authorized in the participating carriers' respective certificates of public convenience and necessity. (d) Through bills of lading.-The traffic transported in interchange service must move on through bills of lading issued by the originating carrier, and the rates charged and revenues collected must be accounted for in the same manner as if there had been no interchange of equipment. Charges for the use of the equipment shall be kept separate and distinct from divisions of the joint rates or the proportions thereof accruing to the carriers by the application of local or proportional rates. (e) Inspection of equipment.-It shall be the duty of the carrier acquiring the use of equipment in interchange to inspect such equipment, or to have it inspected in the manner provided in § 207.4 (c) of these rules, and equipment which does not meet the requirements of the safety regulations shall not be operated in the respective services of the interchange carriers until the defects have been corrected. (f) Identification of equipment.-The authorized carriers operating equipment in interchange service under this section shall carry with each vehicle so operated a copy of the contract, lease, or other arrangement while the equipment is being operated in the interchange service. $207.6 Rental of Equipment to private carriers and shippers. (a) Renting equipment with drivers.—Unless such service is specified in their operating authorities, authorized carriers shall not rent equipment with drivers to noncarriers. (b) Rental of equipment without drivers.—Authorized common carriers shall not rent equipment without drivers to noncarriers. Notice of this order shall be given to the general public by depositing a copy hereof in the office of the Secretary of the Commission at Washington, D. C., and by filing it with the Director of the Division of the Federal Register. By the Commission. [SEAL] W. P. BARTEL, Secretary. The CHAIRMAN. Now, in view of the large number of people who have asked to testify on this bill, it has been necessary to extend these hearings for the balance of this week; that is, until Friday. On today and Thursday, the committee will hear from the proponents of the bill; tomorrow and Friday, the committee will hear from the opponents of the bill. Thus, today, Tuesday, we will hear from proponents of the bill. Tomorrow, Wednesday, we will hear from the opponents of the bill; Thursday we will hear from the proponents of the bill, and on Friday, the opponents of the bill. It is our intention, because of the pressure of business before this committee, to close these hearings on Friday. I mention that fact for this reason: That it would be an impossibility for this committee to hear every witness who has indicated a desire to be heard. It would not be possible to hear all of them if they spoke extensively, if we continued the hearings through the balance of this month and probably next month. It is therefore suggested that all witnesses who have asked for timeor it is urged that they consolidate their statements as much as possible. I take it that there are farm groups that are interested in this legislation and may be included in these classifications: The farm organizations and those associated with them; the railroads, who are in opposition to the bill; some labor unions who are in opposition to the bill, and some industry, and so forth. Now, I suggest that leaders in each of those several classifications confer together to the end that there may be some understanding and agreement between you as to the division of time to be allotted to individual speakers. It is hoped that it will be done in a way that will bring to the committee every possible argument for and against the legislation but prevent reiteration by different witnesses, which I take it would not mean much other than the consuming of time. Therefore, to the end that there may be as full and complete hearings as possible, will you assist the committee in a way in which I have indicated, by consolidating your statements, making certain that each of the points you desire to make is brought to the attention of the committee; but not taking up the time of the committee in listening to a reiteration of the same arguments over and over and over again. Now, at this point in the record, I also wish to insert the reports which have come to us from the different departments of the Government. I have before me a report from the Department of Agriculture, dated April 14, 1953, signed by the Secretary of Agriculture, Mr. Benson, which is favorable to the legislation. I will not take the time of the committee to read those at this time; but, if any of the members of the committee would like to see them, I have them here for their use. I also have a report from the Acting Secretary of Commerce, dated April 20, 1953, which is adverse to the legislation. I also have a report of the Interstate Commerce Commission, dated March 24, 1953, signed by Commissioner Mahaffie, which is adverse to the legislation. (The letters above referred to are as follows:) Hon. CHARLES A. WOLVERTON, THE SECRETARY OF COMMERCE, Washington, April 20, 1953. Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This letter is in further reply to your request dated February 21, 1953, for the views of this Department concerning H. R. 3203, a bill to amend the Interstate Commerce Act in order to prohibit the Interstate Commerce Commission from regulating the duration of certain leases for the use of equipment by motor carriers, and the amount of compensation to be paid for such use. The bill apparently is intended to overcome the present prohibition against trip-leasing arrangements contained in ICC regulations recently upheld by the Supreme Court. The position of this Department is to favor economic regulation of transportation only to the extent absolutely necessary to protect the public interest, but when regulatory need is established the administrative power conferred should be sufficiently efficient and flexible to make such action effective. This is illustrated by the present regulation of truck leasing by ICC in protection of certificated transportation agencies against certain uneconomic aspects of existing practices and conditions. Such regulations can be changed from time to time as necessary to meet new conditions or to correct adverse effects of prior action under present law. A flat statutory limitation such as is proposed in H. R. 3203 would unduly limit the Commission's discretion and destroy necessary flexibility. An orderly system of motor-carrier control is essential to our national transportation system, and it is possible that such a system might be jeopardized if the ICC were denied adequate power to control the practices in question within its reasonable discretion. We therefore oppose the enactment of H. R. 3203, which would deny to the ICC flexible authority in this important area of motor-carrier regulation in its present form. We have been advised by the Bureau of the Budget that there would be no objection to our submission of this letter. If we can be of further assistance in this mater, please call on us. Sincerely yours, ROBERT B. MURRAY, JR., Acting Secretary of Commerce. INTERSTATE COMMERCE COMMISSION, Hon. CHARLES A. WOLVERTON, Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D. C. MY DEAR CHAIRMAN WOLVERTON: Your letter of February 21, 1953, addressed to the Chairman of the Commission and requesting comments on H. R. 3203, introduced by you (by request), to amend the Interstate Commerce Act in order to prohibit the Interstate Commerce Commission from regulating the duration of certain leases for the use of equipment by motor carriers, and the amount of compensation to be paid for such use, has been referred to our Committee on Legislation and Rules. After careful consideration by that committee, I am authorized to submit the following comments in its behalf: This bill proposes to amend section 202 of the act by adding at the end thereof a new paragraph (d) which would specifically deprive the Commission of authority to regulate the duration of, and the compensation to be paid under, any lease, contract, or other arrangement for the use of any motor vehicle by a motor carrier, the exercise of which authority by the Commission was recently upheld by the Supreme Court in American Trucking Association, Inc. v. United States (— U. S. —, 73 S. Ct. 307), decided January 12, 1953. The reasons which impelled the Interstate Commerce Commission in Er parte No. MC-43, Lease and Interchange of Vehicles by Motor Carriers (52 M. C. C. 675), to adopt rules and regulations respecting the lease and interchange practices of authorized motor carriers subject to its jurisdiction may be summarized from the report in that proceeding as follows: Leasing practices of authorized carriers have presented difficult problems from the inception of regulation in 1935, particularly in determining the parties entitled to certificates and permits under the "grandfather" clauses of the act. The Commission's Bureau of Motor Carriers began a study of the practices in 1940, held meetings with various typical carriers throughout the country, and released a statistical report dealing with practices in 1943. The study was suspended during the war, but resumed thereafter, and in 1947 tentative rules to govern the practices were offered to representatives of the carriers for criticisms and suggestions. Although there was general agreement that some action should be taken to correct abuses, the carriers were unable to agree as to the nature of such action. During the war, directives of the Office of Defense Transportation and orders of this Commission, intended to make the fullest use of motor-vehicle capacity and conserve fuel and tires, sanctioned many practices which were permitted only because of the emergency. As a result, leasing among authorized carriers became more prevalent and widespread. After the war, the desire of veterans to engage in business for themselves and the ease in obtaining financial aid, together with the difficulty of entering a regulated industry, resulted in a great increase in leasing practices, particularly with respect to the employment of owner-operators. Motor common carriers in the eastern part of the country began augmenting their equipment during periods of heavy traffic with vehicles of other carriers, exempt haulers, or private carriers, without a lease of any kind. In the Chicago, Ill., area motor carriers became increasing dependent on the services of itinerant owner-operators of trucks. Arrangements for the use of equipment by authorized carriers frequently were made over the telephone, without any inspection of the vehicle by the lessee to insure compliance with safety regulation requirements or any check as to whether the driver was qualified to operate the vehicle under Commission rules. These arrangements were not