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sion. The record details the plaintiff's method of operation and amply supports the finding of the Commission. The modus operandi employed by the plaintiffs shows the total absence of good faith participation by members in this conduct of their affairs, and leaves no doubt that the underlying purpose of their organization was to operate unlawfully as freight forwarders.

Now our sole purpose is to undertake to rid ourselves of unlawful competition. We have no intent to harass anyone, and I think it would be rather farfetched to conclude that under a law such as this proposed in 1727 there could be any harassment.

Senator LAUSCHE. Your position is that the requirement in the bill that the plaintiff show by "clear and patent" evidence that a violation is occurring and the further requirement that he post bond to indemnify the defendant in the event the action is ultimately decided in favor of the defendant, together with the provision that the Interstate Commerce Commission can intervene, and if it does that automatically-not automatically, but upon request-can suspend the proceedings, is adequate protection against harassment?

Mr. MORROW. Yes, sir; I certainly believe so.

Senator LAUSCHE. Now what about the complaint that has been made here today that there is discriminatory treatment of different types of carriers? That is, the exempt and the cooperative carrier is not given the protection that is given to the private and the contract and the public carrier?

Mr. MORROW. I came in rather late, Mr. Chairman. I am afraid I did not hear that testimony.

Mr. SENDER. There was testimony as to provisos that the House added. There was some feeling that the intention of these provisos was discriminatory.

Senator LAUSCHE. Well, what has been said with respect to certain carriers, and that is all of the carriers other than the exempt and the co-ops, the Commission under the bill retains jurisdiction with the three. With respect to exempt and co-ops, they must go directly to the court without the Commission having anything to say.

Mr. MORROW. I suppose that must relate to the parenthetical phrase in the right-to-sue provision.

Mr. KENNEY. That came afterward. Let's take 5401, on the bottom of page 8, for instance, is the sentence "nothing in this paragraph shall be construed to deprive the Commission of its jurisdiction to interpret"-et cetera.

The comment has been made particularly with respect to comparable language under part II that the sole purpose of this language can only be to protect those who have certificates at the expense of those who do not.

Mr. MORROW. Well, I may be a little bit dense, but I certainly do not construe it that way. As a matter of fact, I don't see that that sentence saying "nothing in this paragraph shall be construed to deprive the Commission of its jurisdiction to interpret or construe permits or rules"

Senator LAUSCHE. A little louder, please.

Mr. MORROW. I was reading that sentence too fast, I am sure, Mr. Chairman, but I don't think the sentence has any meaning. I don't think that there is anything in this bill that would disturb the Commission's jurisdiction to make these decisions anyway.

Senator LAUSCHE. That is what is claimed. But those who have certificates will still be subject to all of the protections that the Commission can give and will be allowed to go to the Commission, while those who do not have certificates can be pulled into court.

Mr. MORROW. I see the point now. It took me a long time to get it. Senator LAUSCHE. They contend that it is discriminatory; those who are certified are given one source of remedy and those that are not certified are denied this.

Mr. MORROW. I will tell you why that just simply could not be that way. Any suit that we would bring, supposing you amend this bill as we suggest, would be a suit claiming that some person was violating section 410 of the Interstate Commerce Act, which is the permit section. Senator LAUSCHE. Where would you bring the suit?

Mr. MORROW. We would bring the suit in the district court. But we would claim that they were violating a provision of the Interstate Commerce Act.

Now that would raise a jurisdictional question, and this sentnece, if it has any meaning, would apply to the exempt as well as the nonexempt, because you have to allege a violation of the Interstate Commerce Act to bring yourself within the framework of this language of the law.

Senator LAUSCHE. Well, but the certificated carrier or injured party would have two remedies: one by going to the Commission and asking it to handle the matter, and two, by going to a court.

Mr. MORROW. Well, I look at it rather the other way around. The plaintiff, we will assume, is an injured person, probably another carrier. Now we say he sues under this bill. He sues a forwarder having a permit from the Commission. I don't understand it that that forwarder could go to the Commission and assert some rights before the Commission. The Commission itself could go to the court and say we want this case remanded to us.

Senator LAUSCHE. Will the witness this morning who made the complaint which I am trying to describe at least restate it? Step up, will you please?

Mr. HARMANSON. Mr. Chairman, my statement was not directed to part IV of the act, which is the principal section of the act on which Mr. Morrow is testifying.

