The interpretation placed upon Rule III by these two parties amply illustrates and supports our argument. Intentionally or otherwise, any rule that is provided will be misconstrued by carriers in a manner to permit their evasion of Rule II. The only safe course is to abandon any attempt to define an "emergency" which will suspend the effectiveness of Rule II.

III. THERE ARE OTHER, RELATIVELY MINOR OBJECTIONS TO THE EXAMINER'S REPORT AND PROPOSED RULES WHICH WE BELIEVE REQUIRE CORRECTION

Partial Exemption of Railroads

1. The Examiner reported (p. 66) that there was one group of carriers which merited partial exemption from the rules he proposed: viz., the railroads in performing substituted motor service in the transportation of railroad freight between rail stations on railroad billing, and the Railway Express Agency in its motor transportation of railroad express traffic. The Examiner believed (p. 66):

"These operations are essentially those of the railroads or of the Express Agency, in the transportation of railroad freight or express traffic. They are performed under plans which have had the full consideration of the Commission *** They do not utilize *** the services of owneroperators. Because of the drastic change in their methods of operations that such a requirement would impose upon them, it is the opinion of the examiner that these respondents should be exempted from the requirement that drivers of leased vehicles must be employees of the lessee carrier. If abuses result from this exemption it could later be removed." The Union does not agree that there should be this partial exemption of the railroads and of the Express Agency. In the transportation field there is no halfway house, as the railroads above all others should know. If the railroads choose to conduct any part of their operations by motor carrier, then they should pro tanto be subjected to the normal restrictions and rules imposed upon motor carriers. They could show no reason why they would be harmed through imposition of all the rules on them. The fact that it would result in minimal changes in their method of providing motor-for-rail service was not, in itself, significant since effectuation of these changes would be no real detriment to the railroads. The Express Agency, similarly, to the extent it conducts motor carrier operations, should be obligated to abide by requirements applicable to all other motor carriers.

Matters of Minor Substance in Proposed Rule II

There are various matters in the framing of the all-important Rule II which we believe require correction. All of them are relatively minor in comparison with the points which we have previously covered. Of course, we believe that the introductory portion of Rule II should be redrafted, as we first proposed, to limit sources from which carriers may lease equipment. We consider in order hereafter the various additional suggestions we have for rephrasing Rule II. 2. The Examiner proposes to add a definition of the word "own" (Rule If), primarily effective in the interpretation of Rule II. Under his definition a carrier would be considered to "own" equipment if it is licensed and registered under State laws in the name of a carrier or of a wholly owned subsidiary. The Examiner's inclusion of the proposed definition represents an adoption of a proposal made by the Bureau of Motor Carriers on brief after hearing.

The Union believes that the adoption of any definition of the word "own" in these Rules is highly impolitic. The result will be that any rule which this Commission prescribes respecting the leasing of equipment will be at the mercy of the laws of forty-eight separate states with respect to the "ownership" of equipment. If equipment is licensed and registered under State laws in the name of the carrier or its subsidiary, the application of all the rules would be suspended as to vehicles so licensed and registered even though they might not be actually owned in a true sense by the carrier. It may well be that groups of carriers would endeavor to utilize existing state laws, or plug for passage of specially designed state laws, which would enable them to avoid all the rules applicable to leasing.

We see no necessity why "own" or "ownership" should be defined. Though they may be borderline cases of difficulty as to whether a carrier "owns" certain equipment, we do not anticipate that substantial questions will ever arise if words of this character are left undefined and to be determined under the law as it now exists. We appreciate that a purpose of the definitions was to ease

certain situations pointed out by the Railway Express Agency and others in the course of the hearing in which subsidiary corporations had been organized and vehicles were leased between parent and subsidiary to affect tax saving or easier compliance with state laws. The Union has never been impressed by arguments that considerations of this kind should receive serious attention from the Commission. Important regulations by a Federal authority applicable in nationwide fashion are not to be arrived at, because there may be some few parties who may be unable to continue tax savings they contrive by the formation of subsidiary corporations.

