In other instances the so-called origin carrier because of the lack of availability of additional traffic, the size of the shipment, backhaul or other considerations will without communication to the shipper tender the goods to another carrier which happens to have equipment available in the territory moving in the direction of a particular shipment based upon the amount of booking commission which the particular carrier is willing to pay to obtain this additional shipment or traffic. As a result the shipper and owner of the goods does not know who is responsible for the movement and safety of his traffic. Another problem which the promiscuous so-called interline arrangement has resulted in is the lack of effective control over safety of operations between various so-called interline carriers. The Interstate Commerce Commission rules and regulations concerning the lease and interchange of equipment between carriers cannot effectively be enforced and maintained where carriers are permitted to effect socalled interline arrangements which are nothing other than pool arrangements without some regulation or control by the Interstate Commerce Commission.

A further problem arising has to do with the stabilization of cost of transportation to the shipping public whether it be the military or the general public. A lack of regulatory influence upon the pooling arrangements between carriers will result in nothing other than a chaotic rate condition in the regulated motor common carrier household goods transportation industry, which will ultimately affect the cost of transportation services available to the detriment of all users of such service.

It has been our experience in the past years of our association in this industry that the existence at least of possible regulation of these practices has been a deterrent to the widespread abuse despite the failure of enforcement by the Commission in the same manner that the knowledge of the existence of various laws on the statute books will deter many violations which would otherwise occur.

To avoid the problems attendant upon either abuse or enforcement, many of the affected carriers have filed and prosecuted applications for extensions of existing authorities which have resulted in costly and time-consuming proceedings both to the Interstate Commerce Commission and the affected competing carriers. In some of these cases the results have not been satisfactory in that the Commission has without following the statutory mandate granted authorities which have resulted in the dilution of available traffic, particularly traffic from the military which is awarded to approved carriers on the rotation basis. Such dilution of traffic has adversely affected previous existing and available service since such diversion reduces the load factor at any given time which must result in delay to shipments and increased cost. Many other problems could be cited which are the result of the Commission's failure to enforce the pooling provisions of the act insofar as the household goods carrier industry is concerned. Enactment of the proposed legislation would only multiply them since it would be considered tantamount to congressional approval of the "hands off" policy of the Commission. It is our firm belief that strict enforcement policies by the Commission of existing legislation will be of benefit to the Commission in other enforcement areas, will stabilize the practices in the household goods carriers industry and afford

better service to the public generally, including the military, at lower

cost.

We have been requested by North American Van Lines, which company also operates under an approved pooling plan, that we express its opposition to this proposed legislation. We are advised that this company employs approximately 350 agents in the United States for whom pooling agreements have either been approved or for whom the provisions of section 5(1) of the act would be applicable if the Interstate Commerce Commission would entertain appropriate applications for approval of pooling practices.

Senator LAUSCHE. Thanks very much.

Mr. SENDER. Your testimony is directed to S. 1146 which was a Commission recommendation. Would you give an example of the pooling type of practice that you referred to in your testimony?

Mr. REBMAN. Mr. Sender, may I answer your question? The reason I ask permission to is because I have participated in so many hearings around the country in household goods cases.

Take, for example, carrier A who has a limited authority, say operating in the States of New York and Pennsylvania. He will, as Mr. Meyer points out in his testimony, advertise in the yellow pages of the phone directory in New York that he hauls nationwide long distance, in no way indicates his authority is limited authority territorially. He will secure the traffic. He will do one of several things with it.

Let's assume it is a shipment moving into the St. Louis, Mo., area. If he has other traffic moving generally in that direction of sufficient. amount he may well move that himself under so-called interline arrangement with one or several other carriers who join with him at Pennsylvania and then move on through the various-Ohio, and so on, Indiana, Illinois, into St. Louis. He will pay these so-called connecting line carriers a percentage of his revenue, whatever it may be-5 percent, 10 percent, whatever kind of a deal he can negotiate.

Now this other carrier does nothing other than merely lend an operating authority, so to speak.

