CONTENTS Statement of James Bonaccorsi, president, Consolidated Flower Shipments, Inc., G. Nathan Calkins, Chief of the International and Rules Division, George A. Dice, Assistant to the Deputy Administrator for Marketing Joe FitzGerald, Director, Bureau of Air Operations, Civil Aero- Lloyd C. Halvorson, economist, the National Grange, 744 Jackson Frank Kuwahara, president, Flower Consolidators of Southern Mike M. Masaoka, Washington representative of the Japanese Giles Morrow, president and general counsel, Freight Forwarders Stuart G. Tipton, general counsel, Air Transport Association of Matt Triggs, assistant legislative director, American Farm Bureau True D. Morse, acting secretary, Department of Agriculture, to Sen- Joseph Adams, acting chairman, Civil Aeronuautics Board to Senator Matt Triggs, assistant legislative director, American Farm Bureau Summary, Bureau of Air Operations.. III EXEMPTION OF AGRICULTURAL COMMODITIES (Amendment to Civil Aeronautics Act) WEDNESDAY, MARCH 30, 1955 UNITED STATES SENATE, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, SUBCOMMITTEE ON AVIATION, Washington, D. C. The subcommittee met at 10 a. m., in room 155, Senate Office Building, Senator A. S. Mike Monroney (chairman) presiding. Present: Senators Monroney (presiding), and Payne. [Professional staff member assigned to this hearing: Edward C. Sweeney, aviation counsel.] Senator MONRONEY. The committee will come to order. We have before us today a bill S. 1192, by Magnuson and Kuchel, introduced February 23, 1955, to amend the Civil Aeronautics Act of 1938 to exempt operations in the transportation of livestock, fish, and agricultural, floricultural, and horticultural commodities from the act and from regulation by the Civil Aeronautics Board thereunder. (The bill is as follows:) [S. 1192, 84th Cong., 1st sess.] A BILL To amend the Civil Aeronautics Act of 1938 to exempt operations in the transportation of livestock, fish, and agricultural, floricultural, and horticultural commodities from the Act and from regulation by the Civil Aeronautics Board thereunder Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 416 (b) of the Civil Aeronautics Act of 1938 is amended by adding at the end thereof the following new paragraph: "(3) Neither this title, nor any rule, regulation, term, condition, or limitation prescribed under this title, shall apply to any person who engages indirectly in air transportation of property consisting of livestock, fish (including shellfish), or agricultural, floricultural, or horticultural commodities (not including manufactured products thereof), and who, in the ordinary and usual course of his undertaking, (1) assembles and consolidates or provides for assembling and consolidating shipments of such property, and performs or provides for the performance of break-bulk and distributing operations with respect to such consolidated shipments, and (2) assumes responsibility for the transportaion of such property from point of receipt to point of destination, and (3) utilizes for the whole or any part of the transportation of such shipments, the services of a direct air carrier, if such person does not otherwise engaged in air transportation." Senator MONRONEY. We have several witnesses. We will hear from Congressman Younger who has, I believe, introduced a similar bill in the House. 1 STATEMENT OF HON. J. ARTHUR YOUNGER, A REPRESENTATIVE IN CONGRESS FROM THE NINTH CONGRESSIONAL DISTRICT OF CALIFORNIA Mr. YOUNGER. I want to appear in support of Senate bill 1192. I introduced a similar bill last year in the House and I was a member of the Interstate and Foreign Commerce Committee that considered the bill. We held hearings and after the hearings the committee reported the bill to the House unanimously and it was passed under the Consent Calendar by the House without objection. It came to the Senate, it came over late, and it was felt by Senator Bricker at the time that he wanted to hold hearings here. It was late in the session and hearings could not be held. I have the assurance of the present chairman of the Interstate and Foreign Commerce Committee, Mr. Percy Priest, of Tennessee, and also of the ranking minority member of the Interstate and Foreign Commerce Committee of the House, Mr. Wolverton, that if the Senate will act on this bill now they will give it priority and speedily enact it in the House. They will not need to hold hearings again on it and will pass it on through. I come from the county that is probably more interested in this bill than any other county in the country-San Mateo County, Calif.