creases based on industry average carrier costs may seriously understate or overstate actual carrier costs.

Accordingly, we suggest that antitrust immunity with respect to single line rates be discontinued January 1, 1983. On January 1, 1984, such immunity for discussion and voting on general rate increases or decreases and broad tariff changes should be eliminated. Finally, we would recommend termination of immunity for discussion or voting on joint line rates on January 1, 1985.

ICC restrictions on exit from the industry have had a minimal effect in the past. The restraint on exit comes from individual State regulatory authorities. Thus, Federal reform proposals for exit have to deal with the potential problems that could result from divergent Federal and State policies.

The exit provisions of H.R. 3663 set up a procedure that would allow carriers to exit from unprofitable routes, or substantially reduce the service level, on the intrastate portion of a route for which they have both interstate and intrastate authority. Once the criteria in the bill are met, the Commission is required to grant the discontinuance or reduction in service unless a protestant can show that such action would not be consistent with the public interest or that continuance of service would not constitute an unreasonable burden on interstate or foreign commerce.

These procedures give passengers and communities notice of the discontinuance and allow an opportunity for protest. At the same time, carriers will have greater assurance concerning exit and compensation for serving unprofitable routes.

With flexible entry, rates and exit, it is likely that new carriers will be willing to provide service in instances where service has been discontinued. Failure to liberalize regulation of exit could effectively preclude new companies from entering the field. Thus, we consider the exit provisions central to this legislation.

While we strongly favor adoption of exit provisions similar to those in H.R. 3663, several additional suggestions on time frames and the test for exit are set forth in our testimony.

On the Federal-State relationships, in our view the legislation strikes an appropriate balance in this area. We believe the mechanisms in the bill and cooperative Federal-State study should ultimately result in greater uniformity and less need for use of the preemptive provisions.

Before concluding, I would like to comment briefly on several other provisions of the bill.

Certain provisions of H.R. 3663 would give the Commission the discretion to deny applications of Mexican and Canadian motor carriers if the Commission determines that Mexico or Canada, or pertinent governmental subdivisions of those countries, discriminate against U.S. carriers. The Commission would also be prohibited from issuing a license to a foreign carrier whose government does not grant authority to U.S. carriers.

This issue is of great concern to the Commission. We have recently instituted an investigation of the situation, and we have reopened certain pending cases to obtain additional evidence. While we do not object to the approach in H.R. 3663, it may be that we will have a separate recommendation at the conclusion of our investigation.

With respect to securities regulation, we advocate transfer to the Securities and Exchange Commission of jurisdiction over the issuance of securities, not only for motor carriers of passengers as proposed in H.R. 3663, but for all motor carriers.

I would also like to mention that on December 29, 1981, we submitted to Congress a proposal to eliminate publication of Federal Register notices of motor carrier applications and to substitute an in-house publication of those notices which would be available on a subscription basis. If this proposal could be included in the bus bill, it would result in substantial savings for the Commission.

Finally, I would reiterate our support for prompt enactment of bus legislation. The House bill, with changes such as those we have outlined today, will provide the intercity bus industry with essential reforms.

This concludes my prepared remarks. At this time, I will try to answer any questions that you might have.

Senator DANFORTH. Let me just ask you the most basic of all questions, Mr. Taylor. I have now been in the Senate for 5 years, and I have spent a lot of time traveling around my State talking to constituents. I cannot remember anybody ever asking me a question about intercity bus transportation. Maybe I will have to check my mail, but I do not think I get any complaints about it. Why are we doing anything at all?

Mr. TAYLOR. Well, I suppose the biggest reason is that everybody else has had a chance to sup at the deregulatory banquet. The bus industry feels they have some very serious problems in areas such as rate flexibility and in exit. In these areas there is a confusion with the State authorities.

I think

Senator DANFORTH. Let us suppose, just hypothetically, that a Senator is less interested in who sups at what table than what is in the best interests of his constituents, his people. What is wrong with the present system?

Mr. TAYLOR. I think you will have a better bus industry if we adopt this bill.

Senator DANFORTH. How about the people? Let's take the people of Rolla, Mo., how are they going to be better off with this legislation than they are now?

