freight tariffs. Our position is that if rates are established at a level which will be compensatory to the overlying carrier or prime carrier, then it is logical to establish a percentage of that rate for the subhauler. We believe that the same logic applies to ICC carriers and leasers. Another widespread practice of ICC carriers, in their relationship with owner-operators leasers, is to deduct from the revenues due to the leaser the entire year's prorate fees for the States in which the carrier has authorities. For example, a carrier who has authorities in the 11 Western States can, under the present absence of regulations to the contrary, deduct the prorates from a leaser on the first month's pay, even though the leaser may have entered only two or three of the individual States. Further, even though the carrier has deducted an entire year's prorate fees from one leaser, nothing prevents the carrier from retaining this money if the leaser moves to a second carrier, and charging the entire year's fees to a new leaser. Some method of eliminating this practice must be found. As others have testified here, the need for some system of uniform fees among the individual States for interstate truck traffic is obvious. A100 believes that the Federal license plate, or a similar plan, is the ultimate solution. We would welcome any system which would simplify and stabilize the many and varied requirements of individual States with respect to independent owner-operators transporting interstate cargo. I could mention many other problems which A100 would like the subcommittee to consider, but time is limited. We urge the subcommittee to hold sessions in California, and promise that we will arrange to have individual owner-operators testify there. Thank you for this opportunity to air A100's views. Mr. BEDELL. Thank you, Mr. Foote. We are pleased that you were able to do this before we had a quorum call. Mr. Hungate? Mr. HUNGATE. I had just one question technically, Mr. Chairman. Leaser, is that the fellow who owns the trucks and leases it to somebody else? Mr. FOOTE. Yes; he leases it to a carrier. Mr. HUNGATE, Thank you. Br. BEDELL. Mr. Baldus? Mr. BALDUS. No questions. Mr. BEDELL. Mr. Foote, you said that about half of your members are interstate freight haulers; did I understand you correctly? Mr. FOOTE. No, sir, I said that about half of our members are general freight haulers that haul intrastate and interstate both. I don't know how many are interstate haulers specifically. Mr. BEDELL. I took it from your testimony that you felt that some of the ICC certificated carriers who then contract with your members to haul freight for them, that you felt that some of them charged more than what would normally be proper for the services they perform, such as the insurance and those other services; did I understand you correctly! Mr. FOOTE. Yes; that is my opinion. Mr. BEDELL. If there were not the present controlled rates, then it would be possible for your members to go to a furniture mover, for example, and contract to haul that furniture directly from one point to another without using the ICC regulated carriers, which would seem to solve that problem if it is a problem, as you state that it is? What would be your reaction on that? Mr. FOOTE. I do not favor that; I favor maintaining the regulations, but to reform them in the method I recommended there to set the split that the leaser would get of the total revenue. Mr. BEDELL. Would you explain why? Mr. FOOTE. For basically the same reasons that others have mentioned, that I believe the large carriers could basically afford to operate at a loss for a long enough time to put the individual owneroperator out of business, and then the large carriers would be able to set the rate at any level they wished. Mr. BEDELL. Åre there any figures to indicate what the costs would be per ton-mile, for example, for a large certificated carrier as compared to a smaller independent carrier? And do you know which would be the higher or lower? Do you have those figures at all? Are they published anywhere? Mr. FOOTE. No; I don't have them with me. But every carrier who files tariffs with the ICC has to justify his rates by cost studies. And to answer the second part of your question, naturally an independnent owner-operator can operate at a much greater efficiency than a regulated carrier who has hired drivers and restricted routes and things of that nature. Mr. BEDELL. The difficulty I have with this testimony, in fact-and I don't know if it is correct or not-but if it is correct that an independent owner-operator can operate more efficiently at lower cost than the large operator, then I should think you guys would just be welcoming a chance for deregulation, because it appears to me that nobody in our society can continue to operate for a long time at a loss, and if you can compete better than they can, I should think that this would be what you would hope to see. I am puzzled. Mr. FOOTE. Where we disagree is, how long can they operate at a loss. Mr. BEDELL. The big operators? Mr. FOOTE. The big operators; yes. Mr. BEDELL. How long do you think they can operate at a loss? Mr. FOOTE. Some of them I think far longer than an owner-operator could compete with them. They could, say, for a year operate at a loss at a low enough rate to put the owner-operator competitors out of business. Mr. BEDELL. I guess I may be naive in my confidence as to how our competitive system tends to work over the long haul. Any questions? Mr. JENSEN. I have no questions. Mr. BEDELL. Mr. Lynch? Mr. LYNCH. In your statement you