drain on its resources to be an interastate route for which it had no corresponding interstate authority. At the very least, a carrier should be allowed to argue before the ICC that such a situations is occurring to the detriment of its interstate operations. It appears that this requirement for concurrent routes is inconsistent with proposed Section 17, where it appears that preemption of any intrastate rate practice may occur.

In addition, the carrier wishing to leave an unprofitable intrastate route would have to apply to the State before it sought final relief from the ICC, although there may be reason to believe that the carrier would not get authorization from the State to discontinue the losing operation. We propose that the carrier be allowed to seek relief directly from the ICC. This would simply eliminate the two step process and provide a faster means to cease inefficient operations.

Another objectionable feature to the exit proposal is the precondition that in order to take advantage of the preemption process, the carrier must apply for authority to discontinue its interstate authority under 49 U.S.C. 10925 before the ICC. The ICC has chosen to be virtually out of the schedule and discontinuance business for many years. 124 Requiring the ICC to renew scrutiny of interstate exit after a long hiatus would seem to serve no useful purpose. The regulatory lag inherent in the BRRA's complicated exit procedures is thus magnified since the ICC must have granted or indicated it will grant interstate exit before the two-level exit preemption process could even begin.125 It is not possible to predict the extent of the total regulatory lag time since the ICC has no procedures in place for interstate discontinuance proceedings. 126 The multiple step process and the length of time added to the period in which carriers might successfully abandon routes would penalize those carriers least able to afford extensive hearings or to withstand long periods of low profitability.

We also question whether the discontinuance standards proposed in the section of the BRRA that would be codified at 49 U.S.C. 10935(g) are appropriate. The ICC, in its appellate capacity, is directed to consider whether a carrier-applicant has received an offer of financial assistance, whether the route to be discontinued will leave the area with no other service being available, and whether granting the discontinuance petition will adversely affect commuter operations.

Under the test proposed by the BRRA, however, lack of service to an area could justify requiring a carrier to run a losing operation if that is the last service available. This approach fosters inefficiency and is unfair to the public in the long run. A State should not be allowed to hold a bus company hostage to a route which only few members of the public care to use. Such an action would be detrimental to the riding public in other States who may also rely on the service of that carrier and who have an equal interest in preserving its financial health.

We believe one portion of Section 17 is ambiguous in its present form. It is not clear from the provisions of proposed Section 17 whether as a precondition to preemptive relief, the intrastate rates or practices for which preemptive relief would be sought would always have to correspond to an interstate route. Under the section of the BRRA that would be codified at 49 U.S.C. 11501(e)(2)(C), for example, it appears that relief from unreasonably burdensome scheduling practices would be preconditioned on situations where interstate transportation was provided by the carrier on the same route. However, under the section of the BRRA that would be codified at 49 U.S.C. 11501(e)(1), preemption relief would be warranted as to any rate, rule or practice. It thus appears that all rate practices might be preempted, since, for example, general rate increases would be covered. In the rate area, at least, there appears to be implicit recognition that a State action which has no specific connection to a specific dual interstate-intrastate route may nonetheless have a burdensome effect on interstate commerce. This broader rationale shoud be extended to the schedule reduction provisions of this section as well as to the exit provisions of Section 16 and the intrastate entry provisions of Section 6.

Senator DANFORTH. The next witness is George Sheldon, Governmental Operations Committee, Florida House of Representatives.

124 This is admitted by the ICC's own staff. See Intercity Bus Industry, supra, at 11-12. 125 We question how the ICC can indicate it "will grant" such an authorization. Presumably, a carrier would be on safe ground only when the ICC action was administratively final.

126 It does require public notice although the ICC places no time limit on this. See 49 CFR 1063.6(b).

STATEMENT OF GEORGE H. SHELDON, GOVERNMENTAL OPERATIONS COMMITTEE, FLORIDA HOUSE OF REPRESENTATIVES

Mr. SHELDON. Mr. Chairman and members of the committee, thank you for the opportunity to be here. I have some prepared comments that I would like to enter for the record.

I currently chair the Committee on Governmental Operations of the Florida House of Representatives. I was chairman of the Committee on Regulatory Reform, which deregulated in 1980 the trucking and bus industry in Florida.

We in Florida had a very similar scheme to that which you have at the Federal level, substantial burden of proof on entry, substantial process in terms of trying to go into the trucking business.

Just before the legislative session we deregulated the industry in Florida. There was a man by the name of Henry Browning who wanted to provide transportation to those people who lived in Perry, which is 50 miles outside the city of Tallahassee to Tallahassee to go to work. Greyhound, Trailways, none of which competed with the service that he was trying to provide, objected to that.