Mr. TAYLOR. I listened to some of the questions earlier, particularly Senator Pressler's, and as Senator Cannon knows, I am from the State of Nevada and we are very, very concerned about bus service to small communities.

We have a number of them in the State of Nevada. 80 percent of our people live in two urban areas and the rest of them are sprinkled around in small communities. It is absolutely true that people who ride buses are generally the old and the sick and the poor and the young, people who really do not have any other form of transportation.

Many of those-

Senator DANFORTH. Are we going to hurt those people?

Mr. TAYLOR. I do not think we will. I think you will encourage more service. I do not think there is going to be any problem on bus service to Rolla, anymore than there is to Ely, Nev.

91-998 0-82--6

We had a company by the name of Nevada Central that provided service to Ely for some period of time, and they eventually went out of business. There was a great hue and cry about how Ely, Nev. was going to be served. Their service was in jeopardy, and eventually a fellow came along that used to work for a former client of mine, LTR Stage Line, Inc., and he put together an operation and he is now providing service to Ely, Nev.

He is doing it in vans; he is not doing it in 45-passenger, $138,000 equipment, but Ely, Nev. is being served, and I think that sort of thing will happen.

Senator DANFORTH. You are talking about a small community which is currently served by interstate buses. As I understand it, with the proposed legislation, with varying degrees as to how far we go, it would be much easier after any bill is passed to just bypass the small community in the middle and provide service for the larger, more lucrative communities on either end.

Mr. TAYLOR. I do not believe that is so, Senator. To start off with, any service that is purely intrastate-

Senator DANFORTH. I am talking about interstate. Let us take a bus that goes from Tulsa to Ft. Leonard Wood, to Rolla, to St. Louis, to Chicago. Now, that would be covered by the bill, correct? Mr. TAYLOR. That is right.

Senator DANFORTH. Let us suppose that it is very lucrative from Tulsa to Ft. Leonard Wood to St. Louis to Chicago, but at the Rolla stop there are very few people who get on and off. The service is, however, very important to those few people.

Now, under the bill would it not be likely that that Rolla stop would be eventually abandoned?

Mr. TAYLOR. I do not think so, because I think the community of Rolla, if they wanted to, could come in and show that that is not an undue burden on interstate commerce. Exit is not automatic. When you get into this preemption area, you have to meet the tests that are in the bill. If they wanted to, the community could appeal or the Missouri Public Service Commission could appeal, and they could lay out all of those significant matters for us.

So, it is not just that we do not want to serve Rolla anymore, so apply to the ICC and service ends. It will not work that way under the statute.

Senator DANFORTH. Well, that is not my understanding. My understanding is that it would be easier under the bill, to abandon that intermediate stop. It would also be easier for a competitor to come in and provide faster service. Everybody would want to take the fastest bus from Ft. Leonard Wood to St. Louis, so they would not take the one that had the intermediate stop.

Mr. TAYLOR. Well, the difference is that today, the Missouri Public Service Commission, to the extent that that service is performed within the State of Missouri, would have some kind of handle on it, and with the preemption authority in the bill, the ICC could make the ultimate determination.

Senator DANFORTH. Why is that good?

Mr. TAYLOR. The point about it is that it is not just an automatic thing, it is not just a matter of the bus company coming in and saying to the ICC, we no longer want to serve Rolla. It does not work that way.

They have to come in and satisfy the standards of the legislation, and there is an opportunity for the communities to come forward and show that this is not an undue burden on interstate commerce, and that there is a public interest use consideration involved, and that therefore, the service should be continued.

Of course, the Commission would take all of those things into account.

Senator DANFORTH. Senator Pressler?

Senator PRESSLER. Thank you, Mr. Chairman. Basically, you are talking more about Greyhound and Trailways, but I would like your assessment of what you think bus deregulation will do to the small carriers.

Mr. TAYLOR. Well, for years, Senator, I represented a small carrier, Las Vegas and Reno Stage Line, Inc. I do not know how they feel about the specific piece of legislation, but I have to say that I believe small carriers will benefit from this legislation, and I think that there is a record for supporting it.