always concluded before the transportation took place. Sometimes owner-operators picked up loads, and then shopped around for a carrier which would issue billing covering the shipment under the most desirable arrangement. Some operators at times transported freight on the billing of a carrier, without the knowledge of the latter, and without paying to it any portion of the revenue collected. In some instances, the owners of the vehicles obtained control of the traffic through the contacts which they established with the shippers. As a result of such contacts, in some instances the vehicle owners transported for shippers under lease, without reporting the lease to the carrier. Authorized carriers were found to be extending their operations outside the scope of their certificates or permits under the guise of leasing to other carriers. In preference to interchanging traffic at a common point, other carriers were transporting traffic through to destinations under ostensible lease to the carrier having actual authority to serve the destination. Many authorized carriers utilizing the services of owner-operators under trip leases found that they were unable to determine whether the operators were in compliance with the Commission's hours-of-service regulation, and, as such operators did not always carry certificates of physical examination, their fitness to drive could not be ascertained. Violations of the Commission's hours of service were widespread, accompanied by falsifications of the daily logs of the operators. In the case of an owner-operator engaged for a single trip, it was not always possible for the lessee-carrier properly to inspect the equipment to ascertain if it complied with the safety requirements of the Commission. A number of witnesses who were formerly owner-operators testified to driving for periods exceeding the Commission's hours-of-service requirements, ranging from 16 to 76 hours without adequate rest, overloading of equipment, deferring necessary repairs, driving under hazardous conditions and numerous other bad practices. Laxity of inspection of equipment by the lessee-carrier was a common experience of these witnesses. The Commission's policy with respect to leasing practices, particularly trip leasing, is shown in the following summary of statements from the Commission's report in Lease and Interchange of Vehicles by Motor Carriers, supra (pp. 725-726): "The evidence as to laxity in inspection of equipment and the checking by prospective lessees of drivers and drivers' qualifications relates preponderantly to equipment leased for a single trip, particularly equipment of the itinerant owner-operator who does not become integrated with the service of an authorized carrier for any definite period. *** Where their [owner-operators] services are utilized under continuing arrangements, such as those considered in the grandfather proceedings, we see no obstacles to proper administration of the act nor any necessity at present to require the assumption by such owner-operators of the status of employed drivers. We are convinced, however, that trip leasing, and especially trip leasing of equipment that is operated for the lessee by the owner, or employees of the owner, is inimical to sound regulation and proper administration of the provisions of part II of the act and of our safety regulations. The rules prescribed herein will provide that leases of such equipment apply for a definite period. Some minimum period is necessary to insure proper inspection of equipment and a check of the qualifications of the driver, particularly when the latter is not an employee of the lessee and we find that a minimum period of 30 days would be reasonable. "In this connection we observed that carriers which conduct operations entirely, or almost entirely in nonowned equipment, and, more particularly, in equipment rented on the basis of a percentage of the revenue earned with the equipment, are in an extremely favorable competitive position as compared with carriers having substantial investment in equipment devoted to for-hire transportation. Moreover, a carrier's inability to provide service except in equipment owned and operated by others raises serious doubts as to its fitness and ability. This is a matter which undoubtedly merits more consideration than it has heretofore received in passing upon applications for operating authority and for extensions of such authority. "We further conclude that compensation for the rental of equipment based upon a percentage of the revenue earned with the equipment should be prohibited. This method of compensation leads the carriers which utilize owneroperated equipment to concentrate upon certain profitable traffic to the e..clusion of other traffic. It certainly distorts the operating statistics of carriers which depend to a large extent upon equipment leased on that basis. We are persuaded also that it plays a large part in the practice of carriers which have extensive operating rights, but are unable or unwilling to provide service thereunder, of leasing such rights to others under the guise of equipment leases. "For the present we shall not require that leases by authorized carriers of the equipment of carriers of exempt commodities, that is subject to our safety regu lations, when utilized solely in return movements, apply for the prescribed minimum period. It seems appropriate to afford the parties some time in which to make the adjustments