(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 think its exercise more crucial than in United States v. Pennsylvania R. Co. The enforcement of only one phase of the act was there endangered; here, practically the entire regulatory scheme is affected by trip-leasing. "" *** "A fair analogy appears between the conditions which brought about the motor carrier act and these sought to be corrected by the present rules, confirming our view of the Commission's jurisdiction.” The court considered the exemption in section 203 (b) (6) of "motor vehicles used in carrying property consisting of ordinary livestock, fish (including shell fish) or agricultural (including horicultural) commodities (not including manufactured products thereof). if such motor vehicles are not used in carrying any other property or passengers for compensation," and the arguments of some of the appellants, particularly the Secretary of Agriculture, that the rules would drastically reduce the significance of this section, in violation of the intent of Congress. With respect to this argument the court stated as follows: We are unable, however, to conclude that the economic dangers to the agricultural truckers from these rules constitute a violation of § 203 (b) (6). The mere fact that commercial carriers of agricultural products will hereafter be required to establish their charges on the basis of an empty return trip is not the same as bringing them within Commission jurisdiction generally. The exemption extends, by its own words, to carriage of the agricultural products, and not to operations where the equipment is used to carry other property. Needless to say the statute is not designed to allow farm truckers to compete with authorized and certificated motor carriers in the carriage of nonagricultural products or manufactured products for off-the-farm use, merely because they have exemption when carrying only agricultural products. We can therefore find nothing in it which implies protection of agricultural truckers' right to haul other property, even though from an economic standpoint that right is important Regulated truckers must also receive protection upon their restricted routes and limited carriage. A balance between these competing factors, carried out in accordance with congressional purpose, does not seem to us unreasonable or invalid." As indicated above, the arguments in favor of permitting trip leasing are largely economic. The vehicles of exempt commodity carriers, itinerant owneroperators, and private carriers provide a pool of equipment available to regulated carriers, even those owning substantial numbers of vehicles, during periods of emergency or peak demand, for which no investment is required and for which no maintenance facilities need be provided. The use of such equipment reduces the empty mileage, not only of private carriers and itinerant owner-operators, but also of authorized carriers which have been granted certificates or permits to transport in one direction only. Such authorities were granted generally to transport particular classes of commodities, upon evidence which justified only the one-way grant. When such carriers later attempt to obtain authority to haul in the reverse direction, they are met by the determined opposition of other carriers in the field, and it is seldom that a need for the additional authority sought can be found to exist With respect to haulers of agricultural commodities, particularly perishables, it is undoubtedly true that a substantial business has been developed, dependent upon such haulers obtaining return loads of general commodities to their points of departure. As mentioned in part above, the arguments against permitting trip leasing of owner-operated equipment are that careful inspection and examination of such equipment and of the drivers' logs, physical condition, and qualification are almost impossible when equipment is leased for a single trip because such inspection and examination consumes too much time. Control over drivers of such equipment is lax, and such drivers are careless in observing company operating requirements, schedules, and routes. On a long haul to his home base, such a driver is inclined to use a route shorter than the one to which the lesseecarrier is restricted. At times when there is an overabundance of agricultural haulers and owner-operators competing for return loads, it is impossible to prevent their exploitation by the authorized carriers. Their utilization in any important degree at such times affords an opportunity to beat down the rate structure to the detriment of the carriers which do not utilize such equipment. Conversely, when the supply of such equipment is short, carriers which depend on it are at the mercy of the owners and may find themselves unable to meet the demands of their customers. The unwillingness of such owner-operators to transport other than solid truckloads leads to a concentration of such traffic with the carriers which utilize their services, tending to a diversion of the less profitable, less-than-truckload freight to the carriers which do not utilize owneroperated equipment. Enforcement of the Commission's safety rules and hours of service is much more difficult in the case of drivers hired for a single trip. The lessee-carriers do not have the same supervision over the drivers of such equipment and the equipment itself, as they do in the case of their own employees and vehicles and those of owner-operators hired on a long-term basis. We believe that the rules and regulations prescribed by the Commission are sufficiently flexible to enable us to strike a proper balance between the competing factors, that they are necessary, and that they will not impose too great a burden on the carriers. In this connection it should be pointed out that these regulations are subject to ready amendment in the event of any emergency. For the reasons discussed above we do not recommend the enactment of H. R. 3203. Respectfully submitted. CHARLES D. MAHAFFIE, Acting Chairman, Committee on Legislation and Rules. DEPARTMENT OF COMMERCE, Hon. CHARLES A. WOLVERTON, 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 or 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 