APPENDIX XII STATEMENT OF CHARLES A. WASHER, COUNSEL, TRANSPORTATION DIVISION, AMERICAN RETAIL FEDERATION Gentlemen, thank you for the opportunity of appearing before you today for the purpose of presenting to you the views of the American Retail Federation on the proposed legislation under consideration. The American Retail Federation is comprised of some 45 statewide and 31 national associations of retailers and, as such, represents the views of the retail industry of all types and sizes. Our views will be confined to two subjects: (1) the provisions for a civil procedure for injunctive relief in cases of alleged violations of part IV of the act and (2) the provisions for the establishment of reparations procedures as to carriers subject to parts II and IV of the act. INJUNCTION PROCEDURES In the year 1962 your subcommittee considered comparable legislation under S. 2560. At that time the American Retail Federation objected to such an amendment to section 417 (b) of the act by the addition of a provision whereby injunctive relief could be sought by any injured party in a district court of the United States for any clear and patent violation of section 410 of the Interstate Commerce Act. We believe now, as we stated then, that: "This will create a situation in which small shipper associations and other shipper groups, not otherwise regulated under the various provisions of the Interstate Commerce Act could be subjected to harassment from regulated freight forwarders and motor carriers. Although no one defends illegal freight forwarder operations in violation of section 410, perfectly proper and bona fide shippers' associations might be included in endless litigation, the very cost of which would require dissolution, regardless of the merits, because of the financial resources and legal talent available to the forwarders and motor carriers." The Interstate Commerce Commission did not recommend the adoption of this amendment on the grounds that it would have an adverse effect on the Commission's enforcement efforts. In pointing out that the problems of part IV were particularly distinguishable from those of part II the Commission 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).” (Hearings before the Surface Transportation Subcommittee, U.S. Senate, 87th Cong., 2d sess. on S. 2560 and S. 2764, p. 102.) Despite the Commission's belief that this provision would be more of a hindrance than a help, the proponent Freight Forwarders Institute urged adoption for future use. They referred to the fact that the Commission was then investigating a number of associations, and stated: "It is hoped that out of the pending proceedings, as soon as they are decided by the Commission, we will obtain some guidelines which will make it possible to go directly into court to enjoin unlawful forwarder operations. If injured persons are given the right to initiate such court actions it should greatly expedite the cleaning up of unlawful activities in the forwarder field." (Hearings on S. 2560, supra, p. 135.) The proceedings referred to have indeed been concluded by the Commission but, contrary to the expectations and hopes of the Freight Forwarder Institute, still do not give any definitive guidelines by which a court could clearly recognize a "clear and patent” violation. In the landmark decision on the subject, Atlanta Shippers Association, Inc., Atlanta, Ga.-Investigation of Operations, 322 I.C.C. 273, the Commission commented that "Whether any particular transportation function is, in substance, a forwarding service, the unauthorized sale of which is prohibited by the statute, can be determined only after careful and complete analysis of all the facts and circumstances surrounding the performance of such transportation." Thus, as a practical matter, we doubt whether the conditions under part IV can be made comparable to part II from the standpoint of establishing for the court's benefit a case of "clear and patent" violation without a previous determination and order of the Commission. It should be pointed out at this juncture that under section 222(b) there is no present provision for any injured party to seek injunctive relief, this being reserved to "the Commission or its duly authorized agent." In part IV, however, section 417(b) extends this authority to the Attorney General of the United States and, in the case of an ICC order, to "any party injured by the failure to comply therewith or by the violation thereof." Thus, the Congress has already considered the question of injunctive relief for violations of section 410 of the Freight Forwarder Act and, although being more liberal in the designation of parties entitled to seek to apply to the courts, has wisely restricted such actions to matters which have had a previous Commission determination. The forethoughtfulness of the Congress in making such a restriction has been justified by the Commission decision in the Atlanta Shippers Association case which holds that such determinations must be made only after a careful and complete analysis of all the surrounding facts and circumstances in each operation—a process best performed by the Commission. H.R. 5401 as originally introduced, made no reference to injunctive relief for part IV violations, nor does S. 1727. There may be much merit to, and need for, such an amendment to part II. Report No. 1588, of the U.S. Senate on S. 2560, for example, states, as the purpose of the bill on sheet 1: "The bill, S. 2560, is designed to foster and encourage activity against illegal operations in the motor carrier field at both the Federal and State levels and by private parties. "The objective of the bill is stricter enforcement of the existing provisions of part II of the Interstate Commerce Act, etc." There is contained in the report, no justification for the extension of one portion of the proposed bill-that of injunctive relief to part IV. Indeed, a comparable situation occurred this year with H.R. 5401 