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TO AMEND THE INTERSTATE COMMERCE ACT
UNDERCHARGES AND OVERCHARGES
WEDNESDAY, MARCH 31, 1948
UNITED STATES SENATE,
Washington, D.C. The subcommittee met, pursuant to recess, at 10 a. m., in the committee room of the Committee on Interstate and Foreign Commerce, Senator Clyde M. Reed (chairman of the subcommittee) presiding.
Present: Senators Reed, Hawkes, and Myers.
STATEMENT OF JOHN V. LAWRENCE, MANAGING DIRECTOR, AMER
ICAN TRUCKING ASSOCIATIONS INC., WASHINGTON, D. C. Mr. LAWRENCE. Mr. Chairman, my name is John V. Lawrence. I am managing director of the American Trucking Associations. That organization is known to most of the committee, but I might say for the record that it is the national trade association of the trucking industry representing all types of carriers, both for hire and private, and having affiliated associations in all 48 States, the Territory of Hawaii, and the District of Columbia. Our offices are located at 1424 Sixteenth Street NW., Washington, D. C.
I wonder, Senator, if it would conserve time, I could summarize it a bit and the reporter can carry the full statement.
Senator REED. He can carry the full statement and you can summarize.
Mr. LAWRENCE. I know you have a heavy schedule this morning. As I indicate in the statement, I am going to discuss first S. 1194 for the purpose of conserving time, as much we say on that will have a bearing on the other bills.
In that way we will avoid some repetition.
On the bill, S. 1194, one part would place under the Federal jurisdiction claims for damages based on violations of part II of the Interstate Commerce Act and provide a 2-year statutory limit on the filing of such claims.
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 Interstate Commerce Commission to be unreasonable or otherwise unlawful.
As to our position on this bill, we favor that part which assumes Federal jurisdiction over claims with respect to violations of the act and which provides a 2-year limit on the filing of undercharge and overcharge claims.
Senator REED. Are you speaking about overcharges and undercharges?
Mr. LAWRENCE. Yes. But on the other hand, we are opposed to that other section of the bill which would apply to reparations provision in part II.
Briefly, I can summarize our position on that by first of all pointing out the relatively small size of the average motor carrier. Back in 1935, of course, this industry was visited and had to swallow in one gulp a degree of regulation that developed over some 40 or 50 years in the case of railroads. This was pointed out in the Fifty-second Annual Report of the Commission, in which the Commission stated it was probably even more comprehensive than that which had been applied to railroads up to that time.
Going to a study the Commission made a few years ago, we find there are about 2,100 of these motor carriers that are Class I carriers, and only 7 percent of the total subject to the Commission's jurisdiction are in the class I bracket. A class I motor carrier of course is much smaller than a class I railroad, in the former case it being the $100,000 or over gross revenue, whereas in the case of tłie railroads it only applies on a million dollars or more.
Of the remaining twenty-odd thousand carriers subject to the ICC, 26 percent operate only one truck; 44 percent operate only one or two trucks; and 56 percent operate only one to three; and 92 percent of the total operate fewer than ten trucks.
So, after all, it is little business.
I think as some of the witnesses here pointed out yesterday, it is a case in many instances of small shippers dealing with small motor carriers.
We come down to the matter of the reparations clause itself. I point out this relatively small size of the carriers to show, in the first case, we have a group of small business people who have their own difficulties reading or understanding tariffs, and being visited suddenly with a reparations case might very clearly just put them out of business.
Secondly, we want to point out another particular phase of the question. I think this important phase deals with the fact that Congress some years ago passed the Hoch-Smith resolution and thereafter the Commission began examining into the maximum reasonableness of the great bulk of the rail rates. Apparrently they had covered the field pretty thoroughly, because in 1931 in their annual report they drew attention to the fact that they had had occasion to pass on the reasonableness of railroad rates generally in all sections of the country.
Up to the present time the Commission has had jurisdiction over rail rates for 42 years, but at the present time the period of their jurisdiction over motor carrier rates amounts to only 12 years, from 1936 to the present.
We see, on the one hand, that most of the rail rates have been examined and approved as to their maximum reasonableness. On the
other hand, far less than a majority of the truck rates have been so examined or so adjudicated.
