Amendment to Interstate Commerce Act (trip Leasing)

AN ACT 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

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 204 of the Interstate Commerce Act, as amended (49 U. S. C., sec. 304), is amended by adding at the end thereof the following subsection:

"(e) The Commission is authorized to prescribe, with respect to 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

"(1) regulations requiring that any such lease, contract, or other arrangement shall be in writing and be signed by the parties thereto, shall specify the period during which it is to be in effect, and shall specify the compensation to be paid by the motor carrier, and requiring that during the entire period of any such lease, contract, or other arrangement a copy thereof shall be carried in each motor vehicle covered thereby; and

"(2) such other regulations as may be reasonably necessary in order to assure that while motor vehicles are being so used the motor carriers will have full direction and control of such vehicles and will be fully responsible for the operation thereof in accordance with applicable law and regulations, including the requirements prescribed by or under the provisions of this part with respect to safety of operation and equipment; but nothing in this part shall be construed to authorize the Commission to regulate 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."

Passed the House of Representatives June 24, 1953.
Attest:

LYLE O. SNADER, Clerk.

The CHAIRMAN. I have a number of communications here that I wish to make a part of the record. The first one is by Alexander Markowitz, general traffic manager of Helm's New York Pittsburgh Motor Express, Inc., and that statement of Mr. Markowitz that he asked be filed in the record says: "Direct testimony of Witness Markowitz"; but his isn't testimony. It will be just simply filed as his statement and made a part of the record.

(The statement submitted by Mr. Alexander Markowitz is as follows:)

BEFORE THE INTERSTATE COMMERCE COMMISSION, EX PARTE No. MC-43, LEASE AND INTERCHANGE OF VEHICLES BY MOTOR CARRIERS; DIRECT TESTIMONY OF WITNESS MARKOWITZ

My name is Alexander Markowitz. My business address is 2700 Smallman Street, Pittsburgh 22, Pa. I am general traffic manager of Helm's New York Pittsburgh Motor Express, Inc., a position which I have held for the last 3 years. I am also a vice president and director of the company. I have been in the transportation business for more than 25 years, and with the motor-carrier industry since the inception of regulation. I participated n these proceeidngs from the beginning, as general traffic manager of my former connection, New York & New Brunswick Auto Express, Inc. I then opposed the practice of oneway trip leasing and payment to owner-operators upon a percentage of the revenue, or any form of compensation related in any way to the load on the vehicle being leased in that manner. Those are still my views and this testimony is offered in opposition to the continuation of the practice of one-way trip leasing or payment for any leasing service upon percentage of revenue or similar forms of compensation.

I am authorized to speak for, and my views and testimony in this proceeding are given on behalf of:

Helm's New York Pittsburgh Motor Express, Inc.

Adley Express Co., New Haven, Conn.

M & M Transportation Co., Somerville, Mass.

St. Johnsbury Trucking Co., St. Johnsbury, Vt.

Great Southern Trucking Co., Jacksonville, Fla.

Chicago Suburban Motor Carriers Conference, Chicago, Ill.
Chicago-Milwaukee Motor Carriers Conference, Chicago, Ill.
Lancaster Transportation Co., Lancaster, Pa.

We believe the one-way trip lease, with no responsibility on the part of the carrier leasing for the safe return of the vehicle and its driver to its point of beginning, or for continuous employment for a period of at least 30 days in its regularly scheduled service, to be an evil practice. It is not in the public interest. It fosters destructive competitive practices as between motor carriers and with other forms of transportation. We believe that it should be outlawed as a device of deregulation, a subterfuge to avoid responsibility which must properly fall upon the operator who engages in such practices for private gain in greater amount than would be available under proper operation, and continuing responsibility for more than the few hours required to transport and deliver the single load being transported in that manner under the cloak of a certificate or permit. We do not oppose the practice of leasing equipment under proper safeguards and rules promulgated and enforced by the Commission in the public interest. The ownership of a vehicle by a carrier does not in and of itself establish his responsibility. It is his method of operation which determines this and it is with that situation that we believe the Commission must deal in this proceeding. We do not oppose trip leasing under similar safeguards and rules, and I have set forth on exhibit No. 1, Witness Markowitz, offered for identification and in evidence, in response to the first item set forth in this proceeding with respect to the provisions of section 207.4 (a) (3), dealing with the term of a trip lease, a proposed rule to replace that promulgated by the Commission thus far in these proceedings, which I believe will serve that purpose.

