On the other hand, it seems entirely reasonable to assume that private truck operators would again be subjected to uncertainty and again forced to defend themselves against selfish attacks in time-consuming and expensive litigation.

We respectfully submit that the change proposed in S. 1677 is not required for proper definition of private truck operation, that it would not facilitate enforcement, and we urge that it not be approved. We appreciate and thank you for this opportunity to express our views.

Senator LAUSCHE. Thank you very much for your testimony.
Mr. DECKER. Thank you, Mr. Chairman.

Senator LAUSCHE. Mr. Rice.

STATEMENT OF E. G. RICE, PRESIDENT, COMPLETE AUTO
TRANSIT, INC.

Mr. RICE. Mr. Chairman, I think, if you wish, I would just as well dispense with the reading of the statement in the interests of saving time.

Senator LAUSCHE. The statement may be transcribed into the record as if it were fully read by you, and you may proceed to give your supplemental testimony.

Mr. RICE. My name is E. G. Rice and I reside in Detroit, Mich. I am president of Complete Auto Transit, Inc., which is a contract carrier by motor vehicle holding permits issued by the Interstate Commerce Commission for the transportation of automobiles in interstate

commerce.

We serve General Motors Corp. exclusively, and have served this manufacturer of automobiles continuously since a time prior to 1935. Our only service for them is in the outbound distribution of new automobiles from their assembly plants located at Flint and Willow Run, Mich.; Norwood, Ohio; St. Louis, Mo.; and Atlanta and Doraville, Ga.

In providing service for General Motors we assign motor vehicles for the exclusive use of this company. The equipment provided is an automobile type transporter and is generally of the same type provided by motor common carriers engaged in the transportation of automobiles. So far as the over-the-road transportation is concerned, the service rendered by my company is substantially the same as that rendered by common carriers engaged in the transportation of automobiles for other manufacturers. The important distinction between the operations of my company and the operations of motor common carriers of automobiles lies in the fact that our operations are so closely integrated with the operations of the shipper that we consider them a part of the shipper's complete operations.

I have had an opportunity to study the changes in the Interstate Commerce Act proposed in S. 1384, and am appearing here in opposition to that bill. I serve as the chairman of the contract carrier conference of American Trucking Associations, Inc., and have worked closely with our general counsel and the mempership in an effort to present to the Interstate Commerce Commission and to this committee proposed changes affecting contract carriage which would be satisfactory to the contract carrier industry, the shippers whom we

serve and the transportation industry generally. I, therefore, support the proposals of the contract carrier conference.

Our general counsel has or will present the views of the contract carrier conference as a whole, and I would like to limit my comments here to those of my own company and my own personal experience. I consider S. 1384 to be objectionable in its proposed redefinition of contract carriage. Under the proposed change in section 203 (a) 15, contract carriage would be redefined to include a transportation service performed "under continuing contracts with one person or a limited number of persons for the furnishing of transportation services of a special and individual nature required by the customer and not provided by common carriers."

If such a provision should become law, the operations conducted by my company probably could not be defined as those of a contract carrier. Although under the present concepts the services rendered by Complete Auto Transit are so closely integrated with those of the shipper that we consider ourselves tantamount to a substitute for private carriage. As previously indicated, however, we do not provide a type of service that is "not provided by common carriers" and, therefore, would be forced into the necessity of either going out of business or of converting the operations to those of common carriage. As a common carriage, we would be required to make our services and facilities available to the shipping public, and this would deprive us of rendering a specialized type of service now rendered for General Motors.

My company was in operation when the Motor Carrier Act of 1955, which now is part II of the Interstate Commerce Act, became a law. Our investment was made under the present concept of the law which recognizes the restriction of service to one shipper, or a limited number of shippers, sufficient specialization to constitute contract carriage. We never have held our service out to the general public, and have no desire to do so at this time. If we are required to make our services available to the general public, it may result in a change in our relations with General Motors, and may lessen or destroy the value of our investment. Such requirement would be of no particular benefit to our competitors and certainly would not be of any public benefit.