The Commission has determined a pooling practice because the percentage of revenue paid to the connecting line carrier bears no relationship to any service performed by that so-called connecting line carrier. Again this origin carrier that I mentioned with the limited authority in New York and Pennsylvania, he may have again the same shipment, but has no other tonnage. It may be a small shipment of several thousand pounds. It would be uneconomical for him to run that traffic on his own vehicle. He may look around to see if there is some other carrier who has authority or has a vehicle in the area going generally in that direction with other traffic.

Senator LAUSCHE. In what direction?

Mr. REBMAN. In the direction of movement of the traffic, toward St. Louis, let's say, from New York. He will tender this shipment then to the highest bidder of the several who may have vehicles, and he will get a commission then, a so-called booking commission.

Again that has been held in our case, the United Van Line case and North American case, to constitute a pooling activity inasmuch as the origin carrier, the small local carrier who booked the shipment is being paid revenue out of the transportation dollar involved for which he has performed no service. In other words, it is out of proportion,

let's say, to the service which he performed in securing the business. Now those would be two examples, for instance, of what is a pooling arrangement.

Mr. SENDER. But you say the shipper doesn't know this from the advertisement. He calls up, say, Jose Moving Co., and they say: "Yes, we will send a truck out," but it is actually Smith Moving Co. Mr. REBMAN. Sir, I could document that to you in numerous cases of proceedings before the Interstate Commerce Commission.

Now as another example of the situation-it is a very recent one with which I happen to be familiar-it was four shipments actually for the military that was tendered to an agent of a carrier in the Columbus, Ga., area; one shipment to this agent, one for carrier A to the same agent who happens to represent carrier B, another shipment to the same agent who represents carrier C, another shipment to the same agent who represents carrier D. These four shipments are all moving up from the Columbus, Ga., area to South Carolina. This agent using one van painted with the name of carrier A puts all four shipments on the same van. Now who is the carrier? Does the public know who is moving his goods? Who is responsible for his goods? The shipper. If he has a loss or damage who does he go to look to?

Mr. SENDER. Let's take the next step. The Commission says such practices are unlawful under section 5 (1) of the act as pooling arrangements unless they are approved by the Commission after a hearing. Mr. LAYNE. That is correct. I agree, sir.

Mr. SENDER. Now at the present the Commission says in their justification that strict enforcement of this provision as to household goods carriers has not been practical because the combinations whereby they surrender or exchange shipments, solicitation, divide proceeds, et cetera, are so flexible that before agreements can be filed and approved many are terminated or changed and new arrangements entered into. In view of this-and I take it you are opposed to eliminating Commission approval-what is your position as to prohibiting such pooling arrangements since the Commission says it is not practical to enforce this act?

Mr. REBMAN. I believe, sir, that pooling practices are a necessary thing in the household goods carrier industry because of the very nature of the industry. The traffic patterns are not regular. They are very irregular. The average person may move long distance only once or twice in his life, if he ever moves at all. He may move from New York to California, on the other hand, but he doesn't do it every day. It is not like the regulated

Senator LAUSCHE. Let's accept that as a fact that pooling arrangements are needed because of the uniqueness of the operation.

Mr. REBMAN. Right, sir.

Senator LAUSCHE. Now then, your next question: What is your view of what the Federal Government's participation ought to be in it from the standpoint of regulation and otherwise?

Mr. REBMAN. They should be the subject of regulation so that there can be a stability in the industry. In other words, if we are going to regulate the industry, which we feel it must be regulated, it should be regulated in all of its facets, including its pooling arrangements, for the benefit of the public to avoid the situations which we point.

out here, where the public, many times, is not aware of what carrier has his goods and who is really legally responsible for the safety of carriage of his goods.

Mr. KENNEY. Doesn't he sign a contract?

Mr. REBMAN. Sir?

Mr. KENNEY. When he gets his goods moved doesn't he sign a contract?

Mr. REBMAN. He signs a contract.

Mr. KENNEY. But isn't the other party in the contract responsible? Mr. REBMAN. You would be surprised at what some of these contracts look like. They sometimes do not even show the name of the carrier.

Senator LAUSCHE. I might answer that. You may have the original signator who does become liable, but if there has been a subsequent mutation there may be others who are liable that you want to proceed against?

Mr. REBMAN. That is correct, sir.

