Absolutely the only qualification contained in this exemption is that the consolidating operation must be on a nonprofit basis; and the present law gives the Interstate Commerce Commission sufficient power to investigate any operation to determine whether or not it is on a nonprofit basis. If it is found that any shipping association is not, in fact nonprofit, the Interstate Commerce Commission, right now, can order it to cease and desist.

The law says nothing about who can be members of an association, how it shall be organized, what officers it shall have, whether or not it shall have a general manager, whether or not it shall be incorporated or whether or not two or more bona fide associations can coload the freight of their members, in order to secure sufficient tonnage to provide adequate service; and yet, the freight forwarders and the motor common carriers have filed approximately 40 complaints against nonprofit shipping associations and Interstate Commerce Commission has instituted approximately 10 investigations on its own motion. Grounds upon which they have sought to estop these various associations would be ludicrous if the matter was not of such great importance. They have complained that two or more associations cannot coload their freight; they have claimed that if an association was incorporated it was automatically barred from enjoying the provisions of section 402(c); they have sought to use against various associations the fact that the trucking company employed to deliver the freight at destination was not certificated.

It is rather interesting to note that in some of the complaints and investigations which have been decided by the Commission one or two associations have been ordered to cease and desist operations, while in other cases, based upon evidence strikingly parallel to the evidence in the first group of cases, the complaints have been dismissed; and the situation has now become so unstable and uncertain that thousands of individual members of these associations never know from one day to the next whether or not they will be the next target and what the flimsy, whimsical, technical, operational procedure will be used as a basis for the unwarranted attack.

Incidentally, I would like to make it plain to this subcommittee that there are one or more associations operating in every major city of the United States and that the members of these individual associations are respectable, substantial, honest and ethical national concerns with branch stores located in these respective cities and that it is an indictment of the honesty and the integrity of these national groups to imply that they would participate in a shady operation.

Now, the committee will have noticed that I have openly charged the regulated freight forwarders and the motor common carriers with harassment. You might well think that this is a biased and prejudiced charge based upon a feeling of persecution which is brought about only because the shipping associations happen to be the objects of the litigation initiated by these regulated carriers. However, my principals are not the only persons who give counterance to the possibility, or even probability, or harassment, for no less a person than an examiner for the Interstate Commerce Commission in his proposed report following consideration of the evidence adduced at the joint hearing on two complaints initiated by the motor carriers quite clearly stated that harassment might well be present.

I refer to a conclusion of Examiner Callow in his report on ICC Docket No. MC-C-3192 (Sub. Nos. 11 and 32), Natioal Motor Freight Traffic Association v. Southeastern Michigan Shippers Cooperative Association, et al, and Detroit Shippers Association, et al, reading as follows:

"The examiner concludes, on the basis of the evidence adduced, that the defendants' allegations of harassment in these proceedings have some basis in fact, and that the complaints should be dismissed forthwith * * *" (p. 9, Examiner's Report, Aug. 25, 1964)

Quite naturally, the complainants in these two cases filed exceptions to the examiner's report. However, on appeal, Division I of the Interstate Commerce Commission affirmed the examiner's findings in the following language:

"We find, that the evidence considered in the light of the exceptions and the reply thereto does not warrant a result different from that reached by the examiner; and that the statement of facts and the findings of the examiner. being proper and correct in all material respects, should be and they are hereby, affirmed and adopted as our own; * * *”

In the light of all that has transpired, in both the field of litigation and the field of legislation and looking objectively at the continuing efforts on the part of the misguided few who honestly think that shipping associations are in

herently suspect and those that are selfish interests who seem determined to eliminate this inherently proper operation in the hopes of falling heir to some increased tonnage, it seems to us that it about time that the members of Congress should see the picture in its true perspective and should do the courageous and proper thing by emphatically refusing to consider any amendment to any bill that will give an added avenue for the harassment and persecution of American citizens whose businesses demand the movement of small shipments on an economical basis.

My foregoing statement refers particularly to the amendment of H.R. 5401 in sofar as it relates to part IV of the Interstate Commerce Act. However, to be consistent and fair, we would also protest an amendment of S. 1727 that would add a similar amendment with reference to part II of the act. In other words, private truckers should not be faced with the necessity of answering indiscriminate petitions for injunctions in Federal court any more than nonprofit shipping associations should be faced with the same problem. A private truck operation is either legal or illegal; and the law now provides for an established Commission of the U.S. Government to take steps to curb illegal operations.

We have no comment or suggestion with reference to any other of the legislation being considered by this subcommittee. We have no objection to your committee agreeing to the other basic changes in language embodied originally in either House bill H.R. 5401 or Senate bill S. 1727. In fact, we are as liberal as was Henry Ford when he began assembly line production of his famous Model T. He said, "You can have it in any color you want, provided it's black."

