APPENDIX I INTERSTATE COMMERCE ACT, PART II, SECTION 203(b)(5) Section 203(b): "Nothing in this part, except the provisions of section 203 relative to qualifications and maximum hours of service of employees and safety of operation or standards of equipment shall be construed to include. (5) motor vehicles controlled and operated by a cooperative association as defined in the Agricultural Marketing Act, approved June 15, 1929, as amended, or by a federation of such cooperative associations, if such federation possesses no greater powers or purposes than cooperative associations so defined;" APPENDIX II SECTION 15(a) OF THE AGRICULTURAL MARKETING ACT Approved June 15, 1929, as Amended (49 Stat. 317, 12 U.S.C.A. 1141j(a)) As used in this act, the term "cooperative association" means any association in which farmers act together in processing, preparing for market, handling, and/or marketing the farm products of persons so engaged, and also means any association in which farmers act together in purchasing, testing, grading, processing, distributing, and/or furnishing farm supplies and/or farm business services; Provided, however, That such associations are operated for the mutual benefit of the members thereof as such producers or purchasers and conform to one or both of the following requirements: First. That no member of the association is allowed more than one vote because of the amount of stock or membership capital he may own therein; and Second. That the association does not pay dividends on stock or membership capital in excess of 8 per centum per annum. And in any case to the following: Third. That the association shall not deal in farm products, farm supplies, and farm business services with or for nonmembers in an amount greater in value than the total amount of such business transacted by it with or for members. All business transacted by any cooperative association for or on behalf of the United States or any agency or instrumentality thereof shall be disregarded in determining the volume of member and nonmember business transacted by such association. APPENDIX III NATIONAL COUNCIL OF FARMER COOPERATIVES, Washington, D.C., July 9, 1959. Re "Cooperative Association" Exemption in Section 203 (b) (5) of the Interstate Commerce Act, Part II. Mr. HERBERT QUALLS, Director, Bureau of Motor Carriers, Interstate Commerce Commission, Washington, D.C. DEAR MR. QUALLS: I am enclosing a copy of a report adopted by the Executive Transportation Committee, one of the standing committees of the National Council of Farmer Cooperatives, at a meeting of the Committee on May 15, 1959, with respect to the captioned matter. I concur fully with this report and the purpose of this letter is to effectuate that recommendation in the report to apprise the Commission of the Council's long-standing policy position of preserving this. exemption as clearly intended by Congress in order to provide for the essential transportation needs of farmers through their cooperatives. It seems to us that the scope of this exemption as stated in the statute, supplemented by the legislative history accompanying its enactment is quite clear. There appears to be only one possible major point that needs administrative clarification. That is the point of whether an agricultural cooperative meeting the statutory definition must as to any transportation service in its own trucks within the 50% nonmember business that may be transacted, haul products which (1) exclusively or (2) primarily come within one of the authorized types of activities. set forth in the statute. Our position on this point is set forth under Item 2 on Page 2 of the report and is fully supported, we believe, by Ruling No. 91 of July 17, 1940, subparagraph 5, by the Bureau of Motor Carriers containing this sentence: "The business must be primarily that of farmers acting together in market ing farm products and/or furnishing farm supplies and farm business service." (Italics supplied.) The Council, which has approimately 50% of the approximately 10,000 "farmer cooperatives" in the country represented in its membership, does not seek or desire that farmer cooperatives be permitted to haul for others than its members or other patrons, except to the extent sanctioned by the statute. We do, however, insist that the statutory right to render a transportation service in trucks controlled and operated by qualified agricultural cooperatives be fully preserved in order to provide for the essential transportation needs of farmers through their cooperatives. Since some time at best, will be required for a decision by the Commission in the pending cases involving this exemption, we feel that it is in the interest of all parties concerned and sound administration for the Bureau of Motor Carriers to remove so far as possible the present doubt and controversy that is alleged to prevail in some sections of the country as to the scope of this exemption, by issuing promptly for public guidance the basic rules or criteria to be followed under present law for qualification under Section 203(b) (5) of the Motor Carrier Act. The farmers' business through their associations' trucks must go on from day to day and they are entitled to know from the responsible administrative agency the basic rules for compliance with the law. Since the latest known ruling or regulation promulgated by the Bureau of Motor Carriers for the administration of this particular exemption was issued almost 20 years ago, it seems to us essential in the light of the present controversy that the Bureau of Motor Carriers issue promptly some authoritative ruling for current application as to the scope of