Segment 2 Of 2 Previous Hearing Segment(1)
SPEAKERS CONTENTS INSERTS
Page 14 PREV PAGE TOP OF DOC Segment 2 Of 2
MOTOR CARRIER ECONOMIC REGULATORY ISSUES
WEDNESDAY, AUGUST 5, 1998
U.S. House of Representatives,
Subcommittee on Surface Transportation,
Committee on Transportation and Infrastructure,
Washington, DC.
The subcommittee met, pursuant to call, at 10 a.m., in Room 2167, Rayburn House Office Building, Hon. Thomas E. Petri (Chairman of the subcommittee) presiding.
Mr. PETRI. The subcommittee will come to order.
The subcommittee is meeting today to examine issues relating to the economic regulation of the motor carrier industry. For the most part, the areas that we will look at are related to reforms made in the ICC Termination Act of 1995.
Over the past 2 decades, as the motor carrier industry has matured and become more competitive, Congress has taken a series of steps to regulate the industry, beginning with the landmark Motor Carrier Act of 1980. Perhaps the most aggressive Congress in this regard was the 103rd Congress, when Congressman Rahall chaired the subcommittee, and he will be joining us shortly. We enacted legislation to resolve the negotiated rates issue, eliminated tariff filing requirements for individually determined rates, which account for about 90 percent of the 1.4 million tariffs filed each year prior to 1994, and preempted State regulation of intrastate transportation.
Page 15 PREV PAGE TOP OF DOC Segment 2 Of 2
Finally, in 1994, the House first voted to eliminate funding for the Interstate Commerce Commission. This led to the ICC Termination Act of 1995 when a variety of ICC motor carrier functions were eliminated, others transferred to the Department of Transportation and a small number retained at the newly created Surface Transportation Board.
The motor carrier industry has thrived in a deregulated environment. Competition has increased, and the industry is more efficient and service-oriented. Trucking today is a $300 billion industry with 9.5 million Americans employed throughout the economy in truck-related industries.
Generally, the ICC Termination Act has been a success. One area where we have heard concerns, however, is in the area of consumer protection and the moving industry. It is important to note that of the 1.5 million interstate moves that occur each year, the vast majority are completed by reputable movers with little or no serious problems. However, there is a very small segment where abuse does occur and unscrupulous movers appear to prey on innocent consumers.
Today, we will hear testimony from two citizens who experienced problems in their own moves. When this happens, the customers are in a particularly vulnerable position, with all of their earthly possessions under the control of a dishonest businessman who literally holds the customer's goods hostage until a ransom payment is made. For many, a mover may be utilized perhaps only once or twice in a lifetime and a customer may be unfamiliar with moving business practices or how he can protect him or herself from an unscrupulous mover.
Page 16 PREV PAGE TOP OF DOC Segment 2 Of 2
Some stories in the media imply that there are no rules or regulations governing the moving industry. This is simply not the case. Old ICC rules and regulations remain on the books, with oversight of these regulations transferred to our Department of Transportation. Almost every horror story we have heard involves blatant violations of these existing and ongoing regulations.
So I don't believe that more regulation is required nor will it solve anything. However, we will examine whether we can strengthen enforcement efforts at the Department of Transportation, where resources are already strained, through granting greater enforcement authority to the States or by some other means.
Our final two panels of witnesses representing motor carrier and shipper interests will discuss other motor carrier issues, including revisiting the antitrust immunity reforms which were included in the ICC Termination Act, implementation of financial reporting reforms, and the continuing differences over cargo loss and damage liability and whether reforms should be made to the current liability system.
While no formal schedule has been set, this hearing will provide valuable insight as the subcommittee considers whether to move legislation addressing these matters in the future.
I want to welcome our witnesses today, including Administrator Wykle of the Federal Highway Administration, who is making his first appearance before the subcommittee as Federal Highway Administrator, although he testified before us in his previous capacity as a Lieutenant General in the U.S. Army.
Page 17 PREV PAGE TOP OF DOC Segment 2 Of 2
I also want to note, because antitrust immunity proceedings are currently under way at the Surface Transportation Board, it was determined not appropriate that the Board testify as to those issues at this particular hearing.
With that, I will yield to my colleague, the Ranking Minority Member of the subcommittee, Congressman Rahall, for an opening statement.
Mr. RAHALL. Thank you, Mr. Chairman. I commend you for holding this first post TEA 21 subcommittee hearing.
And looking around the room, I see that we are still popular but not quite as popular as when we were distributing more than $9 billion for highway projects around the country. I suspect that you share this view as well and the staff I know does, that we are glad that we are done with it.
Today we turn to more arcane matters. Rather than discuss how many millions of dollars are spent on the Woodrow Wilson Bridge, today we are considering issues relating to antitrust immunity for commodity classifications. No longer are we debating whether to complete the subway system in Los Angeles but, rather, we turn to uniform cargo liability standards. And yet, while perhaps not as flashy as crafting a $218 billion highway and transit bill, the items that are the subject of this hearing today are the bread-and-butter issues for an industry that moves nearly three-quarters of the values of all shipments in this country, well over $4 billion worth in a given year.
Page 18 PREV PAGE TOP OF DOC Segment 2 Of 2
Indeed, not only are these matters of importance to the trucking industry but equally to shippers and consumers alike. And so, after a rash of deregulation legislation in 1994 and 1995 governing both interstate and intrastate motor carrier operations, today, for the first time in the post-ICC era, we are scheduled to consider the fallout from these actions.
Here, once again, we find truth in that old adage, ''What goes around comes around.'' I note that the testimony submitted by the American Trucking Association has listed a number of issues that were not fully resolved during consideration of the ICC Termination Act in 1995, including the elimination of a single rate registration system, establishment of uniform cargo liability standards and issues relating to financial reporting. In all candor I think we can admit that these issues were purposely not resolved by the Congress.
Single State registration, it is the States versus the trucking industry.
The Carmack amendment, it is shippers versus the trucking industry.
Financial reporting, it is organized labor versus the trucking industry.
So this kind of puts the subcommittee in a position kind of like going to the wedding between two close friends and having to decide which side of the aisle to sit on. The natural response in many of these cases was that we simply bucked the issue to DOT to wrestle with.
As Congress did with the household goods carriers. The 1995 Termination Act retained much of the consumer statutory protection requirements, but it transferred them from the ICC to the FHWA without the benefit of additional staff.
Page 19 PREV PAGE TOP OF DOC Segment 2 Of 2
Today, we find that FHWA has no inclination to deal with this responsibility. Is that any surprise? This is an agency charged with building highways. Its history and fundamental mission have little to do with consumer protection.
As for the STB, taking center stage for the purposes of this hearing is the matter of antitrust immunity for such items as rate making and commodity classification.
I strongly support this grant of antitrust immunity as being in the public interest. Compromises being what they are, rather than the permanent grant of immunity that had existed, the 1995 Termination Act, as we know, arbitrarily requires a 3-year review of existing agreements, with the first deadline fast approaching.
In this regard, I doubt that the Congress envisioned this matter being addressed by the Surface Transportation Board with only a single member sitting on it. Just as the Roman Republic first fell to a triumvirate and then to a dictatorship, I fear the same thing is in store for the STB. Consider that during its heyday the ICC had 11 commissioners, which constitutes a small republic, and by the end of this year the STB could have only one member left. What is this person going to do, debate the pros and cons with herself as part of a formal proceeding and then make a decision?
The prudent course is to eliminate the mandatory review, the statutory time period and allow the public interest to prevail by providing for a relatively secure grant of antitrust immunity for classifications and rate making.
Page 20 PREV PAGE TOP OF DOC Segment 2 Of 2
Thank you, Mr. Chairman. I look forward to today's hearing.
Mr. PETRI. Thank you.
And the statements, if any, from our Chairman, Mr. Shuster, and Ranking Member of the full committee, Mr. Oberstar, will be included as part of our record.
The first panel is two of our distinguished colleagues, Representatives Sherwood Boehlert and Peter Goss.
TESTIMONY OF HON. SHERWOOD L. BOEHLERT, A REPRESENTATIVE IN CONGRESS FROM NEW YORK; HON. PORTER GOSS, A REPRESENTATIVE IN CONGRESS FROM FLORIDA
Mr. BOEHLERT. Thank you, Mr. Chairman. I ask unanimous consent that I be permitted to revise and extend my remarks.
Mr. PETRI. Without objection.
Mr. BOEHLERT. I am appearing here today because a situation was brought to my attention by a constituent in Cooperstown, New York, Judith Cooper, who had a very unfortunate situation when moving her household goods with a named company, one of the big names in the business.
You expect when you do it that the goods are going to be picked up and delivered intact in a timely fashion. This was not the case with Mrs. Cooper. As a matter of fact, it has been months and months and constant frustration. The goods are still not there. She has been all over the bureaucracy in the State and Federal Government and has had no satisfaction to date.
Page 21 PREV PAGE TOP OF DOC Segment 2 Of 2
My concern is that consumers are not adequately protected under the current system for regulating interstate moving companies. It is a serious situation, and it does not just involve the fly-by-night operators. We all have to be concerned about them, but we would like to think, the American public would like to think, that when you go to an established company with an established reputation that you will get what you pay for. The problem is that is not the way that it works.
Now, I have got the message loud and clear and I think most of us in this Congress have the message loud and clear from the American people. They want smaller, less costly, less intrusive, yet more efficient government. That is a tall order, but the American people did not expect us to dismantle the government, to walk away from any responsibilities.
Now, the easy thing to do is to say, well, we have abolished the Interstate Commerce Commission and we have given a new responsibility to the Department of Transportation. Part of the problem is that we gave the responsibility without the personnel slots, so we say we want you to take on added workload. The fact of the matter is that it is a difficult task at best for an agency not familiar with this issue, not used to dealing with the issue.
The bottom line is, American consumers are being hurt; and I think it is our job to provide a measure of protection. So I am here, Mr. Chairman, to advocate to you and this very distinguished subcommittee that you get very serious about this issue. Because I think we have consumer protection as one of our primary objectives as Members of Congress, and I don't want a repeat of the situation like that faced by Ms. Cooper, my constituent. And she is not the only one. All across America, constituents are facing that same type of problem. We have got to get on with the job of providing some measure of relief, some avenue where the person who is victimized by inadequate service can go to appeal to get remedy.
Page 22 PREV PAGE TOP OF DOC Segment 2 Of 2
So, Mr. Chairman, I am here, and I am a member of the full committee, and I am proud to serve with you and Mr. Rahall on this panel. I think we are up to the task. I think we can do it, and I just want to make a contribution.
Thank you very much.
Mr. PETRI. Thank you.
Representative Goss.
Mr. GOSS. I have prepared remarks which I would like to ask to be admitted to the record.
Mr. PETRI. They will be made a part of the record.
Mr. GOSS. And I would like to ask unanimous consent to revise and extend my remarks by way of an abbreviated and more intense underscoring of the same problems that my colleague from New York has just made, and I certainly would associate myself with his remarks.
It turns out these days, as in days past and days of the future will also show, a lot of people are moving to the State of Florida, which I represent the southern west corner of, and a lot of people are having very unhappy moving experiences, more recently because they are not getting the kind of protections that they need from what I would classify as unscrupulous people in the moving business.
Page 23 PREV PAGE TOP OF DOC Segment 2 Of 2
I am not just talking about the legitimate concerns that we all understand when there is a disagreement when two reasonable people might have a difference of opinion about something. I am talking about calculated rip-off by people who are getting away with it because there is no enforcing authority to deal with the problem.
We have people coming to the office in the district asking for help. We are the office of last resort. We have tried very hard and very diligently to assist people, and we ourselves in our office are a little puzzled and confused about what the answer to this problem is, and I therefore am very grateful for the opportunity for you to accept our testimony today, and hear some of the horror stories going on. And I won't detail them because they are in the written testimony, and I will fill them out with many more, but ask in addition to bringing attention to the matter that we have, I am curious to know how we can help in the solution.
I tend to believe that we have an enforcement problem here, and I think if we tighten up the registration and licensing procedures and connect them to performance of the movers, which I believe is something that the authorities, the Federal Highway Administration could do, that would solve a lot of problems. And that is a suggested remedy, and I have no wisdom on that. It is the kind of thing that we have talked back and forth.
I had the privilege of dealing with the Administrator yesterday, who came to the office with some of his staff; and we talked about positive ways to respond to this. This is what we can do.
Obviously, we are legislators, and I asked if there was some legislation that we could do. And the conclusion that we had yesterday is that there may be a few places where we tweak legislation to get a better performance and perhaps, as my colleague from New York has said, add some resources if necessary, and I don't know whether that is the case or not. The Administrator or the staff indicated yesterday that perhaps the resources could be redirected and a little more efficiency could be derived to deal with this problem. I don't know that.
Page 24 PREV PAGE TOP OF DOC Segment 2 Of 2
But I do believe that a full legislative sweep is not the problem. I think that the attention to the subject is the problem, and between what I will call an administrative fix in the executive branch and perhaps some legislative support to support that, that we will provide the kind of protection that consumers I think are fairly and rightly asking for for these most egregious cases.
I don't have an answer to a totally satisfactory and happy move, because if you have moved as many times as I have, something seems to go wrong. I am not looking for perfection, but I am looking to stop the rip-off.
I thank you for the opportunity to testify.
Mr. PETRI. I thank you for your testimony and for you and your staffs for calling this to the subcommittee's attention. It is because of our efforts on behalf of your constituents that this hearing and this part of the hearing is being held here today.
So we very much appreciate not only your testimony and your calling our attention to this subject but the spirit of the remarks which is, rather than passing out legislation and pretending to do something about it, trying to get down to the meat and potatoes of it and really trying to improve the situation for the people that we represent who go through enough trauma moving as it is without being ripped off by unscrupulous characters in that industry.
Are there any questions?
Page 25 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. RAHALL. Just a comment and then I may have a question for colleague Sherry.
We appreciate your bringing this to our attention, but I am sure that you would agree that this is the exception rather than the rule. And, as in any industry, there are those few bad apples that upset the cart and give the industry a rather bad view.
I don't have precise figures with me. We will have people from the moving industry testifying later who perhaps can give us those precise figures, but I think we are talking about 4 percent of household good movements that are subject to such complaints that you described here today.
The second point I would make is, and I appreciate if you would comment on this, either one of you, that we are certainly here to blame in Congress for much of this situation at the FHWA.
As you will remember, certainly you do, Sherry, we had an amendment on the floor of the House to eliminate the ICC offered by our colleague from Ohio, Mr. Kasich. It passed. That put us in a rare, uncomfortable position. It put us on the defense on this committee, and in 1995 we had to enact legislation abolishing the ICC. In doing so, the bottom line to some in the Majority was not consumer protection but, rather, it was the budget. So obviously we were, some on this body, sacrificing on the altar of a balanced budget at the expense of the consumer. You can't have it both ways.
Page 26 PREV PAGE TOP OF DOC Segment 2 Of 2
We transferred the consumer protection authority to FHWA. We did not provide them with the necessary means, as I said in my opening statement. They are in the business of building highways and not necessarily consumer protection. We put them in a difficult position. That is how I see it.
Mr. BOEHLERT. Let me respond in this way—in reaction to point one, you are absolutely right. The overwhelming majority of shippers are responsible. They do exactly what they tell the customer they are going to do. We have a small percentage that are not responsible, and we have to deal with them.
For example, we have companies that intentionally low-ball the estimate for the cost of the shipment, and when the shipment occurs the bill is three times the estimate. That should not occur. It is not just the fly-by-night operators. As I submitted in my testimony, in Ms. Cooper's case it is one of the big names in this business, and I think we have to get at them.
But I would agree with your observation. The overwhelming majority are responsible and do what is expected of them.
The second point, I don't apologize for downsizing government and making it less costly and more efficient, but we are not here to dismantle the government. So as we transfer responsibility to a leaner and, hopefully, more effective government, we should be mindful of the need to protect the consumer because we are the last line of defense to the consumer.