We propose that the present regulation be continued without change, and that in addition thereto another paragraph be added to the section with respect to control of the practice of trip leasing, that will require continuous responsibility for the vehicle and the driver, by the lessee for at least one continuous bona

fide round trip returning to the point of beginning or within a reasonable area thereof. We believe the regulation to be workable and practical. It gives freedom of action and flexibility to those who argue that the device of the trip lease is necessary to meet peak periods of operation, and for other legitimate reasons upon which the practice of trip leasing in that manner may be properly founded. It outlaws the real evil, the one-way trip lease, upon which every other evil connected with the practice of trip leasing, which the Commission has found to exist in this proceeding, is made possible.

We believe that the exhibit speaks for itself and is responsive to the order of the Commission in this proceeding. In many ways, it resembles the regulations issued by the Commission in this proceeding under date of November 30, 1953, amending subdivision (i) of section 207.4 (a) (3) which deals with arrangements with exempt equipment, modified in accordance with the for-hire carrier undertaking of certificate or permit holders desiring to engage in such practices. The proposed regulation also prevents situations such as that which arose at Washington, N. J. when, on March 20, 1953, a trip-leased vehicle, returning from New York City after discharging its load for a certificated carrier there, was involved in a fatal accident which caused the deaths, of 10 members of 1 farm family, with apparent lack of responsibility of the leasing carrier because a oneway trip lease had been executed by the parties, and the unladen vehicle making the return trip was ostensibly not under the responsibility of the carrier which had leased it for the one-way trip which had been completed prior to the accident. The Commission is investigating other aspects of that matter, including the use of an irresponsible driver operating without a license.

While such tragic happenings might not be wholly avoided by the proposed regulation, we believe it would have a sobering and deterring effect upon the use of one-way trip leased gypsies, when the company undertaking to employ them realized the full extent of their responsibility and risk and could not, through any device, escape it. There have been similar occurrences in other States, notably Connecticut, in which a State court agreed that responsibility for an accident following the empty return of a vehicle, following a one-way lease, did not clearly place responsibility for the accident on the leasing carrier. This proposed regulation will effectively deal with that matter also.

Such a provision will also serve to insure proper compliance with the Commission's hours of service and safety regulations, since a continuing inspection of the vehicle at both origin and destination will insure proper liability for the complete movement of the vehicle, will charge the carrier entering into the lease with the duty of a safe return of the vehicle to its base, and will also permit the leasing carrier an opportunity to obtain compliance with the hours of service regulations by requiring him to maintain the log for the entire trip, and make a proper check all the way to see that such rules are not violated. The vehicle and the driver, in any event, whether the equipment was owned, leased for short or long periods, or otherwise obtained, would be controlled in the same manner under the responsibility of the lessee until that responsibility was fully and properly discharged. The proposed rule fairly guarantees that result, except in the matter of willful violations, with which the Commission may deal under the criminal statutes. If the rule proposed were adopted, a one-way trip lease, or any device or subterfuge to accomplish one, would be in that category and dealth with accordingly.

The requirement for at least a round-trip lease is not unreasonable or onerous upon anyone proposing to engage in the practice of trip leasing for legitimate purposes, not trying to evade regulation, or public responsibility, and not proposing to promote the evils of itinerant trip leasing, in which the gypsy moves from place to place, hiring his services and his vehicle from day to day on a load basis, never returning home for long periods, if ever, using the public highway as his domicile and the vehicle as his home. The files of the Commission are replete with indictments and convictions obtained and investigations made of the evils of this type of leasing, and it is no accident that such situations coincide with operations that have caused the Commission and the public considerable trouble, with respect to other aspects of regulation, such as the maintenance of just and reasonable and nondiscriminatory rates, hours of service, and safety violations, the conduct of operations without a certificate or permit and the various forms of leasing subterfuges with which the Commission has had to deal in this and other cases. They go hand in hand and coupled with the percentage of revenue method of compensation, we have gypsying. It is to the abolition of gypsying that these proposals are made, not to the abolition of bona fide short- or long-term trip leasing.

