In the 78th Annual Report of the Interstate Commerce Commission page 25, I note reference to the proceedings entitled "Ex Parte No. 19, Practices of Motor Common Carriers of Household Goods 95 M.C.C. 138." The opening statement states:

After an extensive study of the practices of motor carriers of household goods, we promulgated new rules and regulations designed to increase protection of the public against various abuses.

To me it follows if the Commission saw need to study and to establish new rules and regulations pertaining to practices of motor common carriers of household goods, then the continued need for section 5(1) of the act is also established."

Due to the limit of time and cost of travel from their places of business, many small business carrier owners did not come to this hearing, even though several have indicated agreement with my positionthat is, do not amend section 5(1), as proposed.

Several of these limited-scope, certificated motor common carrier small businessmen are:

Mr. W. Jeff Hammond, of W. Jeff Hammon Moving & Storage, Hopkinsville, Ky.; Mr. Gene Anderson, Armstrong Transfer & Storage, Lubbock, Tex.; Mr. Carlos Hogue, Albuquerque Moving & Storage, Albuquerque, N. Mex.; Mr. Don Johnston, Johnston Transfer & Storage, Denver, Colo.; and many more.

Mr. Chairman, I thank you for this opportunity of expression. Senator LAUSCHE. You are very welcome. I have no questions. The hearings will be concluded today. The committee will meet on Wednesday, May 19, and Thursday, May 20 to hear additional wit

nesses.

The meeting stands adjourned.

(Whereupon, at 11:50 a.m., the subcommittee recessed, to reconvene on Wednesday, May 19, 1965.)

The subcommittee met, pursuant to notice, at 10 a.m., in room 457, Old Senate Office Building, Hon. Frank J. Lausche presiding. Senator LAUSCHE. Good morning.

Mr. BREITHAUPT, general attorney, Association of American Railroads.

The meeting will come to order.

STATEMENT OF HARRY J. BREITHAUPT, JR., GENERAL ATTORNEY, ASSOCIATION OF AMERICAN RAILROADS

Mr. BREITHAUPT. My name is Harry J. Breithaupt, Jr., I am general attorney of the Association of American Railroads, with headquarters at Washington, D.C.

The Association of American Railroads is a voluntary, nonprofit organization. Its membership comprises railroads that operate 96 percent of the total mileage of all railroads excluding switching and terminal companies-in the United States and have operating revenues approximating 98 percent of the total operating revenues of all the railroads in the United States.

My appearance here today is by the authority of the board of directors of the association and is for the purpose of expressing the views of the association and its members on certain of the bills enumerated in the committee's public release of April 28, 1965, announcing these hearings, all of which were introduced by the chairman of this committee and all but one of which, S. 1727, appear to have been drafted to reflect and implement individual legislative recommendations made by the Interstate Commerce Commission and contained in its 78th annual report to the Congress, 1964.

With your permission I shall deal with the several bills in the order in which they were listed in the notice of these hearings. To avoid unnecessary repetition and thus conserve the committee's time I shall refrain in most instances from detailed discussion of the measures at hand, for other witnesses-especially the Interstate Commerce Commission-have discussed their provisions with particularity.

Naturally I shall attempt to answer any questions that may occur to the members of the committee and be put to me.

S. 1727, to provide for strengthening and improving the national transportation system, and for other purposes, is in the nature of an omnibus measure. It deals for the most part with what has come to be generally known as the gray area problem, which is the problem of coping with and curbing unlawful highway transportation.

The railroads' interest in those provisions of the bill that bear upon unlawful motor carrier practices and operations is a strong interest: and the reason for that interest is, I should think, easily understood and fully justified.

Any threat to the preservation of a sound common carrier system is a threat to the railroad segment of that system; and unlawful highway transportation has time and time again been recognized by the Interstate Commerce Commission and by others knowledgeable in the field of transportation as posing a grave threat to the preservation of a sound common carrier system.

Because those features of S. 1727 that would facilitate and strengthen effective enforcement of the motor carrier provisions of the Interstate Commerce Act would serve at least in some degree, and possibly in substantial degree, to counter that threat, the railroads solidly support them. I refer specifically to these sections of the bill:

Section 1, which would authorize the Interstate Commerce Commission to make cooperative agreements with the various States to enforce the economic and safety laws and regulations of the various States and the United States concerning highway transportation.

Section 2, which could be expected to encourage the several States to require State registration of the ICC certificates and permits of motor carriers operating in interstate commerce within their borders, by making provision for uniform standards in that regard.

Section 3, which would extend the civil forfeiture provisions now contained in section 222 (h) of the Interstate Commerce Act to certain unlawful motor carrier operations and to certain matters of highway safety, and would increase the amount of the forfeitures prescribed. Senator LAUSCHE. With respect to section 3, is it the position of your association that the civil forfeiture provision should be applicable to not only unlawful motor carrier operations insofar as certification and so forth is concerned, but also as to the safety provision?

Mr. BREITHAUPT. We don't have as direct an interest in the applicability of civil forfeitures to safety violations by motor carriers on the highway. We feel nevertheless that the public interest is great in the enforcement of the safety regulations of the Commission and we do endorse it.

Senator LAUSCHE. Proceed.