Page 27 PREV PAGE TOP OF DOC Segment 2 Of 2
So if we give to an agency new responsibilities as we have, I think we should give the resources to carry out those responsibilities. I think you and I are on the same wavelength.
Thank you.
Mr. GOSS. I would certainly agree that the great majority of the industry does a credible and necessary job. The concern I have and the reason that we have come forward at this time to take your subcommittee's time and attention is that we see an increase in complaints happening. We see an increase in incidents that are being reported. And it may be that there is a lot of media interest and there tends to be a little frenzy when that happens, but the fact is that we are hearing more of this.
When you track cases that come into the congressional offices, we are seeing that there are people who feel that they have no place to turn, and that is the second part of the problem. When we tried to pick up the phone and call, we got an unsatisfactory answer when we asked what should we do about this. I wasn't satisfied with the response. So we felt it was necessary to find out if there was a better response, and oversight, which is our job, requires us to look into these kinds of things and see if there is a better response.
I am satisfied after talking to the Administrator yesterday that there is an opportunity for a better response by doing some things differently, and I believe the Administrator will testify as to some things that were discussed in our office which are fine ideas which will help. They involve customer-awareness-type activities and education activities, making people more alert as to what they are embarking on when they deal with one of these contracts.
Page 28 PREV PAGE TOP OF DOC Segment 2 Of 2
If you have ever read a moving contract, you have read a long, complicated piece of paper that is printed in very small print generally, and sometimes there are some surprises. Part of it is education, and part may be reallocation of resources to get more mileage out of what they have. But I agree. I don't think that we need to back away from our job of oversight to see if we can't help people come up with a reasonable solution in the executive branch, and I don't think that it is that complicated.
I thank you for the opportunity to say that.
Mr. RAHALL. I have one comment to Sherry, who is chairman of the Water Resources Subcommittee.
I mentioned the Woodrow Wilson Bridge in my opening statement. In drafting TEA 21 under the capable leadership of Chairman Petri and Chairman Shuster, we didn't let any small thing like the Woodrow Wilson Bridge get in our way of getting a final bill out. My question is, you are not going to let a little thing like the Auburn Dam stop you from getting a bill out of Water Resources, are you?
Mr. BOEHLERT. We are going to be very thoughtful and deliberative, and we are going to fashion responsible public policy for the American people.
Mr. RAHALL. We did that in TEA 21.
Mr. BOEHLERT. That is exactly right.
Page 29 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. PETRI. Representative Goss, you referred to the small print in the moving contracts and how it is basically impenetrable. The Federal Congress and the regulations issued pursuant to acts that we have passed, it says Federal law requires that movers advise shippers that they may expect tariffs, and each person is supposed to receive this booklet. So the issue is a question of awareness and enforcement and resources.
Mr. GOSS. I agree with the Chairman. I think there is a lot of awareness necessary here.
Mr. PETRI. Thank you very much.
The next panel is Kenneth Wykle, Administrator of the Federal Highway Administration, accompanied by George Reagle, Associate Administrator for Motor Carriers.
Welcome. Your full submission will be included in the record, and you are invited to proceed as you wish for 5 minutes.
Mr. RAHALL. I believe you mentioned this was the Administrator's first time testifying as the Administrator?
Mr. PETRI. Yes.
Mr. RAHALL. As a fellow West Virginian, it is my pleasure to welcome him to the subcommittee. I had the distinct pleasure of introducing him on the day of his confirmation hearing, and it is indeed a pleasure to welcome a fellow West Virginian from my district.
Page 30 PREV PAGE TOP OF DOC Segment 2 Of 2
TESTIMONY OF KENNETH R. WYKLE, ADMINISTRATOR, FEDERAL HIGHWAY ADMINISTRATION, U.S. DEPARTMENT OF TRANSPORTATION, ACCOMPANIED BY GEORGE L. REAGLE, ASSOCIATE ADMINISTRATOR FOR MOTOR CARRIERS
Mr. WYKLE. Thank you, Mr. Rahall.
Mr. Chairman and Mr. Rahall, thank you for inviting me here today to address the Department of Transportation's role in economic regulation of the motor carrier industry. I am accompanied by George Reagle, Associate Administrator for Motor Carriers.
This subcommittee's oversight and the commitment of its members are critical to the effective and productive operation of this country's motor carrier transportation industry. It is an honor for me to have the opportunity to appear here today and represent the Department.
Since various motor carrier economic regulatory functions were transferred to the Department of Transportation by the ICC Termination Act, we have worked to integrate those functions rationally and effectively into the Department. We have made great progress, but certainly more remains to be done. The written testimony I have submitted for the record today provides full information on how these new regulatory responsibilities have been assimilated over the past 2 and a half years and highlights the significant activities affecting the motor carrier industry.
Mr. Chairman, I would welcome any questions that you or the subcommittee may have on motor carrier economic regulatory issues in general, but in consideration of your time I have focused my remarks on the Department's activities with respect to a particular segment of the motor transportation industry, household goods carriers.
Page 31 PREV PAGE TOP OF DOC Segment 2 Of 2
The Department is fully aware and sensitive to the consumer concerns about abusive commercial practices of household goods carriers. The media focus has been intense. Nonetheless, we need look only to the 2,500 complaints from aggrieved shippers processed annually by the Federal Highway Administration's field staff to know that the matter is severe and merits our continuing attention.
I want to review the measures that the Department has taken to assist household goods shippers through consumer protection initiatives. Please be assured that we continue to explore ways to expand our role in advising and assisting consumers without compromising our primary mandate, to ensure motor carrier safety.
Upon inheriting economic regulatory responsibilities over motor carriers, we immediately trained and focused our field staff to identify household goods carrier violations and respond to consumer complaints alleging improper or abusive carrier practices. Our field staff can identify remedies available to shippers who have suffered commercial abuses and can provide practical guidance to assist shippers in assessing those remedies, for example, through the use of arbitration or the judicial process.
To ensure consistent and informed response to complaints, we distributed to the field comprehensive complaint-handling guidelines. These guidelines require complaint tracking which provides data that assist the FHWA in identifying and responding to patterns of improper or abusive carrier practices.
Field staff conducted compliance reviews of household goods carriers, focusing on both safety and commercial regulations. Currently, we are conducting or have completed about 13 ongoing investigations of household goods carriers for alleged violations of economic regulations.
Page 32 PREV PAGE TOP OF DOC Segment 2 Of 2
The FHWA also participates in a national household goods strike force with other Federal agencies. Knowing that consumer knowledge is power, we have developed self-help information packets for consumers involved in disputes with household goods carriers. We also have updated and distributed a consumer information brochure, Your Rights and Responsibilities When You Move, which is required to be provided by all household goods carriers to their customers.
Given the scope and frequency of household goods carrier violations, we are prepared to establish a task force to develop additional responses to this problem and more aggressively exercise the Department's existing authority. Areas being considered include increasing public information and outreach activities, increasing the number of household goods carrier compliance guidelines reviews and establishing teams of specialists to investigate household goods carriers that are subject to recurring complaints.
Clearly, the FHWA's primary mission is to ensure motor carrier safety and identifying those carriers that pose a high safety risk. We are mindful that any significant expansion of our consumer protection activities could divert critical safety resources. Accordingly, we seek less resource intensive alternatives which may be available within our existing authority.
As we continue to do so, we look forward to working with the subcommittee to pursue additional measures which might provide household goods shippers with meaningful relief. These may include increasing the value of loss damage for mandatory arbitration above the current $1,000 maximum limit and technical changes to the Carmack amendment.
Page 33 PREV PAGE TOP OF DOC Segment 2 Of 2
This completes my testimony. I will be happy to respond to your questions.
Mr. PETRI. Thank you.
Mr. Rahall, do you have any questions?
Mr. RAHALL. Thank you for being here today, with having to sort through 547 pages of conference agreement on TEA 21 and the 91 pages of technical agreements that followed and make sense of that and implement the program, so we know how valuable your time is.
Let me just point out one thing while I am on the subject of TEA 21. I hope you will take a particularly hard look at my home State of West Virginia when it comes to allocating that $700 million in the corridor program. There are needs we have in our State that even Senator Byrd and I have not fully addressed yet. I just wanted to put in that plug.
I want to start by questioning you in regard to the area of household goods. We will hear testimony later today on behalf of the Attorney General of New York that the FHWA is unable to enforce even the existing regulations, let alone be faced with more proposed changes. Also, we will hear from movers that consumer complaints made to the FHWA are simply referred to the industry trade association.
Both of these testimonies will recognize that you do not have the adequate budgetary resources to fulfill the mission that we thrust upon you from Congress. So standards without enforcement are meaningless, and enforcement cannot be done on a shoestring budget. Are you planning to ask for any additional staff or budget from the Congress?
Page 34 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. WYKLE. We want to review the current administrative authorities we have in terms of being able to levy fines. We also have the authority for injunctions currently, and then we have some other current legislative remedies such as I mentioned the arbitration. So we want to look at all of those and determine how to add more teeth to those before we come to ask for any additional resources.
Currently, it is my intent to put together a small task force, if you will, within the Department to start looking at these most egregious cases, get an idea as to the workload required. If we can handle that within the Department, we will do so. If not, I will come back and ask for additional resources.
Mr. RAHALL. Do you have any time frames under which this task force will operate?
Mr. WYKLE. I think we can get it up and running and start the evaluation within the next month or so and then go after the specific cases. I would speculate that we could look at three or four or five significant cases per year.
I would mention to you that we have already started this year, fiscal year 1998, a much more aggressive, responsive program. We have initiated action against nine household goods carriers, and we have levied fines against them. There is a pending $125,000 fine pending against a carrier. We have turned over four cases to the IG because of potential criminal activity.
Page 35 PREV PAGE TOP OF DOC Segment 2 Of 2
So we have been taking more aggressive action over the last several months as these issues have come to our attention. We want to see what additional things we can do before we ask for additional resources.
Mr. RAHALL. The single State registration, it is true that Congress directed the FHWA to develop a single online Federal motor carrier registration system, but looking through your statement, I think you are being rather polite when you noted that this is difficult to do because of the statutory condition placed on this mission by the Congress. I view this more as a poison pill.
The difficulty is that Congress said you can replace the State systems, meaning you would have to accommodate 38 States only if they suffered no reduction in revenue from a reduction of fees associated with these State systems and their replacement by a single Federal system. I realize that you carry with you that can-do attitude of a military background, but is it within the realm of possibility that this statutory condition can actually be met?
Mr. WYKLE. Well, I think it is within the realm of possibility. But, as the statement indicates, it is almost a catch-22 because the guidance we have is to, of course, work toward the establishment of a single system. But at the same time the direction was to ensure that the States continue to receive the revenue that they are currently receiving from their own systems, and there are 38 States that currently have revenue-generating sources from their registration system. So putting together an online single system is certainly technically possible.
It is the additional piece of ensuring there is no loss of revenue that makes it difficult to achieve, because we have to get the States to agree to that and we have to have a means within the Department to collect and then distribute those revenues, which is new for the Department. We don't currently do that type of thing, and it could impact upon our objectivity in terms of perception from the public as to how we administer that program. So it is technically possible, but it is administratively difficult because of the constraints.
Page 36 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. RAHALL. Mr. Reagle, speaking of the uniform registration program, I would like to ask you about another uniform program which is near and dear to my State of West Virginia that deals with the hazardous materials transportation. This is being delayed in its implementation by the FHWA. Can you give us any update?
Mr. REAGLE. I knew that you would bring this up, Mr. Rahall.
First of all, I think what we said to your colleagues at the State level, we want to help them. I don't want us to be viewed as recalcitrant. We did have some concerns about, in fact, what Congress asked us to do.
We have looked at other means to achieve the same goal. We have sent letters to all of the governors asking them their views, their personal views on the report from the alliance, and we have gotten some comments back, but I must tell you not very many. But we have started a dialogue with the States.
I think in the reauthorization for RESPA we have some ideas in there on the same goal but different means by which to get there, and I think we are moving.
What I hope is that the responses that we get back from the individual States give us some indication of collectively where the States are and what the whole wants us to do in the future. I think what is important, though, is we have had serious dialogue with the States, and I think the communications and the relationship with the States is much better than it was the last time I testified before you.
Page 37 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. RAHALL. Very good. There is some progress.
Mr. REAGLE. Yes, sir.
Mr. RAHALL. Thank you, Mr. Chairman.
Mr. PETRI. I actually have a series of questions. They may overlap a little bit with Mr. Rahall's.
I wonder if you could—in your testimony, you mentioned your primary mission of ensuring safety on the highway and that consumer protection is important, but it is secondary to safety, although they are both important. And you add that you are examining some ways to be more responsive to consumer concerns at the Department. Could you outline some of the options that you are considering?
Mr. WYKLE. Yes, sir.
As I mentioned in my oral statement, one of the primary things we can do is a more effective outreach program. So, in essence, educating and making the public aware of their rights. So we have made contact, as an example, with the Association of Retired Persons to have them assist us in terms of getting information out to their members.
As the complaints have indicated, moving from the northeast to Florida is a corridor where we get a lot of complaints, and in the California area people move to a sunny and more mild climate. So making the public more aware, indicating their rights in terms of getting a written estimate from the carrier, ensuring that they have a copy of the tariff, ensuring that the carrier is licensed and then, as you mentioned in your comments, have a copy of that booklet. Those four things will go a long way in terms of ensuring that the public is aware of their rights.
Page 38 PREV PAGE TOP OF DOC Segment 2 Of 2
Then on the legislative side, perhaps working with the committee to raise the dollar threshold for mandatory arbitration from the current $1,000 to something a little higher than that, because a thousand dollars doesn't cover much today in loss and damage.
The other item on the legislative side is taking a look at the Carmack amendment to perhaps make some technical adjustments there so that it does not preempt the States' right to take action against the carriers who are involved with interstate moves of household goods.
I think those two legislative changes along with the administrative things we can do will go a long way toward improving the situation.
Mr. PETRI. Can you put on the record your view as far as the scope of the problem that we are discussing today as far as disreputable household goods movers are concerned? Do you think, based on your Department's work, the situation is actually getting worse or is this a subject that is before us largely because it has received a flurry of media attention recently?
Mr. WYKLE. I will provide for the record some specific numbers, but in terms of the data as was mentioned by the previous witnesses, on a percentage basis it is not large. As you commented, about 1.5 million moves per year, we receive about 2,500 complaints out of all of those moves per year. So that is a small percentage. But to tell you about the trend line, I will provide that for the record. I don't have it with me.
Page 39 PREV PAGE TOP OF DOC Segment 2 Of 2
[The information follows:]
[Insert here.]
Mr. WYKLE. Let me ask George if he has anything else.
Mr. REAGLE. We would be happy to provide it for the record, but what I heard from the staff which came with the ICC functions is that it has remained pretty much level.
Mr. PETRI. We would be interested if you do have—figures and maybe—I don't know if you can give it an evaluation of the quality of the figures. Sometimes the numbers themselves need some analysis as well.
Representative Goss testified a bit about efforts of his district office to try to help constituents in contacting Federal agencies, I think your Department in particular. Could you indicate what your staff typically does now when they receive a consumer complaint concerning household goods transportation?
Mr. WYKLE. Yes. We have educated our staff, motor carrier staff in each of the States, we have offices in every State in the United States, in terms of receiving complaints, tracking those complaints, establishing a database for that. So the first place a consumer should turn in each of the States is to our motor carrier office, and then we have a policy prescribing for them how to handle those complaints and the actions they should take.
Page 40 PREV PAGE TOP OF DOC Segment 2 Of 2
So in my meeting with Representative Goss yesterday, that is one of the questions he asked. Where should my constituents go? And so we told him that and then provided a name and point of contact with a telephone number as an example. But that capability exists in each of the States, and so we have the capability within our field structure to go investigate those complaints.
Mr. PETRI. In your testimony you said that your Department is conducting 13 investigations of alleged violations of the agency's economic regulation. How many unlicensed movers have you investigated or prosecuted since the transfer of enforcement responsibilities in this area to your Department in the ICC Termination Act?
