STATEMENT OF L. E. GALASPIE, MEMBER OF BOARD OF DIRECTORS, TRANSPORTATION ASSOCIATION OF AMERICA; ACCOMPANIED BY HAROLD HAMMOND, PRESIDENT, AND FRANK SMITH, VICE PRESIDENT

Mr. GALASPIE. Thank you, Mr. Chairman.

Mr. Chairman, before I proceed, I would like to introduce Harold Hammond, president of the Transportation Association of America and Frank Smith, vice president.

In view of your recommendations in the beginning of the hearing, Mr. Chairman, I will not read all of the statement.

The first page simply indicates how the Transportation Association of America formulates its various policies.

The second page gives more or less a description of the problem as it relates to S. 1727.

And, as I understand it, this statement will be placed in the record. Senator LAUSCHE. Yes, it will.

(Prepared statement of Mr. Galaspie appears in the appendix.) Mr. GALASPIE. The seriousness of the problem is indicated on page 3, and I would ask you that you read that carefully.

I should also like to refer to page 4 in connection with the Committee Against Unlawful Transportation. We have been engaged in educational activities for several years now. I served for 3 years as vice chairman of the Committee Against Unlawful Transportation, commonly known as CAUT, and presently am serving as chairman.

We have distributed a number of publications which we have available in case the committee should like a copy for their records.

We think that it has done something at least in trying to educate the general public in regard to the unlawful transportation situation.

There is still a lot to be done, and we are trying to take steps to do the things that we think are necessary.

CAUT, in itself, primarily is an educational activity. It does not permit us to appear as a witness or promulgate any legislation. So I am appearing here as a member of the Board of the Transportation Association of America and not as representing CAUT.

Mr. GALASPIE. Now, in reference to S. 1727, section 1, this section would permit the ICC to make cooperative agreements with the various States to enforce laws dealing with motor carrier operations, and particularly the illegal and the unlawful for-hire trucking operations. The Transportation Association supports this legislation.

The need for this legislation is evident when we recognize that such illegal operations may be carried out by any number of literally millions of trucks moving every day over the Nation's highways. Obviously, the small number of ICC highway enforcement officials-251 fieldmen in 1964 cannot do the enforcement job required in 50 States. These men spend a considerable portion of their time handling administrative details dealing with more than 100,000 motor carriers that are subject to either the ICC's economic or safety regulations.

Therefore, if we are to expect any reasonable enforcement, we must lean heavily on State motor carrier enforcement officials, who are actually in a better position to take effective action against illegal operators because many of them have the power of arrest-a power not given to, nor being sought by, ICC high enforcement officials.

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Unfortunately, at present these State officials are unable to obtain helpful information from ICC motor carrier enforcement officials that would assist in apprehending and prosecuting illegal operators because of the following provision in the Interstate Commerce Act:

SEC. 222(d) Any special agent, accountant, or examiner who knowingly and willfully divulges any fact or information which may come to his knowledge during the course of any examination or inspection made under authority of section 220, except as may be directed by the Commission or by a court or judge thereof, shall be guilty of a misdemeanor and shall be subject, upon conviction in any court of the United States of competent jurisdiction to a fine of not more than $500 or imprisonment for not exceeding 6 months, or both.

Section 1 of S. 1727 would, in effect, exempt cooperative agreements made to help curb illegal for-hire trucking from the above restriction. We believe the resulting two-way exchange of vital information should go a long way toward solving this problem and, at the same time, establish better Federal-State relations in this area.

Section 2 of S. 1727 would specifically authorize the States to require ICC regulated motor carriers to register their operating authorities, provided such registration is done in accordance with standards determined by the National Association of Railroad and Utilities Commissioners (NARUC) and promulgated by the ICC. This section sets forth the specific items to be covered by such registration, and also provides for ICC determination of the standards if NARUC fails to act within 18 months from the date of enactment.

TAA supports this provision. It also supports an amendment to an identical section of H.R. 5401 that added the words, "or qualifications as a self-insurer under rules and regulations of the Commission," at the end of (c) of line 3, page 3.

The purpose of such registration is to enable State enforcement officials to identify motor carriers hauling, on a for-hire basis, commodities subject to regulation-and thus take on-the-spot action against those who haven't the authority to do so. This, in effect, means that we want to encourage the States in helping the ICC keep unlawful interstate motor carriers off the highways.