There never has come to my attention during the period of nearly 22 years of regulation any instance in which contract carrier operations, such as those conducted by my company, have had an adverse effect on the ability of common carriers to conduct efficient, economical and profitable operations. We never have been accused of having an undue competitive advantage or of engaging in destructive competitive practices; and, my experience in the contract-carrier industry convinces me that the contract carrier who is willing to devote his facilities to a single shipper, or to relatively few shippers, under long-term contracts has a legitimate place in the transportation industry.

The present definition of a contract carrier is satisfactory to my company. If the Congress finds that a redefinition is necessary or desirable, however, the new definition proposed by the contract carrier conference, in my opinion, is the one that should be selected. Such definition makes a valid distinction between contract and common carriers, and is one which would have practical application now and

for the future. The operations of Complete Auto Transit would fall clearly within the definition proposed by the conference, and I believe it would be in the public interest to have a carrier such as Complete Auto Transit remain as a contract carrier.

Another objectionable feature of S. 1384 is the requirement to be imposed in section 209 (b) of the Interstate Commerce Act that before any extension of rights be granted to a contract carrier it must be shown that "existing common carriers are unwilling or unable to provide the type of service for which a need has been shown." Although Complete Auto Transit received its initial operating rights as a "grandfather" clause applicant, it has extended its operations for General Motors through extension applications of the type contemplated by section 209 of the act. It is also possible that in the future it would be called upon to further extend its operations for General Motors, and, in all probability, would be required to secure this authority through an application to extend its rights. There is no way that my company nor General Motors can foresee additional points at which assembly plants would be located, and which Complete Auto Transit would be called upon to serve.

Under the criteria proposed in S. 1384 to govern extension applications it would be difficult, if not impossible, under such circumstances, for my company to extend a service for General Motors, although such an extension might be granted under the existing provisions of section 209 (b) or the criteria proposed by the contract carrier conference. In my opinion, the criteria proposed by the conference would be a clear guide to the Commission in determining extension applications of contract carriers, and would be a wholly equitable way of measuring the conflicting interest of motor carrier applicants, the opposing common carriers, and the supporting shippers in any particular extension application.

In conclusion, I believe that the Commission should not be empowered under any circumstances to require a carrier to change the character of its business to the extent that it would be required to serve the general public when it has not been required to do so or seen fit to do so under existing regulations. Nor do I feel that the Comission should have the power to limit or restrict my present permit to service for General Motors; for, although I have served this shipper for a number of years in the past, and intend to continue to render an exclusive service for them in the future, the time might arise when it will be necessary for me to expand my services for other shippers. A limitation upon my present authority would be depriving me of a valuable property right which heretofore could be used in any manner consistent with my commodity and territorial authorizations.

For the reasons stated above, I oppose S. 1384 and speak in support of the counterproposals of the contract carrier conference. I thank the committee for this opportunity to present my views.

I have heard the testimony of Mr. Todd and I am in agreement. with his proposal. We operate for General Motors exclusively, have for 20 years; we have never added, subtracted, or done anything about contracts. We are serving six branches which makes it rather large, as of itself, but other companies probably have such an operation broken down into several.

Now, we admit that our operation is substantially the same in the over-the-road operations as the common carriers of automobiles, of which there are many. However, the dedication of our service to the shipper is where the important distinction is. I can think of nothing that we do that he can't do for himself.

Now, there is one item I wanted to mention in connection with his use of our service. By reason of this consolidation of this six companies into one, our volume approaches $22 million or $23 million a year. That is a question of about 650,000 or 700,000 in the transportation tax of 3 percent that is paid when they elect to use a private carrier. Now that is quite an item. I feel there is one thing which hasn't been mentioned, which I would like to state, and that is in the Commission's proposal it seems to me that the desires of the shipper are lost sight of. He may choose to do business with a contract carrier. If a common carrier interposes and says "I am fit, willing, and able," why, then the shipper has no alternative but do one thing, and that is go into private carriage. He may not choose to deal with the common carrier, and that item there is left silent, so the desire of the shipper in the choice of carriers seems to have been forgotten. I believe that concludes my comments, Mr. Chairman.

Senator LAUSCHE. Now, your testimony applies primarily to S.

