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It may be that, instead of "owner-operators", Chairman Stafford said or meant to say "private carriers." He may likewise have said or meant to say "private carriers" also in a speech he gave which was reported in the February 5 issue of the Journal of Commerce. Whatever be the case, I would hope that you might wish to take steps to clarify this matter because the question of whether owneroperators continue to operate routes under brokerage arrangements with ICC regulated carriers is not only of utmost importance to the shipping public but is totally within the Commission's jurisdiction and power to regulate in any way it deems best.

If I can be of any further assistance to you on this matter, please let me know.

Respectfully,

Enclosure.

ALLAN I. MENDELSOHN.

[From Traffic World, Mar. 1, 1976]

HOUSE PANEL QUESTIONS ON ICC COMPLIANCE FALL SHORT OF MARK

An expected confrontation between the Interstate Commerce Commission and the oversight and investigative subcommittee of the House interstate and foreign commerce committee has failed to materialize.

The subcommittee chairman, Representative John Moss (D-Calif.), stated in opening the hearings on February 23 that the ICC was one of nine agencies in the regulatory field that his subcommittee would be investigating.

Representative Moss said his February 23 hearing would concentrate on the "costs which may have been incurred by the consumer and the public from what the Commission's staff Study Panel on Regulatory Reform found in the October 8, 1975 Report on the Commission's Compliance Program."

That report (T.W., Feb. 9, p. 24) found, in essence, that the Commission's compliance program concentrated on smaller carriers, and had little economic impact or direction.

However, the discussion between the subcommittee and ICC Chairman George M. Stafford, Commissioners A. Daniel O'Neal, Jr., Robert J. Corber and a group of ICC staff members quickly broke down into a primer reading in the difference between common, private and exempt carriers; the role of rates in entry; empty back haul; and free versus regulated entry.

Typical of the level of dialogue was this exchange between Representative Richard L. Ottinger (D-N.Y.) and Chairman Stafford : Ottinger: ". then why do you require empty backhauls?" Stafford: "We don't." Ottinger: "That's not what you read in the papers. Stafford: "I know, you read a lot of hogwash. .

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Speaking further on the backhaul question. Mr. Stafford went on to say that "there is no way to totally get rid of empty mileage."

"What you're talking about," he said, "is breaking down the regulatory process of regular route carriers. You're talking about owner operators, not under our jurisdiction. They would like to take the regular carrier (business)—a carrier we require to give service. You're hearing a loud cry from those who have no reason to expect government to step in and break up a regular service a very good service."

Representative Philip R. Sharp (D-Ind.) asked if eliminating entry and exit requirements would not greatly ease the work the Commission has. Mr. Stafford replied that it would indeed eliminate the case load and probably would do a lot for the general counsel's office, but he added, seriously, that to do so would also eliminate service for many small shippers and undoubtedly force many small businesses back into major cities and thus cause great economic havoc in many rural areas.

Reference was made several times to a so-called "Smith Report," which was a statistical analysis made by S. Arnold Smith, an attorney adviser in the ICC managing director's office, who left ICC managing director's office, who left ICC employment early in 1975. His analysis concluded that the vast majority of the case work in compliance involved carriers not having gross revenues of over $250,000. Practically all the ICC witnesses disagreed with that conclusion, noting that in 1975 the ICC had under its jurisdiction 15,415 Class II and Class III motor carriers as opposed to 989 Class I motor carriers.

It was also noted by ICC sources later that the so-called Smith report (Mr. Smith was also a former employe of the investigative subcommittee) was the basis for much of the statistical data in the first and second "Blue-Ribbon Panel" reports and that Commissioner O'Neal was examining those reports as well as the Smith report and expected to have an analysis of the documents and their validity within a "month or so."

Mr. Stafford also said that while the ICC has not yet officially commented on the Department of Transportation's proposals for deregulation of the motor carrier industry he found "those major changes unwarranted" and added that they would work to the disadvantage of the system.

Mr. Stafford said, too, that the cost of regulation figures thrown out by those who would deregulate are "contradictory, greatly overstated and based on little reliable information." He added that they also "fail to mention any countervailing benefits of regulation" but added that the Commission was trying to arrive at some sort of general figure in that area.