Since this proposal deals with State regulation of interstate carriers, the various panels in TAA studied it very carefully. Recognizing its need, our user, investor, highway, pipeline, and railroad panels supported it, and the other three panels indicated they would not oppose

it.

Many States at present are already working hard in trying to stop unlawful motor carriage. A survey by TAA showed that, in 1963, 29 States reported prosecution of 18,231 cases involving motor carriers operating without proper authority. The fines, which generally were levied against the driver, averaged about $68.

This provision, like section 1, would encourage much greater participation by the States in curbing illegal for-hire trucking. A State official, if equipped with this registration information and backed up with the power of arrest, plus access to ICC supporting data for use in court, could be an extremely effective enforcement tool in this serious problem area. Passage of this section should result in more States requiring such registration, and in all of them standardizing their registering procedures.

Section 3 of S. 1727 would permit the use of civil forfeiture procedures by the ICC in court cases involving both economic and safety

motor carrier violations. At present, such cases have to be handled under criminal procedures, a more complicated method.

This provision would also apply a level of fines five times that now provided for under the civil forfeiture statute. Finally, the proviso at the end of this section would assure that in cases where there is a reasonable question of the validity of a private carrier operation in dispute under the primary business test, the ICC should make an initial determination prior to any court action. A clear-cut violation could, however, be handled directly through the courts.

Senator LAUSCHE. Just one moment on that subject. You state:

Finally, the proviso at the end of this section would assure that in cases where there is a reasonable question of the validity of a private carrier operation in dispute under the primary business test, the ICC should make an initial determination prior to any court action.

By "court action" do you mean a court decision?

Mr. GALASPIE. Actually it means interpreting by the court of the primary business test. That is what we mean here. In other words, if the question arose as to whether or not it was a bona fide private carrier operation and a private carrier was operating under the primary business test, if that came into play the Commission should take jurisdiction and make its determination as to whether or not in its opinion it was a truly bona fide private carrier, in which event the court would take the Commission's decision as prima facie evidence to make its decision.

Senator LAUSCHE. I see. Would an action be brought and, while it is pending and before the court took any action adjudicating the petition, would the Commission exercise its original power?

Mr. GALASPIE. The Commission could enter the case, and, in our opinion, the court would pend its case until the Commission made its determination.

Senator LAUSCHE. That clears it up for me.

Mr. SENDER. These are Commission-brought actions, are they not, sir?

Mr. GALASPIE. That is correct.

Mr. SENDER. Under section 3 the action would be brought by the Commission? These are not actions brought by private parties? Mr. GALASPIE. That is true. These are civil forfeiture actions. Senator LAUSCHE. All right. Proceed.

Mr. GALASPIE. The application of this proposal to economic violations is supported by the Transportation Association of America, and has the specific support of its user, investor, air freight forwarder, highway, railroad, and domestic water carrier panels. The remaining pipeline panel is not opposed to it. TAA does not, however, have a position on its application to safety violations.

While much more needs to be done, the ICC is to be commended for its legal action against unlawful for-hire carriers. A TAA tabulation of ICC cases handled in 1963 found that the Commission completed 432 court cases against illegal for-hire carriers, 379 of which were for operating without authority. The courts levied fines totaling nearly a half million dollars, averaging $1,277 for the 383 fines given.

These ICC cases show that violators are not just gypsy operators, since they included 109 shippers, 352 unregulated carriers, 67 regu

lated carriers, and 50 individuals. In addition, the Commission's legal staff handled 27 cases that resulted in cease-and-desist orders against 58 carriers and 47 shippers. The relatively small number of cease-and-desist cases shows the time-consuming nature of processing a case through the Commission and why direct court action is preferable. With passage of this provision for economic violations, it would be hoped that the number of ICC enforcement cases handled during each year would increase sharply, with a resulting decrease in illegal operations.

The first provision of section 4 of S. 1727 would enable the Interstate Commerce Commission, in court cases involving illegal for-hire operations, to obtain service of process upon motor carriers or brokers and to join other necessary parties without regard to where the carrier or other party may be served.

