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Response to Reform Bill: Trucking Industry

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Labor and industry were predictably upset with the Cannon- Packwood reform bill on trucking deregulation. Teamster president Fitzsimmons telegrammed Cannon that the bill was "completely unacceptable" and that the union would "expend all [its] effort to have this measure changed." "If enacted into law," Fitzsimmons continued, "the proposal will result in complete destruction of qualified motor carriers who now employ over 500,000 of our members." The ATA had a more measured response, reflecting the industry's belief that some legislation was necessary to prevent independent deregulation by the ICC. "While the trucking industry adamantly opposes some of the provisions of the Senate Commerce Committee [bill] and has grave reservations concerning others, we pledge our support for Congress's effort to give specific directives to the [ICC] as to its intent for future truck regulatory policy."

The Public Works Committee introduced a bill days later that diverged from the Senate proposal on the key provisions of entry and rate bureaus. It preserved antitrust immunity for single- and joint-line ratemaking and placed the burden of proof for entry on the applicant rather than the protestant, thus negating the ICC's reforms in that area. Not surprisingly, the ATA said it could "live with" the House proposal.

"Operation Pendorf"



Five days after Cannon introduced S. 2245, the New York Times reported that the Federal Bureau of Investigation had been secretly investigating the Nevada senator to determine whether he "was illegally influenced in handling trucking deregulation legislation " Specifically, the FBI suspected that Chicago businessman Allen Dorfman, a Teamsters crony with alleged ties to organized crime, had found a way to reward Cannon for steering trucking deregulation legislation into his committee.

Dorfman, convicted in 1972 on a federal charge of conspiring to facilitate a loan from the Teamsters' Central States pension fund in return for a $55,000 kickback, had been under secret federal investigation since approximately 1978. The FBI's "Operation Pendorf"--referring to the pension fund and Dorfman--was one of a dozen specialized operations within a broad federal inquiry into organized crime and political corruption. The New York Times had published accounts of another of those operations- "Abscam"--just three days before the Cannon story. That sting operation, in which FBI agents posed as wealthy Arab sheiks, implicated Sen. Harrison Williams (D-N.J.) and seven other members of Congress.

The one-year, highly secret investigation of Cannon's ties to Dorfman was set off in early 1979 when FBI agents, monitoring a court-authorized wiretap of Dorfman's phones, overheard a conversation between him and Cannon. The conversation apparently concerned Cannon's efforts to acquire some Nevada land that was owned by a Teamsters Union pension fund. Cannon was leading his successful fight to take over jurisdiction of trucking deregulation legislation when the call was intercepted.

Cannon denied any wrongdoing or any awareness of the inquiry. He acknowledged that he had talked with Dorfman in 1979, when he and some of his neighbors banded together to prevent the sale of some Teamster-owned land to developers with plans for high-rise units. Cannon said he got in touch with Dorfman to ask who he should contact about buying the land. (The 5.8-acre plot of land, which bordered the Las Vegas Country Club and a luxury housing development where Cannon lived, was eventually sold to a buyer other than the homeowners' group.) But as to any connection between the land deal and his efforts on deregulation, Cannon said, "I've never heard anything more absurd in my life." Noting the deregulation proposal he had introduced days earlier, he said "the Teamsters have threatened to defeat any member of Congress who votes for this bill."

Masterpiece Theater

Two weeks later, when the Senate Commerce Committee began three days of hearings on S. 2245, Cannon, whose face was slightly bandaged, joked about the publicity in his opening statement:

Despite my appearance today, I was not mugged by a group of Teamsters or the ATA.
However, I must say that dodging the past few days, I have felt ambushed by certain journalists in search of a sensational story without much concern for the facts. . . .

After my experience with the news media in the past couple of weeks, I am reluctant to even mention the fact that I have had minor surgery on my face, for fear of seeing it reported on ABC tonight that I had a lobotomy over the weekend free of charge from the American Medical Association.

The Senate hearings, as well as their House counterpart, which Representative Howard held simultaneously, were essentially a replay of earlier committee hearings on trucking deregulation, as Cannon jokingly reminded the audience at the start of the second day:

At the beginning of each of these hearings, I feel like Alistair Cooke when he's introducing the latest episode of Masterpiece Theater. To refresh your memory, when the series first began last March, we heard testimony from the administration in the form of strong reform measures; we heard from the Teamsters in opposition to any degree of deregulation; and we heard from the National Industrial Traffic League in favor of a middle position.

Much has happened since then. In today's episode, I understand we will nave the administration in favor of strong reform measures; the Teamsters in opposition to any degree of deregulation; and the NIT League in favor of a middle position.

However, one aspect of the dual hearings did make newspaper headlines. In testimony before the Howard subcommittee, Neil Goldschmidt, the new secretary of DOT, had harsh criticism for the Public Works bill: "[H.R. 6418] doesn't do enough to open up entry, it allows price-fixing to continue indefinitely, and, in light of these weaknesses, it offers too much pricing flexibility to carriers, to the detriment of shippers and consumers. The end result of this combination may well be inflationary." Goldschmidt said the administration was "extremely disturbed" that the bill would not lift antitrust immunity, and that it was "essential that this committee develop legislation which will phase out price-fixing."

