AMEND THE INTERSTATE COMMERCE ACT

The CHAIRMAN. I have in mind now that your statement is not over 15 to 20 minutes, and we could very well utilize the time now to hear you. It may be that we would be unable to proceed with the hearing this afternoon. It may be necessary to adjourn until tomorrow morning.

I am anxious, however, to finish the hearing by tomorrow. I think it would help us to do so if we heard you at this time.

Mr. LAWRENCE. Might I have a word then, after Mr. Morrow, for a minute or two?

The CHAIRMAN. Yes.

You may proceed, Mr. Lawrence.

Mr. LAWRENCE. Mr. Chairman and members of the committee, my name is John V. Lawrence. I appear here as the managing director of the American Trucking Association. That association is the national trade organization of the trucking industry, representing for-hire and private carriers, with affiliated associations in all the States. Our offices are located at 1424 Sixteenth Street NW., Washington, D. C.

From the standpoint of the motor-carrier industry, the bill under consideration, H. R. 2324, can be divided into two general parts:

1. One part of the bill would place under Federal jurisdiction claims for damages based on violations of part II (motor carriers) of the Interstate Commerce Act, and provide a 2-year statutory limit on the filing of such claims.

2. The other part would authorize the Interstate Commerce Commission to grant reparations to shippers and others who employ motor carriers, with respect to published rates charged by motor carriers but subsequently found by the ICC to be unreasonable or otherwise unlawful.

As to our position, the motor-carrier industry favors that section of the bill which assumes Federal jurisdiction over claims based on violations of the Act, and which provides a 2-year time limit on the filing of such claims.

The industry is very much opposed to the other section of the bill which would subject motor carriers to payment of reparations with respect to rates which, at the time they were charged, were the legal published rates, and which the carriers were required by law to collect, but which at a subsequent date are found illegal.

As to the statute of limitations the industry favors the 2-year statutory limit on filing of claims based on violations of the Act because it would give motor carriers a uniform and reasonable degree of protection against suits based upon ancient violations of commission or omission, violations which in most cases were unintentional. (The bill would give shippers the same protection with respect to suits filed against them by motor carriers for undercharges. It works both ways and this, of course, is as it should be.)

The principle that such protection is desirable, reasonable, and justified is well-established and has been recognized in numerous similar enactments by the Federal and State governments. The State laws, which apply in the absence of an applicable Federal statute, are not uniform. Moreover, many of them allow considerably more than 2 years in which suits may be filed, running up to as many as 8 and 10 years. Such statutes defeat their own purpose and fail to provide the protection for which they were intended.

Most of the motor carriers who are subject to the Interstate Commerce Act perform operations in several States and some of them, such as household goods movers, operate in all the States. The confusion and difficulty inherent in this situation is obvious. Consider for example a motor carrier who hauled a shipment through three States having varying statutory limits of 2, 4 and 6 years. In performing the operation, the carrier unwittingly charged the shipper more than his published tariffs provided. The shipper, under present circumstances, could bring suit in any one of the three States involved. Such a situation not only makes for unnecessary and burdensome confusion and difficulty, it also places the motor carrier in the position where he is subject to suit under the maximum limit of the most liberal State-in this instance 6 years.

The for-hire branch of the trucking industry is made up of thousands of small business concerns. In 1935, Congress placed these concerns, many of them operators of only one or two trucks, under the jurisdiction of the Interstate Commerce Commission and made them subject to the Interstate Commerce Act one of the most rigid and comprehensive statutes of its kind, applying to virtually every minute detail of operation. It certainly appears just and reasonable for Congress to now give these small business concerns the benefit and protection of a uniform and reasonable Federal statute of limitation covering suits based on violation of the Interstate Commerce Act.

As to reparations, the mator-carrier industry is opposed to that part of the bill which would make motor carriers subject to reparations because it believes such a provision would be both unnecessary and unduly burdensome. The fact that the railroads presently are subject to such a provision is not necessarily proof that the provision is proper, and in no case should be considered justification for applying it to motor carriers.

Consider what the effect of such a provision would be. Under the Interstate Commerce Act, motor common carriers are required to publish tariffs specifically stating their rates. It is unlawful for a carrier to charge a shipper either more or less than the published rates. Insofar as all parties of interest are concerned, the published rate is the legal rate and if the carrier charges any other rate he is in violation of the law.