which, after hearings had been concluded, was amended in committee by adding "the same type of procedure by individuals injured by persons operating as freight forwarders as was provided in the case of motor carriers." (See Rept. No. 253, accompanying H.R. 5401, p. 8.) This amendment was added, according to the chairman of the Committee on Interstate and Foreign Commerce, solely on the request of the Freight Forwarders Institute for equal treatment as the motor carriers. Congressional Record, May 6, 1965, p. 9344.) The chairman, on the floor, introduced an amendment comparable to that which had just been approved to the similar part II injunctive relief provision and which would add that in any action brought under the section, the Commission may notify the district court "that it intends to consider the matter in a proceeding before the Commission" and thereupon the court shall stay further action pending disposition of the Commission proceeding. He indicated, in all fairness and candor, that this statement should provide adequate protection but: (See "If this amendment is not adopted by this committee and by the House, then I will move to strike out the entire subsection (b). If we cannot straighten it out in this way, then I would be in favor of eliminating that entire subsection. "Furthermore, I assure the gentlemen and his constituents as well as others who are interested in it that they will have an opportunity then to analyze this completely and fully before the committee in the other body where they are going to have hearings within the next few days and if they can find any bugs in it that need clarification, I myself will join in helping to straighten it out." (Congressional Record, May 6, 1965, p. 9340.) The American Retail Federation would prefer that the part IV application be stricken as suggested above. In part IV there is no comparable situation as to violations of part II of the act. First, under part II, as has been recognized for many years by the Congress (see S. 2560 of 1962; H.R. 9903 of 1963; S. 2796 of 1964) that illegal motor carrier operations siphon off and erode the traffic that should be carried by the railroads and common motor carriers, upon which the basic transportation needs of this Nation depend. The freight forwarder system is also dependent upon these carriers so that efforts for effective control of the highway violations are the concern of all. On the other hand, activities con ducted under part IV have no bearing on the total traffic handled by the railroads or common motor carriers. Actually, whether activities be conducted by a lawful and licensed freight forwarder; an unlawful freight forwarder operation; a bona fide shipper association; an "illegitimate" shippers association; or even as a violation of section 402(c) (2); the traffic is transported in line-haul movement by rail or common motor carrier. Thus, there is no erosion of over-thehighway traffic, the prevention of which requires added enforcement authority. Also, the determination of a "clear and patent" violation is more difficult under part IV than under part II, and section 417 (b) presently contains a provision for injunctive relief for injured persons whereas part II does not. For these reasons we urge you to avoid any amendment extending the provisions of section 4 of S. 1727 to part IV and to insist, in any conference on S. 1727 and H.R. 5401, on striking of section 5(b) as amended, of the latter. REPARATIONS The American Retail Federation urges you to adopt the provisions of sections 5 and 6 of S. 1727 and thereby extending the right of reparations to motor carriers and freight forwarders. This has long been denied the shipping public, and although these sections provide only for court actions, as distinguished from S. 1732 introduced upon the recommendation of the Interstate Commerce Commis sion in which Commission awards may be made, the result will still protect the shippers from the publication of reckless rates for which no recovery can now be made if found to be unlawful. APPENDIX XIII STATEMENT OF SIDNEY ZAGRI, LEGISLATIVE COUNSEL, INTERNATIONAL BROTHERHOOD OF TEAMSTERS My name is Sidney Zagri, legislative counsel for the International Brotherhood of Teamsters. On behalf of the general executive board and General President Hoffa, representing over 1,780,000 members, with a substantial number directly engaged in intercity motor freight transportation, I appreciate the inivitation extended me to appear on S. 1727, H.R. 5401, and related bills. TEAMSTERS JOBS AND COMMON CARRIER SYSTEM BOTH THREATENED BY ILLEGAL TRUCKING The years of delay during which Congress has failed to act in the matter of the illegal or gray area trucker have resulted in an expansion of such illegal activities and a relative erosion of the common carrier system. The best estimates we can find indicate that over $1 billion of motor freight traffic is presently being diverted from the legitimate common carrier to illicit gray area operations. Estimates suggest that over 50 percent of all motor freight traffic is unregulated. The Doyle report predicts that, if the present trend continues, two-thirds of all motor freight traffic will be unregulated by 1975. We do not see how the common carrier system can survive under such conditions. The responsible common carrier cannot continue to face the competition of the gray area operator who makes his services available at marginal rates which are only made possible by violations of the ICC safety and economic regulations. VIOLATING SAFETY REGULATIONS IS STILL GOOD BUSINESS At the present time, enforcement of safety regulations by the Interstate Commerce Commission is not effective. The Doyle report notes: "It is a common saying in the industry that under present interstate enforcement programs an unauthorized motor carrier can carry out his illegal transportation activities in interstate commerce for a period of 5 years or more before he may be forced to cease and desist."1 Enforcement of safety regulations by State agencies is sporadic, lethargic, and far too lenient. In 1957, the ICC conducted four nationwide road checks at more than 150 road points plus a special check on the Florida-Georgia line. Over 46,000 interstate trucks were examined and of these 17.5 percent, or nearly 1 out of every 5, were found to be in such dangerous condition that they had to be ordered out of service immediately. Spot checks were made on common, contract, private, and exempt motor carriers. The exempt units were found to be in deplorable condition. Sixty-seven percent, or two out of every three exempt units, were found to have four or more vehicle or driver defects. These road checks underscored the fact that most exempt carriers are subsidizing their low cost of operation by refusing to carry out basic safety regulation requirements. 