order y 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 matter, please call on us. Sincerely yours, ROBERT B. MURRAY, Jr., Senator GRISWOLD. There are also a number of letters and statements from interested parties that are to be incorporated in the record at this point. If others wish to prepare something in writing, they can submit them and we will put them in the record, although we may not be able to hear all of the witnesses in the brief hearings that we are going to have. (The material referred to is as follows:) Hon. DWIGHT GRISWOLD, Chairman, Senate Interstate and Foreign Commerce Subcommittee, Senate Office Building, Washington, D. C. MY DEAR SENATOR: May we most respectfully submit, on behalf of our several hundred members and their hundreds of thousands of principals and patrons, livestock producers, feeders, and farmers in the Corn Belt area and their truck operators, the following statement to be included, if you please, in your record July 8 of those favoring enactment of S. 925 into law. If the Interstate Commerce Commission order in Ex parte MC-43, abolishing truck trip leases, is permitted to become effective September 1, 1953, severe losses will be inflicted upon the livestock producers, feeder, and farmer, as well as upon thousands of legitimate, reliable, livestock truck operators. The practice followed for a number of years, longer than the Motor Carrier Act has been in effect, by these truck operators, handling livestock distances of more than 200 miles, of securing additional revenue by trip-leasing their driver and equipment to over-the-road truckers, makes possible the furnishing of additional market outlets for the livestock producer, feeder, and farmer, thus performing a service that is of the utmost value to our livestock industry. The livestock truck operators returning home loaded under a trip lease furnished a great many shippers service upon commodities that can be handled in livestock trucks, and an outlet that is also of great value to them. The regular over-the-road truck operator benefits through having available the additional supply of dependable, reliable transportation service. Depriving these livestock truck operators of the right to trip lease would result in either a stoppage of the service or, through increased cost, bring about higher rates and charges to be paid by the livestock producer and feeder that would be compensatory for the longer haul involved, and the return home empty would be an extravagant, wanton waste of transportation service, manpower, tires, gasoline, equipment, etc. Your proposed legislation, S. 925, would prevent these tremendous losses to the livestock producers, feeders, and farmers, and these legitimate, reliable truck operators, as well as the over-the-road authorized carriers and their patrons. The Interstate Commerce Commission decision is in direct conflict to section 203 (b) (6), as well as public interest, and the congressional national transportation policy set forth in the preamble to the Interstate Commerce Act. During the war, governmental agencies responsible for the conservation of war material, including transportation service, rubber, gasoline, equipment, etc., recognized the importance of livestock truck operators in the economic picture and fully protected their interests. It would seem use by the ICC of power and authority to control such intimate details as duration of a truck lease is beyond the authority intended by Congress. Too much emphasis cannot be placed upon the fact that these reliable livestock truck operators handling livestock interstate and distances of 200 miles or more, particularly into and out of the open, competitive public livestock markets, furnish a service that cannot and is not met by the railroads, and the stoppage of such service would withdraw a most valuable outlet and, therefore, additional competition for his animals, to the livestock farmer, feeder, and producer. Most heartily congratulate and thank you for the foresight and thoughtfulness responsible for the proposed legislation, S. 925. We, therefore, most earnestly pray that you and your associates on the Senate Interstate and Foreign Commerce Committee will approve and recommend the adoption of this splendid piece of legislation. Respectfully yours, THE CHICAGO LIVE STOCK EXCHANGE, Chairman, Transportation Committee. Hon. CHARLES W. TOBEY, INTERSTATE COMMERCE COMMISSION, Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. DEAR CHAIRMAN TOBEY: Your letter of June 25, 1953, addressed to former Chairman Alldredge and requesting comments on H. R. 3203, "to amend the Interstate Commerce Act, with respect to the authority of the Interstate Commerce Commission to regulate the use by motor carriers (under leases, contracts, or other arrangements) of motor vehicles not owned by them, in the furnishing of transportation of property," has been considered by the entire Commission, and I am authorized to submit the following comments: As originally introduced in the House, H. R. 3203 was identical to S. 925 on which our Committee on Legislation and Rules reported to you by letter dated March 27, 1953. In that letter, we discussed at some length the reasons which impelled the Commission to adopt rules and regulations respecting the lease and interchange practices of authorized motor carriers subject to our jurisdiction, and pointed out that the bill 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 was upheld by the Supreme Court on January 12, 1953, in American Trucking Associations, Inc., v. United States (334 U. S. 298). In recommending against the enactment of S. 925, we stated (at p. 16): "We believe that the rules and regulations prescribed by the Commission are sufficiently flexible to enable us to strike a proper balance between the competing factors, that they are necessary, and that they will not impose too great a burden on the carriers. In this connection, it should be pointed out that these regulations are subject to ready amendment in the event of any emergency." Several important liberalizing amendments in these rules and regulations were made on May 18, 1953, and petitions seeking other amendments are now receiving active consideration. H. R. 3203, as it was