Mr. WYKLE. Did you say unlicensed, Mr. Chairman?
Mr. PETRI. Yes. Unlicensed.
Mr. WYKLE. We would have to provide that for the record.
Mr. PETRI. Could you?
Mr. WYKLE. Sure.
[The information follows:]
[Insert here.]
Page 41 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. PETRI. How many investigations or audits have you instituted into the practices of licensed movers?
Mr. WYKLE. We don't have the information on the license. We will have to go back and break it out as to whether or not these carriers were licensed or unlicensed.
Mr. PETRI. Will that be difficult?
Mr. WYKLE. I don't want to say. We will certainly give it a good effort.
Mr. PETRI. If it is difficult, contact us, because we don't want to divert resources from consumer protection to bureaucratic file shuffling.
Mr. WYKLE. I appreciate that.
[The information follows:]
[Insert here.]
Mr. PETRI. Has lack of oversight by the Department in this area helped foster the activities of disreputable movers who believe that they can act with near impunity because the Department is unwilling or unable to enforce existing laws concerning household goods movers?
Page 42 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. WYKLE. Certainly with the transfer to Federal Highway under the ICC Termination Act and the time that it took us to assimilate the personnel into the agency and get familiar with the programs, there was probably a period when the carriers were not receiving the oversight, so they felt some opportunities to bend their regulations or to see how far they could go.
With the recent initiatives starting with fiscal year 1998, as I mentioned, to do more compliant reviews, to respond more to complaints, the investigations that I talked about that we have completed and are ongoing, the fines levied and certainly the one for $125,000, and it appears that particular carrier is interested in working with us to potentially identify others, a few of these cases I think will get us back on the track with the carriers realizing we have the capability to enforce and we are going to do it. As we proceed with three or four of these high-profile cases, I think the message will get out.
Mr. REAGLE. The one thing that we need to do is publicize these kinds of cases. We have done that from the safety perspective, and that has been very helpful and creates general deterrence, which is precisely what we want to do in this case.
Mr. PETRI. Next, I will ask two questions which have to do with Federal-State regulations in consumer protection.
Some suggested that, due to the apparent lack of resources at the Federal level and the nationwide scope of unscrupulous household goods movers, Congress should establish concurrent Federal and State jurisdiction to enforce the Federal household goods laws and regulations in Federal court. Would you support the concept of concurrent enforcement jurisdiction, first of all? And, secondly, what is your view on the proper role of State and local consumer protection agencies in aiding consumers who have complaints against interstate household goods movers? How could their efforts be integrated with your Department's enforcement activities?
Page 43 PREV PAGE TOP OF DOC Segment 2 Of 2
We are not alone in this. We are citizens of States as well as the Federal Government. Perhaps we could coordinate better with consumer protection agencies in each of the States. Consumers turn to them in the first instance when they have a complaint, rather than to us.
Mr. REAGLE. I think we need to involve the States. By virtue of looking at the Carmack amendment and making some changes so that the States can in fact almost be our agents would probably be one of the most beneficial things we could do.
Second, I think, relative to public information, as we did in NHTSA when I worked there, I think we need to involve the consumer protection agencies at the State level with respect to, for example, our brochures and what they might be able to do. But my belief is that some changes in the Carmack amendment that allow the States' attorneys general to almost become our agents would be very, very helpful.
Mr. PETRI. Thank you.
The ICC Termination Act required the Department to conduct a study to determine whether any reforms should be made to current cargo loss and damage provisions, including any reforms regarding limitation of liability by carriers. A report on the study was due last—actually January 1, 1997, about a year and a half ago. What has caused the final version of this report to be delayed and when can we expect that it will be submitted?
Mr. WYKLE. Is that the one on dispute settlements?
Page 44 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. PETRI. Cargo liability. General trucking cargo liability.
Mr. WYKLE. I will have to get back to you. I wasn't prepared to respond to that.
Mr. PETRI. We draw your attention to the fact that it is not unique that deadlines are missed, but it will help us in working on legislation to get that.
Mr. WYKLE. We will provide that for the record.
[The information follows:]
[Insert here.]
Mr. PETRI. In the draft cargo liability report released last year, the Department appeared to be backing away from the current cargo liability standard of the Carmack amendment which makes carriers liable for the actual full value of any goods lost in shipment. What is your rationale for this change in the final report? Will the Department endorse a specific form of limited cargo liability? Maybe you will want to get back on that, too?
Mr. WYKLE. The Carmack study is certainly under way within the Department. It has been completed, and it is undergoing internal staffing at the present time. So we should have that up to you fairly soon with the Department's position on that.
Page 45 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. PETRI. It is important to the industry to understand what your thinking is in that regard.
Mr. WYKLE. Yes, sir.
Mr. PETRI. The Department of Transportation has not been able to consider requests for certain exemptions reporting requirements as provided in the ICC Termination Act because no procedure is in place to evaluate such requests. Do you have any idea how many requests have been made for exemption from these reporting requirements and any sense as to what the Department's schedule is for establishing a procedure in order to implement the exemption provisions?
Mr. WYKLE. I assume that you are talking about the financial reporting that is required.
Mr. PETRI. Yes.
Mr. WYKLE. The ICC Termination Act certainly transferred that to the Department, requiring us to continue that collection, plus expanded it to include the collection of safety data. That information that we have determined is used by several other Federal agencies, GSA as an example, the Department of Defense, the Bureau of Economic Analysis, and we are taking a look at all of that now to see how badly they need that or whether or not it can be gained from other sources.
Our Bureau of Department of Transportation Statistics has the responsibility for the collection of that data and providing it. In the interim, they are trying to reduce the workload burden on the industry by eliminating such things as ton miles of cargo moved and other data like that and focusing primarily on the financial side. But there is diversity of opinion there because it is a burden on the carriers. But other organizations, as I mentioned, see a need for that and so we are trying to get the consensus between the groups as to what the best solution is for that.
Page 46 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. PETRI. We hope that you will continue working in that area.
Mr. WYKLE. We will continue to work in that area. I think we will probably have a position within the next few months on that.
Mr. PETRI. Thank you very much for coming and—I am sorry, Mr. Horn.
Mr. HORN. I was very impressed with an item in your testimony and congratulate where you talk about the electronic filing of the insurance notices and you have gone from 15 percent 2 years ago to 45 percent today. Do you see that going up to the 90 percent mark?
Mr. WYKLE. I certainly see it continuing to improve, sir. I would like to see it achieve 90. The caveat is the small businesses are not proficient in the automation. We will continue to champion that.
Mr. HORN. Is there a way that you can develop the software and give it to them?
Mr. WYKLE. We are looking at that, and also some of the associations may be able to do that and provide it to them. We are exploring those types of ideas to make it available to the smaller carriers.
Page 47 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. HORN. A lot of them are members of State and national associations, and workshops held there might help, also.
Mr. WYKLE. Yes.
Mr. HORN. One of the things that we saw recently on television was that people were moving, and they were moving themselves, and U-Haul was sort of collapsing on the highway, and there was a real problem of safety. Is there any jurisdiction that you might have over that or is it strictly left to the States when you have a major company on the roads with people taking their own goods and they have the safety records that seem to be in some areas?
Did you happen to see the show, number one?
Mr. REAGLE. No, sir, I didn't.
Mr. HORN. You ought to get a tape.
Mr. REAGLE. We will. It was an interstate. Obviously, we would have jurisdiction. If it was a person moving their own personal goods.
Mr. HORN. They are interstate.
Mr. REAGLE. That is a State issue. We obviously deal with the International Association of Chiefs of Police, for example, and if it is a safety problem we want to work with them.
Page 48 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. HORN. If there is a pattern and practice, something ought to be looked into.
Mr. REAGLE. We will.
Mr. HORN. I happen to come from the area of California, Long Beach, where we have the Alameda Corridor, which is one of the great innovations in intermodal transportation; and I think every port in America that has water and rail and air is going to probably be doing similar things.
The question is this: When you try to clean up an intermodal corridor such as the Alameda Corridor, which has strong bipartisan support from this subcommittee, the full committee and the House and the Senate, it seems to me that you have situations where, in order to improve the traffic pattern on the surface with the highways, you need to depress a lot of rail lines. That might be the simplest solution. And then you wouldn't have the rails blocking highways which they do in Downey, California. I have sat there 25 minutes waiting for the train to cross. And the emergency services are on one end of town, and if there is a fire on the other end, good-bye house. You need to straighten out the surface system, be it rail or highway, to solve that problem.
So the question is this: Do you feel your administration has sufficient authority to relate rail and highway and to fund those projects when they make sense, to depress the train tracks or maybe even depress some of the highway to a certain degree and get the train tracks running over? What is your thinking on that?
Page 49 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. WYKLE. Certainly within the Department I think that capability exists. I have visited the Alameda Corridor and traveled it, flown over it, and L.A., Long Beach, and I am familiar with the congestion that is there.
In the agency, we are doing a connector study. Because port clearance is one of the challenges that we have, moving from ports to inland destinations. So we need to upgrade the highway connections to our major ports and terminals as well as, where possible, to endock rail directly for the transfer of that cargo and have—reducing the number of rail grade crossings. So the Federal rail administrators and myself talk frequently—how to reduce them, minimize them, provide overpasses or depress, whichever is best in each of the cases.
From the funding, of course, then we have to look at the various committees in Congress and where the funds are available. But we are coordinating and working together to maximize the capability of the two administrations to do that.
Mr. HORN. Is your coordination matched in most States or in most States do we have childish feuds between highways and railways?
Mr. WYKLE. One of the things that Secretary Slater——
Mr. HORN. When you deal with 50 different States, what do you see there? Do you see cooperative endeavors now that they understand that these intermodal corridors are going to be a mainstay in American transportation?
Page 50 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. WYKLE. Yes, sir, I do. I see much better cooperation. Secretary Slater has an initiative that he is championing. In fact, we have an off-site tomorrow with the intermodal administrators and the Secretaries to do more work on this.
I have personally met with AASHTO, the American Association of State Highway Transportation Officials. I have personally met over the last year with every State Department of Transportation leader, chief administrative officer, talking about intermodalism, the connectors, the rail and highway and the existence of the two together. I think we are well on the road to improving that relationship.
Mr. HORN. So you are saying that you do not need any more legislative authority in your administration, I am talking about the one that you were the head of, because you can do it through your colleagues in transportation. And then the question would be, when it gets out to the States, do you see that cooperation going on?
Mr. WYKLE. I do not see the need at this time for any additional legislation, from my standpoint, and I do see cooperation in the States as I go out and visit. If you have a specific example——
Mr. HORN. We had a little a few years ago, but we got the State officials in and that has worked out. But this is a big country and we do not know everything that goes on sitting in Washington. You would know because you get around a lot, and I congratulate you on dealing with 50 State transportation officials.
Mr. WYKLE. It can be a challenge at times, but we are doing quite well, sir.
Page 51 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. HORN. Thank you.
Mr. PETRI. Thank you very much.
Representative Taylor?
Mr. TAYLOR. No questions.
Mr. PETRI. The next panel is Ms. Beth Redlich from New York and Mr. Steve Haines from California. Please come forward.
TESTIMONY OF STEVE HAINES, PHILADELPHIA, PA; AND BETH REDLICH, NEW YORK, NY
Mr. PETRI. Mr. Haines, would you like to proceed?
Mr. HAINES. Sure. I would first like to thank the Chairman for inviting me to speak today at this committee hearing. I am happy in the fact that my testimony may help future consumers and will enlighten this committee regarding the events that took place during my recent interaction with this moving company. I am, however, not very happy that I am the person speaking to you today about this.
We have seen many negative television reports about moving companies; and, of course, things like this don't happen to people like me. Unfortunately, they can and they do.
Page 52 PREV PAGE TOP OF DOC Segment 2 Of 2
This past October, 1997, I made the decision to move from Fort Lauderdale, Florida, to Philadelphia, Pennsylvania, to start a new life in the Northeast. I had recently accepted a marketing position and looked forward to this move. I was, of course, a little nervous to leave my home of 6 years, start a new job and also move my entire life across the country.
My belongings were picked up from my home on a Friday, October 17, without much fanfare. My entire life was entrusted to strangers, put in a truck and driven off. Little did I know at that time it would be several weeks and several thousands of dollars later that I even saw my belongings.
The original date of arrival was to be Wednesday, October 22. I was informed of truck problems on that Wednesday and that the shipment would be delayed. I was informed that there would be another delay and yet another delay, contradictions and then outright lies.
For the next week, I continued to call the movers each day, sending faxes and making telephone calls several times each day. I never received one return phone call, and it is now August, 1998. I am still waiting for that phone call.
During the entire time of waiting for my furniture, clothes and life to arrive, I resorted to camping out on my hardwood floor. I had driven from Florida to Pennsylvania with only the bare necessities, knowing or assuming that my belongings would arrive on time. Realizing that they would not arrive on time for my first day in what turned out to be my first several weeks of work, I was forced to purchase a wardrobe that would carry me through, including pants, shirts, jackets, ties and even shoes and socks.
Page 53 PREV PAGE TOP OF DOC Segment 2 Of 2
Unfortunately, the result of living on a floor for several weeks led to a case of the flu, missing work time and eventually checking into a hotel. I could no longer live in my apartment that I was renting.
By this time I was, needless to say, a little upset. I contacted every agency that I could think of, including the Department of Transportation, Federal Division of Motor Carriers, the headquarters of licensing and insurance, attorneys general in each State between Florida and Pennsylvania, Consumer Affairs and even the Broward County Sheriff's Department. Everyone was extremely helpful but could do nothing.
When I did have the opportunity to finally speak with someone at the moving company, I received the perpetual ''this is not my fault and that person is not here to answer your questions.'' The owner was never available for comment. I did speak with a new staff person who was in charge of scheduling deliveries. I explained my situation to him, and he said, ''I know about your situation, and I would not want to be in your shoes.'' Of course, at this point my shoes were still in their truck.
My items were finally delivered on Friday, November 7, 3 weeks late. They were missing items, and an antique desk was broken completely in half. The company failed to send me any claim forms so I sent my own by certified mail. This certified mail and letter was returned to me as refused. I again called the company and asked why and did I need to have the police deliver my claim in person, and I was told, quote, ''I don't care if you have the President deliver it.''
Page 54 PREV PAGE TOP OF DOC Segment 2 Of 2
I have tried many channels for resolution, but none have worked. I have even directly contacted the mover's insurance carrier. I have followed proper channels for complaints and even submitted my claim to the American Movers and Storage Association for arbitration. The moving company has never even once responded to this Federal agency, which is in clear violation of the law.
Again, the agencies that I contacted have had been extremely helpful. There are many codes and regulations under which motor carriers must operate, but, as I discovered, there is no enforcement of these codes. I see no difference in what this moving company has done to me than that of a burglar robbing my home, stealing my money and getting away with it.
The excitement and anticipation of living in a new city, starting a new job were completely muted by this situation. I have now been informed that the only way to collect my money is to hire a lawyer and file a lawsuit, and this entire process has resulted in this binder, over a hundred pages of notes and faxes and letters. It has been extremely time-consuming and costly. I also discovered from this company truth and honesty were two words completely missing from their vocabulary.
Hopefully, from hearing from me today and countless others who have had similar and, in many cases, much worse scenarios, this committee will find an answer to the problem. Codes, laws and regulations should be in place to keep motor carriers from creating situations like this, but that may only be in a dream world. When carriers do step well beyond their bounds and create the harm like what they have done to me, they need to be held accountable. Their acts should be considered criminal, and these codes and regulations must be enforced. A company such as this should not be allowed to do business.
Page 55 PREV PAGE TOP OF DOC Segment 2 Of 2
I hope that my story will help you, and I thank you for your time.
Mr. PETRI. Thank you.
Ms. Redlich.
Ms. REDLICH. First, I have to say that I am really sorry, because your story is much worse than mine.