2 Neglected exempt trucks are a public menace. Apart from the losses to the trucking industry, the public at large is in danger from the continuance of exempt trucks which have not been properly maintained on the highways. A survey of accidents on the New Jersey Turnpike from 1952 through 1957 showed that trucks were involved in a disproportionately high proportion of accidents. Of 6,048 accidents reported, trucks were involved in 1,508, or in almost 25 percent of all accidents. Even worse, trucks were involved in 39 percent of fatal accidents and in 43 percent of all fatalities. Trucks were also involved in an abnormally high percentage (30 percent) of front and rear end collisions, or 846 1 Doyle report, p. 535. 2 "Accident Experience on the New Jersey Turnpike," by John R. Crosby in Traffic Engineering magazine, February 1959. out of 2,805 accidents of this type. The accident rate for trucks on this turnpike during the period of the study was 70 percent more than that of passenger car. The New Jersey study notes: "The tabulated summary for the 6-year period indicates that truck traffic accounted for 10 percent of vehicles using the turnpike and 9.8 percent of vehicle-miles. While accumulating this modest exposure record, trucks were involved in 24.9 percent of all accidents and 39.3 percent of all fatal accidents." It is reasonable to assume, from the evidence, that the "gypsy" and exempt trucker played a considerable part in compiling the high accident rates on the New Jersey Turnpike from 1952 to 1957. These trucks frequently are last to install the latest safety equipment and their operators pay little attention to control and regulation of driver hours. The great extent of truck farming in New Jersey makes it likely that exempt carriers hauling farm produce to markets in New York and elsewhere represent an unusually high proportion of trucks on the New Jersey Turnpike. This could substantially contribute to the fact that the turnpike accident record for trucks is over twice the national experience. In recommending measures to lower this alraming record, the study called for better equipment, better control of driver hours, and improved bumper design.1 Another study on the Pennsylvania State Turnpike made in late October and early November in 1960 consisted of a spot check of vehicles for their safety conformity. Forty-eight percent of private trucks which were stopped, 50 percent of exempt trucks, and 52 percent of carriers in unknown status were declared off the road as being too hazardous to operate (National Transportation Policy, p. 537). The dangerous condition of most exempt trucks was highlighted before a House subcommittee in 1962 by Robert L. Murphy, Chairman of the Interstate Commerce Commission. Mr. Murphy stated: "In a nationwide road check last October, 58.8 percent of the exempt carriers had four or more vehicle defects as compared with 28.7 percent authorized carriers. Fifteen percent of the vehicles of exempt operators were removed from service for serious defects, as compared with 10.1 percent for authorized carriers. These figures reveal nothing new. The compliance record of exempt carriers has always been considerably worse than that of authorized carriers." While we are in complete agreement with the objectives of S. 1727—namely, to put some "teeth" into the enforcement machinery at both the Federal and State level-we are impressed with the limited nature of the means proposed. Nevertheless, we support S. 1727, with some reservations and one major amendment which would constitute a major step forward in assuring more stringent enforcement of the safety regulations of the ICC. Such enforcement would tend to equalize competition between the legitimate common carrier and the illegal operator who is presently subsidized because he is permitted to drive unsafe equipment and violate the maximum hour regulations. SECTION 1 OF 8. 1727 Section 1 provides for cooperative arrangements between Federal and State Governments to enforce economic and safety laws of the United States regarding motor freight transportation. This section will encourage and permit an interchange of information by the ICC and State regulatory bodies in order to bring about better enforcement of the Interstate Commerce Act. It exempts from the proscription of section 222(d) such cooperative agreements. We favor the adoption of this section. SECTION 2 OF S. 1727 Section 2 would have the effect of encouraging the several States to require ICC-regulated motor carriers to register their operating authorities in accordance with certain uniform standards. The study states: "(7) An appreciable improvement in highway safety and reduction in accident severity could be achieved on the turnpike by (a) Improved rear lighting on trucks. (b) Universal adoption of the recommended standard rearward warning devices delineating a very slow moving or stopped vehicle. "(c) Adequate bumper designs on the front and rear of trucks. "(d) Better regulation and control of driver hours of service. "(e) Improved truck performance, particularly its accelerative ability." |