Mr. SENDER. My last question--the Commission says strict enforcement of these pooling provisions as to household goods carriers has not been practicable, and therefore they sought this amendment-is it your thought that the Commission should be directed to increase its enforcement rather than to seek to get out from under the provision of section 5 (1) requiring it to approve?

Mr. REBMAN. Very definitely, sir. I would say this: the pooling provisions, insofar as household goods carrier industry are concerned, are no more difficult of enforcement than are the safety rules and rules promulgated by the Commission which are very necessary, and the mere fact that it may require a constant attention, the same as their attention to safety rules and regulations, should be no excuse for deregulation.

Senator LAUSCHE. If it is deregulated would that mean that all that you went through originally in getting your organization set up would no longer be required?

Mr. REBMAN. Not as far as I understand, sir. The act would make no exemption for those who are presently operating under pooling arrangements.

Senator LAUSCHE. That is why in your statement you set forth the laborious process through which you had to go in order to get approval?

Mr. MEYER. That is correct.

Senator LAUSCHE. It is now contemplated to eliminate any regulation at all?

Mr. REBMAN. That is correct.

Senator LAUSCHE. And you feel that in the interest of the general public there ought to be regulation of these pooling activities? Mr. REBMAN. Very decidedly.

Senator LAUSCHE. All right.

We have one more witness, Mr. John Keene of the Eastern Industrial Traffic League.

Mr. SPRUILL. Mr. Chairman, my name is William Spruill, counsel for the Industrial Traffic League, and I would like permission to sit with Mr. Keene.

Senator LAUSCHE. Very well. You may proceed, Mr. Keene.

STATEMENT OF JOHN KEENE, CHAIRMAN, LEGISLATIVE COMMITTEE, THE EASTERN INDUSTRIAL TRAFFIC LEAGUE, INC.

Mr. KEENE. My name is John Keene. I am director of traffic for Howe Sound Co., and I appear here today on behalf of the Eastern Industrial Traffic League, Inc., a nonprofit membership organization of almost 200 associations, shippers, and receivers of freight. The league's purpose is to safeguard the transportation interests of the shipping and receiving public, who have a cause to be interested in commerce within, to and from the Middle Atlantic and New England areas. The membership includes many of the principal associations and industries engaged in many types of businesses in their territory and representation by industries located elsewhere.

At the semiannual meeting of the Eastern Industrial Traffic League, at Baltimore, Md., on April 15, 1965, I reported to the general membership, as chairman of the legislative committee, on current, proposed. and expected legislation of interest to the shipping and receiving public. The particular details of House of Representative bills 5401, 5396, and 5397, were reported. There were motions made by the membership, after discussion and with strong feelings on this matter. that the league's position would be outlined as follows:

House bill 5401.-The league supports this legislation except insofar as sections 3 and 5 are concerned. Absolute opposition to sections 3 and 5.

House bill 5396.-The league supports this legislation only insofar is it agrees with our support of H.R. 5401 but strongly opposes any inclusion of the motor carrier safety regulations. It is the belief of the league that the voluminous number and highly technical administrative safety regulations would be literally impossible to control through the setup of a civil forfeiture procedure.

House bill 5397.-The league opposes this legislation which requires shipper associations to file applications and obtain proof of eligibility for exemption under section 402 (c) of the Interstate Commerce Act. It would seem that this type of bill would make it difficult for shippers to associate together for their own benefit.

The league is appearing here today to indicate to your committee that we are strongly in opposition to sections 3 and 4(2) of Senate bill 1727 which are comparable to those sections of the House of Representative acts discussed in the previous section.

INCREASED CIVIL PENALTIES

Section 3 of S. 1727 provides for civil forfeitures in cases where authorized transportation or a safety violation may have occurred. Section 3 of H.R. 5401 provides for civil forfeitures in cases where unauthorized transportation may have occurred. The league opposes these sections on the principle that even an innocent violation could subject an individual to harsh penalties. Under a civil forfeiture there is no requirement to show any form or degree of intent or knowledge on the part of the accused. It is enough to merely show that the act occurred in order to place an accused at the mercy of the court.

At the present time, there is a whole plethora of safety regulations promulgated under section 204 (a) of the Interstate Commerce Act.