Good morning, Mr. Chairman. Prior to my move last summer, I called a moving company in Baltimore and asked them to provide me with an estimate of a move from D.C. to New York City. I made it clear from the beginning that I wanted an overestimate so I would be assured of a price ceiling. It was also important for me to have a specific delivery date, not a window of 3 or 4 days. Not a problem they said. After an exchange of additional information, I was guaranteed a price and a delivery date.
Late in the afternoon on the day of the delivery, I called the deliverer's home office only to find that the movers would not arrive until the next day. I was frustrated and disappointed but, fortunately, was able to reserve my difficult-to-access building elevator the next afternoon. Late the next day, the movers eventually arrived.
According to the moving company, they had moved much more than originally expected and thus refused to unload my furniture until I paid an additional $500 cash above the guaranteed price. Aside from the fact that they moved exactly what had been described, I asked why I was not told of the alleged discrepancy sometime within the 4 days since the pickup of my belongings or, at the very least, when I called the day before looking for my things. It seems clear that they purposely waited to make their claim until my furniture was sitting in front of my apartment building.
Page 56 PREV PAGE TOP OF DOC Segment 2 Of 2
After more than an hour on the phone with the home office, I had no choice but to pay approximately $400 and sign a release to get my belongings. As an aside, the workers moving my furniture compassionately I told me shouldn't be upset, this happens all the time.
After I settled in New York, I sent a letter to the Maryland Division of Consumer Affairs outlining my experience. In a rebuttal letter, the moving company claimed they had estimated the move at the price eventually charged. To support their claim, they enclosed what they said was the original inventory list which showed an inflated price quote and a delivery date within a 3-day period. Fortunately for me, I had retained the real original inventory list appropriately dated by a fax machine providing my version of events to be correct.
Of course, given their behavior during my move, their attempted forgery didn't shock me. I intend to pursue my claim in small claims court. Although I am sure I will get a positive resolution, the simple recoupment of my $400 is insufficient to adequately penalize the moving company for the frustration and stress they put me and I am sure many others through. Hopefully, stronger legislation will make them change their behavior in the future.
Thank you.
Mr. PETRI. Thank you both.
Are there any questions?
I have just one or two.
Page 57 PREV PAGE TOP OF DOC Segment 2 Of 2
I think I know the answer, but did either of you receive this federally required information booklet at the time you moved?
Ms. REDLICH. No.
Mr. HAINES. No. There was no bill of lading received or this pamphlet, written estimates, and I could continue.
Mr. PETRI. I would like to personally thank you both for coming and putting a human face on this problem, but I wonder if you could, based on your experience, share with others who are considering engaging a mover any advice? Now that you have been through it, are there some things that you would like to be sure anyone did or knew about who might be thinking of moving? If you had a friend or relative who said, I am going to be moving, what would you tell them?
Ms. REDLICH. One thing is to call agencies like the Consumer Affairs Office to see if there have been complaints against the company, to see if something bad has happened. That is the only thing that I can think of.
Mr. HAINES. Now being educated after the fact, actually I did have a second move since I have moved to Philadelphia. My first apartment was just temporary, and I definitely played more than 20 questions with that moving company because I had been educated.
The booklets that you were just holding up that are available through the Department of Transportation, they are wonderful and helpful for anybody, so read everything about that, ask many questions and get everything in writing. That is about the only thing that I can suggest.
Page 58 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. PETRI. So you say do a little more research and be a wary consumer and ask questions in advance and get things in writing before entrusting your household goods to the people that are going to be moving them?
Mr. HAINES. That is correct. But even if you have everything in writing and have every rule and regulation, unfortunately I have a feeling my experience would still happen.
Mr. PETRI. Any further questions?
If not, thank you very much for——
Mr. TAYLOR. I am curious, what was the outcome of your case in the small claims court?
Ms. REDLICH. I took it to arbitration, but that was only for lost and damaged goods, so I am going to take it to small claims.
Mr. TAYLOR. Was the $400 paid back?
Ms. REDLICH. They have not repaid.
Mr. TAYLOR. Have you retained a lawyer?
Page 59 PREV PAGE TOP OF DOC Segment 2 Of 2
Ms. REDLICH. I have a lot of friends that are lawyers that I have been talking to.
Mr. TAYLOR. What are you hearing from them are your chances once you go to court?
Ms. REDLICH. I have not gotten that far.
Mr. PETRI. Mr. Horn.
Mr. HORN. During your testimony the question of informing a consumer agency like the Better Business Bureau came up. Did you phone them and did you have any word about the company that has abused both of you, and what kind of reaction?
Ms. REDLICH. They have not mentioned anything to me about the company, but they—when I initially wrote the letter, they responded very quickly and have been great about it.
Mr. HORN. Did they tell you that complaints have been filed with them?
Ms. REDLICH. They did not.
Mr. HORN. How do we expect consumers to find out when you have creeps like this that hold up your assets, and that is the way you put it, and I think you are right. So that is the only consumer group that you talked to?
Page 60 PREV PAGE TOP OF DOC Segment 2 Of 2
Ms. REDLICH. Yes.
Mr. HORN. Was it Better Business Bureau?
Ms. REDLICH. Consumer Affairs of Montgomery County.
Mr. HORN. Suppose you got somebody to phone in. Would they say, look, I need to tell you that there are 10 complaints on this firm. What kind of reaction would they have? Would there be something there, based on your experience, so they would change their advice? Or are they scared of giving advice other than saying, hey, we have 10 complaints, rightly or wrongly?
Ms. REDLICH. I am not really sure I understand what you are saying.
Mr. HORN. The system doesn't work in a society like this unless you have got some consumer group, presumably Better Business Bureaus, but some of them are off the wall. Where else does the consumer go unless it is a State or Federal agency? You went to this one and they didn't have much information for you, I take it?
Ms. REDLICH. I went to them to complain for the people after me.
Mr. HORN. Okay, if you got somebody to phone up, would they acknowledge that they had complaints on this because you phoned?
Page 61 PREV PAGE TOP OF DOC Segment 2 Of 2
Ms. REDLICH. I don't know.
Mr. HORN. What would they say?
Ms. REDLICH. I don't know.
Mr. HORN. Why don't you test it? Write Mr. Petri a letter for the record, and we will see if the system works.
Ms. REDLICH. I will call them and let you know.
Mr. PETRI. Thank you both for coming and testifying. I know that it takes time, and it is time well spent because, hopefully, it will benefit others and make some lemonade out of the lemon that you each have been given with your move.
Ms. REDLICH. Thank you.
Mr. HAINES. Thank you.
Mr. PETRI. The next panel is comprised of Ms. Shirley Sarna, the Assistant Attorney General in Charge of Consumer Fraud and Protection, Office of the Attorney General of the State of New York; Ms. Wendy Weinberg, the National Association of Consumer Agency Administrators; and Mr. Joseph Harrison, the American Moving and Storage Association.
Page 62 PREV PAGE TOP OF DOC Segment 2 Of 2
TESTIMONY OF SHIRLEY F. SARNA, ASSISTANT ATTORNEY GENERAL OF NEW YORK STATE, BUREAU OF CONSUMER FRAUDS AND PROTECTION, ON BEHALF OF DENNIS C. VACCO, ATTORNEY GENERAL FOR THE STATE OF NEW YORK, AND CHAIRMAN, CONSUMER PROTECTION COMMITTEE, NATIONAL ASSOCIATION OF ATTORNEYS GENERAL; WENDY J. WEINBERG, EXECUTIVE DIRECTOR, NATIONAL ASSOCIATION OF CONSUMER AGENCY ADMINISTRATORS; AND JOSEPH M. HARRISON, PRESIDENT, AMERICAN MOVING AND STORAGE ASSOCIATION
Ms. SARNA. Good morning and thank you very much for the opportunity to appear before you, and our thanks especially for holding these hearings and providing a forum for us to present our views.
I would like to take the liberty of submitting my comments for the record and, based on much of what I heard this morning, frankly, skip over a lot of it.
I think that the record has been passionately made about how serious this problem is in terms of the individual consumer dislocation and nightmarish quality that some of the abuses that have been described cause. And not only do they cause problems for consumers, but I think it is important to note that the legitimate moving industry is also stigmatized by these kinds of stories.
Just by way of a statistic, our New York State Department of Transportation tells us that 95 percent of the complaints that it receives each year are from 2 percent of the moving industry, and that is a very compelling statistic.
I would also like to make another observation. I wouldn't want in any way—I think the words recalcitrant were used someplace during the hearing earlier. I would not like to suggest that our relationship certainly in New York State has been adversarial in any way with the Federal Highway folks. They have been very sympathetic with the problems that we have presented to them. And, unfortunately, as you describe, they are someplace between a rock and a hard spot. They have a fair amount to oversee and very little in the way of resources to perform that oversight. That is what I would like to focus on, not so much talking about the scope of the problem but perhaps suggesting to you some solutions.
Page 63 PREV PAGE TOP OF DOC Segment 2 Of 2
One solution that we stressed in our comments and in our comments to the Federal Highway folks is that the enforcement piece of their business really needs strengthening. Having stronger regulations is, of course, very helpful and very welcome, but to not be able to enforce even that which is on the books makes those regulations almost pointless, and it has been our experience that the agency is really not in a position to help out either in terms of individual complaints, referrals that might be sent from other offices. The kind of facilitator, mediator efforts that were provided by the ICC have not been picked up, and it leaves consumers of interstate moves without any recourse at the Federal level.
The other piece that I would like to talk to you about is what we are calling in New York, trying to find smart enforcement. And the reality is that, in all levels of government now, we are being asked to do more with less; and. As I mentioned in my testimony, that is virtually a mantra in our office.
I think there are some models that are available to us that would allow smarter enforcement in this area to the greater good, I think, of consumers around the country. Just looking in New York State, for example, traditionally, the attorney general did not get involved even in intrastate moving issues, deferring to our Department of Transportation for those kinds of problems.
Our Department of Transportation is an administrative agency and is authorized to bring administrative proceedings, assess fines and penalties for violations of its regulations. What it was finding was that, particularly with respect to the rogue elements of the moving industry, it was assessing fines and getting nowhere, assessing penalties and getting nowhere, and what was really needed was bona fide law enforcement action.
Page 64 PREV PAGE TOP OF DOC Segment 2 Of 2
So we have worked out an already very promising relationship with our Department of Transportation, and in the last year our office has brought three law enforcement actions which encompass 12 movers, something like 10 individuals, and the litigation record is replete with 270 individual instances of outrageous, outrageous, abusive mover misconduct.
We would like to encourage that kind of relationship is established and nurtured between the Federal folks and the State folks as we have done intrastate in New York.
The third piece that I would like to recommend for the committee's consideration is the model where the States and the Federal Government essentially have concurrent or shared jurisdiction in most instances in Federal court, although, in one, actions can be brought in State court. It is a way of multiplying the enforcement without putting the burden squarely on the budget of the Federal agency.
I think the FTC's telemarketing rule, which was enabled by 1994 legislation from the Congress which empowered the FTC to pass regulations which are very similar to those already in place at DOT and permitted the States' attorneys general or chief law enforcement officers to enforce those regulations in district court, the importance of that is that we are able to achieve nationwide injunctive relief, nationwide asset freezes.
And, of course, what is important is to add to the legislation, and that can be done without the States having to provide performance bonds. This would go a very long way in solving the void that now really exists at the Federal level for lack of enforcement.
Page 65 PREV PAGE TOP OF DOC Segment 2 Of 2
I think also it would be helpful to have legislation to clarify the reach of the Carmack amendment and other Federal statutes, making it very clear that, in terms of unfair and deceptive practices, the States have regulatory and law enforcement authority, and I think the courts have so held. But it is a battle that has to be repetitively faced, and so it would be easier to have that cleaned up in proposed legislation.
Mr. PETRI. Thank you.
Ms. Weinberg.
Ms. WEINBERG. Thank you for the opportunity to address this committee. My name is Wendy Weinberg, and I am the Executive Director of NACAA, the National Association of Consumer Agency Administrators. NACAA is a nonprofit association whose members are State, local and federal government consumer protection agencies.
NACAA will make two points today. First, consumers are significantly injured by unscrupulous movers. Second, NACAA urges this committee to strengthen the authority of State and local agencies to address this problem.
Consumers have become sitting ducks for unscrupulous movers. We have heard stories about these horror stories. The stack of papers next to me are interstate moving complaints recently handled by NACAA member agencies. The stories are of movers who lure consumers in with low-ball estimates and then hold their possessions hostage until they pay a ransom of thousands of dollars over the estimate.
Page 66 PREV PAGE TOP OF DOC Segment 2 Of 2
Other stories reveal unsavory movers who pad bills with charges for unnecessary packing materials, or other surprise charges. Consumers have lost invaluable and irreplaceable possessions to the carelessness or callousness of rogue movers.
Moving scams are particularly despicable because they target people when they are vulnerable and often too overwhelmed by their move to fight back. Many of the victims are elderly.
The fact that some consumers have problems with their interstate movers is only half of the picture, however. The other half has to do with the lack of recourse available to consumers who find themselves victims of scams or negligence.
Since the dissolution of the ICC, consumers have nowhere to turn on the Federal level for helping resolve their complaints. In fact, Federal Highway has taken the position that they are precluded from becoming involved in disputes between consumers and movers. Some courts have taken the incorrect position that State and local consumer protection agencies are also precluded from helping consumers.
It is this confusion about the power of State and local agencies to address this issue that compounds the problems of consumers who are scammed in interstate moves. NACAA urges this committee to make explicit that State and local consumer protection agencies have the power and responsibility to take action against unscrupulous movers. Many consumer protection agencies already successfully handle these types of complaints. Others would eagerly take on this responsibility upon clarification of their role.
Page 67 PREV PAGE TOP OF DOC Segment 2 Of 2
State and local agencies are the natural venue for these complaints. They have established mechanisms for handling disputes between private companies and consumers. Consumers recognize these agencies as an avenue for them to seek redress when faced with unfair or deceptive business practices. These agencies are able to conduct investigations and initiate enforcement action against businesses engaged in illegal practices. Apparently, Federal Highway is unable to handle these complaints.
It is unacceptable to say that the government will not intercede in light of the voluminous complaints by consumers. Allowing State and local agencies to pursue unscrupulous movers would not subject movers to too many different and confusing standards.
We are not talking about different licensing or sticker requirements. We are talking about stopping fraud and deception. A mover should not need special notice that if he picks up 20 boxes, that he should deliver 20 boxes. Nor should a mover need special notice that a binding estimate of $1,000 should not swell to a bill for $3,000 after the consumer's goods are loaded onto the truck.
There is general uniformity among the States in the way that courts and consumer agencies interpret unfair and deceptive trade practices. Other industries are subjected to these laws. Why should this industry be any different, especially in light of the problems that consumers are experiencing?
This is common sense, not burdensome and obtuse regulation. NACAA is not arguing that Federal Highway should be taken completely out of the role of oversight of interstate movers. We hope that they would continue in several of the important functions that they have assumed, and strengthen others.
Page 68 PREV PAGE TOP OF DOC Segment 2 Of 2
Specifically, we recommend that Federal Highway gather and compile complaint data from consumers, collect arbitration reports and make those reports available to the public over the Internet. And, finally, we would recommend that Federal Highway develop mechanisms for working in cooperation with State and Federal agencies.
The main point that I would like to emphasize is that we do not have to throw up our hands and walk away from the problems caused by disreputable movers. State and local agencies are naturally positioned to help consumers and legitimate movers alike by taking action against the con artists who give interstate moving a bad name. We simply ask this committee to help State and local agencies do what they do best, help consumers.
Thank you.
Mr. PETRI. Thank you.
Mr. Harrison.
Mr. HARRISON. Thank you, Mr. Chairman.
My name is Joe Harrison. I am the President of American Moving and Storage Association, headquartered in Alexandria, Virginia. AMSA is the national association of the moving and storage industry, representing 3,500 movers worldwide, 2,000 of which are interstate motor carriers regulated by the Federal Highway Administration and the Surface Transportation Board.