1384?

Mr. RICE. Yes, sir.

Senator LAUSCHE. Do I understand that you subscribe to the proposed amendment that was suggested this morning by Mr. Todd? Mr. RICE. I do, sir.

Senator LAUSCHE. Are you familiar with the expression made by Mr. Clarke concerning what part of that proposed amendment was acceptable to Mr. Clarke and what he wanted added to it to make it wholly acceptable?

Mr. RICE. You are talking with reference to the common carrier reference? I was not present at Mr. Clarke's testimony.

Senator LAUSCHE. He accepts Mr. Todd's proposal almost in its entirety, but he wants added this language:

"Provided, however, That such primary business enterprise may not be a business of transportation, nor the purchase, transportation, and sale of property for the purpose of fostering a highway transportation business”—

am I correct on that?

Mr. RICE. That is on the other bill?

Senator LAUSCHE. S. 1769.

Mr. RICE. Yes.

Senator LAUSCHE. You are not giving testimony on S. 1769? Mr. RICE. NO. There is a provision in there that the service will not be provided by common carrier, and that Mr. Clarke did nothing about. However, further on there is the matter of the issuance of a permit and a common carrier being fit, willing, and able. That he agreed to take out. However, I make the point if it is in the first place you never will get to the second. You can't become a carrier under the definition, so it should come out in both places, and I think Mr. Todd so testified.

Senator LAUSCHE. I think he testified that S. 1384 would further provide that additional permits may be issued only upon showing that existing common carriers are unwilling or unable to render the required type of service.

I wish to state at this point that because of the very difficult burden of proof that would be imposed on applicants by the last mentioned provision, the Commission, upon further consideration, voted to withdraw its recommendation to amend section 209 (b) in this respect. We, therefore, recommend that the bill be amended by changing lines 9 through 15, on page 3 to read

Now, your opposition to this proposal is that while he agrees to rectify the language in section 2, part II, he doesn't do so in the definition?

Mr. RICE. That is right, and you will never reach part II because you wouldn't be a carrier under the definition.

Senator LAUSCHE. I see. All right. Thank you very much.
Mr. RICE. So it should be out in both places. Thank you.

Senator LAUSCHE. Thank you.

Mr. MACPHERSON. Mr. Chairman, I have no prepared testimony. The remarks which will be made will be brief and to the point and I will try to speak distinctly so the gentleman can take it.

Senator LAUSCHE. Thank you very much.

Mr. MACPHERSON. My name is L. M. MacPherson, I am director of traffic for the American Seating Co., Grand Rapids, Mich., manufacturer of public seating, including school seats and desks, theater chairs, folding chairs, church pews, and transportation seating. STATEMENT OF L. M. MacPHERSON, DIRECTOR OF TRAFFIC OF THE AMERICAN SEATING CO.

Mr. MACPHERSON. We operate a plant in Grand Rapids, Mich., Lowville, N. Y., and one in Quebec. We have branches and distributors all over the country. We operate a private carrier for the reasons that a common carrier is not able to meet the requirements for transportation for our needs. All of our products are shipped knocked down or taken apart. They must be delivered to a building and installed to meet the customer requirements.

Therefore, we have some unusual requirements for delivery, and after many years of using common carrier motor service and rail service, we were compelled to go into the transportation ourselves. That trucking business has grown from 1 piece of equipment to 9 tractors and trailers.

It is our belief that this recommendation of the Interstate Commerce Commission would impose a hardship on our business. We would not like to see anything in the law which would disturb the primary business test which has been used for many years, and has been affirmed on many occasions by the courts. It should be allowed to stand, we believe.

The rail carriers and motor carriers, common and contract, have waged an incessant battle to disturb that definition, and therefore it is our opinion that the shippers should take their stand and oppose it, because a legitimate private carrier operation would be seriously interferred with. That is my reason for appearing here today.

We have no objection to observing the labor and safety regulations which we adhere to rigidly and strictly, and we feel that is as far as the Commission regulation should be extended.

Now, if any of the Senators have questions, I would be very glad to answer them.

Senator LAUSCHE. Do you have any questions you want to ask?