this exemption without awaiting a decision in pending cases. This should be helpful in eliminating abuses and preventing unqualified organizations from engaging in transportation under the guise of the "exemption" to the extent that any such activity may exist. If you should desire additional evidence other than that cited in support of our position that a proper interpretation of the statute will permit some incidental hauling of products other than those coming within the scope of the specifically authorized activities as set forth under Item 2 on Page 2 of the enclosed report we shall be glad to furnish it on request. I am designating a copy of this letter for the information of the Chairman of the Commission and those Commissioners presently comprising Division 1, which I understand has supervision over motor carrier activities. Sincerely yours, HOMER L. Brinkley, REPORT OF SPECIAL COMMITTEE ON "COOPERATIVE ASSOCIATION" EXEMPTION (SEC. 203(b)(5) OF THE INTERSTATE COMMERCE ACT, PART II-ADOPTED BY EXECU TIVE TRANSPORTATION COMMITTEE OF THE NATIONAL COUNCIL OF FARME COOPERATIVES, MAY 15, 1959) The Executive Transportation Committee at its meeting on May 14-15, 1959 has given careful consideration to the current problems incident to alleged abuse under Section 203(b)(5) of the Interstate Commerce Act, Part II, commonl referred to as the "cooperative association" exemption. Representatives of th U.S. Department of Agriculture, the American Trucking Association, Inc., an the Bureau of Motor Carriers of the Interstate Commerce Commission, hay appeared before the Committee by invitation and presented their views wit respect to these problems. There are some important questions involved in these problems which sugge the need for prompt clarification of the issues on behalf of the agricultural c operatives of the country. The following points are noted: 1. There are two complaint cases MC-C-2488 and MC-C-2488 Sub 1, and investigation proceeding MC-C-2576 presently pending before the Commissi involving a determination of qualification for exemption from economic reg lation under Sec. 203(b) (5) of the Interstate Commerce Act, Part II, and possible interpretation of the scope of the exemption in such Section. 2. The principal case law applicable to this exemption is the decision in t case Interstate Commerce Commission v. Jamestown Farmers Union Federa Cooperative Transportation Association, C.C.A. 8th, 151 F. 2d 403 (1945), affir ing 57 F. Supp. 749. 3. Since the enactment of the Motor Carrier Act in 1935, containing t exemption, as later amended, the only known ruling or regulation promulga with respect to it by the I.C.C. or any of its Bureaus, was Ruling No. 91, da July 17, 1940. 4. We believe that under the wording of the "cooperative association" exemption, and the legislative history accompanying its adoption as interpreted by the Courts to date, the I.C.C. can and should exercise its administrative responsibility and authority so as to preserve the exemption from economic regulation for motor vehicles controlled and operated by cooperative associations meeting the definition in the Agricultural Marketing Act of 1929, as amended, by denying the claim to such exemption to any organization or business enterprise not meeting such definition. The responsibility and authority should be exercised vigorously and promptly to prevent operations under the guise of the exemption by those who do not qualify under the provisions of the statute. It is the considered judgment of this Committee that qualification for the "cooperative association" exemption in existing law as judicially interpreted to date includes the following: 1. The motor vehicles must be controlled and operated by a cooperative association meeting the requirements of the statutory definition (Sec. 203(b) (5)). 2. The association must be one in which farmers act together: (1) in marketing farm products and/or furnishing farm supplies and/or farm business services as their primary or predominant activity (See Jamestown Decision and Bureau of Motor Carriers Ruling #91, July 17, 1940). The handling of some transportation business not qualifying as a strictly farm business service which is merely incidental to the authorized primary activity is still within the scope of the exemption (see statements of Congressman Jones, sponsor of the exemption amendment-Congressional Record, Vol. 79, part II, page 12218, July 31, 1935). (2) For their mutual benefit as provided in the statute. 3. The association allows each member only one vote regardless of the amount of stock or capital owned by the member and/or does not pay dividends on stock or membership capital in excess of 8 percent (Agricultural Marketing Act of 1929, as amended). 4. The association shall not deal in farm products, farm supplies, and farm business services with or for nonmembers in an amount greater in value than the total amount of such business transacted by the association with or for members. The Committee, therefore, recommends that Council officials take appropriate and timely action to apprise the Commission of the Council's long-standing policy position of preserving this exemption, as clearly intended by Congress, to provide for the essential transportation needs of farmers through their cooperatives. It is further recommended, that the Council officially apprise the Secretary of Agriculture of the importance of this matter to the thousands of farmer cooperatives throughout the country and urge that the Department under its statutory authority actively participate in proceedings before the Commission and take such other action as may be appropriate to preserve, without