You can amend this bill as you see fit provided you do not give to our sworn enemies added weapons or any ammunition with which to snipe at us.

APPENDIX IV

STATEMENT OF L. E. GALASPIE, TRANSPORTATION ASSOCIATION OF AMERICA

My name is L. E. Galaspie. I am director of transportation of the Reynolds Metals Co., Richmond, Va. I am testifying today on behalf of the board of directors of the Transportation Association of America, of which I am a member. Since a number of the members of your subcommittee may not be familiar with TAA, I should like to explain very briefly its purpose, makeup, and policymaking procedures. The association is a national transportation policy organization composed of leaders from all types of transport interests, including users, investors and carriers of all modes, the latter including air, freight forwarder, highway, pipeline, rail, and water carriers. These groups work together to develop common positions on national policy issues for the purposes of creating and maintaining the strongest possible transportation system in this country under private ownership and operation.

These eight basic transport interests are represented by permanent committees, or panels, on which serve more than 300 leaders in their respective fields. These eight panels all work as part of what we call our cooperative project, which is headed by Dr. George P. Baker, dean and former professor of transportation at the Harvard Graduate School of Business Administration. Dean Baker is assisted in this project by Dr. Gayton E. Germane, professor of logistics, Stanford Graduate School of Business.

Transport policy issues are submitted to these eight panels for their respective views, after which conflicting positions are discussed and analyzed by a special coordinating committee of panel representatives. Through the process of give and take, the panels strive to come up with positions that meet with their approval, or at least their nonopposition. The 110-man TAA board of directors then takes final action in adopting the proposals, or referring them back for further consideration.

As to legislation being covered by TAA today, the positions expressed have gone through this rather detailed screening process and have met with approval of the TAA board. Of the 16 bills before the committee, TAA has positions on all or parts of nine of them, as outlined below.

Of particular interest to TAA is S. 1727, which deals with two problem areas in the transportation field. One of these is the troublesome illegal for-hire trucking problem, and the other is the lack of any statutory provisions to permit shippers to seek reparations from motor carriers and freight forwarders for unreasonable rates. While passage of this bill won't eliminate these problems, it would help materially in easing them.

Since S. 1727 contains four sections dealing with the illegal for-hire trucking problem, perhaps it is appropriate to explain briefly just what is so bad about this problem.

In brief, we can say that an illegal for-hire trucker is one that transports nonexempt commodities as a for-hire carrier without having authority to do so from the ICC or a State regulatory commission. Illegal for-hire trucking takes form in a number of ways. Some truckers, both regulated and unregulated, openly perform illegal service, taking advantage of the relatively small number of Federal and State highway enforcement personnel in this area. Some other carriers, who are specifically exempt from ICC regulation when hauling agricultural commodities or when operating as lawful private carriers, engage in illegal for-hire transport of general commodities to avoid empty return trips, Please note that we say such illegal carriers are those engaged in "for-hire" transportation, since we in no way wish to convey the impression that we wish to prevent a lawful private carrier from hauling his own goods in his own vehicles. We do object very strongly, however, to various subterfuges-all very difficult to bring out into the open and prove in court-by which many illegal for-hire haulers operate under the guise of private carriage. Some of these violators are shippers, while others are carriers claiming to be shippers engaged in private

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carriage. While many examples could be given, perhaps the two most common are the use of phony leases and the so-called buy-and-sell practice. By use of shady leasing practices, many shippers can "rent" out trucks and drivers to handle goods under the guise of private carriage and thereby avoid an otherwise empty back haul.

Under buy and sell, a shipper, again usually to avoid an empty back haul of what might well be a lawful one-way private haul, will purchase some commodity that does not relate to his primary business, haul it back to his home base, and then sell it under prearranged deals or for any price over the out-of-pocket costs of his return trip.

The above practices may appear to be just smart business and simply a way to make a profit or prevent a loss, but they play havoc in a regulated industry such as transportation, particularly in the rail and trucking field where the competitive impact of such practices hits the hardest. Such competition is not only illegal but also is unfair since motor and rail common carriers are required by law to provide transportation to the general public under rules and regulations, enforced by Federal and State regulatory agencies, that are designed to assure reasonable and nondiscriminatory rates and services. Already faced with very sharp competition from all types of lawful private and for-hire carriers, these common carriers cannot afford to take on additional competitors that unfairly obtain traffic that should move under regulation or by lawful private carriage.

Such illegal operations also are unfair to the legitimate private carrier, since the illegal operator so often claims to be a private carrier. They likewise are unfair to shippers who are confronted with competitors who unlawfully cut their transport costs by resorting to such practices.