Mr. BREITHAUPT. Section 4, which would amend section 222 (b) of the Interstate Commerce Act in such a way as to enable the Interstate Commerce Commission in enforcement proceedings to obtain service of process upon motor carriers and to permit the joinder of any other person acting in concert or participating therewith without regard to where the carrier or such other party may be served; and which would also provide that any person injured by a violation related to those requirements of the Interstate Commerce Act in respect of motor carrier operating authority (certificates of public convenience and necessity, permits and brokerage licenses) may, under stated circumstances, sue in the Federal courts for injunctive relief against the violator.

Senator LAUSCHE. At this point, testimony has been offered that giving an alleged injured individual the right to bring a separate lawsuit would lead to the institution of proceedings that were intended to be harassing and not contemplating reaching an ultimate objective of justice.

May I have your views?

Mr. BREITHAUPT. We believe there is ample protection in this section of S. 1727 to avoid that sort of incident of the proposed provision. We think that the provisions for the fixing of a bond by the court where such an action is brought would protect against harassment.

Senator LAUSCHE. My recollection is that there are several provisions intending to protect a defendant. One, there must be a showing of clear and patent violation. Two, before the preliminary injunctive relief is granted, a bond in an amount fixed by the court must be posted to operate as an ultimate indemnity of the defendant in the event the final proceedings are adjudged against the plaintiff. Three, the Interstate Commerce Commission may become party to such proceedings and may apply for the right to investigate on its own, and if that is done, the court shall suspend the pendency of the action until the Commission acts.

Mr. BREITHAUPT. Let me say in that regard, Mr. Chairman, that as S. 1727 was drafted, it differs in some degree from the counterpart section included in the bill S. 5401 as passed by the House of Representatives.

I don't believe that in the Senate bill, as it is now pending before this subcommittee, there is anything automatic about the right of the Commission to obtain a stay in the Federal courts.

However, the bill now pending before your subcommittee does provide for the retention of primary jurisdiction in the Interstate Commerce Commission.

The way a stay would come about, as I understand S. 1727 as now drafted, would be that if someone raised a question of primary jurisdiction in the ICC with the judge conducting the court it would be the responsibility of the judge to refer the matter to the Commission. for a determination of the administrative question.

Senator LAUSCHE. Do you have an opinion of which of the two proceedings would be preferable and most effective in the achievement of justice? That contained in the House bill or that contained in 1727? Mr. BREITHAUPT. I would prefer, Mr. Chairman, the bill as it now stands before your subcommittee, although I must say that the bill passed by the House would be acceptable; but if you want my prefer ence, it would be the Senate bill.

Senator LAUSCHE. Proceed.

Mr. BREITHAUPT. In connection with section 4 of S. 1727, I have seen a copy of the letter Senator Magnuson addressed to Senator Lausche under date of May 7, 1965. I refer to the letter in which Senator Magnuson stated that certain language had been inadvertently included in the bill and that certain other language had been inadvertently omitted.

We are of the view that the bill should be so amended as to reflect the intention of those who introduced it.

Senator LAUSCHE. I have a copy of Senator Magnuson's letter dated May 7 before me here and you have correctly stated the information that he imparted to me in that letter.

Proceed.

Mr. BREITHAUPT. The foregoing first four sections of the bill would, we believe, aid considerably in efforts to curb unlawful highway operations. We favor their enactment.

Sections 5 and 6 of S. 1727 are intended to make common carriers by motor vehicle and freight forwarders, respectively, liable in actions at law for the payment of reparations to persons suffering damages resulting from transportation charges found by the Interstate Commerce Commission to have been unjust and unreasonable, or unjustly discriminatory or unduly preferential or prejudicial.

Under present law the Interstate Commerce Commission has the power to award damages or reparations for violations of parts I and III of the Interstate Commerce Act, applying to railroads and to common carriers by water.

For many years it was assumed that, while the Commission lacked such authority with respect to violations of parts II (motor carriers) and IV (freight forwarders), such redress could be obtained in the

courts.

In a case decided by the Supreme Court about 6 years ago, however, it was held that neither the Commission nor the courts had such authority. Shippers are thus left without legal remedy for violations of parts II and IV.

The position of the railroads is that regulation of the various modes of transportation should be fair, equal and impartial. Sections 5 and 6 of S. 1727 would not provide full equality, for shippers seeking reparations from motor carriers and freight forwarders would not be able to pursue their remedy by way of complaint to the Commission but would in each instance have to proceed by action at law in the courts. We nevertheless support sections 5 and 6 of the bill.

I do invite your attention to the fact that S. 1732, another of the bills being heard, and one based on a recommendation of the Interstate Commerce Commission, would provide uniformity for all forms of surface transportation as to the recovery of reparations.

To sum up, then, the railroads support S. 1727 and recommend its favorable consideration.

Senator LAUSCHE. In substance, it is your position that the law ought to be so written to be equally applicable to all modes of transportation in regard to the right to bring an action for damages.

Mr. BREITHAUPT. It is a principle that we, without exception, espouse, Mr. Chairman, that in all regulatory matters there ought to be fair and impartial treatment.

Senator LAUSCHE. You state that under the law, as it now exists, actions can be brought against railroads and water carriers but not against motor carriers?

Mr. BREITHAUPT. As the law is today, that's correct.

Senator LAUSCHE. Yes.

Mr. BREITHAUPT. If sections 5 and 6 of S. 1727 were to be approved and enacted by the Congress, then it would be possible to proceed against motor carriers and freight forwarders in the courts but not in the Interstate Commerce Commission.

In the case of railroads and water carriers, the shipper has an option. He may proceed either before the Commission or in the courts.