impairment, the intended scope of the exemption for agricultural cooperatives. Mr. HOMER L. BRINKLEY, INTERSTATE COMMERCE COMMISSION, Executive Vice-President, National Council of Farmer Cooperatives, DEAR SIR: I have your letter of July 9, 1959 and the report of the Council's Executive Transportation Committee concerning abuses of the "cooperative association" exemption in Section 203(b)(5) of the Interstate Commerce Act. You ask that this Bureau issue an administrative ruling stating its current position as to the scope of this exemption, particularly with respect to the transportation that may be rendered for non-members. As you know, there are pending before the Commission certain proceedings which involve the lawfulness of operations conducted by an organization purportedly operating under this exemption. It is expected that these cases will be set for hearings before too long and that they will provide formal answers regarding the questionable features of the exemption. In view of this we believe that no new ruling to supplement existing Ruling No. 91 should be issued at this time. You have received a copy of my remarks made before the Central Area ShipperMotor Carrier Conference at Fort Wayne, Indiana, on June 11, 1959, in which this exemption was discussed in some detail. Those comments represent the informal views of the Bureau as to the scope of the exemption. Very truly yours, HERBERT QUALLS, Director. APPENDIX IV FREIGHT REVENUE AND TONS OF FREIGHT HAULED OF SEVEN CLASS I MOTOR CARRIERS The information concerning the freight revenue and tons of revenue freight carried in intercity service of the seven Class I motor carriers which follows was abstracted from their respective Annual Report Form A's, for the years indicated, which are on file with the Interstate Commerce Commission, Washington, D.C. BRADY MOTORFRATE, INC., DES MOINES, IOWA, ICC DOCKET NO. 52110 1961 1962 1963 1964 1965 1961 1962 1963. 1964. 1965. FROZEN FOOD EXPRESS, DALLAS, TEX., ICC DOCKET NO. 108207 MIDWEST COAST TRANSPORT, INC., SIOUX FALLS, S. DAK., ICC DOCKET NO. 111812 REFRIGERATED TRANSPORT CO., INC., ATLANTA, GA., ICC DOCKET NO. 107515 1961 1962. 1963. 1964 1965. 1961. 1962. 1963. 1964. 1965. 1961 1962 1963. 1964. 1965.. 1961.. 1962. 1963. 1964. 1965.. SAFEWAY TRUCK LINES, INC., SOUTH BEND, IND., ICC DOCKET NO. 110193 WATKINS MOTOR LINES, INC., THOMASVILLE, GA., ICC DOCKET NO. 95540 ZERO REFRIGERATED LINES, SAN ANTONIO, TEX., ICC DOCKET No. 110098 1 Tonnage decrease not explained. Figure may be error in view of freight revenue increase for year Senator LAUSCHE. Mr. Churchill, if you will come forward, please. STATEMENT OF RICHARD T. CHURCHILL, SECRETARY AND GENERAL COUNSEL, AGRICULTURAL TRANSPORTATION ASSOCIATION OF TEXAS; ACCOMPANIED BY JACK R. COBB, GENERAL MANAGER Mr. CHURCHILL. Mr. Chairman, my name is Richard T. Churchill. I am secretary and general counsel of Agricultural Transportation Association of Texas, Fort Worth, Tex., also known as ATA of Texas. With me here today is Mr. Jack R. Cobb, general manager of ATA of Texas on my right. We are here today to present the position of our association with respect to S. 1729 as well as the amendment suggested by John W. Bush, chairman, on behalf of the Interstate Commerce Commission, and the amendment proposed by the American Trucking Associations, Inc. Previous witnesses for the proponents of S. 1729 have testified concerning ATA of Texas and its operations, and we desire to correct certain inaccurate statements and misconceptions left in the record. As a prerequisite to the statement of our position on the bill, ATA of Texas is not, as has been alleged by many prior witnesses, a "phony" or "sham" cooperative, nor has it attempted to engage in "unrestricted for-hire transportation of general commodities" under the partial exemption of section 203(b)(5) of the Interstate Commerce Act. Neither is ATA of Texas the "successor" or "a continuation" of Agricultural Commodity Service which was ordered by the ICC to cease and desist operations in 86 MCC 5 (1961)—and it was expressly found to the contrary by Examiner Shoup in his report in MC-C4028 at page 22. ATA of Texas was chartered under the Texas Marketing Act and has at all times been operated as a nonprofit membership association without capital stock. It now has 54 registered members, all of whom actively use the services furnished by the association. The members include more than 20 old-line bona fide agricultural cooperatives, most of whom are themselves members of banks of cooperatives in their respective area of the United States. The remaining members are all producers of agricultural products. Two-thirds of the present board of directors of ATA of Texas are either officers or key management personnel in other large agricultural cooperatives which are themselves member of ATA. The remaining directors are substantial independent producers of agricultural products. The board of directors meet regularly to fix operating policy for the cooperative, to investigate and approve all applications for membership, and to review and approve reports from the staff. ATA of Texas presently has and has had for some time pending applications from a number of qualified producer members which have not been approved by the board of directors because the cooperative does not, in the board's opinion, have sufficient equipment to furnish the marketing services needed by existing members and still serve the new members also. All operations of the cooperative and decisions of the board of directors are reviewed by the members in annual meeting each year. ATA of Texas has declared and paid 67-566-66-17 |