3. The introductory portion of Rule II now speaks in terms of "vehicles," although this word is not anywhere defined. Since Rule Ib contains an expansive and unobjectionable definition of "equipment," we believe that the Bureau of Motor Carriers was correct in suggesting that Rule III, in its introductory sentence, be rephrased in terms of "equipment" rather than in terms of "vehicles." 4. The Union is concerned that the Examiner may not have achieved his purpose in his rephrasing of Rule IIc. The Bureau's original proposal affirmatively stated that compensation for the use of leased equipment should be computed on a use basis, and forbade any lease which provided for payment based on the revenue earned by the equipment. The Examiner's discussion of this important issue (pages 65-66) indicates that he was well aware of the importance attached to the method of compensating for leased equipment.

But, though the Examiner was conclusive that compensation should not be based upon a percentage of revenue, we are not sure that his proposed Rule IIc represents maximum draftsmanship to preclude the evil he recognized. Rule IIc now merely forbids compensation for the use of leased equipment computed on the basis of division of percentage of any applicable rate or rates on any commodities. Undoubtedly the intention is to preclude any percentage split of the total earnings of leased equipment, but in our submission the Rule originally proposed represented draftsmanship superior to that the Examiner proposes to substitute. The original proposal not only forbade computing compensation in a certain way, but affirmatively required that the methods of computing compensation be of a definite character. We believe it wise to return to the language first proposed, particularly since no one at the hearing appeared to misunderstand the intent and application of the Rule as then stated. If it be objected that the original Rule failed to permit computation of compensation on a cost-plus basis, then we have no objection to a clarification which would make it plain that this method is unobjectionable.

5. Rule IIe. (1) requires an authorized carrier's leased equipment to be properly and correctly identified as such by displaying on the side thereof a legend reading "Operated under Lease by To avoid a token and "fine-print" compliance with this requirement the Union believes it desirable that the operative clause should read "There shall be prominently displayed

etc.".

6. Though the original proposal requires that authorized carriers retain in their files for two years truck or load manifests covering each load or trip for which leased equipment is used in its service, the Examiner's proposed Rule IIf cuts to one year the period during which such records must be retained. The Union believes it desirable and proper, all factors considered, that such documentary evidence be retained for two years. Particularly is this true since by the Examiner's proposed Rule IIh the carrier is required to retain in its files for two years the original copy of the lease.

7. The Bureau's original proposal (Rule IIg) required that before any person other than a regular employee of the carrier was assigned to drive equipment operated under Rule II, it should be the duty of the authorized carrier to insure that the driver was familiar with the Motor Carrier Safety Regulations, and furnish a certificate of physical examination. The Union's proposal would not, under any circumstances, have permitted an authorized carrier to assign a driver other than its employee to equipment operated under lease. For that reason Rule IIg became superfluous and we suggested it be stricken.

The Examiner's proposal, if it is to stand, would permit leased equipment to be driven by persons not employees of the carrier under two circumstances. These circumstances, described in the Examiner's proposed Rule IIg, involve instances in which equipment is leased between two authorized carriers or is utilized in the transportation of railway express traffic or substituted motor for

rail service. Adoption of these exceptions proposed by the Examiner would again necessitate the inclusion of Rule IIg as originally proposed by the Bureau of Motor Carriers. That is to say, it is the Union's firm conviction that a carrier, assigning a driver to leased equipment operated by it under lease, should always be responsible for the driver's familiarity with the Commission's safety regulations and with the driver's possession of a physical certificate.

8. The Bureau's original proposal (Rule II) would have required that any lease of equipment include statements as to the charges to be made for the use of the equipment, the method of arriving at such charges, and any agreements or practices affecting the charges or the value of the rental service. The Examiner has proposed no specific provision comparable to the original Rule IIi, but has embodied in Rule IIa requirements as to what the lease must contain. In the rearrangement and redraftsmanship of the provisions governing what the lease must contain, the Examiner has failed to include requirements of the character pointed out above.

The Union believes that this is an unhappy omission, and that Rule IIa should be so redrafted as again to include a clear requirement that the lease must state the manner in which compensation for use of the equipment is determined. It may be suggested that any lease, in order to be valid, must state either a total compensation, or the method by which it is to be reckoned. We, nevertheless, believe that the provisions we have pointed to may often serve a highly useful purpose and we respectfully insist that they be continued.

