Yesterday, when Mr. Ellis testified to this committee, he commented to some extent upon the fact that these rules and regulations of the Commission are discriminatory because they provide, as he said, certain exemptions for the railroad industry.

I would like to make it clear to this committee that the rule in no way exempts the railroads. If the railroads are engaging, and indeed some of them do engage, in operations of the type that might be called over-the-road transportation, the type of operation conducted by the ordinary motor carrier, these rules would apply to the railroads in full impact.

However, there is a provision in the rules that provides an exemption for certain limited types of railroad operations. Those operations are normally referred to by the Commission as "substituted service."

It is interesting to note that the exemption in the rule does not apply to railroads engaged in substituted service, but rather, to vehicles that are used in rail-substituted service.

In many instances, the performance of substituted service which is a practice of the railroads to distribute less-than-carload traffic in relatively local areas by motortruck to reduce expense (what we in the railroad industry refer to as "peddle-car operations") is conducted by rail subsidiaries.

In other instances, those operations are conducted by motor carriers on a contract basis. So the exemption which was referred to by Justice Black in his dissenting opinion is not an exemption to the railroads. It rather applies to a specific type of operation, which is a purely localized operation, which the railroad uses in distributing traffic that has moved long distances in rail cars and is distributed to the customers and consignees in motortruck service.

It is interesting to note, and this committee should keep in mind, that the local distribution services of the motor carriers are exempt from regulation, for much the same reason. These are short-haul, localized services in which there is no trip leasing. So the evils created by trip leasing do not exist. as I say, the Commission exempted these operations which are purely short-haul.

For that reason,

The motor-carrier industry complained in the courts and before the Commission about these exemptions. The courts unanimously held that there was ample evidence before the Commission to justify these exemptions.

Mr. Ellis also commented on the fact that the railroads rely upon leasing, that they lease cars from one railroad to another, and indeed, they do. It would be impossible to run the railroad industry if we did not lease cars from one railroad to another. But the type of leasing that the railroads do is precisely the type of leasing that the motor carriers would conduct under these regulations, because the railroad industry does not hire cars and independent contractors to operate them from itinerant movers, first in the East and then in the West, but rather leases the car from one railroad and operates it in its own business in the same way that it operates its own cars.

It is interesting to note that the statutes which are part of the Interstate Commerce Act give the Commission very wide powers over the railroad car-service rules. They can fix the compensation of

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those leases, the terms and practices. So the railroad industry has nothing comparable to the type of thing that is condemned by these leasing rules, namely, the motor carriers relying on those outside of the Commission's jurisdiction to perform their essential transportation function.

For the reasons I set forth in my longer statement before the House committee, we request that this committee not report out H. R. 3203. Senator GRISWOLD. Thank you very much, Mr. Helmetag. Is Mr. Loos here? You may proceed, Mr. Loos.

STATEMENT OF KARL D. LOOS, SOLICITOR, DEPARTMENT OF AGRICULTURE

Mr. Loos. Mr. Chairman, I am Karl D. Loos. I am solicitor of the Department of Agriculture, a position which I have held since January 22 of this year. I have been asked to present to your committee a brief statement on this subject. I am aware of the committee's admonition not to repeat material that was covered in the hearing before the House committee. I did appear before the House committee. I understand that testimony will be incorporated in this record.

First, I would like to briefly refer to Agriculture's position on this subject and why Agriculture has such an interest.

Mr. Tobin suggested in his statement that Agriculture had no significant interest in this controversy. Agriculture does have a very material interest because this trip leasing is essential to making effective the agricultural exemption, the agricultural commodities exemption of the act; so to consider the reasons for Agriculture's interest, I think we have to conside the exemption and the trip leasing together. They cannot very well be separated.

There are two primary fundamental reasons why Agriculture has such a tremendous interest in this exemption and trip leasing that makes it effective. This first is that it must be for agriculture; agriculture has a particular need for flexibility of transportation. It must, of course, also have adequacy of transportation and availability at the time it is needed.

Agriculture's crops, for the most part, are seasonal, and the need for transporting agriculture's crops is a seasonal need and not a year-around movement.