Page 69 PREV PAGE TOP OF DOC Segment 2 Of 2
My testimony will focus on concerns expressed by Members of Congress about the state of Federal regulation of the interstate moving industry. We are well aware that since enactment of the ICC Termination Act many of your constituents have called upon you to assist them in their dealings with a mover. As an industry, we are deeply concerned that this situation exists and that, in the past 2 and a half years since enactment of the Termination Act, the regulatory system, which is intended to govern the service we provide, has functioned with very little government oversight. I will endeavor to shed light on this problem from my industry's perspective since it has placed us in the unfortunate position of answering for actions of unregulated movers who have no regard for the welfare of consumers.
The overwhelming majority of all movers are reputable. They perform an essential public service by complying with consumer regulations governing our business that were put in place by the former ICC. Since the ICC was terminated, these movers have followed a self-policing course by adhering to the requirements of the existing regulations.
Unlicensed, less reputable movers, on the other hand, engage in practices that create consumer dissatisfaction and tarnish my industry's image, knowing full well they will suffer no adverse regulatory consequence. It is this essentially deregulated climate that has fostered the negative environment we find ourselves in.
In evaluation of the situation, we urge Congress not to lose sight of the fact that my industry performs 1.3 million interstate moves each year, the vast majority of which are accomplished without incident. It is the exceptional, out-of-the-norm ''horror story'' which attracts media attention and portrays the industry in a bad light. No attention is paid to the hundreds of thousands of incident-free moves that take place each year.
Page 70 PREV PAGE TOP OF DOC Segment 2 Of 2
As an aside, my full statement includes copies of a small sampling of congratulatory letters to AMSA members from customers expressing their satisfaction with service that they have received.
The media sensationalist approach to these problems is understandable. They concentrate on the exception to alert the public to what is perceived to be a potential problem. We understand that motivation. In fact, we also firmly believe that the public should be encouraged to make certain that they are selecting a licensed reputable mover when they require moving services.
My point is, given the existing, somewhat negative climate, Congress should not react in a manner that would unduly burden reputable movers by imposing regulatory obstacles that translate into less efficient, more costly service to the public.
As for a solution to this problem, a significant step towards improvement could be taken if the Federal Highway Administration would assert the jurisdiction conferred on it by Congress. For reasons that are not clear, the Administration lacks the initiative to fully discharge its responsibilities under the act. Unlike the former ICC, they will not assist consumers. They simply refer complaints to my association, with the explanation that they do not have the budget or staff to handle inquiries. Their typical advice suggests that consumers pursue court action or through the carrier's dispute settlement program. The underpinning for this position apparently lies in language contained in the legislative history of the Termination Act which says, essentially, that the Federal Highway Administration should not use their resources to resolve private disputes. We believe this language has been improperly used to sidestep their enforcement responsibilities.
Page 71 PREV PAGE TOP OF DOC Segment 2 Of 2
Clearly, Congress did not intend that they would become the final adjudicator in disputes between shippers and carriers. The ICC did not resolve disputes, but it did facilitate matters for consumers when it perceived a violation of its regulations. It is difficult to understand why the Federal Highway Administration does not use its resources to also informally assist consumers. As a statutory regulation, it bears the responsibilities of interpretation and guidance to consumers. Most importantly, when it appears that a violation has occurred, enforcement action should be taken, including revocation of a carrier's registration, civil penalties or other action to ensure compliance.
After much prodding, the Federal Highway Administration has finally instituted a rule-making proceeding to amend the former ICC regulations. This is a step in the right direction.
AMSA will participate in that proceeding along with various consumer organizations and other interested parties. We will attempt to influence the formulation of regulations that realistically assist consumers while, at the same time, avoiding extreme requirements which render the industry service difficult to perform and unnecessarily costly to consumers and carriers. We hope to be successful on this point.
Be that as it may, whatever the outcome of those efforts, the fact is consumer regulations are in effect today governing the industry's practices; and whether it is those regulations or a revised version, neither has its intended effect unless they are enforced by the Federal Highway Administration.
Page 72 PREV PAGE TOP OF DOC Segment 2 Of 2
My complete statement includes an update on my industry's compliance with the congressional requirement that we establish a dispute resolution program. To date, Federal Highway Administration has not provided its required report to Congress on this same subject.
AMSA operates the most extensive dispute program in the industry. We have processed over a thousand requests for arbitration in the past 2 and a half years. As word of our program spreads, the number of cases that we are requested to process increases. This has proven to be an effective means of resolving disputes between consumers and carriers.
My final point deals with Federal preemption of State regulation of movers, which is also addressed in my complete statement. In a nutshell, we believe the process of deregulation of the moving industry at the State level has gone too far. We are opposed to any attempt to effect wholesale deregulation through Federal preemption.
I commend the subcommittee for holding this hearing. We want to continue to work with your staff, and if you have any questions, I will be glad to answer them. Thank you.
Mr. THUNE. [presiding.] Thank you.
I will recognize Mr. Rahall, the distinguished Ranking Member.
Mr. RAHALL. I would like to address this to the entire panel, and I do note your recommendations on the role that you think FHWA should play, especially yours, Ms. Weinberg. But does it not come down to a simple matter of budgetary resources, in this case the lack thereof at FHWA to even enforce what they are currently required to do, much less additional regulations or additional laws? So I guess I just address that to the entire panel and ask you if it is not just a simple matter of budgetary resources?
Page 73 PREV PAGE TOP OF DOC Segment 2 Of 2
Ms. WEINBERG. I will begin by saying that I do echo the sentiments of other people who said that more resources would be more than welcome. From our perspective, it would enhance the ability of Federal Highway to take on the responsibilities.
However, another way to address the lack of resources on the Federal level is to enable the State and local agencies to pursue these complaints as well. It shifts the burden and makes more effective enforcement between Federal and State agencies, and it is a more effective use of resources.
Ms. SARNA. I echo that, Wendy's observations of sharing this responsibility. At the same time, and I say this without knowing specifically what—how Federal Highway operates, I can just tell you a little bit about what we do in our office.
In New York City alone, we get 48,000 inquiries. We get 30,000 to 35,000 written complaints a year, and we perform a mediation service that includes one full-time lawyer and four full-time non-lawyers. Even that—and I understand from Federal Highway that their complaint rate is about 2,500, so it suggests to me that there is a considerable amount that could be done in facilitating dialogue, for example, with a licensed mover who has a stake in the process and knows that part of this complaint handling and complaint process is tied to the issue of licensure.
As to the other part of the industry, the rogue movers, I firmly believe that law enforcement is the only useful way to address those folks. They are immune from regulation. In the three cases that we brought, our Department of Transportation had assessed $135,000 of penalties against one cluster, $260,000 worth of penalties against another cluster, and had absolutely no clout.
Page 74 PREV PAGE TOP OF DOC Segment 2 Of 2
As to consumers—and this is a response to some earlier questions asked. As to consumers who tried self-help and went to Small Claims Court, in general, Small Claims Court is the sound of one hand clapping against this segment of the industry. The consumers are successful in getting judgments. They are wholly unsuccessful in having those judgments executed.
In the case of one company, the statistic is, as I understand it, there were 10 judgments that were obtained and one was actually collected on. Candidly, I am surprised that the one was collected on.
May I also—I neglected a terribly important thing. May I ask your indulgence to explain that my comments are being delivered on behalf of Attorney General Vacco, who is Attorney General for New York; and for the record I also brought with me comments to be submitted by Attorney General Fisher of Pennsylvania who regrettably was unable to be here today.
Mr. HARRISON. I would like to respond to the resource question. I have heard that mantra for 2 and a half years, and I suspect that some of it is true as to how they allocate their resources. I am not that familiar with how to run an agency that large, but I do know that they have 68,000 employees, and they also brought over from the ICC nearly a hundred employees or more, some of which have some expertise in the area of household goods regulatory oversight. While it seems to me that they may need more resources to do the job the way that they think they should do it, I do believe, within the scope of the current resources, that they have the ability to at least discuss with the consumers their problems if they only handle 2,500 or 3,000 complaints a year. My association, because of the ICC shutdown, now handles at least 3,000 complaints a year, and we do it with two employees that also do other things.
Page 75 PREV PAGE TOP OF DOC Segment 2 Of 2
So I think there is at least some room within the current Federal Highway to at least talk to the consumers and provide them with some advice other than go to court or hire a lawyer, and I am heartened by Mr. Wykle's comments earlier today that he is going to look at that and address that issue in short order.
Mr. RAHALL. The other two on the panel are suggesting that the State Attorneys General be given explicit authority of enforcement of Federal penalty provisions. Yet you are saying that is a problem for your industry. What is the difference who does the enforcement of the standards as long as the enforcement is done?
Mr. HARRISON. Well, I would say this. It appears to us to be preferable to have the Federal agency that administers the regulations to enforce those regulations, especially for the sake of uniformity in terms of that enforcement and the expertise necessary to understand the complex regulations of the industry that they are enforcing.
In terms of having the States take the place of the Federal agency in enforcing Federal regulations, we certainly would take a look at that, but we have reservations about it. We would be glad, for the record, to provide those reservations.
We think it may be a very complex and perhaps even frightening experience because, you know, the reason that we have uniform regulations on the Federal level for moving as well as for the motor carrier industry is because we traverse more than one State. We have destination services and we have stop-offs in different States. We may have a move that involves three States or more. And if there is a particular problem with the consumer, what particular State agency is going to handle the complaint, the origin, the destination or the stop-off point or all three? Are all three of those particular State agencies going to be familiar with the Federal regulations and then enforce them on a uniform basis?
Page 76 PREV PAGE TOP OF DOC Segment 2 Of 2
Those are just some of the questions that we have regarding having the States do what I think the Federal agency should do.
Mr. RAHALL. Would you like to comment?
Ms. SARNA. I appreciate that concern, although I think it is not as poignant in practice.
First of all, the issue of an individual consumer complaint having an issue in three spots, and I noticed in your testimony there was concern of having a lot of individual actions, can be addressed by requiring that there be a pattern and practice or, as is true in New York, a statute that enables us to enforce other statutes, that the conduct be persistent and repeated so that the idea of individual small actions all around the country would be unlikely.
Most of us, for example, in working with our State Departments of Transportation are already familiar with the kinds of issues that appear in the Federal regulations as well, and they are all really embraced under the idea of unfair and deceptive practices. So that what we are talking about are not hypertechnical kinds of problems but a kind of problem where the estimate says $330 and at the end of the day the cost being coerced out of the consumer is $3,500, which is the fact pattern for one of our consumers.
It is these egregious practices which absolutely cry out for some enforcement action that I think are the kinds of things that the States are very, very able to assist the Federal Government in addressing.
Page 77 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. RAHALL. If I might move to antitrust immunity, Mr. Harrison, you are for it?
Mr. HARRISON. That is correct.
Mr. RAHALL. Why is that so important to your industry?
Mr. HARRISON. Because of the way that we are structured. That is, we have three different, individual businesses involved—or more—involved in a particular move. We have the independent contractor. We have an agent of a van line and a van line, as an example, that might conduct a particular move for a particular consumer.
And integrating those services and the prices related, at least the base prices related to those services in a network which would accommodate a consumer to move anywhere in the United States, it becomes very difficult without this collective base-pricing system.
As an example, if you have an estimating—if you have a move in New England somewhere and you are trying to provide that consumer with a reasonable estimate of his charges, which include some storage charges in New Mexico, you need to have a basis for a collective establishment of the storage rates all over the country so that particular mover in New England knows what the basis of the storage rates are in New Mexico. That is one of a variety of examples.
In addition to that, one of the requirements of the Surface Transportation Board is for licensed interstate movers to publish tariffs, to have these tariffs available for consumers. Right now, there are probably 2,000 certificated movers out there who move one central tariff, the collective tariff established by the Association. And what that does, in addition to the pricing mechanism as it relates to the networking necessary for the move from New England to New Mexico, it facilitates the regulations and the enforcement of the regulations that are in those tariffs because you only have one tariff to look at.
Page 78 PREV PAGE TOP OF DOC Segment 2 Of 2
So whether it is the Federal Highway Administration or the Surface Transportation Board or a State association board, if there is a pricing problem, they can look to one collectively maintained tariff to determine the base pricing and the rules associated with that pricing as opposed to having to, without antitrust immunity, find 2,000 or more different tariffs that have to be maintained by each and every mover across the United States.
Mr. RAHALL. Thank you.
Ms. WEINBERG. May I respond to the earlier question? I just wanted to echo——
Mr. RAHALL. On enforcement?
Ms. WEINBERG. Yes. I wanted to echo a couple of Shirley's comments about States enforcing Federal laws, and we are talking about very straightforward issues of deception and fraud, which shouldn't cause any confusion among movers as to what the issue is really going to be.
I also wanted to add that Mr. Harrison expressed some concern about consumer agencies in three different States commencing action against the same mover. Consumer protection agencies at this time are strapped. They have increasing case loads and decreasing budgets. They are not going to commence an action if another agency is also pursuing that mover, and particularly if we can commence the sort of coordination with Federal Highway and helping States coordinate their investigation activities. The State would welcome the opportunity to back off bringing their own action if they knew that another State was bringing one.
Page 79 PREV PAGE TOP OF DOC Segment 2 Of 2
I also would add that it would not cause duplicative efforts to have the Federal Government and the States enforcing. I think that the Federal Government and the States have different priorities. The Feds might look at it and say that they need a threshold of so many movers or a monetary amount that a local government would not be looking at. If they have 20 consumers who are injured in their local area, they are going to see that they need to move against a mover. Twenty movers might not impress a Federal agency.
Finally, I want to add that I think the number of complaints that we are hearing about, both that Federal Highway has received and the moving industry has received and the consumer agencies have received, represent only the tip of the iceberg. Many people don't complain. They might complain to these agencies or to their local BBB. However, many people don't complain at all, either because they are too overwhelmed by the move or embarrassed. They feel that they have done something that perhaps they should have known better. And since many of the people who are scammed by interstate moves are elderly, they may fear that if somebody finds out that they made such an unwise decision and they lost thousands of dollars, people might start thinking that they can't live independently any more and so they don't want to bring attention to the goof that they might think that they have made.
Mr. PETRI. [presiding.] Mr. Oberstar?
Mr. OBERSTAR. Thank you, Mr. Chairman; and I appreciate your calling these hearings and the work that you and Mr. Rahall have done in preparing for this hearing. This is a subject of great concern and consternation to a great many of our constituents who have written to us individually and collectively as Members of Congress and members of this committee as to the problems that they have had with the household goods moving industry.
Page 80 PREV PAGE TOP OF DOC Segment 2 Of 2
But this predicament is really a victim—consumers who are in this predicament are victims of the much-too-hasty sunsetting of the ICC. Many aspects of that legislation—and I don't quarrel with the economic termination or the termination of the economic role of ICC as a move to encourage greater competition, but I do find fault with the failure to keep in place those mechanisms which ensure competition. We are seeing this in the airline industry today, where there is authority for DOT and where they do have a capacity to enforce competition rather than monopolistic control.
In the ICC termination, DOT was given continued authority to protect consumers but without the personnel to carry out that enforcement. That now is generating expressions of interest to give States the authority. It seems to me that we ought to have a single, centralized national voice with national standards, and we ought to get tough on this matter.
There is another oversight or shortcoming of the ICC Termination Act, and that is the single State registration system that Mr. Rahall referred to in his opening remarks, and I am sorry that I couldn't be here at that time.
Our full committee and the House in approving the ICC termination intended to establish a single State registration system. When we got to conference, the legislation was modified in deference to the other body which continued an allocation of $90 million to be divided among 38 States without proper respect for the overall thrust to move in the direction of a single system. DOT was instructed to come up with a final rule by January 1 of this year, and they haven't been able to do so.
Page 81 PREV PAGE TOP OF DOC Segment 2 Of 2
The States are fighting this whole idea of a single State registration system for the very simple and clear and often outright stated purpose of protecting their revenue stream, without regard to the consequences of their self-serving actions for the national motor carrier sector. We ought to phase out this multiple State management of the registration system. We ought to decisively move in the direction of the original intent of the legislation that this committee and our house approved, and if it takes further legislation to do that I am prepared to introduce such legislation. At the appropriate time motor carrier regulatory legislation is to move in this committee, I will do so.