The problem is significant

The illegal for-hire trucking problem, in our opinion, is one of the key issues in the transportation policy area today. While authoritative statistics about the scope of such unlawful activities are very difficult to obtain, we do know from already extensive enforcement activity at both the Federal and State levels that millions of tons of freight are being hauled illegally every year and that such hauls are diverting potential revenues of at least $500 million a year, and probably well over $1 billion a year, from our regulated carriers.

Various national transportation organizations, including user, carrier, general business, and governmental groups, have joined in a collective effort to help stamp out illegal for-hire transportation through a coordinated educational effort. This collective group, working under the direction of shippers and under the name of the Committee Against Unlawful Transportation, commonly referred to as CAUT, does not itself support specific legislation, although it has taken an active role through its educational program to stress the need for legislative changes at both the Federal and State levels. I have served for 3 years as vice chairman of CAUT and am at present serving as chairman.

CAUT has prepared and widely distributed a number of publications covering different aspects of the illegal for-hire trucking problem, including a detailed description of its scope and significance as well as its relationship to highway safety. Another CAUT booklet, to which reference is made later in this statement, contains information about enforcement efforts at both the Federal and State levels. If any of the members of the committee would like to review any of these booklets for background information about this problem, we shall be happy to furnish them copies.

CAUT has just completed its fourth year of existence, so you can see that we are not talking about a problem about which nothing has been done. Yet, despite strenuous educational and enforcement efforts at both the Federal and State levels, it is a problem that remains with us. Furthermore, its nature is such that it could easily get far worse if these efforts slacken off, or if the economy levels off and competitive pressures to cut corners become a greater factor in business decisions.

By strengthening our statutes to assure that adequate powers are available to keep illegal for-hire trucking practices at a level that will do a minimum of harm to our publicly regulated carriers, your subcommittee will be taking a very constructive step toward strengthening our national transportation system.

APPENDIX V

STATEMENT OF L. JAMES HARMANSON, JR., NATIONAL COUNCIL OF FARMER

COOPERATIVES

My name is L. James Harmanson, Jr., and I am general counsel of the National Council of Farmer Cooperatives, 1200 17th Street NW., Washington, D.C., on whose behalf this statement is presented.

We appreciate the opportunity of presenting to your subcommittee today the policy position and views of the Council with respect to S. 1727, S. 1733, and H.R. 5401.

IDENTIFICATION OF THE COUNCIL

First, I would like to identify the membership and interest of the council as an aid in your appraisal of our position. The council is a nationwide organization whose members are farmer-owned and farmer-controlled cooperative marketing and purchasing associations. The council's direct members and their affiliated local, county, State, and regional associations number approximately 5,700 cooperatives which market agricultural commodities and purchase farm production supplies for a total of nearly 3 million farmer memberships. The dominant purpose of the council's members is to increase the income of the farmers they serve through cooperative marketing of their products and cooperative purchasing of supplies they need to produce the crops. In performing these authorized functions the council's members use all forms of fully regulated carriers and pay millions of dollars annually in freight charges to the railroads and regulated motor carriers. In addition, our members in many cases have found it necessary to control and operate their own trucks under the exemption in section 203 (b) (5) of the Interstate Commerce Act. Such activity is not engaged in from choice, but in order to render more efficient and economical service to the farmers they serve. Our members also patronize "exempt" carriers who transport agricultural commodities under section 203(b)(6) of the Interstate Commerce Act and whose services are essential for the economical and efficient marketing of their farm products. Therefore, our interest and the interest of our members in the strengthening and improvement of the national transportation system is second to none as users and purchasers of transportation services of all modes, regulated as well as exempt.

COUNCIL POSITION

The council and its members believe in and strive to practice obedience to all law including the Interstate Commerce Act. This includes those provisions of the act which exempt carriers from obtaining operating authority from the Interstate Commerce Commission, as well as those provisions which require operating authority. Accordingly, the council's members over 3 years ago adopted a policy position to support measures designed to curb unlawful transportation operations, particularly in the motor carriage field, provided adequate safeguards were contained in the measures in the interest of equity and sound administration. We testified on predecessor bills S. 2560 and S. 2764 on which hearings were held before your subcommittee in 1962 and have expressed our views on similar bills which have subsequently been introduced and considered in the Senate and House. Although S. 1727 contains some of the safeguards we have advocated to prevent harassment and abuses, we believe this bill as introduced is still seriously defective in several major respects. The most objectionable provisions are found in sections 3 and 4 of S. 1727, sections 3 and 5 of H.R. 5401 and S. 1733.

INCREASED CIVIL PENALTIES

The council is strongly opposed to authorization for the imposition of civil forfeitures as contained in section 3 of S. 1727 and in S. 1733 for failure or refusal to comply with regulations pertaining to maximum hours of service of