say that A-100 members are required to pay the balance of the year's tax after selling a truck though the new owner is required to pay the tax from the date of purchase. Are you inferring that perhaps the IRS is collecting twice. the same tax? Mr. FOOTE. Yes; I am. And that happened to members nationally, incidentally. Mr. LYNCH. Is it possible for you to document that for us? Mr. LYNCH. Also, you feel that some of these taxes which should be going to help support the highway construction fund are getting mixed up in the general fund? Mr. FOOTE. Yes. Mr. LYNCH. Do you have any documents you could submit on that for the record? Mr. FOOTE. I think I do. I won't say positively. Mr. LYNCH. Can you check with your membership and let us know? Mr. FOOTE. Right. Mr. LYNCH. Thank you. Mr. BALDUS. I am struck with the testimony that we have had over the various States, both by the fact that you have to deal with 50 States, and also you have to deal with a number of different Federal agencies. I mentioned some way to bring about some uniformity. But it would seem to me that it would take sometime to do that because of the various facets here. Let's say if the Congress charged the ICC with the responsibility to develop a separate body to work with the various States on this, and to put together the various agencies, would that be a better approach, or would it be better done in some other manner? Mr. FOOTE. Yes; and I would strongly recommend that it not be put. in the hands of the ICC, because of a couple of reasons, but mainly, there is no one at the Commission who understands the independent truckers' problems. In fact, I am not positive, but I don't think there is anyone from the trucking industry on the Interstate Commerce Commission. Mr. BALDUS. Would you rather see someone from the Transportation Department, let us say? Mr. FOOTE. No: I would rather see the Congress formulate a plan and impose it on the States as they did the speed limit. Mr. BALDUS. We are not very expert along these lines that you are talking about, and our time requirement is limited, the amount of time that we can spend on any one subject. But go ahead. Mr. FOOTE. But instructing any bureau or commission to do it I think would only prolong the issue. And I think it is an urgent issue, that we do something to protect the owner-operators, and to try to keep them in business. Mr. BALDUS. I would suppose if the Small Business Committee set up, let's say, a major study, it would then say that it reflected the bias of small businessmen, let us say, or the major truckers. Any reaction to that? Mr. FOOTE. I think it would be about time that the small truckers had a voice. Mr. BALDUS. That kind of bias would be all right with you? Mr. FOOTE. Yes; that would be fine with me. Mr. BALDUS. Thank you. Mr. BEDELL. Any other questions? Mr. LYNCH. Mr. Chairman, I would just like to announce that the subcommittee will meet again next Wednesday at 9:30. The witnesses will be Mr. Timothy Person, a minority trucker from St. Louis, Mo.; a representative from the American Farm Bureau; representatives from the Colorado Meat Packers Association; and also the Independent Owner-Operators Association of America from Oak Grove, Mo. Mr. BEDELL. We would like to thank you for your testimony here, Mr. Foote. It has been most helpful. And sure enough we have finished up before having to go to the floor of the House. And we also would like to thank the other people who have testified this morning. The subcommittee is now adjourned. [Whereupon, at 11:20 a.m., the subcommittee adjourned, to reconvene at 9:30 a.m., Wednesday, May 26, 1976.] REGULATORY PROBLEMS OF THE INDEPENDENT OWNER-OPERATOR IN THE NATION'S TRUCKING INDUSTRY (PART 1) WEDNESDAY, MAY 26, 1976 HOUSE OF REPRESENTATIVES, SUBCOMMITTEE ON ACTIVITIES OF REGULATORY AGENCIES Washington, D.C. The subcommittee met, pursuant to notice, at 9:33 a.m., in room 2359, Rayburn House Office Building, Hon. Berkley Bedell (acting chairman of the subcommittee) presiding. Mr. BEDELL. The subcommittee will come to order. Would Mr. Timothy Person of the Allstates Transcontinental Van Lines please come forward? Do you solemnly swear the testimony you are about to give is the truth, the whole truth, and nothing but the truth? Mr. PERSON. I do. [Witness duly sworn.] TESTIMONY OF TIMOTHY D. PERSON, DIRECTOR AND CHAIRMAN OF THE RESEARCH COMMITTEE-MINORITY TRUCKING-TRANSPORTATION DEVELOPMENT CORP., PRESIDENT, ALLSTATES TRANSCONTINENTAL VAN LINES, INC., ST. LOUIS, MO. Mr. PERSON. Mr. Chairman, my name is Timothy D. Person. I am president of Allstates Transcontinental Van Lines, 5736 Martin Luther King Drive, St. Louis, Mo. 63112. I am here today testifying as a director and chairman of the research committee of Minority Trucking-Transportation Development Corp., a national trade association of minority carriers and owner-operators in all areas of trucking. Mr. BEDELL. Thank you. We are requesting all witnesses to hold their testimony to under 20 minutes. Mr. PERSON. First, I would like to thank this panel for having invited me to present our particular story before the public. Minority Trucking-Transportation Development Corp. has been organizing for approximately 1 year, completing a national and regional structure. We have held organizational meetings and hearings on the problems of minority truckers in Boston, Chicago, Washington, Newark, and in Los Angeles. We are structured in nine regions, paralleling the regional organization of the Interstate Commerce Commission. Each region has a regional director; I am the regional director for the midwest region |