I do not believe this is just a Greyhound-Trailways proposal. The entire bus association, as I am sure you are going to hear later in the day, is of one mind on this thing and they are here to support the legislation.

I think it will be beneficial to small companies as well as big companies, and I think it will also benefit some new companies. Perhaps we will get some new companies in the business that we have not had before, and we will have some additional competition for Greyhound and for Trailways, and I think that is a good thing. Senator PRESSLER. I also was pleased with Senator Danforth's statement. No one has ever talked to me about bus service. And when I was first in Congress in 1974, in those first years, no one ever talked to me about airline service. But since we have had airline deregulation, everybody talks to me about it. So I hope this same pattern does not follow with buses.

Now, Mr. Taylor, last fall in a speech to the American Bus Association, you stated that a priority concern for the Commission would be, "the continuation of scheduled regular service to small or rural communities." Now, I want to talk about small carriers. I am not talking about Greyhound and Trailways.

How do you think H.R. 3663 addresses this concern, and what steps will the Commission take to insure rural bus service?

Mr. TAYLOR. Well, I got into some of that discussion with Senator Danforth earlier. And I think your concern is in the area of exit and the fact that up until now, the States have done a fairly good job in not allowing firms to exit even if there are only two or three people on the bus and it is not operating profitably.

I do not really think that is a very healthy situation, and yet I have the same concern that you do, Senator, for a small community because I come from a State where we have a lot of them.

But service is very important, particularly to people who have no other mode of transportation available. An example in my State would be an Indian, for example, who wants to get up to the medical center. If he does not ride an LTR bus, he probably does not go. So I have a great concern about that kind of service as well and I think it is terribly important that we retain it.

But I think you have in this legislation a very fine balance and that we will see that service to small communities is not disrupted. As the Secretary pointed to the Florida experience under deregulation, I would do the same. I do not think they have had problems with it, and I do not think that we need anticipate any problems under this legislation.

As I explained to Senator Danforth, if you have a small community that feels it is going to be disadvantaged by the elimination of service, that small community has the right to make a presentation to the Commission to say that it is not an undue burden on interstate commerce, that the service is needed and necessary, and obviously, I think we are going to take those things into account.

Now, I cannot offer you any guarantees. I know your question to the Secretary included that word, and there are not any guarantees. But as far as I can tell-and I have a great concern for retaining important bus service to small communities-I do not think this bill will jeopardize that service.

Senator. PRESSLER. Thank you, Mr. Chairman.

Senator DANFORTH. Senator Cannon?

Senator CANNON. Do you have any reform initiatives that you plan to undertake in the absence of legislation or without waiting for this legislation?

Mr. TAYLOR. Reform generally, or just insofar as the bus industry is concerned?

Senator CANNON. Yes, to go along the lines of what we are talking about here in the event that Congress does not act. What do you plan in that area?

Mr. TAYLOR. Well, generally, Senator, we have been involved in a very heavy regulatory reform program at the Commission. We began that last July. It is not just aimed at the bus industry as such, but to all areas where the Commission has adopted rules or regulations. After carefully reviewing these rules and regulations, the Commission has determined that some are either no longer necessary or are unduly burdensome.

We have targeted over 150; 76 are intended for the funeral pyre relatively soon, with at least 40 of them to be acted upon by September. They are not just bus industry matters, however. They apply to the entire spectrum of the ICC's regulatory jurisdiction.

Senator CANNON. What has been your experience with respect to complaints about loss of service in rural areas caused by trucking deregulation?

Mr. TAYLOR. We really so far have not had a problem with that. Now, there is a three-phase study that is going on, which I believe should be completed in September 1982.

The first phase indicated that there really had not been a problem insofar as trucking service to small communities was concerned. However, this phase was conducted only over a 6-month period immediately following passage of the Motor Carrier Act. We should have a better picture when all three phases are complete. We also have the Florida experience. I plan to go and talk to the Florida Public Service Commission to see firsthand what has happened. But at this time we see no indications of problems there.

And I do not think we really have problems elsewhere. And I would expect that that kind of result, insofar as trucking service to small communities is concerned, gives us some indication that we