Goldschmidt conveyed to the committee the same message President Carter had hinted at several weeks earlier in his State of the Union address to Congress and through his aides in two meetings they'd had with ATA representatives-namely, that Carter would veto (or let die) a regressive trucking bill and let the ICC proceed to deregulate on its own. By contrast, Goldschmidt praised the Senate bill as a "very positive step."

In addition to the administration, more than fifty groups testified for and against deregulation on behalf of shippers, consumers, labor, regulated carriers, owner-operators, motor carrier lawyers, regulatory utility commissioners, port authorities, and others. They ranged from giant umbrella organizations, such as the National Association of Manufacturers, to highly specialized groups like the National Lime Association.

The weeks before and immediately after the hearings saw intensive lobbying by many of these groups, including the administration. Most of the lobbying effort focused on the Senate Commerce Committee, which was scheduled to "mark up" (amend) its bill in early March. Committee members-particularly those who were regarded as swing votes-were visited by scores of lobbyists and influential constituents flown in by lobby groups. In addition, they received hundreds of telephone calls, letters, and Mail- grams from their home states. The administration lobbied actively, and President Carter even telephoned several senators on the Commerce Committee personally, a display of commitment that provoked the ATA to sarcasm: "I am sure you derive the same comfort I do," wrote Whitlock to industry members, "in realizing that the continued imprisonment of Americans in Iran, the Russian invasion of Afghanistan, and the deteriorating economy are not of great enough consequence to cause Mr. Carter to alter his priorities."

Markup-Day One

On Thursday, March 6, less than five weeks after the bill was introduced, the Commerce Committee began its markup of S. 2245. While Cannon had set aside two days for the committee to amend the bill, both sides felt that the initial votes would determine its fate. "If we lose on those," said one lobbyist supporting deregulation, "we will see [debilitating] amendments coming in like pigeons at the end of the day in Farragut Square."

It was not a day for pigeons. The first critical vote came on the issue of entry. Warren Magnuson, who had chaired the Commerce Committee for thirty years before resigning to take over the Appropriations Committee, proposed to alter the entry standard in S. 2245 so as to shift the burden of proof back to the applicant, consistent with the Public Works bill. Packwood argued firmly that "Maggie's" amendment would "reverse the major thrust of the bill." When Magnuson said that under the traditional system "we don't deny right of entry," Packwood responded, "No, we just make it impossible." "Well, we're going to have chaos," said the seventy-four-year-old Magnuson weakly, but the committee disagreed and rejected his amendment ten to seven.

The truckers won a few, less critical skirmishes. The committee scuttled the section of S. 2245 that would have permitted owner-operators to carry regulated goods on their return haul and weakened the provision allowing private carriers to transport for-hire for their subsidiaries (the committee leadership privately agreed to the weakening amendment to get a needed vote on another provision).

The truckers narrowly avoided another defeat, but the amendment was destined to come up again. Adlai Stevenson of Illinois proposed to expand the list of exempt commodities to include all food products as well as agricultural inputs such as fertilizer. To illustrate the seeming absurdity of exempting some commodities but not others, Stevenson regaled the audience by reading aloud from the ICC's guide to exempt commodities, "Can They Do That?"

Hay is exempt, but hay containing 3 percent molasses is not; manure is exempt, but fermented manure "with additives such as yeast and molds, producing a rich liquor which in water solution is used for soil enrichment" is not; and "shelled, unpopped popcorn weighing ten or more ounces accompanied by a separate package of seasoning consisting of monosodium glutamate, butter flavor, cottonseed oil, and artificial color and flavor weighing approximately VA ounce" is exempt, while "shelled, unpopped popcorn with cooking fiat or oil (one part to 2Vz parts popcorn)" is not.

An opponent of the amendment, Sen. Donald Riegle (D-Mich.), asked the committee staff what market share of transported goods Stevenson's amendment would affect, and the session paused briefly while staff members conferred. (During the pause, the sound of choir music wafted into the committee room from the hallway. Sen. Harrison Schmitt (R-N.Mex.), an ardent deregulator, said "This must be an excellent amendment. I hear the voices of angels.") However, the staff couldn't supply an exact statistic, and Riegle said he thought there was a "pressing need" for such a figure. Echoing Riegle's skepticism, Sen. John Danforth (R-Mo.) asked why the staff didn't include this seemingly drastic change in the rules in the committee bill if it was such a good idea. William (Will) Ris, the staff counsel and primary author of S. 2245, responded tactfully that the provision wasn't included because the bill was a compromise. Packwood smiled and said, "Translated, that means we didn't know if we had the votes."

Packwood's doubts proved justified; the subsequent vote on Stevenson's amendment was eight to eight. Since a tie vote would have defeated the proposed change, Stevenson changed his vote to nay in order to be on the prevailing side and moved for reconsideration on day two of markup.
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