PREPARED STATEMENT OF DONALD E. SHERMAN, ACCOMPANIED BY ALLAN I. MENDELSOHN, IN BEHALF OF THE COLORADO MEAT DEALERS ASSOCIATION

My name is Don Sherman. I am the Traffic Manager of the Sterling Colorado Beef Company in Sterling, Colorado, and I am also the Vice Chairman of the Traffic Committee of the Colorado Meat Dealers Association (CMDA). My good friend and CMDA's lawyer, Allan Mendelsohn, has already told you about our Association, and he has also told you about our major concerns in the field of motor common carriage in interstate commerce. My purpose will be just to give you some details about the very real problems we in Colorado face when we try to get our meat products to the marketplaces of this country. These problems, I assure you, are real and serious.

There are five major CMDA meatpacking companies in Colorado-ours in Sterling; Monfort in Greeley; and United, Pepper and Litvak all in Denver. Through our Association and our lawyers, we have done a great deal of rate protest work before the ICC. The reason for this protest work is because there is virtually no real competition among the major truckers that serve us from Colorado to our principal destination markets. When one increases its rates, all the others usually follow. So unless we protest the increase and get it suspended, we could easily be facing rates that would make all of us uncompetitive in the East Coast markets. Of course, were more truckers to be given Colorado meathauling authority, competition alone would insure a proper and economic rate. But despite years of efforts, we have just not been able to prevail on the ICC to provide us with those new and additional competing truckers.

In the past week, I have spoken to all of our members, and I have tried my best to establish just how many new meat-hauling truckers have been added to the Colorado scene in the past six to eight years. Over these years, of course, the production of our company, as well as the production of each of the other four meat-packing companies I mentioned earlier, has at least doubled. Moreover, as late as 1968, we were still shipping more than half of our production by rail piggyback. Today, less than 20% still goes by rail, and all the remainder goes by motor carriage. So I think you can really see how our need for new truckers has escalated.

Since 1970, however, I know of only four truckers that have obtained new permanent PC&N certificates for transportation of our products to the East Coast. The first of these was given authority only from Greeley and Sterling but, in any event, it later merged with another carrier and in the past year I believe it carried no more than perhaps a half dozen loads out of Sterling. The second of these carriers is small, received authority to serve only United, and it has rendered no service at all under its certificate except through leasing its rights to another carrier. The third carrier received its authority in late 1973, after a 6-year ICC battle; but it then published rates which were so much higher than those of its competitors that it has not carried even one ounce of any CMDA member's meat to the East Coast since it received its certificate.

As a matter of fact, knowing that its rates were so high, this carrier has not even bothered to solicit traffic under its East Coast rights. The fourth and final carrier received its permanent certificate only earlier this year, but we doubt that it will have any significant impact on the market, as it was previously serving the market under interline or leasing arrangements (which I shall discuss later). From this overall traffic picture, however, I believe all of us can

see just how stingy the ICC is with its authority-notwithstanding the needs of the marketplace. And I should note that over the course of the past 8 years there have been at least a dozen other carrier applications from the East Coast authority, but permanent certificates were granted only to the four I mentioned above.

The way in which we have been able to survive is through carriers who are prepared and willing to interline with other carriers in order to be able to hold authority for the through service. In other words, carrier A, which holds authority from Colorado to Chicago, but not beyond to New York, may interline with carrier B, which holds rights from Chicago to New York. This means that A would lease or rent the Chicago-New York rights of B in order to provide the complete service from Colorado to New York. But in leasing these rights, A must pay to B a price that, I understand, can range from as low as $25 to as high as $180. We in Colorado are shocked that the Commission would allow these kinds of rental payments to be made for the use of public rights. Moreover, why should carrier B ever be permitted to profit in any way for use of the Chicago-New York sector when this carrier could never have moved the shipment himself from Colorado. In other words, carrier B should not even be in the picture. Equally as importantly, if carrier A is in a position to obtain Colorado-New York shipments, why should he not be certificated to provide the complete service himself rather than being forced to pay a rental fee to B for the use of public rights in order to provide that service. Perhaps we in Colorado are just too far away from Washington to be able to understand and appreciate these strange requirements. But perhaps there really is no explanation for them and they are just wrong.

