ICC ADMINISTRATION OF THE MOTOR CARRIER ACT

WEDNESDAY, NOVEMBER 30, 1955

UNITED STATES SENATE,

SELECT COMMITTEE ON SMALL BUSINESS,

Washington, D. C.

The Select Committee on Small Business met pursuant to notice, at 10 a. m., in room 318, Senate Office Building, Washington, D. C., Senator John J. Sparkman (chairman) presiding.

Present: Senators Sparkman and Humphrey.

Also present: Walter B. Stults, staff director; Lewis G. Odom, Jr., chief counsel; Walter Adams, economic counsel; Robert A. Forsythe administrative assistant to Senator Thye; Darrell Coover, legislative assistant to Senator Goldwater.

The CHAIRMAN. Let the committee come to order. Let me say that I am hopeful that Senator Humphrey will be able to come later today and that Senator Duff may be with us in the later stages of the hearing. It is possible that other members may be here at some stage of the hearings, but unfortunately none of them can be here regularly.

Today the motortruck is a vital part of the American transportation industry. For example, according to the Automobile Manufacturers Association, 47.7 percent of the fruits and vegetables, 52.6 percent of the butter, 96.6 percent of the shell eggs, 75.8 percent of the livestock, 99.7 percent of the live poultry, 79.7 percent of the dressed poultry, 42.3 percent of the cheese, 80.5 percent of the milk, and 72.8 percent of the cream received at principal markets arrived via motortruck.

The importance of the motortruck is not, of course, confined to agricultural products. Nearly all kinds of manufactured articles are distributed by truck to some extent, and some are distributed almost entirely by motor vehicle. Interstate Commerce Commission reports indicate that a large proportion of particular commodities moves by truck, especially over shorter distances but often over longer distances as well. This means that the performance of the trucking industry is a matter of concern to practically every shipper in the country.

But the interstate trucking industry is not an ordinary industry— subject to the rigors of the untrammeled competition. Instead it is a regulated industry, entry into which is tightly controlled. Since 1935, the Interstate Commerce Commission-and not the dictates of the competitive market-has determined who shall be allowed to transport certain commodities, what routes he shall travel, what his minimum rates shall be, whether or not he can expand or improve his service, whether he may merge with other lines, and so forth. In

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short, the Commission by its decisions determines in large degree both the structure and performance of the trucking industry.

It determines what opportunities shall be open to the small-business man who desires to risk his capital and exercise his freedom of enterprise. It determines in large degree what service the small-business man who ships his products to market shall receive and what rate he shall pay. Here is an industry which has a multidimensional impact on small business in America.

Obviously our committee cannot explore the entire spectrum of transportation problems confronting our Nation. It does not propose to investigate the proper place of trucking, railroads, water carriers, and other media in the complex scheme of national transportation policy. However, the committee does propose to investigate the validity of the many complaints received over the last few months from small truckers and small shippers.

I may say in this connection that as some of you may have seen by the press, there has been expressed some disagreement, some criticism of our holding these hearings on the ground that we were trespassing on the jurisdiction of the Interstate and Foreign Commerce Committee which does have legislative jurisdiction over this field. However, I call attention to the fact that this committee has no legislative jurisdiction. That is, we do not have the right to pass on the merits of legislation and to present it to the Senate Calendar.

Naturally, our jurisdiction therefore, wherever we strike out, duplicates the jurisdiction of some other committee which does have legislative jurisdiction. I think that was clearly understood when the Senate, by an overwhelming vote, created this committee, and gave to us the responsibility of making a continuing study of problems confronting small business. If those problems are such as to call for legislation, there is a legislative committee to consider the wisdom of recommending legislation to the Senate as a whole, and to the Congress as a whole, for enactment. But we have the responsibility of making the study and making our recommendations to the Senate as a whole and to the various executive departments if through that method we may be hopeful of obtaining relief.

There is another thing that I should like to call attention to and that is the fact that the membership of this committee, of course, is made up of members of other legislative committees.

As it happens we have three members on this committee who are members of the legislative committee having jurisdiction over this particular field, that is the committee on Interstate and Foreign Commerce. Senator Smathers, Senator Schoeppel, and Senator Duff are all members of that committee and are members of this committee.