Senator LAUSCHE. I see.

Mr. HARMANSON. Part II, the private suits as authorized under part II of the act, direct motor carriage operations, was the section to which my statement was addressed. I do not feel competent to get into the shipper association provisions because that was not the subject of my testimony and I have not studied this section of the bill.

I can state the principle, though, which may have some application in the freight forwarder section, if you would like me to.

Mr. SENDER. Mr. Washer was the other man.

Senator LAUSCHE. Now, Mr. Washer, I think you had some views on this item.

Mr. WASHER. If I could give you an illustration it might serve to point out this confusing thing.

Let us assume that a freight forwarder brings in a district court a complaint, seeks injunctive relief against a shipper association. It must be on the grounds that that association does not come within

the purview of section 402(c)(1) and is an unlawful violation of section 410. Am I right?

Mr. MORROW. Yes; I would put it the other way; 410 is the one that raises the jurisdiction.

Mr. WASHER. Now let's assume from the standpoint before the answer is filed in the district court the defendant applied to the Commission and admitted his guilt and applied for a freight forwarder permit, or even filed a pleading in the court to the effect he was a freight forwarder in violation of the act. If he confesses, the court has no jurisdiction because under section 417 (b) the court only has jurisdiction if the freight forwarder has previously been in violation of a Commission order.

Mr. MORROW. I simply don't understand it, Mr. Chairman. If the man confesses and he is guilty I don't see what the problem is here at all. I am just sorry, I don't get that point.

Senator LAUSCHE. Now what language of the bill do you use as the predicate for your position that the jurisdiction still continues in the Commission?

Mr. WASHER. Under the proposal of the amended H.R. 5401 you will have two chances.

Senator LAUSCHE. Now identify the chances.

Mr. WASHER. The first one is in the existing section 417(b) whereby if it is a violation by a forwarder the injured party has only jurisdiction in cases of violations of Commission orders. In the proposed one in question the court would have jurisdiction, regardless of whether it had been considered by the Commission. If the defendant said "I think you are right, I am actually a freight forwarder in violation," and he has in the meantime sought a permit, the Commission, first of all, would probably have to take jurisdiction to hear his application for a permit. That would take it out of the court jurisdiction on the ground it is already considering the matter.

Senator LAUSCHE. Anything further?

Mr. WASHER. And secondly, if he pleaded he was an unlawful forwarder the court doesn't have jurisdiction.

Senator LAUSCHE. He would have to go back to the Commission? Mr. WASHER. Yes.

Senator LAUSCHE. Now let's hear your views. I don't want you to argue between yourselves; you give your views.

Mr. MORROW. I think Mr. Washer is probably right. I would think that situation would make him happy rather than unhappy, however. If a forwarder should sue a shippers association, the shippers association confesses error, says "I believe I am a freight forwarder, I am going to file an application with the Commission," and the Commission, according to Mr. Washer and I suppose he is right-would have to take jurisdiction then and probably would exercise the right under this proviso, ask the court to stay the matter until it could look into it and see whether he ought to be regulated or not. And I should think that ought to be fine for Mr. Washer's clients.

Senator LAUSCHE. All right; I think that sets it forth at least in the record, and I stop at this point.

Mr. SENDER. For the record, Mr. Morrow, do you have any objection on behalf of your clients to the striking of the words in the freight forwarder section in H.R. 5401, the words "Nothing in this paragraph

shall be construed to deprive the Commission of its jurisdiction to interpret or construe permits or rules and regulations issued by the Commission"?

Mr. MORROW. We have absolutely no objection.

Senator LAUSCHE. Thanks very much.

Mr. MORROW. Thank you, Mr. Chairman.

Senator LAUSCHE. Mr. Alvis Layne, counsel for the American Waterways Operators, Inc.

STATEMENT OF A. ALVIS LAYNE, COUNSEL FOR THE AMERICAN WATERWAYS OPERATORS, INC.

Mr. LAYNE. Mr. Chairman, I have submitted to the committee a written statement, and with your permission I would like very briefly to summarize the position taken.

Senator LAUSCHE. I find that when you begin to summarize it does not leave its impact in trying to make the highlights.

Mr. LAYNE. It is a very short statement. If the chairman would like, I would be glad to read it. It is no more than four pages in length.