I should also add that the whole subject of interlining or leasing public rights is one that directly and adversely affects the public of this country. For if carrier A must pay to carrier B, say, $150 just to use carrier B's rights, this amount must necessarily be reflected in a higher cost by carrier B for the transportation and, hence, a higher cost for the ultimate consumer of the product. In other words, if a reasonable truckload rate is $1,500 for a direct shipment, it would have to be at least $1,600 for an interlined shipment. But the public would be paying this extra $100 in the ultimate price they pay when purchasing the product.

And if this is not bad enough, it is even worse when carrier C, having direct Colorado-New York rights, sees that carrier A has a $1,600 or $1,650 rate and is still carrying the traffic. In that situation, and because there is no competition, carrier C immediately increases his rate to the same amount even though, because he holds direct authority, a $1,500 rate would otherwise have been sufficient to assure him a proper return. What all of this means, of course, is that, in the non-competitive markets that the ICC has created today, it is usually the highest and least economic price that controls. And we in Colorado think this might help to explain the $800,000 and $975,000 in dividends that Mr. Mendelsohn spoke about in his statement as being appropriated to the two individual Colorado truckowners who presently have broad Colorado-origin authority to carry our products. How else, I might ask, could anyone ever earn such huge dividends in such short periods of time-at least in a truly competitive industry.

I am sorry if I may have raised more problems than I can answer. I truly do not know how some of these problems can be solved. But I do know that some solution is necessary to a situation where a trucker can threaten to cut off my company and supply us with no trucks if we elect to support another carrier for competing authority. I think the best way to end practices of this type is by restoring competition and thereby drastically reducing the value of the public monopoly rights in existence today.

I join Mr. Mendelsohn in offering CMDA's assistance to this Committee any time in the future and whenever the Committee might wish to call on us. It has been my honor and pleasure to appear before you.

Mr. BEDELL. We certainly appreciate your being here. I am sorry about the time restraints. We want to thank everybody who appeared here today.

I think it has been very helpful. The subcommittee is adjourned. [Heavy Duty Trucking magazine submitted the following articles for insertion in the hearing record:]

76-102 O - 77 - 22

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HDT

APRIL, 1973

Cab Card Stamps:

For Some States, It's Like Finding Money in the Street

Loophole-plagued federal law that took effect in 1971 was supposed to establish uniform fees

charged for interstate operating rights, but has resulted in a potential gold mine for states. The law has so far done little to improve uniformity

because several states have ignored it, and it has opened the door for some to sock it to truckers with fee charges beyond what anyone dreamed of.

R

EMEMBER ALL THOSE permit numbers

painted on the truck door to show you had the right kind of authority to legally haul whatever you were hauling?

And remember how great it was when they brought out the little cardboard cab card showing all those little stamps from each state you haul through?

Well, the inside cab card sounded like a great idea. It saved all that painting of numbers on the cab door, and it was supposed to help standardize that great mess of individual state requirements necessary to show you were legal and that you had all the necessary insurance.

So how is it all working out?
Pretty well for some.

Lousy for most.

What started out as something to help the forhire interstate truck operator has turned into something of a nightmare. Instead of standardizing fees state to state, some greedy states are gouging truck operators crossing their borders.

Under the law that brought about the cab card, a state was to charge a relatively small annual fee for cab card stickers showing authority within its borders.

But instead, the fees are running up to five times the designated maximum in some states.

But that's only part of it.

The law, Public Law 89-170, provides for three maximum fees that states may charge interstate forhire truckers for operating authority and identification:

1. Initial authority filing fee: not over $25.
2. Amendments to authority: not over $10.

3. Identification (cab card stamp): not over $5, unless the amount over $5 is used for regulation of highway carriers and enforcement of highway carrier laws.

Some states, particularly those in the east, aren't charging anything for filing authority or cab card stamps. But many midwestern and western states, and some in the south, are charging far more than the law is supposed to allow.

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