I understand there has been a change made in the bill as printed in that case and that the parenthetical clause will be included in the final reading of the bill.

Senator LAUSCHE. Yes.

This section is thus identical to S. 1728, another bill now under consideration. Transportation Association of America favors such legislation.

Present rules governing procedures in such court proceedings limit the service of process to the territorial limits of the States in which the court sits. The purpose of this proposal, therefore, is to assure that neither the illegal operator nor the participating shipper avoids service of process, as is now possible, if located, or they remain, outside of the State where the legal action is being taken.

This is very important, since the operations of such carriers often extend into many States.

Such legislation would also serve as a deterrent to shippers who might be considering unlawful operations, particularly large ones very jealous of their reputations with the general public, since they would be more susceptible to becoming a party in an illegal for-hire court case.

It is obvious that without shippers' cooperation, illegal operations could not take place. Even with the limitations now placed in ICC court cases, many shippers are made parties to them. For example, in 1963, the courts found 109 shippers guilty of illegal for-hire operations, or aiding and abetting them, and the ICC issued cease-and-desist orders against 47 shippers for the same offenses.

It can be seen that this provision, coupled with other provisions of S. 1727, should materially strengthen the available enforcement tools to curb illegal for-hire trucking operations.

Part 2 of section 4 of S. 1727 would permit any person injured by an illegal for-hire operation, whether performed by a regulated or unregulated carrier, to seek direct injunctive relief in a Federal district. court.

Now, in the printing of this bill I have here it includes a parenthetical clause which would eliminate regulated carriers, but we understand that parenthetical clause is being removed.

Mr. GALASPIE. The ICC would be served with a copy of any such application for relief, and it could appear as of right in any cases that it believes necessary or desirable. To prevent harassing suits, the plaintiff would be required to post bond, and the party prevailing may,

if the court so decides, recover both court costs and reasonable attorney's fees.

Two provisos are included in this provision. One would assure that the ICC assume responsibility for interpreting, when there is a reasonable question of interpretation, certificates, and permits issued by the Commission.

The other proviso, which is identical to that shown in section 3, would assure that the ICC assume responsibility for making a determination in those cases where there is reasonable question of the validity of a private carrier operation in dispute under the primary business test. If the court feels the initial evidence indicates a clearcut violation, however, it can take jurisdiction. We would have no objection to an additional proviso, if offered, to permit the ICC to take jurisdiction over any case upon notice to the court.

With respect to these two provisos, as well as the one in section 3, I should like to note that they were worked out after very careful consideration by a special subcommittee of the Transportation Association of America user panel, of which I served as chairman. This subcommittee had top-level representation on it of private carrier interests, who agreed to the provisos, which were subsequently approved by the 83-member user panel.

Since this provision would permit parties to bypass the ICC and seek relief directly in the courts, it has been given very careful consideration by the various Transportation Association of America panels. With the provisos and other protections included, such legislation is supported by the Transportation Association of America. More specifically, it has the support of the Transportation Association of America user, investor, freight forwarder, highway, air, railroad, and domestic carrier panels, and its pipeline panel does not oppose it.

Passage of this provision would greatly strengthen the enforcement powers available to stop illegal for-hire operations, since it would. permit parties other than the Interstate Commerce Commission to take court action against outright violations, yet provide reasonable safeguards against abuse of this privilege.

Sections 5 and 6 of S. 1727 would provide a means by which shippers, including Government shippers, could seek reparations from allegedly unreasonable rates charged them by regulated motor carriers and freight forwarders, even though such rates had been filed in public tariffs and allowed to take effect by the Interstate Commerce Commission. It would do this by permitting a shipper to seek such reparations in a court of competent jurisdiction, and the Interstate Commerce Commission would be called on to make an administrative determination in aid of the court. Transportation Association of America supports this section.

The effect of this legislation would be to nullify the Supreme Court's decision in the TIME case, in which it ruled that neither the Interstate Commerce Commission nor the courts had the power to consider the reasonableness of a motor carrier's rates that had been published in accordance with Interstate Commerce Commission tariff procedures. This particular subject has been given very careful consideration by the various Transportation Association of America panels, since the Interstate Commerce Commission, as well as shipper interests, have for some time been seeking legislation to extend to both motor carriers