So to obtain the transportation that agriculture needs when crops are ready to move to market, we must have available something in the way of a transportation supply, a truck supply, beyond what that particular agricultural area or that particular commodity can carry on a year-around basis. For example, many, many commodities-take cranberries, for instance, which is an extreme examplemove in a very limited area in a period of, perhaps, 4 to 6 weeks. It would be obviously impossible to maintain a year-round fleet of trucks adequate to carry that crop to market. They must get their truck transportation from sources that are used normally in other movements the balance of the year.

Furthermore, the transportation of agricultural commodities does not lend itself to fixed routes or to any rigid control of the movement of trucks. The markets differ from time to time. The ordinary

origin points are frequently in areas that do not originate other freight. So no carrier that had a rigid routing in its certificate could possibly make available to agriculture the quantities and the type of transportation needed.

Furthermore, there must be flexibility, even after the transportation starts, as, for example, a truckload of tomatoes might start up the road destined for the fresh market, but before it got halfway, it might develop there were too many tomatoes in the market at that time, and as tomatoes are perishable products, that truck must be diverted to a cannery somewhere. If that truck was moving on a fixed route, it could not be diverted.

So the flexibility, availability, and adequacy of transportation that agriculture must have to move its crops can only be provided through this agricultural commodities exemption, and through a system that will make that exemption usable. Unlimited trip leasing, that is, trip leasing that is not limited to duration, must be a part of that system or we cannot possibly have the kind of transportation we need.

The second major and fundamental point in support of this proposition from the agricultural point of view is that this exemption, coupled with trip leasing, is a substitute for what industry enjoys in the matter of unregulated private transportation. As I said a moment ago, it would be impossible for an agricultural group, except in those rare cases like milk which moves every day in the year, to maintain a fleet of trucks for private transportation the year-around, when they can only use it a few months or a few weeks a year.

Private transportation is unregulated for any kind of commodity, except as to safety, of course, and agricultural commodities are regulated as to safety, too. So I think we can justify this exemption and the trip leasing on the ground that it is agriculture's substitute for what industry enjoys in the form of private transportation that is unregulated.

Specifically relating to one or two of the points that were mentioned today, Senator Bricker asked a question about safety, and whether there were any statistics that would indicate whether agricultural-exempt commodities had a poorer safety record than the regulated trucks.

I think the best short answer to that is found in the quotation from the decision of the Supreme Court in the trip-leasing case, American Trucking Association v. The United States, which has been mentioned a number of times in this hearing.

That was a case culminating a long series of proceedings before the Interstate Commerce Commission and the lower court in an effort to set aside the order of the Commission. It is inconceivable that if there had been anything in the way of evidence on this point that it would not have been introduced in the record.

The court reached this conclusion:

The conclusion that highway safety may be impaired rests admittedly on informed speculation rather than statistical certainty. A road-check examination conducted by the bureau did not indicate any significant difference in the number of safety violations between leased and owned vehicles.

Again, some reference has been made to the competition between the regulated carrier and the trip-leased vehicle, as though that competition were one between the owner and lessor of that vehicle, the

so-called gypsy trucker and the regulated carrier. That simply is not the case, because the itinerant trucker, or the truck owner-operator, cannot engage in the transportation of other-than-exempt commodities, except by virtue of the certificate of some regulated carrier. So, when that lease is made, whether it be a trip lease, or any other kind of lease, to the certificated carriers, that makes it possible for that truck to haul a particular movement, the competition then is between the regulated carrier that leases the truck, and another regulated carrier that may or may not lease its trucks.

So I think it is not quite accurate to suggest that this trip leasing results in granting certificates to the itinerant as an owner or operator. The certificate is solely in a certificated, regulated carrier. He is responsible, and must continue to be responsible, for the operation of that truck, as long as the trip lease continues.

I want to say just a word with respect to Mr. Preston's suggestion of a modification of the so-called Hinshaw amendment. I believe it was so designated in the House. His suggestion was that that be enlarged so that the next movement, if it were an empty movement, it would not count, the next loaded movement would be subject to a trip lease without limitation as to duration, if that next loaded movement followed an exempt movement under the agricultural commodities exemption, or an exempt movement under section 203 (b) (4a), the farmer-operated truck, or the truck operated by the cooperative association.