He wound up going through about 78 application processes in order to obtain and finally, with a substantial amount of restrictions, a substantial amount of legal fees, was able to obtain that service.

But you find, as carriers try to get into providing trucking service, that it is a costly, lengthy process. One carrier went through 44 hours of hearings and spent $30,000 in legal and accounting fees and ended up with a route that was 8 miles long. That is $3,700 a mile for providing that service.

Other carriers are able to get in but have to comply with certain restrictions once they operate. One carrier was prohibited from having restrooms, reclining seats, and air conditioners on his vehicles because there was a feeling that competed with other carriers. Another carrier could only uses two buses at a time and could not advertise its schedules. Another carrier was forbidden to drop off and pick up passengers in cities even though they passed through those cities.

The conclusion of the Florida Legislature was that the regulation in Florida did not work to the benefit of the consumer. We made the decision to deregulate. We did that with cries that there would be chaos in Florida, that fly-by-nighters would flood the market, ripping off consumers, that there would be cutthroat competition and that small towns would lose service.

The bottom line is now after 2 years of experience, none of those things happened in Florida. For instance, ridership, Greyhound reports, is up 15 percent.

Package service in the first 9 months of 1981 Greyhound reports that the number of packages it carries rose 20 percent. Approval of controls meant that carriers could haul all kinds of packages, but they had to wait 6 months to get that through. They could not compete, for instance, with United Parcel Service.

What has happened is Greyhound and Trailways have cut the amount of time that it takes to travel, for instance, the Tallahassee-to-Tampa route, 250-mile route, is now 2 hours shorter, mean

ing that their ridership on that route is up 21 percent. The consumer benefits as a result of that.

In terms of small towns, Trailways, for example, dropped eight small towns in north Florida, yet increased their total scheduled mileage by 7.5 percent. Greyhound dropped small towns in central Florida but added 8 percent in terms of scheduled miles.

And as Greyhound and Trailways began dropping towns, other companies came in. Trailways came and picked up Jasper, a small town of 2,200 people, between Tallahassee and Jacksonville, simply because the citizens of that town requested it. And Greyhound still maintains several flag stops in those small towns.

A DOT study recently completed in Florida indicates that small towns have not been deprived of bus service, because it is still available to them at a distance of 9 to 21 miles.

But the real winner in Florida has been charter bus service. And our State is unique from the standpoint that it is a high tourist economy. We were underserved in the charter bus service. The number of companies in Florida has swelled from 25 before deregulation to between 150 and 200 companies currently.

And rates have fallen. For instance, the average charter price for a roundtrip from Orlando to Tampa has fallen from $350 to $295. Senior citizens, in my opinion, have better access now to charter service. And tourism has substantially benefited in our State because of the increased availability and reduced prices.

The hotel and motel industry, Florida Attraction Association, the Florida Chamber of Commerce, have all overwhelmingly endorsed what has been occurring in Florida.

From all of this, I can confidently say that deregulation of the bus industry has benefited the people of Florida. We have seen increased service, reduced prices, enhanced business climate caused by the entry of small businessmen.

Service is gradually becoming available to small towns that had lost it after deregulation. Those routes that were profitable will receive service eventually.

Lifting restrictions on small size of packages that buses carry can provide further incentives for companies to continue to service small towns.

I see no reason for Congress to halfway deregulate the busing industry. Even half-regulation imposes a cost on the public and burdens on the industry that are not justified when measured against the benefits of full deregulation. The same kind of total phaseout used for airlines is suitable for the bus industry.

Should you decide to fully deregulate, which I urge you to do, please consider the impact on the industry of 49 States regulatory systems. For deregulation to be completely effective, Federal deregulation must be accompanied by State deregulation. Otherwise, the busing industry will be faced with continued regulation from the States.

We faced a similar situation in Florida. As the State got out, local governments began to proceed with the enactment of licensure and route restrictions. So the State of Florida found it necessary to preempt their power to do so. Florida's experience has shown that deregulation of the bus industry can work to the public benefit without harming the industry.

If it can work in Florida, I believe it can work throughout the country. The conditions in Florida are not so different from those elsewhere to make the State experience a fluke. Florida is a microcosm of the United States. We have sprawling ubran areas isolated from each other by wide expanses of farmland, dotted with small towns and rural communities.

Florida is not a small State. It takes longer to drive from the State capital, Tallahassee, to Miami than it does to drive from Boston to Washington, D.C.

If bus deregulation can work to Florida's advantage, I believe that that same experience can be repeated for the Nation. We have discovered that government is a very poor allocator of market resources. Its intrusion into the marketplace should be limited to only extreme situations and should come only as a last resort.