Meanwhile, I am going to continue pressing the Department to move ahead with the rulemaking, notwithstanding the foot dragging and obstructionism of States who are looking at their own fiscal tally sheet and not at the national good.
Meanwhile, I applaud these hearings, and I hope out of this will come some further action by the committee on behalf of consumers. Thank you, Mr. Chairman.
Mr. PETRI. Thank you.
Mr. Taylor.
Mr. TAYLOR. Based on what the young lady from Baltimore said, her problem, I would like to pose a theoretical question to your panel and see how you three think that it would be answered.
Page 82 PREV PAGE TOP OF DOC Segment 2 Of 2
A person retires say from the Baltimore area, sells their house and is going to move to Alabama. They decide that they have more furniture than they really need, so they say, okay, I want this move to include dropping off my family's prized piano in Charleston and bring the rest of my things down to Alabama. They agree on a price, and they agree on the move.
The truck gets to Charleston to deliver the piano to, say, a child; and the truck driver says, if you want that piano, it is going to cost you $250. The kid says, I am getting it from dad anyway. It isn't going to cost me anything. Here is the $250.
The truck gets down to Loxley, Alabama, not New York City where you have a lot of resources to call on but a town with 2,000 people and a part-time mayor. And the driver says, if you want to see your goods come off this truck, it is going to cost you an additional $1,500. He writes the additional check.
Where does that person go now? We are not talking New York City. We are talking about a town of a thousand people, and there are a heck of a lot of towns that have a thousand people and a part-time mayor and a part-time judge and a part-time public prosecutor. Where do they go now?
And I will open this up to the panel.
Mr. HARRISON. As best I can—if you have that kind of situation and, essentially, what that mover has done, based on your description, is violated a Federal regulation that says that if you get to a destination, you can only collect, assuming it is a COD cash transaction and not some other arrangement——
Page 83 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. TAYLOR. Let's say he signed a contract for X number of dollars, and all of those things were above those charges.
Mr. HARRISON. So it is based on an estimate. I am not quite sure whether your example is real or not, but, nonetheless, based on what you have explained, it at least appears that that mover would be violating a rule in the Federal Highway regulations regarding estimating practices. Whereas if you provide an estimate and that estimate becomes larger or the actual charges become more than the original estimate, you cannot demand payment prior to delivery for more than 110 percent of that estimate. So the mover is supposed to, if there is higher actual charges, he can only collect 110 percent, and he is to deliver those goods to that consumer.
If he doesn't do that, that is in violation of the Federal Highway regulations, and in my estimation there should be a mechanism where that consumer calls a Federal Highway field office in Alabama or the Federal Highway Administration here in Washington to point out that problem, find out who that carrier was and have them call the carrier and to advise them of the rules and regulations and violation and to turn those goods over to the consumer.
Mr. TAYLOR. What if, when the piano is dropped in Charleston, not only do they charge them the extra $250 but the piano is ruined? Where do they initiate the process to get some compensation?
Mr. HARRISON. If any goods are damaged, you have an opportunity to file a damage claim with the carrier, and the carrier has——
Page 84 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. TAYLOR. Where do you file the claim? In Charleston? In Baltimore? In Loxley?
Mr. HARRISON. You file the claim with the mover wherever that mover is domiciled. If they are domiciled in New York, you would file with that mover in New York; and you have 9 months in which to file the claim. The carrier is required to respond and acknowledge the receipt of that claim within 30 days and then resolve it within 120 days.
Ms. WEINBERG. I think that your question highlights exactly the problem that NACAA is concerned about. In fact, if you are dealing with an unscrupulous mover, there are very few options for consumer protections. Federal Highway is unlikely to do anything. A lot of consumer protection agencies are hand-tied from taking any action.
They can try to go to Small Claims Court, but they may find that the mover has skipped town or is judgment proof. They can try to call the police when the truck arrives at their property and they are in the middle of the dispute. But if you are dealing with a shady mover, chances are he has forged documents or had the consumer sign blank forms and he subsequently filled in all sorts of astronomical figures and will say this is according to our contract; and the police will, in all likelihood, not intercede. So that is why we are asking for more enforcement powers with State and local agencies.
Mr. TAYLOR. But you are in agreement whatever legal remedy has to take place has to take place at the domicile of the mover? So that Alabama resident would somehow have to file charges in Baltimore or if the mover is out of New York City in New York City?
Page 85 PREV PAGE TOP OF DOC Segment 2 Of 2
Ms. WEINBERG. No, I am talking about taking action through a local government agency, and in that case I would suggest that this committee look at empowering and confirming the powers of local and State agencies to take those actions.
Ms. SARNA. I really just echo Wendy's observations. I think from Mr. Harrison's comments it is very clear that on the books this is clearly illegal, but that isn't even worth a cup of coffee to the consumer who is sitting, and I must tell you, in no better shape in New York City than in a very small community in Alabama. It may be in some ways worse, because in New York City there is no way that the police will come to intervene. It is not a criminal matter. There might be more community support in a smaller community.
But this really identifies what the problem is. There is nowhere for a consumer in such a circumstance to turn right now. Even if the consumer complains to a local agency and the local agency turns it over to Federal Highway, nothing is going to happen. Federal Highway is unable and does not intervene in individual disputes.
There needs to be some enforcement teeth so a record can be made so that when these clearly outrageous, clearly illegal acts occur, there can be law enforcement action following up immediately.
And as to whether there could be repetitive actions, one of the ways that can be handled is to require notice to Federal Highway before any State enforcement, whatever the regulations are. Right now the slate is consumer zero; bad guy mover has the entire deck.
Page 86 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. PETRI. Mr. Mascara.
Mr. MASCARA. Thank you, Mr. Chairman, and thank you for calling these hearings. I would like to ask unanimous consent to place a statement into the record.
Mr. PETRI. Without objection.
[Mr. Mascara's prepared statement follows:]
[Insert here.]
Mr. MASCARA. I did not have the benefit of hearing the earlier panel, but I learned something a lot of years ago and abide by Santayana, and if I might paraphrase, those who ignore the past are condemned to repeat it.
I was one of the 407 who voted for the elimination of the ICC; and, having said that, I would like to associate myself with the remarks of Mr. Rahall and Mr. Oberstar.
One concern is: Is there enough funding in place to do what we need to do? And the other is, there was nothing in place, apparently, to pick up the duties of the ICC as it relates to the problems that I have heard since I have been here anyway. Do we need to promulgate or pass new laws and rules or do we need to make sure that someone is in charge since the ICC is no longer in business? Does anybody want to——
Mr. HARRISON. I would be glad to answer that.
Page 87 PREV PAGE TOP OF DOC Segment 2 Of 2
I don't think that we need new legislation to promulgate new regulations for the moving industry. There may be something that you might want to take a look at in terms of arbitration or something, but indeed you really don't need to pass new laws and to promulgate new regulations.
The real focus here, I think, there may be some differences of opinion, but I think the basic focus is to enforce the regulations that are currently in place.
Mr. MASCARA. I knew the answer before I asked it, but what I am trying to do is build a case for my colleagues, Mr. Rahall and Mr. Oberstar, both of whom I think hit upon what the problem is. No one knows who is in charge. Who is in charge?
Mr. HARRISON. It is the Federal Highway Administration.
Mr. MASCARA. If they are in charge, do they have sufficient personnel to do the job that needs to be done?
Mr. HARRISON. I am probably the wrong person to answer the question.
Mr. MASCARA. The answer then to Mr. Rahall's question probably is no. If we are going to enforce rules and regulations, we need the people to do it.
Getting back to my two colleagues, I think they really got to the point and the issue is that you answered it. We don't need to promulgate or pass any more laws. We need to enforce those that are on the books today. We know who is in charge. We answered that question, but now we need the personnel to do it.
Page 88 PREV PAGE TOP OF DOC Segment 2 Of 2
And that concludes my remarks, Mr. Chairman. Thank you.
Mr. PETRI. Let me just give Mr. Harrison an opportunity to clarify or amplify an impression that you left in your opening statement, and that is that the Department of Transportation is basically stiffing consumers when they call up and, instead of dealing with the problems, are referring them to your agency?
Mr. HARRISON. I don't think that I used the word ''stiff.'' At least my information is that, in many cases, when a consumer calls the Federal Highway Administration here in Washington, D.C., and desires to get information or complain about a particular move, that the personnel at Federal Highway indicates today we can't help you. All we can advise you to do is to either hire a lawyer and then go to court or perhaps, if it is a loss and damage complaint, seek an arbitration remedy. And you can call the American Moving and Storage Association to get that information if, in fact, the mover that you are dealing with is a member of that organization. And if you need any other information, they can perhaps help you resolve that complaint. We hear that day in and day out.
Mr. PETRI. Thank you very much for your testimony. Thank you all.
The next panel—I think, in the interest of time, we thought it might be sensible to combine panels 5 and 6. They have differing views, and that may actually be beneficial.
Page 89 PREV PAGE TOP OF DOC Segment 2 Of 2
I would like to ask Mr. Kenneth Siegel, the Deputy General Counsel of the American Trucking association; Tim Lynch, the President of the Motor Freight Carriers Association; Mr. Pugh, General Counsel of the National Motor Freight Traffic Association; Micheline Tansey, President of the North American Transportation Council; as well as Mr. Stu Slifkin, the Director of Transportation, Tiffany and Company; Bill Huie, Assistant Vice President for Corporate Transportation at the NCH Corporation; and Mr. Ed Emmett, President of the National Industry Transportation League; to all try to gather at that table if there is enough room.
TESTIMONY OF KENNETH E. SIEGAL, DEPUTY GENERAL COUNSEL, AMERICAN TRUCKING ASSOCIATIONS, INC.; TIMOTHY P. LYNCH, PRESIDENT AND CEO, MOTOR FREIGHT CARRIERS ASSOCIATION; WILLIAM W. PUGH, GENERAL COUNSEL, NATIONAL MOTOR FREIGHT TRAFFIC ASSOCIATION, INC.; MICHELINE S. TANSEY, PRESIDENT, NORTH AMERICAN TRANSPORTATION COUNCIL, INC., ACCOMPANIED BY JAMES HARKINS, MOTOR CARRIER RATE BUREAUS; S.D. (STU) SLIFKIN, DIRECTOR OF TRANSPORTATION, TIFFANY & CO., PARSIPPANY, NJ, AND PRESIDENT, NATIONAL SMALL SHIPMENTS TRAFFIC CONFERENCE, INC., ACCOMPANIED BY BILL W. HUIE, ASSISTANT VICE PRESIDENT FOR CORPORATE TRANSPORTATION, NCH CORPORATION, IRVING, TX, AND CHAIRMAN OF THE ADVOCACY COMMITTEE, NATIONAL SMALL SHIPMENTS TRAFFIC CONFERENCE, INC.; AND ED EMMETT, PRESIDENT, NATIONAL INDUSTRIAL TRANSPORTATION LEAGUE
Mr. PETRI. And we will begin with Mr. Siegel.
Mr. Siegal, would you care to proceed?
Mr. SIEGAL. I will start by thanking the Chairman and the members of the subcommittee for giving us this opportunity to address these issues.
Page 90 PREV PAGE TOP OF DOC Segment 2 Of 2
My name is Kenneth Siegal. I am here in my capacity as Deputy General Counsel of the American Trucking Association. It is the national trade association of the trucking industry.
The ICC Termination Act did away with most economic regulation and has resolved many of the issues which we raised—that had the opportunity to resolve many of the issues that we are raising here today in talking with you today.
Many of these issues, as you mentioned earlier yourself, Mr. Chairman, in your opening statement, were deferred to the Department of Transportation or other agencies for further consideration and reports back to this committee and the Congress; and it is basically those issues which I would like the opportunity to talk about.
In our written comments, we have raised several issues, but I am only going to refer here in the oral statement to a couple. The first one I would like to talk about is the uniform, limited cargo liability standard.
As part of the termination act, Congress directed the Secretary of Transportation to do a study with regards to motor career liability for cargo that is lost or damaged and report back its recommendations to Congress. That study was to be completed 18 months ago, and it was only in June of last year that a draft of the study was released.
The draft did not include any final recommendations. However, it did make several findings and we believe tended to lean towards the adoption of the uniform, limited liability standard; and we endorse the comments and many of the findings in that study.
Page 91 PREV PAGE TOP OF DOC Segment 2 Of 2
A uniform, limited liability standard would be consistent and harmonize with international standards and standards used by other modes. It would further the interests of motor carriers by providing greater certainty of freight risk and a fairer allocation of costs between carriers and shippers. It would benefit shippers by eliminating one of the major concerns which we have heard since the enactment of ICCTA, and that is that they have no way of knowing the actual limitations put on cargo claims by individual motor carriers. Obviously, a uniform, limited liability standard adopted by statute would answer that problem.
A study that the motor carrier industry conducted and submitted to DOT as part of our comments on their DOT study establishes 50 percent of all less-than-truckload and at least three-fourths of all truckload freight has a value of less than $2.50 a pound. A survey conducted by the Bureau of Transportation Statistics at the Department of Transportation actually came with an average value of motor carrier freight of 35 cents a pound. Obviously, the amounts that we are talking about are significantly higher than that average value.
The industry proposal which we have been supporting and which we recommended to the DOT recognizes also the need for package carriers and household goods carriers to retain their own individual levels of liability, liabilities which are unique to the circumstances of their transportation.
But we would ask this committee not to wait for DOT to eventually come out with a report. As you saw from the general testimony earlier, they, for the most part, are not even aware of the fact that the report is sitting in their facility.
Page 92 PREV PAGE TOP OF DOC Segment 2 Of 2
So we would like to see, rather than waiting around for 1-1/2 years or 2 years before they come out with a final report, some action supporting a uniform, limited liability system to fairly allocate the risk between shippers and carriers; and we would be happy to be working with the shippers in order to come out with a final resolution of this issue.
The next matter I would like to speak about is mandatory financial reporting. Another part of the act required—and this is a significant difference from the prior ICC act. The ICC act said that the ICC ''may require'' carriers to file financial reports. The ICCTA, the termination act, made that a ''must require'' or ''shall require'' motor carriers to file financial reports.
It also provided that motor carriers should have the ability to seek exceptions or exemptions from that reporting requirement or from the publication of that reporting requirement. Several hundred motor carriers have filed for such exemptions, and they have been arbitrarily, uniformly turned down by the Bureau of Transportation Statistics, the basis being given, nothing to do with the substance of their petitions but rather that the Bureau had to conduct a rulemaking to adopt a standard in order to consider these factors. They have failed yet to adopt that rulemaking.
I would also like to state that we are in strong support of the continued antitrust immunity for the classification and other rate bureau matters. Since representatives of national motor vehicle classification and also Mr. Harkin are also here to testify, I am not going to dwell on that issue but would rather leave it to them experts.
We state strong support for the continuation of that antitrust immunity and the elimination of the 3-year requirement, which is basically nothing more than an administrative burden both on the limited resources of the STB, the costs imposed on the carriers and rate bureaus for responding to that. And we recommend that we go back to the old form of legislation which enabled the ICC, now the STB, to conduct an investigation into the feasibility or the continuation of antitrust immunity when it was necessary, when some abuse was found or when some reason was found, rather than it being every 3 years whether there is a need to or not.
Page 93 PREV PAGE TOP OF DOC Segment 2 Of 2
As a final issue, I would like to discuss something that was not considered really at the time of ICCTA but which I think has become a major issued deregulation starting in 1980 and carried on through ICCTA, and that is the problem of motor carriers, especially owner operators and small carriers, obtaining their transportation charges from brokers. And I address that more fully in my written testimony and would be glad to answer any questions on it.
Mr. PETRI. Mr. Lynch.
Mr. LYNCH. Good afternoon. My name is Tim Lynch, and I am President of the Motor Freight Carriers Association.
