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, Investigation (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.

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.

Shippers' associations do no trucking-they simply consolidate, distribute, and arrange transportation by regulated common carriers, both rail and motor. There is no equality between part II and IV of the Interstate Commerce Act insofar as the licensing provisions are concerned. Justification, if there be any, for injunctive relief against operations claiming private carrier status cannot be used as justification for permitting direct injunctive relief against groups which derive their status under section 402 (c) of the Interstate Commerce Act.

APPENDIX III

STATEMENT OF Caughey B. CULPEPPER, PRESIDENT, NATIONAL CONFERENCE OF NONPROFIT SHIPPING ASSOCIATIONS, INC.

My name is Caughey B. Culpepper. I am general manager of the Atlanta Freight Bureau, a highly professional and ethical transportation consulting organization, organized and chartered in 1902 on a strictly nonprofit basis and for the primary purpose of securing and maintaining fair and equitable freight rates and service for account of shippers and receivers located in the Atlanta, Ga., area. Since its organization however, the service rendered by the Atlauta Freight Bureau has become so dependable and widely known that its membership is now composed of 530 firms and individuals, a substantial number of which are located in other sections of the country. In fact, 13 States are represented on our roster.

In 1950, at the request and insistence of a number of its members engaged in retail and distribution service, the bureau began the supervision of a consolidated freight service out of New York and Chicago into Atlanta, Ga., under the exemption provided by section 402 (c) of the Interstate Commerce Act.

The above reference to the Atlanta Freight Bureau is made in order that this committee might know the logical reason for my occupying the position as president of the National Conference of Non-Profit Shipping Associations, to which place I was elected in 1955 and to which I have been reelected annually since that time.

The national conference is composed of approximately 20 of the more substantial bona fide nonprofit shipping associations located in almost every section of the country, except the Pacific coast.

The national conference was an outgrowth of an unorganized special committee which was forced into existence by the efforts of the regulated freight forwarders to secure passage of legislation which would in effect abrogate the exemption provided under section 402 (c) of the Interstate Commerce Act, that permits individual shippers and groups or associations of shippers to consolidate less carload or less truckload shipments of freight into carload or truckload lots for the purpose of securing the benefits of the lower freight rates applicable on these volume shipments.

The exemption is quite clear; and the records of both Houses of the Congress will show that part IV of the Interstate Commerce Act would never have passed either House of Congress if individual shippers and groups of shippers had not been guaranteed the right to continue to pool their small shipments of freight in order to secure the benefits of the lower carload or truckload rates.

I am quite cognizant of the provision that the groups or associations of shippers should be on a bona fide nonprofit basis and that no financial benefit should accrue to any individual because of the operation. However, I am also quite satisfied that the nonprofit criterion is the only qualifying yardstick contemplated by the Congress when section 402 (c) was adopted.

Nevertheless, the records of this subcommittee alone will show that through the last 10 or 12 years the members of bona fide nonprofit shipping associations have been compelled to spend large sums of money on expenses incident to appearances before your subcommittee, to say nothing of the aggregate total of years of time involved in trips to Washington. This does not take into consideration the valuable time of the members of this subcommittee, your full comImittee, the entire Senate Body and Members and committees of the House of Representatives in listening to statements and reading records that have been compiled on legislation dealing with this topic alone.

All this is because the regulated freight forwarders covered by part IV and, comparatively lately, the motor common carriers covered by part II who have lost business to the railroads because of the dramatic growth of the piggyback movement, have endeavored to make a whipping boy out of the nonprofit shipping

associations rather than improve their own service and keep their rates and charges on a level that would attract business.

The present legislation is graphically typical of the onslaughts which have been continuous; and the appearance of the representative of the Freight Forwarders Institute before the House subcommittee considering H.R. 5401 is typical of the never-ceasing campaign to write upon our law boks some law or laws, the end result of which would be harassment, intimidation, and final obliteration of nonprofit shipping associations.

As stated above, H.R. 5401 was originally identical with S. 1727. But, when it came out of the committee, it could hardly be recognized. Some of the changes are of small moment to my group. In fact, we have no opposition to your committee amending S. 1727 in the same manner, except in one respect. However, that one aspect and point is of great concern to us.

Following Mr. Morrow's unanticipated appearance before the House_committee, and at his suggestion, that committee wrote into the bill an amendment reading as follows (see printed House Rept. 253 of April 22, 1965, line 20, p. 15 through line 2, p. 17):

"(b) Subsection (b) of section 417 of the Interstate Commerce Act (49 U.S.C. 1017(b) is amended by inserting ‘(1)' immediately after ‘(b)' and by adding at the end thereof the following new paragraph:

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(2) If any person operates in clear and patent violation of section 410 of this part, or any rule, regulation, requirement, or order thereunder, any person injured thereby may apply to the district court of the United States for any district where such person so violating operates, for the enforcement of such section, or of such rule, regulation, requirement, or order. The court shall have jurisdiction to enforce obedience thereto by a writ of injunction or by other process, mandatory or otherwise, restraining such person, his or its officers, agents, employees and representatives from further violation of such section or of such rule, regulation, requirement, or order; and enjoining upon it or them obedience thereto. A copy of any application for relief filed pursuant to this paragraph shall be served upon the Commission and a certificate of such service shall appear in such application. The party who or which prevails in any such action, in the discretion of the court, recover reasonable attorney's fees to be fixed by the court, in addition to any costs allowable under the Federal Rules of Civil Procedure, and the plaintiff instituting such action shall be required to give security, in such sum as the court deems proper, to protect the interests of the party or parties against whom any temporary restraining order, temporary injunctive or other process is issued should it later be proven unwarranted by the facts and circumstances. Nothing in this paragraph shall be construed to deprive the Commission of its jurisdiction to interpret or construe permits or rules and regulations issued by the Commission." It is true that the House of Representatives, before final passage of H.R. 5401, further modified it by adopting the following language, which was, in fact, an additional amendment proposed by the House Committee on Interstate and Foreign Commerce in an effort to satisfy certain segments of the private carrier industry which had objected to the amended bill originally approved by the House committee in that it removed from the Interstate Commerce Commission primary control of litigation affecting transportation:

"(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."

However, this change does not in any substantial degree remove the danger of harassment and persecution of nonprofit shipping associations by their archenemies, the regulated freight forwarders and the motor comon carriers. In fact, the only thing this final amendment does is to further confuse the procedure and to additionaly handicap the objects of a concerted and continuing attack, although these objects-bona fide nonprofit shipping associations-have perhaps the most clearly defined and unquestioned status that could be found, In view of the fact that section 402 (c) of the Interstate Commerce Act clearly, specifically and categorically states that the provisions of part IV of the act shall not apply to individual shippers or groups or associations of shippers who band themselves together for the purpose of consolidating small shipments into carload or truckload quantities for the purpose of obtaining the lower rates applicable on volume shipments.