Matters of Minor Substance in Proposed Rule IV

9. We believe that Rule IV is defective, as now drafted, in failing to provide that any equipment, which is the subject of interchange between authorized carriers, must be properly identified to disclose the carrier responsible for its operation. The essentiality of identification appears so obvious that we do not labor the point.

There is reason to believe that the omission of such a requirement is mere oversight. The original rules formulated by the Bureau of Motor Carriers contained no provision for the identification of interchanged equipment, but these rules so restricted the types of equipment that might be interchanged as to eliminate the need for any identification requirement. The Bureau's originally formulated rules would have permitted only trailers or semi-trailers to be interchanged. Proper identification of the responsible carrier would thus always be apparent from the tractors.

The Examiner concluded (p. 66) that, under the safeguards proposed, it was proper to permit interchange of straight trucks and also tractors, when used in combination with trailers or semitrailers. This proposed expansion of the equipment which may be interchanged (to which the Union does not object) immediately creates the necessity for an identification requirement when straight trucks or tractors are interchanged.

That the failure to include such a requirement is mere oversight seems apparent from the statement of the Examiner in his Report (p. 66) that "interchange equipment should be properly identified as in the service of the carrier receiving it." It is noteworthy that even the American Trucking Associations believed that a carrier, receiving a power unit by interchange, should be required to identify such unit as being operated by it. (See ATA proposed Rule 3a set forth in the Examiner's Report, Appendix C, Sheet 3.)

10. The rules originally proposed by the Bureau of Motor Carriers would have required that traffic on interchanged equipment move "on through bills of lading issued by the carrier interchanging the traffic which shall show the name of the carrier with which it is proposed to interchange equipment." (See Examiner's Report, Appendix A, Sheet 4.) The Examiner, without discussing the point, in his own proposed Rule IVd has eliminated the requirement that the bill of lading show the receiving carrier to the interchange arrangement. The Union believes that the shipper is entitled to know the means by which it is proposed to move his traffic when it is delivered to the originating carrier. If it be asserted that it is inconvenient for the originating carrier to specify initially the interchanging carrier, the answer is that any burden of inconvenience is one which carriers should be required to bear. A member of the shipping public is always entitled to be protected, at least to the extent of knowing which carrier is handling its freight.

CONCLUSION

For the foregoing reasons the Union submits that the proposed Report of the Examiner, the proposed findings and conclusion therein contained, and the proposed Rules, should be adopted only subject to the corrections herein pointed out as desirable.

Respectfully submitted.

BURTON K. WHEELER, /s/ EDWARD K. WHEELER,

ROBERT G. SEAKS,

704 Southern Building, Washington 5, D. C. J. ALBERT WOLL,

736 Bowen Building, Washington 5, D. C.

CERTIFICATE OF SERVICE

I certify that the foregoing document has been served upon all parties to the above entitled proceeding, by mailing a copy thereof, properly addressed, to counsel for each party.

NOVEMBER 1, 1949.

EXHIBIT 3 (F)

/s/ ROBERT G. SEAKS.

ICC RULES PROBLEMS DISCUSSED

[Teamster, October 1948]

TEAMSTER LEADERS IN CHICAGO SESSION, CONCERNED OVER GYPSY OPERATORS, POINT OUT THAT LEASING SCHEMES DEFEAT UNION WAGE SCALES

Problems of serious character faced by teamster local unions in all parts of the country, because of lax Interstate Commerce Commission rules and even more lax enforcement with respect to the leasing of equipment for both over the road and cartage transportation of freight for compensation, were discussed Monday, September 20, by a meeting of representative teamster leaders at the Stevens Hotel in Chicago. The meeting was called by Frank Tobin, director of the statistical and research department of the International Brotherhood of Teamsters at the direction of the general executive board.

PREPARE FOR ICC HEARING

Plans for participation of the teamsters, on a national basis, in the ICC hearings in Washington, D. C., October 15, were outlined. A policy committee was appointed by Tobin to screen the proposals of teamster line-haul locals in preparation for the ICC hearings. The committee is composed of Anthony Morris, local 251, Providence, R. I.; Frank W. Brewster, local 174, Seattle; H. L. Woxberg, local 224, Los Angeles; Michael Healey, local 710, Chicago; James Hoffa, local 299, Detroit; Al Evans, local 407, Cleveland; M. R. Dixon, local 745, Dallas; Arthur Hudson, executive director, Central States Drivers' Council, and Frank Tobin.