— because we ship more cut flowers than any other county in the United States. We have an annual product there of in the neighborhood of $7 million. So that our growers have a tremendous stake in this bill because they are limited to air cargo. The perishable nature of their crop is such that they must use the air shipments in order to get to the markets. The thing that has interested me in this bill is that I have never been able to see any justification, nor did the CAB representatives who appeared before our committee last year give any justification, for the regulation which they promulgated known as the freight forwarders regulation, because it set the air cargo shipments up as a separate and distinct method of shipping contrary to all the other methods of shipping on surface transportation. Senator MONRONEY. You mean on railroads? Mr. YOUNGER. Yes. In other words, a shipper can now, by freight or express or truck go together in a cooperative association and consolidate their shipments to take advantage of the consolidated rates without going through freight forwarders. Here the CAB, by their regulation, endeavored to prohibit that type of shipment. It has always been my feeling that a shipper should not be limited in the air shipments to a method that is different than surface shipments. I never have been able to bring myself to believe that that should be done, and that was the thing that interested me in this bill. I have another similar bill in the House this year. That was the argument that to me seemed to be most compelling. For instance, no doubt in the original instance when that regulation was put into effect it was done with the idea that it would stimulate air cargo by virtue of the fact that you would have these freight forwarders who would really be agents of the air cargo shipper, air cargo transport, out soliciting business and thereby creating business. But actually it has retarde the air cargo business. The hearings which we held last year showed that due to this regulation hundreds of tons of cargo have been denied the airlines due to that regulation. I knew of no way, and our people knew of no way of reaching it by a method that the Congress has already settled on other than by exempting agricultural and horticultural products, because that method and that as a policy has already been determined by the Congress in the trucking act. So we adopted that method and that is what gave rise to why it was limited in that field. After going through all this I feel very strongly on this situation. I think it is grossly unfair. I think it is a bad regulation from the air cargo transport situation so far as the corporations are concerned that own the airlines, and it is also great detriment to the shippers. Are there any questions? Senator MONRONEY. As I understand the bill this does not apply to the regular direct operators of airlines or air cargo planes, or even of charter planes. It applies to those who indirectly engage in air transportation for the assembly of cargoes? Mr. YOUNGER. The exemption applies, yes. Senator MONRONEY. That is what I mean. The exemption bill applies to those indirectly and not to those directly engaged. You spoke of the regular airlines. Was the purpose of that bill to allow these groups to contract with the regular airlines, or is it to allow them to contract with charter carriers or regularly scheduled cargo carriers? Mr. YOUNGER. Allow them to ship by any cargo carrier on any airline that deals in air cargo. They have always had the right to charter a plane if they wanted to, and ship. Senator MONRONEY. Any individual do that? The order of the CAB does not affect that? Mr. YOUNGER. No. There are so many of these small shippers, small growers, that have to have as cheap a transportation as they can possibly get in order to get these flowers to the market at a price that will sell, and they must use the airlines, and the only way they can do it is consolidate their shipments at breaking points at St. Louis and Chicago where they can then break off and reach their markets. Senator MONRONEY. By doing that would you be entitled to or would you negotiate for a better rate, say with an airline? Mr. YOUNGER. No. You would obtain the regular rates that are approved by the CAB. They would pay the regular rates; the consolidated rates that are approved by the CAB. Senator MONRONEY. And those rates are in existence just as they are by rail carriers where you have 1. c. 1. versus carload and the freight forwarders, of course, pass on benefits from the carload rates for 1. c. 1. shipments and make a small charge for assembly, dispatching, and distributing at the terminal points? Mr. YOUNGER. The airlines would get the same rate that they now get for the transportation of the cargo. There would be no difference in that. Senator MONRONEY. In other words, there would be no saving to a flower grower between California and New York in his air freight rate? Mr. YOUNGER. Oh, yes. |