MFCA is a newly formed trade association with the mission of advancing the economic interests of the unionized LTL sector of the trucking industry. The members of my association transported in excess of 260 million tons of fright and generated in excess of $8.5 billion in revenues in 1997. These member companies are all covered by the terms and conditions of the Teamsters Union National Master Freight Agreement.
Mr. Chairman, I appreciate the opportunity to testify before the members of this subcommittee, and I would ask that my full written statement be made a part of the record, and I will briefly summarize for the sake of brevity.
As you well know and the members of this subcommittee well know the trucking industry has gone through a period of adaptation from a very highly regulated to now a totally deregulated system of economic controls. I don't know the actual percentages, but I would hazard a guess that the Surface Transportation Board spends very little time and virtually no resources regulating the general freight portion of the trucking industry.
Page 94 PREV PAGE TOP OF DOC Segment 2 Of 2
We are comfortable with a minimum set of rules that facilitate commerce and leave to the marketplace the fundamental business decisions between shippers and carriers. However, as my testimony and those of others will indicate we still have some differences of opinion but, hopefully, we can continue to work to develop common ground on those differences.
But more important than these differences is a far broader issue for both the Congress and the Department of Transportation and certainly the Surface Transportation Board to consider, and that is how can we move freight in this country as efficiently, productively and safely so that shippers can meet the demands of a global economy and American consumers can be the beneficiary of those efforts?
I mentioned in my written statement that members of my association in many cases move upwards of 28 percent of their traffic over the rail lines. If we are to meet the demands of our shipper customers, we must ensure that our rail system is efficient and fully utilized.
We are partners. We are intermodal carriers not by government fiat but because it is the best way for us to serve our customers. We feel strongly that that same spirit of partnership and cooperation must prevail in other arenas and on other public policy debates.
With that, Mr. Chairman, I will conclude and certainly will be willing to take any questions you might have.
Mr. PETRI. Thank you very much.
Page 95 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. Pugh?
Mr. PUGH. Good afternoon. My name is William Pugh. I am General Counsel to the National Motor Freight Traffic Association. I want to tell the committee that I certainly appreciate this opportunity to appear before the committee and make them aware of the views of my association.
The National Motor Freight Traffic Association is a nonprofit membership corporation with offices in Alexandria, Virginia. Its membership comprises approximately 2,500 motor carriers of property operating nationwide. On behalf of our participating motor carriers, NMFTA, through its National Classification Committee, establishes and maintains the National Motor Freight Classification.
First, we support reauthorization for the Surface Transportation Board. As a successor to the Interstate Commerce Commission, the Board retains its unique and valuable experience, its institutional memory, its rules of practice, and its legal precedents with regard to a variety of important transportation matters.
Clearly, there are some transportation-related activities that still require government oversight. While recent deregulatory legislation has reduced these to a minimum, it is still in the public interest to provide oversight, and the STB remains the agency best equipped to perform this function.
Maintaining the classification is one such activity. In establishing fair equitable and workable pricing for transportation services, shippers and carriers need a means to differentiate among commodities moving in commerce, and this mechanism must be consistent, uniform, predictable, and easily automated.
Page 96 PREV PAGE TOP OF DOC Segment 2 Of 2
The NMFC is a unique national publication that groups all products into one of 18 classes. While these classes themselves are not pricing, they do provide appropriate distinctions between commodities to facilitate equitable pricing.
The committee classifies each commodity based on a set of four composite transportation characteristics, namely density, stowability, handling, and liability. Together, these reflect a commodity's transportability or the burden it imposes on the carrier.
Amendment of the classification is in open public meetings which afford an opportunity not only for carriers but also for shipper representatives and indeed for all interested persons to provide input through either a personal appearance or the submission of written statements to the NCC.
While membership and classification is strictly on a voluntary basis, thousands of carriers nationwide find the NMFC a useful tool for their operations.
The Board has a pending proceeding that concerns our 5(a) or antitrust immunity. Many comments were filed in support of the NMFC, including comments by Congressman Rahall, which we greatly appreciate, in as much he is the Ranking Minority Member of this subcommittee; former ICC Chairman Reese Taylor, former ICC and STB Vice-Chairman J.J. Simmons, and well over 100 motor carriers, the North Carolina Traffic League, including some of the Nation's largest shippers, traffic managers representing the States of California, Michigan, Utah and Washington, as well as a variety of others.
Page 97 PREV PAGE TOP OF DOC Segment 2 Of 2
These statements emphasize that the classification serves an essential purpose and that its maintenance requires antitrust immunity. The comments emphasize that the NMFC provides the only uniform national standards for classifications, rules, packaging and bills of lading.
Without the National Motor Freight Classification, the pricing of LTL transportation services would be much more difficult and expensive. The classes published in the classification are procompetitive, not anticompetitive, procompetitive in that they assist shippers in comparing the prices of a variety of carriers offering the services. The classification enables shippers to package according to a single standard, and it greatly facilitates the interlining of shipments between carriers.
It is important to recognize that the NMFC simply could not be maintained by motor carriers acting individually. The statements of numerous carriers shippers and others made it clear that they would not be willing to risk the antitrust liability of participating in the classification process without immunity.
The preparation of the overwhelming evidence submitted by the NCC and numerous other interested parties required considerable effort and expense and entailed disruption of their normal activities, and the review of these materials will require substantial additional effort by the Surface Transportation Board. The ICC Termination Act provides that the Board may review an agreement on its own initiative or on request and shall change the conditions of approval or terminate it when necessary to protect the public interest.
Clearly, that is all the authority the Board needs in order to protect public interest. Unless there is a dramatic change in the circumstances in which the classification system functions, there is simply no reason for the Board and all interested parties to automatically repeat this effort every 3 years only to demonstrate that, hey, nothing has changed.
Page 98 PREV PAGE TOP OF DOC Segment 2 Of 2
For this reason, the NMFTA respectfully requests the Congress to clarify the act in order to specify that further renewals will not be required and that the NCC's present antitrust immunity will be continued until the STB determine on the basis of substantial evidence that the collective maintenance of a classification is in some way detrimental to the public interest as manifested by the national transportation policy.
That concludes the remarks I had prepared.
In entering the room here, I happened to pick up some of the statements that were made by my co-panelists here and perhaps I might have an opportunity, after they have testified, to have some comments on some of the things they had to say, because they directly affect our organization.
Mr. PETRI. Thank you.
Ms. Tansey.
Ms. TANSEY. Good afternoon Mr. Chairman and committee members.
I am Micheline Tansey, President of the North American Transportation Council. We were formerly the Niagara Frontier Tariff Bureau. I have held this position and various positions with the rate bureau for over 20 years. I am here on behalf of the motor carrier members of the regional bureaus that are listed in my written testimony, which has been introduced in the record, to seek congressional action to continue the limited antitrust immunity that was granted these motor carriers by Congress.
Page 99 PREV PAGE TOP OF DOC Segment 2 Of 2
Under current law, and since 1948, motor carriers have been granted the limited immunity to certain antitrust laws enabling them to collectively determine through routes and joint rates, classifications, divisions, and rules with other motor carriers, including their competitors, so that they can provide competitive service for their customers to areas that they do not serve directly.
The immunity granted by Congress allows carriers to work together legally without fear of antitrust actions to agree upon joint line rates and services that provide alternatives and competition to the rates and services of the large multiregional and nationwide carriers.
In order for these medium and smaller size less-than-truckload carriers to compete throughout the United States and Canada, they participate in rate structures and framework that is established through the rate bureaus which cover millions and millions of rates and combinations. Collective activity undertaken through the rate bureau facilitates competition in the trucking industry since it allows small and medium-sized carriers to offer their customers, and particularly those in smaller and more rural communities, alternatives to service that the large nationwide carriers are offering.
Immunity is needed because the carriers who are working together to establish those joint line services and rates are competitors.
The ICC Termination Act of 1995 continued the trend of deregulation begun with the 1980 Motor Carrier Act by eliminating most Federal regulations from the once heavily regulated trucking industry. It is significant that the ICC Termination Act, just like its predecessors, appropriately continued to provide the carriers with the immunity for collective determination of rates and routes.
Page 100 PREV PAGE TOP OF DOC Segment 2 Of 2
The Surface Transportation Board was directed in this act to renew the limited immunity after 3 years unless the renewal was found to be not in the public interest. The immunity allows small and medium-sized carriers to offer competitive services that they could not efficiently or practically offer by themselves. Nothing has happened since the enactment of the ICC Termination Act to make this limited immunity any less in the public interest than it was then. The Surface Transportation Board gave notice in May of 1997, more than a year ago, that it was going to determine whether it should renew the limited immunity in a proceeding titled, Section 5a, Application No. 118.
The Board has asserted that immunity is not needed by the carriers to formulate joint rates, and it appears to be on a course to administratively terminate the rate bureau agreements.
After 50 years of congressional authorization of the immunity, and continued carrier activity under approved rate agreements, it is very disturbing that, at this time, the Surface Transportation Board would suggest that it does not think that the immunity is needed by the carriers. Time is fast running out, and troubling uncertainty about the future of the immunity is growing. We are faced with an STB that is predisposed to terminate the immunity, and with less than 5 months remaining before the expiration date, there is a need for immediate remedial action by Congress.
The STB has sent a message that, in its view, antitrust immunity is not needed and not likely to act until the very last moment, leaving our carriers with little or no time to seek a remedy and no way to continue the collective rate-making system, much less maintain the countless thousands of rate arrangements now being used by shippers to get their goods to market.
Page 101 PREV PAGE TOP OF DOC Segment 2 Of 2
The collective rate-making system has continued to function in the extremely competitive market. Carriers and shippers still depend on the system and support its continuation. There is still substantial support for its retention. It would seriously undermine congressional intent to allow the collective rate-making system to be destroyed by the STB. Therefore, it is essential that Congress take action to retain the immunity beyond December 31, 1998, so that collective rate-making may continue until such time as Congress makes a different policy determination.
Thank you very much, Mr. Chairman and committee members, for this opportunity to bring our views to you. I have submitted our written testimony, and I will be more than happy to answer any questions, and Mr. Harkins is with me to assist with the technical questions.
Mr. PETRI. Thank you.
I might explain the situation on the floor. There will be a vote in the next 5 or 10 minutes, and we have three panelists and maybe some questions. So if we can try to get through it, we will have another 15 minutes or so here—maybe, if we are lucky, 20—and otherwise we will have to break and all come back at about 1:30, and we will try to accommodate everyone by getting through it today.
So I appreciate again the admonition that the full statements will be included in the record, and I don't want to shortchange anyone. But, on the other hand, I do want to accommodate everyone.
Page 102 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. Slifkin, if you would like to speak.
Mr. SLIFKIN. Thank you, Mr. Chairman.
I am Stu Slifkin, Director of Transportation for Tiffany & Company, of Parsippany, New Jersey. I am the current President of the National Small Shipments Traffic Conference which is known as NASSTRAC. Accompanying me today is Bill Huie, NASSTRAC's advocacy chairman, and our legal counsel, Dan Sweeney.
NASSTRAC is a national association of shippers and carriers, including about 400 shipper members who are regular voting members and 100 providers of transportation services who are associate nonvoting members.
NASSTRAC has been a leading spokesman for shippers which use motor freight carriers as the members' freight is primarily less-than-truckload and small shipments. As such, NASSTRAC has testified before this committee on numerous occasions, including the debate which resulted in the Interstate Commerce Termination Act of 1995.
NASSTRAC's position has been, and remains today, that, one, that there is no need for economic regulation of motor freight carriers and, two, that the Surface Transportation Board should continue to be empowered to make rulings and otherwise aid the shipping public, especially to defend against unjustified undercharge claims which are brought forth in the wake of motor carrier bankruptcies.
Page 103 PREV PAGE TOP OF DOC Segment 2 Of 2
It is appropriate to identify the very narrow scope of economic regulation of the industry which remains today. Currently, the rates of individual carriers are not regulated. A motor carrier's rates need not be filed with the Surface Transportation Board, nor is there any review by the Board as to the reasonableness of a carrier's rates. Thus, the congressional goal of deregulating this industry was substantially accomplished by ICCTA.
The only remaining act of economic regulation of motor carriers relates to the rate bureaus, groups of carriers which choose to meet and collectively set rates and classifications. The survival of antitrust immunity for these groups is an anomaly in ICCTA. If the congressional goal for this industry is deregulation and making its pricing a part of the free market, then the first step in that direction logically would be to terminate antitrust immunity for collective rate price setting.
In ICCTA, the decision was made to allow the rate bureaus a continuing life of 3 years and to delegate to the STB the decision of whether to extend antitrust immunity beyond December 31st. The STB has initiated proceedings which are pending to make that decision on a timely basis before the end of the year.
NASSTRAC has filed comments with the Board in support of terminating antitrust immunity for all motor carrier bureaus engaged in rate setting or classification. We trust the STB will reach the appropriate conclusion and not extend antitrust immunity beyond the sunset date of December 31st.
I now turn it over to Bill Huie.
Page 104 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. HUIE. Thank you, Mr. Chairman. The timing of these hearings were great. It enabled me to escape the Texas heat for a couple of days.
Mr. PETRI. Come on up to Wisconsin if you want to stay away from the heat.
Mr. HUIE. A decision reached by the Board in December, Surface Transportation Board in December, 1997, approving a proposal to substantially increase the rate classification for petroleum products suggests to us that the Board is so heavily engaged in rail regulatory duties that it no longer can commit its limited resources to any significant regulations of the rates or classifications developed by the rate bureaus.
To briefly describe, the issue in the petroleum products protest was whether commodities should be assigned new and higher rate classifications simply because they are assigned HAZMAT designations by the DOT.
The Board had previously processed two cases during the preceding 5 years involving acids and poisons respectively in which it had twice concluded, on the basis of full evidentiary records, that reclassifying HAZMAT articles was not justified. Yet in December of 1997, in a summary protest proceeding, the Board not only refused to suspend petroleum products—the reclassification of petroleum products but did not even assign the matter for investigation to make a full record and a decision upon due deliberation.
In the light of the two previous formal decisions against this same type of proposal, it made no sense for the Board to decline to conduct a formal proceeding to decide the merits of this far-reaching proposal. If STB regulation of bureaus has become ineffective, that is one more reason to terminate antitrust immunity for collective rate-making.
Page 105 PREV PAGE TOP OF DOC Segment 2 Of 2
We do not want to forecast the result in STB's pending proceeding to decide whether antitrust immunity should be extended beyond this year, as we have no basis for predicting the result. However, if the Board does not respond by declining to extend antitrust immunity, then Congress should proceed next year to address this issue by terminating antitrust immunity for the motor carrier industry.
As earlier noted, the practice of suing shippers for undercharges after each bankruptcy continues, despite the many provisions included in ICCTA to put an end to this burdensome and reprehensible practice. While many avenues for undercharge claims were cut off by that legislation, today the collection forces target tariff penalties for what they claim are late-paid freight bills.
Typically, an operating carrier will have a rule buried in its rules tariff stating that if a freight bill is not paid within 30 days, the discounted freight rate does not apply and the carrier may claim the full undiscounted or rack rate published in the tariff. Since discounts of 60 percent or more from the unrealistic bureau class rates are prevalent, this means the bankrupt can go back through its bills, including bills already paid, and demand a freight charge of $240 for a shipment which moved at a charge of $100.
On a shipment paid a day or week late, a bankrupt carrier, or more realistically a collection company which has set itself up to exploit the system, will serve the shipper with a demand that it either pay a 150 percent penalty or defend against such an outrageous charge in a court located far from its home basis. Like shooting fish in a rain barrel, the shipper will usually pay the penalty charges rather than incur the high costs of litigation. Yet the basis for this gross process is said to be based upon the credit rules allowing loss of discounts as late-pay penalties, which were originally adopted by the ICC and inherited by the DOT as a result of ICCTA.
Page 106 PREV PAGE TOP OF DOC Segment 2 Of 2
DOT should promptly initiate a review of these old rules and either modify them to prevent unjust enrichment or repeal them completely, leaving the carriers to rely on a fair rate of interest for payment, as is the norm for all industries. If DOT does not move promptly to remedy this problem, then this committee should consider remedial legislation.
