliver the merchandise to an agent of the shipping association who, in turn, forwards the merchandise via railroad or motor carrier service.

Thus, all of the shipments for our member stores forwarded through the instrumentality of shipping associations are transported either in rail or truck service by common carriers.

At destination the shipping association employs a distribution agent who breaks up the carload or truckload, assesses the members ther proportionate transportation charges and delivers the merchandise to the respective stores.

For example, such associations exist among our members both large and small, in cities such as Detroit, Cleveland, Chicago, Minneapolis, Dallas, Houston, et cetera.

Through the instrumentalities of the nonprofit shipping association, the smaller retail stores are enabled to save freight charges on the transportation of their goods and reap some of the benefits that the larger stores might be able to accomplish by themselves. It is our belief that there are about 30 to 35 nonprofit shipping associations to which NRMA members belong.

In practically all cases they belong to only one association, unless they are a multiple group of stores or a chain and then they may belong to several such associations.

To sum up, we are vitally interested in a strong and efficient national transportation system, but are very concerned and apprehensive of the injunctive provision we have been discussing.

We strongly urge the Surface Transportation Subcommittee of the U.S. Senate not to include such a potentially dangerous provision as now found in amended H.R. 5401.

Mr. O'CONNOR. I would also like to say, Senator, that we subscribe to the views that were presented to you by Mr. Charles A.