that a complete prohibition of trip leasing may render necessary. In permitting this temporary exemption we have given consideration also to the importance of such trip leasing at the present time in certain areas of the country. We conclude that *** it stands upon no better footing than the trip leasing of owner-operator equipment ***." The Commission's order prescribing rules and regulations governing leasing and interchange practices of motor carriers was sustained in two statutory 33212-53--2 three-judge courts. The first decision was in the Northern District of Alabama, American Trucking Association, Inc. v. United States (101 F. Supp. 710), hereinafter called the Alabama case, and the second decision in the southern district of Indiana, Eastern Motor Express, Inc. v. United States (103 F. Supp. 694), herein referred to as the Indiana case. In the Alabama case, the court found that the Interstate Commerce Act of 1940 enunciating a national transportation policy, was intended to expand the statutory jurisdiction of the Commission. In the words of the court: "Integrating the functions of transporting persons and property via rail, by road, and by water into a mosaic of great complexity and infinite variety, the Congress in broad and sweeping terms committed its regulation to the Commission, which had for half a century exhibited both fidelity and skill in this rapidly expanding field of industrial adventure." Although the court found that the Commission's power to prescribe the rules and regulations under consideration was not spelled out in any of the provisions of part II of the act, nevertheless, upon the principles laid down in United States v. Pennsylvania R. Co. (323 U. S. 612), the court concluded that it was the intent of Congress to confer such jurisdiction upon the Commission. The court further concluded that it could not find that the evidence afforded no rational basis for the conclusions of the Commission, or that the rules were neither appropriate nor plainly adapted to carry out the congressional intent expressed in the national transportation policy, or that there was merit in the argument that the rules were unreasonable because they prescribed absolute uniformity with respect to the carriers to which they applied, or were arbitrary because certain carriers were exempted from the force of their operation. The Indiana case also sustained the jurisdiction of the Commission, virtually for the same reasons as stated by the court in the Alabama case, from which latter opinion the court in the Indiana case quoted with approval. In the Indiana case, the court gave particular consideration to the assertions of some of the parties, including the Secretary of Agriculture, that the rules jeopardized the national economy in prohibiting the use of vehicles transporting exempt agricultural commodities in one direction for return trips as a part of the motorvehicle fleet of common carriers. Although agreeing that the discontinuance of such practices might result in restricting the distribution of the products of agriculture, increasing the mileage operated without cargo by both regulated carriers and the transporters of agricultural commodities and farm supplies, the court said this was an argument which must be addressed to the Congress. Referring to an estimate by former Commissioner Rogers that on February 1, 1950, there were approximately 40,000 haulers of agricultural commodities, farm supplies, and fish, operating in interstate commerce, owning 150,000 exempt trucks, as compared to 20,042 regulated carriers of property, the court stated: "Far from justifying the continuation of the system as developed, we are of the opinion that this evidence further points out the necessity for the stricter regulation which will result from the operation of the new rules, in view of the record in this case and the findings by the Commission of the serious evils which have resulted from the unregulated trip-leasing practices of the past, including those of the exempt commodity carriers. The Commission gave the matter very careful consideration. nullifies the agricultural exemption." We cannot agree that the order In sustaining the decisions of the two lower courts, and in affirming the Commission's authority to promulgate the rules, the Supreme Court in American Trucking Association, Inc. v. United States, supra, stated as follows: "We hold then that the promulgation of these rules for authorized carriers falls within the Commission's power, despite the absence of specific reference to leasing practices in the act. See General American Tank Car Corp. v. El Dorado Terminal Co. (308 U. S. 422, 432, 60 S. Ct. 325, 331, 84 L. Ed. 361). The grant of general rulemaking power necessary for enforcement compels this result. It is foreshadowed, of course, by United States v. Pennsylvania R. Co. (323 U. S. 612, 65 S. Ct. 471, 89 L. Ed. 499). That case validated an order requiring railroads to lease cars to a competing carrier by sea, in spite of the inability of the Commission to ground its action on some specific provision of the act. This Court pointed to the fact that the "unquestioned power of the Commission to require establishment of (through) routes would be wholly fruitless, without the correlative power to abrogate the association's rule which prohibits the interchange.” ** There is evidence here that convinces us that regulation of leasing practices is likewise a necessary power; in fact we |