passed in the House, would amend section 204 of the Interstate Commerce Act by adding at the end thereof a new subsection (e) which would specifically authorize the Commission to prescribe, with respect to the use by motor carriers of motor vehicles not owned by them, regulations requiring that any lease, contract, or other arrangement for the use of such vehicles shall be in writing and signed by the parties thereto, shall specify the period during which it is to be in effect, and the compensation to be paid by the motor carrier, and requiring that a copy thereof shall be carried in each motor vehicle covered thereby during the entire period of any such lease, contract, or other arrangement. The Commission would be further specifically authorized to prescribe such other regulations as may be reasonably necessary to assure that the motor carriers will have full direction and control of such motor vehicles while they are being so used and will be fully responsible for the operation thereof in accordance with applicable law and regulations, including the requirements prescribed by the Commission with respect to safety of operation and equipment. The Commission would, however, be specifically prohibited from regulating "the duration of any such lease, contract, or other arrangement for the use of any motor vehicle, or the amount of compensation to be paid for such use." Actually, the affirmative grants of authority are no grants at all, since the Supreme Court has already held that we have such power. These specific grants of power may even hinder our efforts to deal with this problem in the future if the courts should interpret the specific enumeration of the subjects as to which we may regulate as a congressional intent that we have no authority to deal with the problem in any other way. By removing our authority to regulate the term of the lease and the compensation to be paid thereunder, any effective regulation of leasing is made impossible. In this connection, it should be pointed out that H. R. 3203 provides that the Commission shall have no authority to regulate "the amount of compensation to be paid" for the use of any motor vehicle. Our regulations provide that the "compensation shall not be computed on the basis of any division or percentage of any applicable rate or rates." We were dealing with the manner or method of computing the compensation and not with the amount of such compensation. Some of the supporters of H. R. 3203 interpreted this provision to mean that the Commission could not regulate as to the amount, that is, the number of dollars to be paid, but could regulate the manner or method of computing the compensation, that is, could prohibit using a division or percentage basis, and stated they had no objection to the latter. (See, for example, the statement of Mr. Matt Triggs, representing the American Farm Bureau Federaion, at p. 30 of the printed hearings before the House committee.) On the other hand, statements by proponents on the floor of the House indicate that the provision was intended to remove the Commission's authority to regulate the manner or method of compensation. (See, for example, the Congressional Record of June 24, 1953, p. 7410.) If H. R. 3203 should be adopted, we believe the meaning of this provision should be clarified. Trip leasing is one of the phases of transportation now under study and investigation by your committee under Senate Resolution 50, adopted April 11, 1949. Some of the evils incident to trip leasing, and the need for regulation thereof, are discussed at pages 21-23 of the progress report of the Domestic Land and Water Transportation Subcommittee (Rept. No. 1039, 82d Cong., 1st sess.). H. R. 3203 would prevent the Commission from dealing with this problem in the manner our investigation indicates to be the most effective and expeditious, and would probably make action by the Senate, after the completion of your study, substantially more difficult. We recommend that H. R. 3203 be not adopted. J. M. JOHNSON, Chairman. ARMOUR & Co., Hon. DWIGHT GRISWOLD, Washington 5, D. C., July 7, 1953. Chairman, Interstate and Foreign Commerce Committee on H. R. 3203, United States Senate, Washington, D. C. DEAR MR. CHAIRMAN: Attached is a statement by Armour & Co. concerning H. R. 3203 which was written by Mr. H. E. Mathews, general manager of the transportation and distribution division of Armour & Co. We would like to have this statement included as part of the record of the hearings scheduled for July 8 and 9 by the subcommittee of the Interstate and Foreign Commerce Committee. Sincerely yours, J. V. HURSON. STATEMENT OF H. E. MATHEWS, GENERAL MANAGER, TRANSPORTATION AND DISTRIBUTION DIVISION, ARMOUR & CO. Armour & Co., as a shipper of a large portion of meat, meat products, and dairy products consumed by this Nation, including the necessary transportation of live animals to the slaughtering points, has a vital interest in any legislation directly affecting our ability to ship our products as the needs of the foodconsuming public require. Because we felt that MC-43 would seriously impair our overall transportation efforts, we vigorously supported H. R. 3203 in recent hearings before the House Interstate and Foreign Commerce Committee, and our statements are now a matter of record. By virtue of this letter, we respectfully urge your committee to recommend adoption of the bill as now written and passed by the House, as we feel that if same is adopted, the Interstate Commerce Commission will have the machinery to more closely police the features of so-called trip leasing previously deemed objectional, without destroying the many advantages to the public of this well known and widely practiced arrangment. Armour & Co. urges adoption of H. R. 3203. CHICAGO, ILL., July 8, 1953. Hon. DWIGHT GRISWOLD, Chairman, Subcommittee on Interstate and Foreign Commerce, Senate Office Building, Washington, D. C. We favor H. R. 3203 because it will preserve economy, flexibility, and adequacy in transportation of livestock and other agricultural commodities from farms, ranches, and orchards to markets and other commercial channels. The 30-day lease rule and certain other rules proposed by commission to become effective |