That, of course, is an improvement, but it is not adequate in that it fails to give effect to the need of the agricultural hauler to get back to his point of origin or to another area where agricultural commodities will be available.

There may be other defects. I, perhaps, am going a little too far in saying anything about this, because this proposal has not been before us for any opportunity to study.

The Hinshaw amendment was commented upon by the witnesses yesterday. I will not endeavor to repeat what they said about it and the objections they made to it. I probably should preface my remarks on it by saying that we will obviously need further time to consider it before we can possibly develop all of the objections there might be to it. But the principal objection to it that I see is that it circumscribes and holds down the flexibility of the agricultural carrier by reason of the fact that frequently it would be impossible to find the next loaded movement back to the area which must be reached before another agricultural movement could occur.

For example, if an agricultural commodity moves from Norfolk to Pittsburgh, and then at Pittsburgh a haul is picked up to Baltimore, that gets part way back, but not all the way back. There might well be a movement available from Baltimore to Norfolk, or to some intermediate point, and then a further movement to Norfolk, which would be necessary to be availed of if the full benefit of the agricultural exemption and trip leasing were to be realized by the agricultural hauler.

It seems unreasonable and unjustifiable to say to the agricultural hauler, "Well, you can get one load back in the direction you need to go, but you can't have 2 or 3 or 4 loads that may be necessary to get you back there." It unduly circumscribes the use that can be made of these trucks. It means there will be a much greater empty haul.

As I say, there may be many other objections to this amendment in the modified form, but that is the principal one I think of at the

moment.

I also want to make this suggestion. It has been emphasized pretty often that the only reason why agriculture is interested in this matter is to get cheap transportation. If that were the only interest, if the only result of this trip leasing and the agricultural exemption were to give some economy to the transportation cost of agricultural, while that would be important and desirable from the agricultural point of view, I say, if that were the only benefit, I would not be here defending the proposition.

I feel that if regulation does add something to cost, that is something that must inevitably be accepted. However, our real reason, and the reason why I believe this exemption is so essential and must be kept in use through the trip leasing practice to get the maximum benefit of it, is that it is so essential to the flexibility of transportation and to giving agriculture the quantity as well as the type of transportation that it needs, at the exact time it needs it.

You cannot store these commodities. When they are ready to market, they have to move. Asparagus has to move within a matter of hours. Lettuce must move within 2 or 3 days. These trucks have to be assembled when they are needed. The only way they can possibly be is through this agricultural exemption, coupled with trip leasing. There is one other matter that I would like to refer to, and that is particularly in line with new material which has developed since the hearings of the House. I refer to an opinion by Judge Henry N. Graven, the judge of the District Court of the United States for the Northern District of Iowa, in the case of the Interstate Commerce Commission v. Kroblin, an opinion rendered on June 30, 1953.

Judge Graven, in his opinion, made an exhaustive review of the legislative and administrative history on this subject.

While the case dealt with the question of whether eviscerated and dressed poultry was within the agricultural commodities exemption, he referred to the trip-leasing feature and covered the whole statutory history in a manner which I think is very enlightening and very illuminating.

For example, he says in the opening remarks in the opinion:

This particular case is but one engagement of a much larger battle that has been raging for many years. The battle commenced when legislation was proposed granting regulatory powers to the Interstate Commerce Commission as to interstate transportation by motor vehicles, and has continued ever since.

Again, at another point, he says:

The controversy has largely resolved around the matter of the exemption in favor of commercial truckers engaged in hauling farm and other commodities. There has been litle controversy as to the exemptions in favor of farmers who use their own trucks to haul their produce to market and in hauling supplies to their farms.

And with respect to trip leasing, he says, at page 5 of the opinion: Ever since the passage of the act, there has been present the brooding omnipresence of trip leasing. Trip leasing, and matters connected with it, are an important part of the background of the general battle that has been waged in connection with the agricultural exemption. That background is also explanatory of some of the attitudes and positions taken by the Interstate Commerce Commission, the Department of Agriculture, and other interested parties.