Furthermore the subcommittee of the Interstate and Foreign Commerce Committee to which bills pertaining to this subject matter have been referred, contains two members of this committee, Senator Smathers and Senator Schoeppel. Senator Smathers, who is a member of this committee, is chairman of that Subcommittee on Surface Transportation.

There is no intent to try to override the jurisdiction of any other committee but this committee is trying to fulfill its responsibility, under the resolution duly approved by the Senate of the United States.

Typical of the complaints we have received from small truckers and small shippers is the following letter from an attorney representing

small clients in proceedings before the Interstate Commerce Commission.

Says this attorney:

It seems to me and to my clients that the basic problem confronting Congress and the country with respect to the ICC is not simply that the decisions are long delayed and expensive. The basic problem is that the ICC takes such a narrow and restrictive view of the motor carrier authority that should be authorized that even when a small carrier is willing to run the gantlet of an ICC procedure, it has very little hope of being able to secure any significant extension or addition of authority. The ICC seems to take the same view of the economy that is taken by reactionary business and labor unions when they seek to prevent the entry of any new enterprises into their respective fields. This view seems to be based on the assumption that there is only a limited amount of business and that it is to the interest of those in the business to get the biggest slices of the pie that they can by keeping everyone else out of the field.

When such conduct is engaged in by private business or labor unions, it is prosecuted as a violation of the antitrust laws and regarded as highly improper. It seems to me that the effects are just as baneful and antisocial when they are caused by a Government agency acting under a cloak of legal right as when they are caused by monopolists or conspirators acting in violation of the law.

It is respectfully submitted that any careful analysis of and examination into the ICC administration of the Motor Carrier Act will indicate that the Commission has acted principally to prevent the entry of new enterprises or the expansion of old ones and that this is an unwise, unreasonable, and improper method of administering the transportation policy of this Nation and is an extremely poor method of encouraging the economic growth and expansion of the Nation.

These are the charges, and for the next 3 days the committee shall seek to determine the extent to which they may be valid. This morning we are to hear a number of witnesses representing various segments of the trucking industry.

This afternoon, we shall hear from Assistant Secretary of Agriculture Earl Butz and the representatives of several farm organiza

tions.

Tomorrow Assistant Attorney General Stanley N. Barnes, Chief of the Anti-trust Division, and Commissioners Richard F. Mitchell and Anthony F. Arpaia, of the Interstate Commerce Commission are scheduled to present their views.

Finally, on Friday, we shall hear from persons who have studied the problem of regulated competition in this industry and the problem of regulatory commissions, generally.

Our final witness will be Hon. Sinclair Weeks, Secretary of Commerce, who served as Chairman of the Cabinet Committee on Transportation Policy.

At the outset, I must say that the problem of administrative regulation and supervision in the public interest is a serious challenge. At times an agency, created to protect the public, becomes an unwitting handmaiden of vested interests.

As the Chairman of the Civil Aeronautics Board said with respect. to the airline industry:

there has been an undue shift of emphasis from publie convenience and necessity to the seeking and protection of private carrier rights. No one is a stronger believer than I in the free-enterprise system, but air transportation under the Civil Aeronautics Act is not free enterprise-it is regulated competition, and the only excuse for limiting competition at all is the public good. Private rights must be respected, but when protection of private interest reaches such a point that, for any case of reasonable size to reach decision, it takes months and months of hearing and reams of irrelevant, repetitive, and frequently incompetent evidence; when it takes time, energy, and money spent on pressures

to override the evidence introduced; when proceedings grow like cancer because of the need for protecting peripheral private rights *** when all these elements combine, we lose sight of the basic reason for our existence, which is to assure to the public of the United States-to the small communities, the mediumsize communities and the large cities an adequate, safe, and successful air transportation system.

This problem so clearly pointed up by the Chairman of the Civil Aeronautics Board certainly requires the attention of Congress.

One other matter should be noted at this time, namely, the curtain of fear which seems to enshroud this industry. Time and time again small truckers have contacted this committee requesting the opportunity to testify only to discover several days later that "unforeseen developments" have made their public appearance impossible.

These men felt quite free to discuss their problems in considerable detail with our staff, but they are frank to admit that their attorneys counseled them not to appear at public hearings to air their complaints. These men seemed to feel-rightly or wrongly-that they would be subjected to punitive retaliation by the Interstate Commerce Commission if their testimony in any sense were to be critical of ICC policies and practices. Rightly or wrongly, these men were at first eager to tell their stories but on reconsideration decided that their survival in the industry demanded silence.