NASSTRAC's members are concerned over the prospect of a departure from the full value recovery for loss of damage provided by the Carmack amendment. That matter has been delegated by Congress to the Secretary of Transportation for study and recommendation. There would be no warrant for adopting a liability recovery limit based upon some sort of average value for all goods in commerce. That would leave half the shipping public deprived of adequate recompense and tend to reduce the standard of care exercised by the carriers. However, many NASSTRAC members could be receptive to discussing a standard for protection against catastrophic loss for motor carriers.
That concludes NASSTRAC's statement, Mr. Chairman, and we would be pleased to answer any questions.
Mr. PETRI. Thank you very much.
Mr. Emmett.
Mr. EMMETT. Mr. Chairman, Mr. Rahall, it is my pleasure to be here today. My name is Ed Emmett. I am President of the National Industrial Transportation League. We represent shippers of all sizes, of all commodities, using all modes of transportation.
Page 107 PREV PAGE TOP OF DOC Segment 2 Of 2
As much as anything, I will use my very brief time to say thank you for what you have done in the past. The League has long supported motor carrier deregulation. I have as a Texas legislator and as a member of the Interstate Commerce Commission.
By and large, I must tell you that motor carrier issues seldom come across my radar screen anymore, and I think that is a tribute to the work that you have done. The few things that do still come to the League are vestiges of regulation.
The undercharge issue that has been mentioned, of course, was a thorny one for all of us to handle, but Congress stepped up and did what they had to do, and we are appreciative of that.
The question of antitrust immunity has been mentioned a lot. As it relates to the rate bureaus, frankly, it is relatively inconsequential, because most shippers discount off those rates, and whether or not the rate bureaus continue to operate the way they have is not that important. However, I would add that, in our opinion, they do not need antitrust immunity to do that. They can continue doing what they are doing without antitrust immunity.
The national freight classification system, though, is a separate issue that, if nothing else, provides comic relief to us on a regular basis. All you have to do is read the docketed items. You know, it makes sense that a motor carrier should know how much something weighs, how big it is, whether it is fragile. But to carry it to the old, heavy-handed regulatory extreme that the classification committee does is frankly silly in these days and times, and it would make more sense to us to go to a system where shippers are involved.
Page 108 PREV PAGE TOP OF DOC Segment 2 Of 2
They say that shippers have a voice in the process. Well, they really don't. You can talk to shipper after shipper. Once an item is docketed, then first the shipper has to know about it. Then if they write a letter or go appear before the classification committee they can say whatever they want, but they don't have a vote. So I am not sure why we cannot go to a system that is more fair and evenhanded.
Just to give you a couple of examples of the important items that appear on the dockets, these have been in the last couple of years, item 17200 was docketed under athletics goods groups, ''saucers or disks, throwing or hovering, plastic other than expanding.''
Now, we all know what those are. Those are frisbees. Why do we have to go into that? Why don't we just say a plastic toy? Why do you have to define everything?
Or one that is even more fun perhaps is under the games or toys group: ''Liquid, bubble-forming, NOI, with or without wands.'' You know what we are talking about? The little things that you use to blow bubbles. ''Applies only to single or double loop plastic or metal wands designed to be dipped into the bubble forming liquid container.'' Come on, folks. You don't need to know that much detail about what is in the box, and you sure don't need to get into that.
But I think something that Mr. Lynch said I would certainly pick up on, in concluding. The shippers, by and large, are very happy with the motor carrier system the way it is. We would like to see some issues addressed relating to size and weight and, no, I am not getting off into that bigger issue. But if you look at the amount of freight that is going to be moved in coming years, it is going to be a safety issue if we can move it on fewer trucks. The trucks that are already out there, if we can configure their loads better I think that would be good for all of us, and I think we will be able to work with Mr. Lynch's group and with the ATA to perhaps bring the classification system into a more modern era so that we do not have to constantly be reading about these docketed items.
Page 109 PREV PAGE TOP OF DOC Segment 2 Of 2
Let me on behalf of the League say thank you for all your past work, and we look forward to working with you.
Mr. PETRI. Thank you.
Thank you all for your testimony.
Mr. Rahall do you have any questions?
Mr. RAHALL. Thank you, Mr. Chairman.
Mr. Chairman, first, I ask unanimous consent to insert in the record a letter addressed to you as Chairman from Professor Andrew Popper of American University in favor of antitrust immunity.
Mr. PETRI. I got that yesterday. That will be included as part of the record.
Mr. RAHALL. Thank you, Mr. Chairman. Let me begin by commending my dear friend, Tim Lynch, on his premier appearance before this subcommittee in his new capacity with the Motor Freight Carriers Association. It is good to see you working for unionized carriers, Tim. I always knew where your heart really was.
I also want to note that, while Ms. Tansey has appeared before the Canadian Parliament before, this is her first time before a committee of the U.S. Congress, and she did an excellent job, especially surrounded by the individuals with whom she is surrounded.
Page 110 PREV PAGE TOP OF DOC Segment 2 Of 2
I would also note that I agree with everything you and Mr. Pugh said, so you are off to a great start.
Let me ask you, Mr. Pugh, our good friend, Ed Emmett, in his statement says that, and I quote, the classification system is a silly reminder of the days of heavy-handed regulation, end quote.
In 1995, he and Mr. Sweeney liked to cart out the old candy cane story, and if I recall correctly during the hearing we got into debate about classifications on onions with tops and onions without tops. And then in the span of 3 years we have gone from candy canes and onions to horror stories about doghouses in his written testimony, which is the subject of this year's hearings. So I just ask you if you would like to comment about these allegations and offer any defense.
Mr. PUGH. As a matter of fact, I do appreciate the opportunity to comment.
What the classification is all about is the grouping of commodities according to their transportation characteristics. Now, they may have funny names and it may seem that there is no reason to Mr. Emmett why any one commodity should be classified differently than another commodity.
Take the candy canes, for example. How ridiculous, that candy canes are classified differently than candy sticks. It sounds stupid. It sounds absurd. But if you look into it, you can pack three times as many candy sticks as candy canes in a box. The box weighs three times as much, and the lower class makes a lot of sense to the motor carrier that is handling that product. It sounds absurd, but it is dollars and cents when it comes down to it, because increased density means the load is a heck of a lot heavier.
Page 111 PREV PAGE TOP OF DOC Segment 2 Of 2
The same thing with the doghouses. I haven't had a chance to research that, but my sense, after being affiliated with this association for over 20 years, would indicate quite clearly that a large doghouse, that is, one that is over, according to this statement, 50 united inches would be more dense. I would guess that 50 united inches is a point of demarcation on density, so the doghouses under that particular threshold on the average tend to be a lot heavier than doghouses that are larger than that. That is the case with many products.
If I may, sir, I would like to also expand my remarks to the comments made by Mr. Huie—or Mr. Slifkin, I guess it was—with regard to the petroleum products. Now they claim, and this is, apparently, their best shot, that this is why you should eliminate the classification. It is because, according to them, the issue in the petroleum products protest was whether commodities should be assigned newer and higher ratings simply because they are assigned HAZMAT designations by the DOT. Well, that is not the question at all.
It so happens that when a commodity is a hazardous commodity there is a heck of a lot of additional burdens that are imposed on the carrier. The carrier cannot mix it with other freight. The carrier may have to move it in a half-loaded truck. The carrier may have to segregate that product in a particular place on their loading dock. The carrier may not be able to go through a tunnel and it may have to go all the way around a city in order to get to his destination. The carrier may have to give his personnel special training to deal with hazardous materials.
All of those things make hazardous materials a whole lot more burdensome for the carrier to handle, and that is what classification is all about, is the burden imposed on the carrier.
Page 112 PREV PAGE TOP OF DOC Segment 2 Of 2
With respect to the hazardous materials cases that they cite before, they said the Board has previously processed two cases during the preceding 5 years involving acids and poisons and further suggested that they had been decided on the basis of full evidentiary record.
In acids, it was the ICC at that time, it never got to the issue of classification. The ICC said that we are going to suspend this because it involves the committee acting on a release rate, which is prohibited under the Motor Carrier Act of 1980. The ICC never got to the issue of the hazardous nature of the commodities or the reason why they should have a higher or lower rating because of that. That is the first example.
Their second example was with respect to poisons. And he is correct in that, yes, indeed, the ICC told the National Classification Committee that it was going to suspend, and did suspend, and ultimately ordered cancelled, the proposed classifications on poisons. Why? It suspended them because the NCC, in its view, had been unable to show a change in the transportation characteristics, which they said was necessary to justify a reclassification.
Well, guess what? We took it to the United States Court of Appeals and the Court of Appeals said, no deal. You don't have to show a change in the transportation characteristics. All you have to do is show that the transportation characteristics are misaligned with respect to other commodities having a similar rating. Whether or not you can show a change is irrelevant. All you have to show is that this product is misclassified.
So these two cases that were cited as reasons why the Board allegedly should not have even considered petroleum products. Both go by the wayside because in neither case is there a valid decision on the basis of classification criteria.
Page 113 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. RAHALL. I know Ed wants to respond, and I want to give him that chance. Because, as always, it seems like it is down to he and I.
You contend that the term ''current form of classification'' leads to higher rates. I contend that the practice and record does not support that contention. We talked about candy canes, doghouses, frisbees, bubble-blowers, whatever. I believe that certain Federal regulations are necessary and serve a useful purpose.
Over the years I have never heard you testify in support of any Federal motor carrier regulation. You disliked truck size and weight limitations. I know it is not the subject of this hearing, but it is referred to in your written testimony. I shudder at the thought of lifting the LCV freeze, for example. But all of this, I respect the veracity of your views, and we have been through it many times, and I have asked you many questions. In fact, I simply want to refer, in conclusion, and give you a chance to respond to the March, 1995, hearing we had on the bill that became the ICC Termination Act and leave it there and let you respond.
Mr. EMMETT. Number one, I think, Mr. Rahall, you perhaps overcharacterize my position on a number of things, particularly LCVs. I was talking about existing trucks that are on the road perhaps putting additional axles under to fully utilize them, because it is a lot safer to have the same number as opposed to 25 percent more trucks. But that is a separate issue that I am sure we will get into.
The candy cane example is probably the best one that I can use. I don't think you and I disagree, and I think what Mr. Pugh said is the perfect segue. If it weighs more, it costs more to ship. You don't need to know what type of candy cane is inside the box. All you have to do is weigh it. That is the bottom line. You don't need some bureaucracy called the Classification Committee to tell you the characteristics. Instead, you have to know it has candy in it and how big it is and how much it weighs and that is all.
Page 114 PREV PAGE TOP OF DOC Segment 2 Of 2
I think what we will see in the coming years, if not months, I think we will see the motor carrier industry itself begin to do away with a lot of these anachronisms that are out there. Nobody questions if it is hazardous. Sure, that is going to cost more. Otherwise, you don't need to know exactly what is in the box. And let me give you a personal example.
If you were to make candy and send it to your relatives, do you think the package service that carries it needs to know what kind of candy is in that box? All they need to ask is how much it weighs. They don't need to know the type of candy or whether the candy canes you make in your kitchen are curved or straight. And it is not a big deal, frankly. Most shippers get around it now because they go under ''freight all kinds,'' and they negotiate their contracts, and they move on about their business.
Mr. RAHALL. The classifications is a guide, not a mandate.
Mr. EMMETT. It is a guide, not a mandate. But the bottom line question is, if it is a standard-setting body, why would you not include the shippers as well as the carriers? Why is it a one-sided ''gotcha'' kind of game? Why wouldn't you have shippers sitting there with the carriers in order to come to some rational decision. I will pose a question to you, and I know that is always dangerous to do to Members of Congress—but when you go to the grocery store you see the bar codes. Where do those come from? Somebody sits down and gives a bar code to every product that is out there. So if that system is in place and it is standard setting, and to my knowledge there is no antitrust immunity in all of that, why could we not do something similar with freight classification?
Page 115 PREV PAGE TOP OF DOC Segment 2 Of 2
Mr. RAHALL. Thank you, Mr. Emmett.
Mr. PETRI. We will let additional panel members get in their responses.
Mr. HUIE. Thank you, Mr. Chairman.
NASSTRAC is not per se opposed to principal classification. We just want to end antitrust immunity for it. There are other classifications out there, and they do not have antitrust immunity. In fact, I think they probably have a letter from the Justice Department saying they don't need antitrust immunity to determine and publish classifications for use by the carriers.
As Mr. Pugh says in regard to handling of HAZMAT, it is carrier specific, and that is exactly our point. Different carriers have different operating characteristics. What is more troubling for one carrier to handle and he needs to charge more is not the same situation for another carrier. So we are just saying it shouldn't be a matter of classification where the upcharge applies for everybody across the board. It should be a matter of an individual carrier charge based on his own economic necessity. Thank you.
Mr. PETRI. Yes, sir?
Mr. SIEGAL. Just a short statement.
I think Ed in his great wisdom has provided the exact example of why the classification is need. Weight is important. So what Ed is suggesting is that the carrier should have to weigh every package that comes into that truck in order to determine what the weight of those candy canes are. Because, otherwise, how would you know? I mean, you would have to weigh it or take the shipper's word for it.
Page 116 PREV PAGE TOP OF DOC Segment 2 Of 2
I think both are kind of ridiculous assumptions. The classification provides a means by which you can spot check weights to make sure they are correct but eliminate the need to have to weigh every shipment, every package and every shipment because the classification has already done that for you. The Classification Board has already considered density and other similar factors in determining its relative value type classification.
And I would also point out that I don't believe I ever had an opportunity at a grocery store to say how I want the markings on the can to be made, which would be equivalent of the shippers having the statement and the ability to determine how the classifications are made. I am the shipper. I am the customer at the grocery store. No one asks me about those markings.
Mr. PETRI. Mr. Pugh?
Mr. PUGH. I just want to have one more short comment, and I think Mr. Emmett has cited Mr. Delaney of Cass Information Systems as his authority of choice with regard to this area of regulation vs. deregulation.
I would point out to the committee that Mr. Delaney has submitted a statement in connection with the Surface Transportation Board's section 5a proceeding very strongly supporting the National Motor Freight Classification, and he said, ''without the classification it would be the equivalent of searching for a book in the library without the benefit of a catalog or reference number, or driving into an unknown area without the benefit of a map. There is no public interest in creating confusion.''
Page 117 PREV PAGE TOP OF DOC Segment 2 Of 2
This is the expert that Mr. Emmett cites as being an appropriate authority in this area.
One more thing I would say is that, UPS uses the National Motor Freight Classification for LTL shipments.
Mr. PETRI. One observation, I am a little puzzled, you would think that the users of the transportation system and the operators would both have a mutual interest in having as efficient a system as possible because that maximizes everyone's profit. And there seems to be a disagreement as to whether the classification system, for example, increases efficiency or is a needless complexity, and that seems to be sort of a factual question unless it is different in different situations somehow. Why can't you guys sort that out? Because you have a mutual interest in having the system work as efficiently as possible.
Mr. EMMETT. I believe we can sort that out if the shippers work directly with the carriers. I have meetings scheduled with some of the major LTL carriers to talk about this subject.
You are dealing with a bureaucracy that has been in place since well before deregulation, which opposed every attempt at deregulation, and they do not want to let go. While I can disagree with their philosophical position, I do see where they are coming from. But I do think that the carriers and the shippers will resolve this in the end.
Mr. PETRI. We know technology has been marching very fast in your industry as well as every other, and the bar goods are on the shipments and there are systems in place with the larger shippers and they have sophisticated warehousing so they put together mixed content packages for each department store in the country or drugstore, everything else.
Page 118 PREV PAGE TOP OF DOC Segment 2 Of 2
Well, I want to thank you on behalf of the members of committee for taking time to testify on these issues. We will be looking for your associations continued input as we work on these issues. And, with that, this hearing is adjourned.
[Whereupon, at 1:05 p.m., the subcommittee was adjourned.]
[Insert here.]