W. Y. Blanning, Director of Bureau of Motor Carriers of the Interstate Commerce Commission, came from Washington to address the meeting. Director Blanning related the history of the efforts of the Commission to regulate truck leasing in the public interest. The growing practice of operators who own no trucks, but who solicit freight and employ owner operators and their methods of operation, occasioned the steps to tighten controls. Considerable headway had been made toward a standard of ICC regulations, he said, when the war came along and the ODT came in. During the conflict, in order to conserve gasoline and tires, and to insure the handling of important freight, a policy of utilizing all trucks to the maximum capacity was adopted and plans for regulation of leasing were dropped for the time being.

With the ending of the war, however, Blanning said, his staff commenced an investigation of the leasing problem, issued proposed rules and regulations, and scheduled hearings last April. At that time the American Trucking Associations failed to take any position whatever on the matter. Later, however, the ATA formed a study committee and asked the ICC to postpone the hearings until the

industry could make an investigation. This investigation has been completed, but there is no unanimity among the truck operators.

STATISTICS ARE READIED

Blanning said he had prepared exhibits consisting of statistical studies which he will present to the Commission at the October hearings. He will simply cite the facts, offering several alternatve proposals, but recommending none. The examiner will then hear other parties interested, including the teamsters' union, and will make his report and recommendations to the Commission.

Though the matter of safety on the highways is involved, as well as the proper keeping of drivers' logs, enforcement of regulations with respect to hours of service and other safety matters, the question of stability of the industry and the rendering of the best possible service to the public will be given consideration. Blanning cited numerous vicious practices which have grown up during and since the war, which not only have divided the industry but are proving a threat to regulation. He said that reports received from the field show that many practices which now are quite general in the Central and Eastern States, in the handling of of interstate commerce are harmful to the public, disruptive to the best public service, and are undermining and rendering unenforceable the present safety rules. He said that the Commission plans hearings at a later date on new safety regulations.

It was brought out by teamsters in attendance that the majority of the leasing schemes, which have become prevalent, not only cause unfair competition but are intended to defeat union wage scales and working conditions, as well as to relieve the operators of paying social security and unemployment compensation taxes, and to take the men who drive the equipment, mostly owner-operators, out from under workmen's compensation laws. By doing these things, operating costs are reduced, at the expense of the drivers, below costs of legitimate over-the-road carriers.

BEWARE OF "GYPSIES"

Frank Tobin, chairman of the meeting, said that the teamsters are concerned over the gypsy operators because they break down union conditions and wages and enable operators to dodge union contracts. This, he pointed out, is not in the public interest as it encourages a type of sweat-shop operation, creates additional hazards to the public on the highways, and threatens to destroy the very kind of sound, stable, and reliable public service that the Motor Carrier Act was passed to insure.

"The operators are interested only in framing rules for the other fellow, but not for themselves," he said. "It is the job of the teamsters to step in and protect the public interest, as well as highway safety."

It was pointed out that under the present haphazard and chaotic system of leasing it is impossible to protect the public. Operators using private, contract and even exempt trucks, seldom see either the leased equipment or the lessor-operators, do not inspect the equipment to determine if it is safe, and have little control over it. The situation is so bad in Chicago and some other cities, where there is competition between certified operators for the use of gypsy and exempt trucks, that no attempt is made by lessees to enforce ICC rules.

Executive Vice President Dave Beck called attention of the meeting to the extreme urgency of the problem. He pointed out that the trucking industry has grown so rapidly that organization by the teamsters of special groups on a national basis is required to meet such problems.

"We desire to formulate a policy of uniform character for the whole country," Beck said, "affecting our people and the industry." Proof of the seriousness of the situation is to be seen in the inability of the operators to agree on a program to put an end to the evils so plain in the leasing muddle. It must be recognized by everybody that the real purpose of most so-called leasing agreements is to get around wage schedules. The gypsy operator keeps no books and knows no rules. His hope is to expand and some day become an authorized carrier.

"In meeting this problem we must keep the public interest first. We will not solve the leasing problem today: it will require continued study and we must see that the proper investigations are made. We need organization to do this in the protection of our own people, as well as to protect the public."