Certain witnesses appearing before your committee who are members of this union testified concerning violations of law and of existing rules and regulations of the Interstate Commerce Commission, such as those governing hours of service, while operating leased. equipment. We do not believe, and in fact we know, that such persons are not typical of the members of this union. We know from contact with the members of this union that the large majority of them, as other Americans, are law-abiding citizens. We respectfully submit that men who willfully and knowingly violate the law and particularly the law and rules and regulations involving public safety will do this whether they are operating a leased vehicle or a company-owned vehicle. Fortunately such individuals are an infinitestimal minority of the truckdrivers of the United States. The violations of law and safety rules and regulations of the Interstate Commerce Commission by truckdrivers will continue in the future to the extent that there are men willing so to do even if every vehicle operated by a for-hire carrier upon the highways of the United States is owned by the carrier operating it. Proper concepts of the duties of citizenship and of the moral responsibility to obey laws and rules and regulations made in the public interest, if they do not exist in an individual in the first instance, cannot be instilled by the adoption of additional rules and regulations. We respectfully submit that the testimony of certain witnesses before your committee called by the International Brotherhood of Teamsters-Chauffeurs-Warehousemen and Helpers of America should be weighed in the light of the enviable record of conscientious public service of the rank and file of that organization. Five representatives of motor carriers listed as opponents of the bill appeared as witnesses. One of these, however, Witness Speyer, while making some suggestions as to changes in existing law, definitely supported the use of leased equipment and cannot, we believe, be construed as opposing the proposed legislation. Of the other witnesses, 3 represented individual companies and 1 represented 2 groups of carriers in the Chicago area, most of which are local in character conducting their principal operations in and about the commercial zone of Chicago where they are exempt from all regulation by the Interstate Commerce Commission except safety provisions and are specifically exempted from the harsh, drastic, and unworkable rules and regulations included in the order of the Interstate Commerce Commission concerning leasing practices approved May 8, 1951. Such line-haul operations as are conducted by these groups are principally between Chicago and Milwaukee, a distance of approximately 80 miles and virtually the only operations of any distance conducted by the carriers represented by this witness were between Chicago and certain points in Minnesota. These carriers are in a position where operating equipment without lading constitutes no problem because of the short distances involved. Even so, the witness indicated that the members of these groups were not unanimous in their views in opposing the legislation. We want again to emphasize the fact that much of the operations carried on by the members of this group are within the Chicago commercial zone where they are exempt from the very rules and regulations concerning leasing practices that the proposed legislation is designed to remedy. No wonder they have no interest in the passage of the proposed legislation. As to the witnesses representing individual motor carriers opposing the bill, the testimony of Witness Adley of Adley Motor Express of New Haven, Conn., may be considered as typical. This witness indicated that by reason of leasing practices the substantial motor carriers of the United States, such as his company, are being "driven to the wall." It is interesting to note that the annual reports filed by the company of this witness with the Interstate Commerce Commission show a continuing improvement in its financial condition as evidenced by the fact that in the year 1951, doing a gross business of $5,650,995, its operating ratio was 88.76, and in 1952, with a gross business of $6,204,128, its operating ratio was 85.5. The lower the operating ratio the better the financial condition of the carrier. The carrier represented by Witness Adley opposing the legislation having an operating ratio of 85.5 is in an enviable financial position. It does not appear, therefore, that the company of Witness Adley is being "driven to the wall" by carriers using leased vehicles. The real reason the company of this witness is not interested in the pasage of this bill is because of the compact nature of its operations into and out of New York City with a balanced movement in both directions and its most distant points of operation all located in the industrial district of the Atlantic seaboard. A representative of this same carrier in sworn testimony before the Interstate Commerce Commission in a recent case admitted that it does not handle any traffic which does not both originate at and is destined to points on its own routes and refuses to accept any interline or interchange freight whatsoever from other common motor carriers. Atlantic seaboard shipments originating at or destined to distant parts of the United States are refused by this carrier and shippers must depend upon the services of other motor carriers such as the members of this conference. No wonder this carrier is not intereted in the passage of the proposed legislation. VII. CONCLUSION The Motor Carriers Leasing Conference appreciates the privilege granted to it by the committee of filing its original statement, this supplemental statement and the opportunity for the appearance and testimony of Witnesses Ellis and Diehl. We respectfully submit that the pending legislation, H. R. 3203, will cure the situation now existing by reiterating in unmistakable language the previously expressed will of Congress thereby prohibiting the Interstate Commerce Commission from thwarting such expressed