Senator LAUSCHE. Yes; I think you had better read it.

Mr. LAYNE. Very well.

My name is A. Alvis Layne. I am an attorney and I appear on behalf of The American Waterways Operators, Inc., an association of shallow-draft water carriers operating on the inland waterways of the United States.

I should say that the association represents both certificated and noncertificated bargelines.

The AWO opposes S. 1143, which would authorize the Interstate Commerce Commission to revoke water carrier certificates or permits for willful failure to engage in, or to continue to engage in, operations authorized by the certificate or permit. That is similar to S. 1143, but which adds an additional provision. AWO also opposes section 8 of H.R. 5401, which would (1) authorize revocation for willful failure to engage in or to continue to engage in operations and which would (2) require revocation for willful failure to engage in operations for a period of 3 or more years, whether occurring before or after the enactment of this statute.

Where similar language is used for their revocation procedures in connection with those carriers to cover, for example, cessation of operation due to carrier difficulty, they have even construed involuntary bankruptcy as a willful failure to operate and they have also said that the inability to operate as a consequence of the carrier's business methods is a willful failure to conduct operations under a certificate or permit under part II of the act. The term "willful failure" is obviously, it seems to me, a term of art, and if it is used in this section, if it is enacted in this proposed section of the act it will probably be accorded precisely the same meaning in any court interpretation or court test of the sweep of the section.

I have cited in my statement at least one of the leading cases of the Commission dealing with revocation. That case, by the way, has been referred to with approval by the Supreme Court of the United States in the leading water carrier case, Sea Train Lines v. United States.

American Waterways Operators opposes S. 1143 and H.R. 5401 as presently written, because the bills, it seems to us, would authorize revocation of certificates or permits issued to and held by existing carriers and because there is no provision for notice and opportunity to institute required operations before the revocation is effective.

Revocation is not an appropriate action in the public interest in many instances of nonuse of all or part of a carrier's authority. There are a number of reasons for nonuse by a water carrier of its certificates or permits. Among these are the establishment of depressed rates by competing rail or motor carriers, a consequent lack of cargo because of changes in port and waterway facilities, relocation of industries, general economic conditions in the industries served, and many others. These conditions may apply only over a portion of the routes or between a few of the ports authorized to be served by a water carrier. The conditions compelling a cessation of water operations may only be temporary, or, as in the case of depressed rates, may last only so long as the potential of water carrier competition exists. Revocation of water carrier operating authorities under these circumstances would adversely affect the shipping public as well as the carriers involved. Nor would revocation under these circumstances assist the Interstate Commerce Commission in regulation of water carriers. The fact that S. 1143 and H.R. 5401, as drafted, authorize revocation if there is what the bill refers to as "willful" failure to engage in operations provides no assurance that operating authorities of existing carriers will not be jeopardized. The Interstate Commerce Commission has construed the phrase "willful failure" to operate in the case of motor carriers to cover cessation of operations, whether occurring before or after the enactment of this statute, due to carrier financial difficulties and the inability to operate as the consequence of the carrier's business methods. Smith Bros. Revocation of Certificates, 33 M.C.C. 465.

H.R. 5401 contains a mandatory requirement for revocation not included in S. 1143. H.R. 5401 provides in a new section 312(a) (3) that the Commission

shall, upon complaint or on its own initiative, after reasonable notice and opportunity for hearing, in any case of willful failure to engage in any operation authorized by any such certificate for a period of 3 or more years (whether occurring before or after the date of enactment of this section), revoke the part of such certificate authorizing such operation.

This provision would have an extremely serious effect on existing certificated water carriers for the reasons I have indicated. This mandatory provision, moreover, raises a number of additional questions. For example, is it intended to require revocation of a certificate if there were nonuse for a 3-year period at any time in the past 7, though operations are now being performed? The language of H.R. 5401 is not clear on this point. It is intended to provide for mandatory revocation only in the case of water carrier certificates and not in the case of water carrier permits? H.R. 5401 refers only to certificates in providing for mandatory revocation.

A further point should be noted: S. 1143 and H.R. 5401 do not provide water carriers an opportunity to avoid revocation by instituting operations after notice that the Commission has concluded that there has been a willful failure to operate. In this important respect, S. 1143 and H.R. 5401 differ from the present revocation provision

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