This is what could and would happen under a reparations provision as proposed in the bill. A carrier hauls a load of freight for a shipper, and charges the legal published rate, and the transaction is forgotten. At some future date the Interstate Commerce Commission for one reason or another decides that the legal published rate in question was higher than it should have been. The reparations provision, as proposed in the bill, would apply and the carrier would be subject to payment of full reparations on every shipment moved under the

rate.

In other words, the bill would make decisions of the Interstate Commerce Commission as to the reasonableness and lawfulness of rates retroactive. The motor carrier industry believes this would be extremely burdensome and might well mean overnight bankruptcy for small motor carrier businesses if it were put into effect. Congress did not see fit to subject the motor carrier industry to such dire possibilities in the original motor carrier law, nor has it seen fit to take such action when it has reviewed and amended the statute

from time to time in the 12 years motor carriers have been under regulation.

A motorist cannot be punished under a new traffic law for an act which was not unlawful at the time he did it. Prior to the time Congress placed motor carriers under the Interstate Commerce Act, motor carriers did or failed to do numerous things which were at variance with the law as finally enacted, but they were not considered in violation of any law until after a law covering such things was put into effect. Why, then, should they be made liable for charging rates which were the legal rates-the only legal rates-until the Interstate Commerce Commission, in its wisdom, decided otherwise. Those who favor application of a reparations provision to motor carriers usually make much of the fact that such a provision is applied to railroads. Without attempting to discuss justification of such a provision as applied to the railroads, it should be pointed out that from the standpoint of the practical results there were vast differences between railroads and motor carriers.

It bears repeating that the motor carrier industry is made up of literally thousands of small business concerns. By way of contrast, the Interstate Commerce Commission does not consider a railroad to be a class I carrier unless its annual gross revenue exceeds $1,000,000. A truck operator is considered a class I carrier if its annual gross revenue exceeds $100,000.

About 2,100 motor carriers, or only 7 percent of the total, are class I carriers. Even these "large" carriers operate an average of only 29 trucks each.

All the remaining thousands of motor carriers, over 20,000 in number, are much smaller. Twenty-six percent of them operate only 1 truck; 44 percent of them operate only 1 or 2 trucks; 56 percent of them operate only 1 to 3 trucks, and 92 percent of them operate fewer than 10 trucks. This is "little" business in the true sense of the word. The owner frequently drives a truck himself, in this class 2 and 3 group. He has no trained legal department to handle all his regulatory and other legal problems; no traffic department to handle all his rate and tariff problems. He is just a little fellow trying to earn a living, and if he has other drivers working for him he frequently has found in recent years that he was getting less out of his business than his employees did.

The little fellows woke up one day in 1935 to find that they were subject to one of the most comprehensive laws ever applied to any business of any kind. In its fifty-second nnual report to Congress, the Interstate Commerce Commission stated flatly that the regulation provided for motor carriers was, if anything, more comprehensive than the regulation provided for railroads. Virtually overnight these little motor carriers were subjected to regulation of a type that had been fed to the big railroads in small doses over a period of half a century, 47 years, to be exact, and it would not be surprising if a few of them still are not aware of the fact that virtually everything they do is subject to a law administered in Washington by an agency they did not know existed.

These truck lines are small business, just like the little corner grocery store. The difference is that their operations are to some extent competitive with big railroad corporations which Congress long ago decided must be regulated in the public interest, so Congress decided in 1935 that they should be regulated, too.

As already stated, the law is comprehensive and not always easy to interpret and follow. Some of the best lawyers in the country have disagreed vigorously as to the proper meaning of many of its provisions. Different courts have held different views, and members of the same court, including the United States Supreme Court, have differed frequently.

Is it not understandable that a truck driver might fail to interpret a provision of the law in the same way it ultimately is interpreted by a regulatory body or a court?

That is why we believe Congress owes it to these motor carriers to at least give them the protection of a 2-year statute of limitations with respect to violations of the law.

That is why we believe Congress should also refuse to subject them to the constant threat of overnight destruction by enacting a reparations clause.