will. We further respectfully submit that an emergency exists for the enactment of such legislation because the Interstate Commerce Commission may at any time make effective the rules and regulations governing leasing practices, provided for in its order of May 8, 1951. We submit that H. R. 3203 in its present form is short, to the point, and understandable by all. We respectfully request the committee to approve H. R. 3203 in its present form without amendment and to report it favorably for passage to the House at the earliest moment consistent with the numerous other important and pressing duties of the committee. Respectfully submitted. MOTOR CARRIERS LEASING CONFERENCE, Secretary, Pittsburgh, Pa. The CHAIRMAN. We will insert in the record at this point a statement presented by Mr. C. J. Williams, of the Hillside Transit Co., Inc., Milwaukee, Wis., in opposition to the bill. (The prepared statement follows:) STATEMENT OF C. J. WILLIAMS, PRESIDENT, HILLSIDE TRANSIT CO., INC. I am president of the Hillside Transit Co., Inc., at 1526 South First Street, Milwaukee, Wis. This is a contract carrier trucking company holding operating permits from the Interstate Commerce Commission and the Wisconsin Public Service Commission. In addition to this, I am a director of the American Trucking Association, the Wisconsin Motor Carriers Association, and also a director and vice chairman of the Contract Carrier Conference of the American Trucking Association. I do not represent the American Trucking Association in this hearing, but I do represent, besides my own company, the Wisconsin Motor Carriers Association and also the Contract Carrier Conference of the American Trucking Association. Resolutions condemning trip leasing of owner operators and supporting the Interstate Commerce Commission regulations on this particular point have been passed and confirmed by the two organizations which are represented and I am here to present their viewpoints. I would like to point out here that some members of both organizations are opposed to any interference with their use of owner operators under trip leases. Trip leasing other than that between two authorized carriers is a device whereby merchandise is moved by a lessor without operating authority. The ramifications of this device are so widespread that I believe the question involved is the question of whether regulations should be either entirely eliminated or continued only on those companies who have bought their own equipment with the simple idea of carrying out their obligations under their certificate or permits. With respect to authorized carriers using the so-called gypsy operators, the avowed purpose is to move excess freight in a particular direction so as to keep their other freight on a balanced movement. This completely ignores the fact that what they consider excess is the very movement at times needed for some other authorized carrier to balance his freight movements. Even if the avowed purpose is correct and is carried out, then it is pertinent to ask what happens to that individual with his tractor when returning from a far-away point, since upon the discharge of the load all jurisdiction on the part of the employing authorized carrier ceases and there is no other jurisdiction of this individual. In effect this is no different than hiring a man and then discharging him 1rom employment many miles away from his home. What is meant by a trip lease is a one-way movement. The device is also used by private carriers who will lease their equipment to obtain a back use of the equipment on the back-haul, a factor which makes the private carrier operation economically possible. Stating the proposition in another way, were it not for the ability to trip, the private carrier would have shipped the outbound freight by rail or by truck. This practice has, therefore, caused all regulated carriers to lose a tremendous amount of traffic. The next example is that of exempt haulers who, in order to make profitable operations as a nonregulated carrier, transports freight on return movements, which is not exempt under this act, by the device of leasing his truck for a one-way haul. The device amounts to renting out a privilege granted by Congress. The carrier using the device is merely brokering a transportation service, and the exempt hauler is the carrier, even though he is not authorized by the Commission. The Interstate Commerce Commission held very extensive hearings on the entire subject of truck leasing by motor carriers. The evidence submitted at these hearings indicated that in many instances rate control over regulated carriers was hampered, if not completely destroyed, by the practice of trip leasing owner operators. This was true because in many instances those carriers establishing the rates were not paying the cost of operating the trucks used in performing the service. This practice leads to large profits for those owning the certificates and little profit, if not a loss, for those owning and operating the vehicles. This was one of the abuses which the Federal Motor Carrier Act originally sought to cure. The evidence before the Commission showed some instances where equipment was sold to the drivers by carriers. Under these arrangements, the carrier sold to the owner driver all of the materials including gasoline, oil, tires to the owner driver. On all of these transactions, the holders of the operating rights earned a profit while in many instances the owner of the vehicle suffered the loss. Under this so-called independent contractor arrangement wage scales are of little importance because the wage scale is incorporated in the overall contract for the transportation service and the driver has no guaranteed wage. Much has been made by people who will support this law to the effect that such operations compare favorably in safety records with those of companies owning their own equipment. The insurance companies would be the first ones to dispute this and obviously the operating company would not be in a position to establish any records on such men, since after release