The interstate bus system is not such a situation. The Federal Government, by your action, can set an example for the rest of the country and free the bus industry from needless government regulation. And I believe that the consumer will be the beneficiary in the final analysis. Thank you.

Senator DANFORTH. Thank you very much, Mr. Sheldon. That was very good testimony.

Let me ask you this: How many communities in the past 2 years in Florida have seen their bus service discontinued as a result of deregulation?

Mr. SHELDON. The estimates I have seen indicate a total of about 15. Of those, I would estimate that about half of those have been picked up by other carriers.

Senator DANFORTH. Have you or your colleagues in the legislature witnessed any hue and cry as a result of that discontinuation? Mr. SHELDON. I have received no complaints as a result of smalltown loss of service. There was one newspaper article in the northern part of the State, wherein the city of, I believe it was, Apalachicola lost bus service. That bus was a Greyhound bus that went down once a week and picked up four people and brought them from Apalachicola to Tallahassee. There was a huge story, front page.

We went down and found no complaints from the citizens. As a matter of fact, a van service has now developed to fill that void. Senator DANFORTH. Senator Cannon.

Senator CANNON. Thank you, Mr. Chairman.

I want to be sure that I understand what you mean by "deregulation" in Florida. Are you talking about total, absolute, complete deregulation without any ill effects?

Mr. SHELDON. We sunsetted the entire regulatory scheme July 1 of 1980. And with the exception of safety-and that was immediate-it was a disagreement between the industry. And the legislature finally made the decision to end the entire structure.

Senator CANNON. And you did that also with the trucking deregulation; is that correct?

Mr. SHELDON. Yes.

Senator CANNON. Would your same assessment go for trucking deregulation?

Mr. SHELDON. Trucking has been slower, because I think it is a more cemented industry than the busing industry, and Florida was

really underserved. But in trucking, not one city lost service. And there has been a stabilization of rates in our State.

Senator CANNON. Now, you have suggested that we should have deregulation without halfway measures. If Congress is unwilling to go the entire distance, which reform measures or deregulation measures would you see it most essential to enact?

Mr. SHELDON. Well, I think primarily removal of restrictions on entry are essential. The busing industry, and I think Florida's experience demonstrates that, is a competitive industry. If you allow competitors into the marketplace, then you will see the competition in terms of rate structure.

Senator CANNON. Have you had a chance to review the House bill and the proposed administration recommendations?

Mr. SHELDON. Not to the extent that I would like to in terms of providing you with a direction as to which to take over the other. Senator CANNON. Now, later today we will be hearing from the National Association of Regulatory Commissioners. And they will stress the need for State regulation. Do you have any idea where the Florida Public Service Commission would come down on that issue?

Mr. SHELDON. The Florida Public Service Commission opposed us years ago when we eliminated regulations. It is very difficult for an agency to say the work they have been doing for 50 years is unimportant. So they did not say that.

However, their opinion today is that the action of the legislature-and I think I can speak for the entire Commission-is that the action of the legislature was appropriate.

Senator CANNON. So that they think it was a success?

Mr. SHELDON. Yes.

Senator CANNON. Thank you, Mr. Chairman.

Senator DANFORTH. Senator Long.

Senator LONG. No questions, Mr. Chairman.
Senator DANFORTH. Thank you very much.
Mr. SHELDON. Mr. Chairman, thank you.
[The statement follows:]

STATEMENT OF GEORGE SHELDON, FLORIDA STATE REPRESENTATIVE

Henry Browning thought he had a good idea. Many of his friends and neighbors were state workers who commuted from Perry to the State Capital in Tallahassee, even though it meant a 100-mile, two-hour round trip daily.

Henry Browing through that if he bought a couple of vans be could start a little bus service. He though he could save his neighbors gas money, aggravation from that long drive and make a little money for himself.

So in early 1980, Mr. Browning bought two vans.

But be forgot to think about the Public Service Commission. He didn't know he had to get its permission for his bus service.

Informed that he needed to get an operating certificate, Mr. Browning filed his application and paid the $500 fee. It hurt to pay that kind of fee. But if that was what it took to get started, all right.

Now that he had complied with the application requirements, where was his certification.

It was stalled. Two bus companies had contested his application. Although both bus companies served the Perry to Tallahassee run, neither ran at times convenient to the daily communters that Mr. Browning hoped to serve. He offered them no real competition. Except that Mr. Browning proposed to charge about half what the two bus companies did.

Mr. Browning had to hire a lawyer, spend a lot of money and wait several months. Then, he found that he was restricted to carrying only daily commuters