In theory the reparations clause might sound perfectly logical and reasonable. But how does it work? Under regulation, the motor carrier must publish the exact rates he is going to charge. He then must file his rates with the Interstate Commerce Commission, usually to become effective within 30 days after filing. If someone-almost anyone protests the rates, the Commission can suspend them pending an investigation and ruling as to their reasonableness. Even lacking a protest, the Interstate Commerce Commission can suspend the rates on its own initiative if it believes the rates appear to be unreasonable. If the rates are not suspended and are allowed to go into effect, it is a good bet that they are pretty well in line with the rates of other transportation agencies or the carrier is not going to get much business with them.

The problem for the last 10 or 15 years has not been protection of the public from unreasonably high rates, but rather protection of transportation agencies from unreasonably low rates. As long as competition is the way it is, with shippers in a position to play one carrier against another, or one form of transportation against the other, it is not the shipper but the carriers who really need protection. Adequate proof of that statement is the record of the Interstate Commerce Commission for the last 10 years.

In any event, the average shipper is entirely aware of what the rates of the various agencies are. If he hires a carrier he usually has satisfied himself that the carrier's rates are reasonable at least as measured against the rates of others. Of course, he can come into the Interstate Commerce Commission at any time and challenge any rates and demand an investigation and a ruling. If the Commission finds the rate should be changed it can order the carrier to make the change.

But it would be entirely unreasonable to require these little motor carriers to pay reparations on every shipment that had moved under the rate in the past. Most shippers of any consequence have commerce counsel who know infinitely more about rates and tariffs than the average motor carrier. It is conceivable, at least, that unscrupulous shippers might deliberately pay a rate for months, confident that then at a later date they could go into the Interstate Commerce Commission and get a retroactive reduction.

Earning a reasonable profit in the motor carrier industry these days is difficult enough without addition of any more threats to the in

dustry's existence. The margin of profit in motor transportation, always narrow, virtually has disappeared in recent years due to the calculated policy of the railroads of depressing the rates on competitive traffic to low and unprofitable levels, while recouping their losses on carload traffic that is noncompetitive. The level of truck rates in recent years-driven downward by this war of attrition conducted by the railroads-renders ridiculous any general shipper contentions that rates are unduly high.

In the 4-year period 1939 through 1942, the expenses of motor carriers absorbed 95 cents out of every dollar of gross revenue, with income taxes still to be paid-and this was a relatively good period. In 1943 expenses took 96.2 percent of each dollar of revenue; and in 1944, 97.2 percent, and in 1945, 99.3 percent, with many individual carriers operating in the red. It should be obvious that small companies, operating on such a small margin, could be damaged irreparably by an unexpected reparations payment based on subsequent rulings that their rates, filed in good faith, allowed by the Interstate Commerce Commission to become effective, and accepted by the shippers, were higher than the Interstate Commerce Commission now believes they should have been.

Truck operators have been getting it coming and going for 10 years. What they need is a break or two, for a change, not additional burdens. Motor carriers are the "public", too, thousands of little members of the "public" who are just trying to earn a living out of a small business- -a business which is much smaller in most cases than the businesses of that segment of the public which the reparations clause is designed to protect.

What about the instances when shippers have taken advantage of the competitive situation to get rates that were lower than they should have been. Such instances are much greater in number than those involving rates that were too high. If it is fair to enable shippers to collect reparations on rates that were too high, is it not just as reasonable to enable motor carriers to collect reparations from shippers if the rates subsequently are declared to be too low?

We sincerely hope that Congress will grant this large group of small businessmen which it has taken under its wing the protection of a 2-year statute of limitations and, at the same time, refuse to impose upon it the added burden and threat or a reparations clause. The CHAIRMAN. Are there any questions, gentlemen?

Mr. HINSHAW. Yes, Mr. Chairman.

The CHAIRMAN. Mr. Hinshaw.

Mr. HINSHAW. I would like to ask Mr. Lawrence if he has specific recommendations with reference to amending the act, that he desires to make to the committee.

Mr. LAWRENCE. Mr. Chairman, I would like to say to Mr. Hinshaw that I took this assignment from our staff on very short notice. In fact, I was out of town for the greater part of last week.

We do not have any specific suggested amendments because of lack of time, but would be glad to submit them later. I think that is what you had in mind, Mr. Hinshaw.

Mr. HINSHAW. Yes. We want to know what you mean to do to the act, in order to make it conform to your ideas.

Mr. LAWRENCE. Yes, sir. That is correct. We shall be delighted

to submit them, but we have not had time.

Mr. HINSHAW. I have no further questions.