If these fears are well founded, we have here a situation which should alarm every thoughtful American. The Interstate Commerce Commission, as well as the other regulatory agencies, was created to protect the public, not to harass the individual.

In a democracy an agency of government is the servant of the people and the guardian of freedom, not the oppressor of those who may voice disagreement or register dissent.

In a democracy the business of government is conducted in a fish bowl so that all citizens who bear the financial burdens of government have a chance to see that their mandate is faithfully executed. In a democracy an agency of the government must stand ready for a public accounting; it must be prepared to demonstrate that its position of public trust is well deserved.

This committee shall, therefore, maintain a continuing interest in the fate of the companies which have submitted oral or written statements, and shall be quick to act if any abuse of administrative authority comes to its attention. At a later time the committee may also decide to release some of the sworn depositions which are now in committee files.1

Senator Thye, who is a very valuable member of this committee and formerly the chairman and now the ranking minority member of the committee, is out of the country on an assignment with the Appropriations Committee. He has submitted a statement that I should like at this time to read into the record as follows:

Though I am unavoidably absent from this hearing, I shall read the record and follow the proceedings with great care. For the trucking industry is of vital concern not only to the small-business man but to every farmer in America. Under the agricultural exemption of the Motor Carrier Act, truckers who haul unmanufactured farm commodities to market are free from ICC regulation. They are exempt from the certificate requirements of the act, but are still subject to the safety regulations. Yet, despite this clear provision of the law, I have re

1 Retained in committee files.

ceived numerous complaints charging that the ICC has, by administrative interpretation, attempted to undermine the will of Congress.

If these complaints are borne out by testimony before our committee, I, for one, shall demand a strict accounting from the Commission. When Congress translates the will of the people into law, no regulatory agency has the right to circumvent or subvert that law by an abuse of administrative discretion. Therefore, I shall examine the record carefully in order to determine what action, if any, is warranted.

Our first witness this morning is Mr. A. W. Hawkins, Jr., of the A. W. Hawkins Co., Culpeper, Va.

Mr. Hawkins, will you come around, please?

Just have a seat, Mr. Hawkins, right there.

Mr. Hawkins, we are delighted to have you with us and we simply invite you to proceed in your own way.

STATEMENT OF A. W. HAWKINS, JR., CULPEPER, VA.

Mr. HAWKINS. I would like to say initially that I am connected with A. W. Hawkins, Inc., in the capacity of vice president, a family firm that my father founded approximately 30 years ago. My father is a man who can neither read nor write. My mother is secretary and treasurer of the company, and basically she does his reading and writing for him. My sister works in the firm with us also. It is a small family business. My father started in the transportation business as a muleskinner, and from that he went into the trucking business-1 truck-and since 1927 to the present day we have always had at least 2 trucks in Washington from our area, and we have maintained regular service between Charlottesville and New York City over certain routes. The Motor Carrier Act came into effect in 1935, and my father, a man of limited education, was not aware of what was involved. Approximately 1937, he was contacted by a Mr. C. M. Marks, an ICC field representative, who visited him and advised him of the Motor Carrier Act and that he was operating illegally at that time since he held no authority from the Commission. Mr. Marks went to great lengths in aiding my father and our attorney, who at that time was Mr. E. E. Johnson of Culpeper, Va., in making the application for him to file with the Commission.

The Commission received the application and it was passed on and approved and a certificate was issued in 1938. This certificate allowed us to operate and gave us general commodities between Charlottesville, Va., and New York City, serving over certain routes. We had some bills of lading to back up our testimony. We had shippers to testify. We had drivers. We had employees. And we had people connected with the business such as people who sold us gasoline and people who solicited business for us and people of that nature.

Basically my father who appeared in 1938 to testify on his actions of 1935 and previous to that, was not able to give a good clear-cut picture of his operation 3 years earlier. I am sure you can appreciate that. If, for example, a contractor of houses today, who had the same limited education my father had, were called upon to describe his operations 3 years ago, I seriously question whether he would be able to do that much better or if as well.

Following this certificate received from the Commission, our certificate was protested by Mr. F. X. Masterson who represented the Official Classification Territory Lines, which is basically a rail group; at the