at the point of destination they do not know what occurs on the individual's return trip. In fact, instances were brought to light where such individuals did not even report accidents on their outgoing trip, and Mr. Blanning of the Interstate Commerce Commission has so stated naming the particular accidents in open meetings. The overloading of vehicles has been another serious result from use of such individuals, since they are often forced to take chances on account of the low revenues granted to them and they are probably the most adept in using roads which bypass scaling of weighs as they usually choose their own route and the Commission would need ten times as much enforcement personnel to be able to catch such violators. As this committee knows, the Interstate Commerce Commission is an expert body created by Congress to work out the details of transportation regulations. The Commission, as previously mentioned, has conducted extensive hearings on this subject and as a result of studying the voluminous testimony has concluded that the trip leasing of owner operators by motor carriers should be prohibited. It may very well be that the public interest would require some exceptions to this general rule and the Commission is so constituted that it can hear evidence and give consideration to the advisability of such exceptions. There are carriers who perform specialized services with special equipment such as riggers, automobile haulers and others who may be entitled to an exemption. This they may obtain from the Commission as can other carriers who have special problems. This would appear to be the way in which these problems should be handled, rather than through an amendment to the law which would prohibit the Interstate Commerce Commission, an arm of the Congress, from imposing and enforcing a regulation which, after a great deal of deliberation, it has found to be in the public interest. I would like to take this opportunity to thank the committee for listening to my testimony on this very important far-reaching subject. Respectfully submitted. C. J. WILLIAMS. The CHAIRMAN. We also have a telegram from Mr. H. D. Abbott, administrator, division of highway taxes of the State of California. The telegram will be made a part of the record. (The telegram referred to follows:) Hon. CHARLES A. WOLVERTON, SACRAMENTO, CALIF., April 24, 1953. Chairman, House Interstate and Foreign Commerce Committee: Thanks your consideration my request be heard on H. R. 3203 trip leasing. Regret unable to appear in opposition Friday as best interest of western agricultural shippers, highway carriers, and State of California would not be served by restricting powers Interstate Commerce Commission to regulate leave vehicle operations. Sole purpose carrier trip lease to shipper is to evade Federal regulation and Federal transportation taxes on carriers. Such leases invariably at cut rates destructive to established carriers. Governor Warren sent me to Washington in 1949 and 1951 to make arrangements with ICC and Collector of Internal Revenue for cooperative enforcement of State and Federal regulatory and tax laws to prevent subterfuge. Trip lease to shippers costing heavy loss of highway revenue to California and Federal Government. Carriers and shippers hauling for hire on backhauls transported 159,665 truck and trailer loads unprocessed agricultural products in and out of California last year approximately 21⁄2 million tons. Most of vehicles under long-term leases as trip leases not recognized in California. Long-term leases not restrictive in the State. Movement farm products by truck which has nearly doubled each year since 1947, recommend rejection of trip-leasing bill as unsound legislation inviting evasion of State and Federal taxes and detrimental to public interests. H. D. ABBOTT, Administrator, Division of Highway Taxes, The CHAIRMAN. The committee is now adjourned. (Whereupon, at 5:45 p. m., the committee was recessed, subject to the call of the Chair.) TRIP LEASING (Interstate Commerce Act) THURSDAY, APRIL 30, 1953 HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D. C. The committee met, at 10 a. m., pursuant to adjournment, in room 1334, New House Office Building, Hon. Charles A. Wolverton (chairman) presiding. The CHAIRMAN. The committee will come to order. We will take under consideration, for further hearing, H. R. 3203, relating to trip leasing, and the witness to be heard this morning is Mr. Karl D. Loos, Solicitor, Department of Agriculture. It was expected that we would also have with us this morning a representative from the Interstate Commerce Commission, but Dr. Splawn called me yesterday and stated that they had not been able to get their statements ready and asked for additional time. I regret it very much, but under the circumstances I saw no other course to pursue than to grant his request. So, we will proceed with your statement this morning, Mr. Loos. STATEMENT OF KARL D. LOOS, SOLICITOR, DEPARTMENT OF AGRICULTURE, WASHINGTON, D. C. Mr. Loos. Mr. Chairman and gentlemen of the committee. The CHAIRMAN. It may be that after hearing your statement we will be able to proceed without hearing anybody else. Mr. Loos. Thank you, Mr. Chairman. My name is Karl D. Loos. I am Solicitor of the Department of Agriculture and have held that position since January 23 of this year. This is the first time I have appeared before your committee as a representative of the Department of Agriculture, although I have appeared in the past as representative of private industry. Prior to taking this position I practiced law in Chicago and Washington since 1914, and during that time I have appeared before the Interstate Commerce Commission in many cases and have represented among others the agricultural organizations, such as the California Fruit Growers Exchange, now known as Sunkist Growers, and California Walnut Growers organization, California Almond Growers Exchange, and other similar organizations. The CHAIRMAN. Well, we appreciate the statement that you have made and the background of experience you have given. I have al |