There are examples of the evils of one-way trip leasing already of record in this proceeding, principally through the testimony of Witness Blanning and others who have dealt with them. Fatal accidents in which gypsy trucks were involved have spread themselves almost daily in the Nation's newspapers. A distressingly large number of such accidents have taken place when a one-way trip lease was in operation or an exempt hauler, making a trip in conjunction with a return one-way trip lease, was involved.

Aside from the matter of fatal accidents, however, I desire to show two other aspects of the evils of one-way trip leasing through two exhibits which I shall now identify as Witness Markowitz, exhibits Nos. A through D, and ask that they be received in evidence. The first of these identifies a portion of the record made in a hearing before the Interstate Commerce Commission at Pittsburgh, Pa., November 16, 1953, in which an owner-operator, trip leasing his vehicles to certificated carriers, applied for separate authority for a certificate to conduct similar operations himself. The application was denied. A previous application proceeding along the same lines had also been denied. The exhibit portrays the testimony given by a witness under oath who is himself a trip-lease victim, as to just exactly how that nefarious business is now conducted under the cloak of one carrier's certificate or another, dependent upon the origin or destination of the traffic. We believe this testimony supports our position that one-way trip leasing must be abolished to eliminate such evils.

My next exhibit is an FBI release dated January 8, 1954, announcing a search for a fugitive from justice, whose principal business appears to be that of offering his services for trip leasing, in addition to numerous illegal activities to which the FBI release also refers. We want to call a spade a spade in this proceeding. One cannot expect a high class of people to engage in trip-leasing activities. While it does not follow that every person offering his services in a one-way trip leasing operation is potentially or actually a law breaker, the danger is not only there, but the record shows that it is real. In the final analysis, however, it is the public that is being exposed to dangers of this kind. One-way trip leasing is an aid to unlawful endeavor and even to crime. The persons who engage in it are ruthlessly exploited, generally treated like animals, and become chattels of their temporary masters. Even though a majority of them may be honestly seeking a decent livelihood in that manner, the conditions under which they are eventually compelled to operate serve to degrade them, and there arises a resourcefulness that is engendered by a struggle for survival, in which they can never win and in which they must sooner or later run afoul of the law. In giving this testimony, I speak only of one-way trip leasing. There are many leased operators holding contracts with reputable firms for longer and continuous periods who are decidedly not in that category. We cannot, however, allow a practice to continue which will also serve to degrade them, and to serve the purpose of deregulation. That is the end result of the one-way trip leasing practice. Usually they also involve a third party, who operates from the shadows in making such arrangements, an unregulated broker who is actually a middleman between misery and usury.

The next part of my testimony relates to the second proviso of the Commission's order in this proceeding, which deals with rules and regulations promulgated under section 207.4 (a) (5) that compensation for leasing services shall not be computed on the basis of any division or percentage of any applicable rate or rates on any commodity or commodities transported in said vehicle, or on a division or percentage of any revenue earned by said vehicle during the period for which the lease is effective. This provision is being assailed by nearly everyone engaged in any kind of leasing practice, whether exempt, long term, or short term, for it represents the economic heart of the practice of gypsying or leasing, and upon its being upheld or removed in this proceeding, depends the future of this entire practice.

Without the opportunity to relate the compensation to leased operators on a percentage of the revenue to the load being transported by payment per ton, per hundred pounds, or in some other measure directly related to the revenue received from the lading, the practice of gypsying might disappear entirely, and that of leasing would be weighed by the operator against his alternative of making other arrangements for the acquisition of the vehicles to conduct operations by ownership of them. The role of a certificate or permit holder as a broker, without lawful right to such designation as an agent of deregulation, would suddenly end. All certificate holders or permit holders would be compelled to give attention to their costs and methods of operation and, in weighing them, without the economic advantage of being able to transfer all of

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