We know that the Supreme Court in that same year, 1931, decided that the Commission could not award reparations on shipments which had moved under rates prescribed or approved by it.
In other words, they could adjust the rate from then on.
It will be seen that in the vast body of rates, reparations would not mean a great deal today to the railroads, but with the majority of ours unapproved or unadjudicated in that fashion, it might very well be ruinous to this industry, particularly if from the present rising spiral of costs we suddenly had a leveling off or a drop, in which event many rates that are perfectly logical and lawful today might seem a little high some years later. Then there would be the question of going back on reparations for the 2-year period.
Senator REED. Would you suggest that we limit the application of this bill to class I motor carriers !
Mr. LAWRENCE. They are in the same position as the little fellow insofar as most of their rates have not been adjudicated.
They operate under the same rates that the small fellows operate under.
Senator REED. What is your main point, Mr. Lawrence, the inability of the small motor carrier to handle himself and defend himself in the reparations case?
Mr. LAWRENCE. That is the first point, sir. Senator REED. Or the question of whether your rates have not been adjudicated!
Mr. LAWRENCE. That is the second point. Finally, as to the third point in the statement, we point to the continual representations of the Commission to the Congress. The references appear in the reports of 1916, 1919, and 1930 and 1931 and 1932, on the difference between the proof in a case of unjust discrimination as compared with a case where there is unreasonableness alleged. In other words, in the former case on unjust discrimination, one must prove that he has been injured, whereas in the latter case, unreasonableness, one only proves that he paid the freight charges that may have been passed on to customers. They may have been paid for the account of someone else. But the person who paid the charges collects; that is all he has to
that he paid the bill.
Senator REED. And of course with the finding of the Commission that the rates were unreasonable.
Mr. LAWRENCE. Yes. I think when we discussed this matter before the House we illustrated it by a term which was very prevalent around the Capitol at the time, a “windfall," a term which was used when we were speaking of the Portal-to-Portal Act whe! it was before the Congress.
We find the situation where in many cases commission merchants, producers of things and sellers, passed on the charges to the public or to a client, and then would come in and get a windfall because the rate was found to be unreasonable later. We feel that even though this bill says that this will only apply to proceedings that develop after the effective date of it, we may be in a period of falling price levels, where we might have an avalanche of cases like that as prices went down and costs went down. Damages would run back on us 2 years. Whether a man was a class I, II, or III carrier, it might have the effect of breaking him.
On the other two bills, Senate 935 and H. R. 2759, I think it will be easily seen that in language they are almost identical. There may be a word or two different in them. We naturally would favor H. R. 2759 because of its 2-year provision. We feel that 2 years is ample. It has apparently proved so on undercharge and overcharge claims in connection with rail shipments all these years. We have not heard any great complaint over it.
We think that would make it uniform, and the simplest way would be not to upset things as they have been, but to use the 2-year provision.
Mr. Chairman, I have tried to summarize what is said in the statement.
Senator REED. Thank you very much, Mr. Lawrence.
STATEMENT OF JOHN V. LAWRENCE BEFORE A SUBCOMMITTEE OF THE SENATE INTER
STATE AND FOREIGN COMMERCE COMMITTEE ON S. 935, S. 1194, AND H. R. 2759
Mr. Chairman and members of the committee, my name is John V. Lawrence, and I am managing director of American Trucking Associations. That organization is known to most of you but I might say for the record that it is the national trade association of the trucking industry, representing all types of carriers, both for-hire and private, and having affiliated associations in all 48 States, the Territory of Hawaii, and the District of Columbia. Our offices are located at 1424 Sixteenth Street NW., Washington, D. C.
In my presentation here I should like to discuss first the bill S. 1194, as much of the discussion of our position on that bill applies in large measure to our position on the other two bills. In that way I think much repetition can be eliminated and time can be conserved.
THE BILL S. 1194
From the standpoint of the motor-carrier industry, the bill under consideration, S. 1194, 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 Interstate Commerce Commission to be unreasonable or otherwise unlawful.
POSITION OF MOTOR-CARRIER INDUSTRY
1. 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.
2. 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.
1. 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 now to 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.
The motor-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?