ing, to issue to such person a permit or certificate, whichever is appropriate, authorizing the continuance of its operations in conformity with the amended definition.

Section 12 (a) of the bill implements the recommendation of the Advisory Committee report relating to the filing of actual rates by contract carriers by motor vehicle by amending section 218 (a) of the act so as to require contract carriers to file rates, fares, and charges actually maintained and charged for the transportation by such carcarriers, or the actual contracts covering such transportation.

In view of the fact that the amendments made by section 10 (a) and section 12 (a) implement the same recommendation in the Advisory Committee report, relating to contract carriers by motor vehicle, such amendments will be discussed together.

REDEFINITION OF CONTRACT CARRIER BY MOTOR VEHICLE

The purpose of the amendment made by section 10 (a) is to assist the Commission in drawing a line of demarcation between contract carriers and common carriers by motor vehicle. Originally, the contract carrier made arrangements with a single shipper for specialized services which could not be supplied by common carriers. These arrangements were for a relatively long term, on an individual basis, and amounted in essence to a dedication of the carrier to needs of a single shipper, or perhaps a group of closely related shippers. However, some contract carriers at the present time have so many contracts that they are actually rendering services comparable to those offered by common carriers and are holding themselves out to serve any shipper willing to enter into agreements with them. The Interstate Commerce Commission pointed out in its 67th annual report, November 2, 1953, that it faced a difficult problem in drawing a line of demarcation between contract carriers and common carriers and said at page 116 that:

Experience indicates that many carriers who now hold authority as contract carriers are more properly to be classified as common carriers by reason of the nature of their present operations *

The Commission continued to call attention to this problem in its 68th annual report, November 1, 1954, and its 69th annual report, November 1, 1955, and recommended to the Congress in the latter report that it be empowered

to limit the person or persons and the number or class of persons for which a contract carrier by motor vehicle may logically perform transportation serv ices.

The term "contract carrier" was originally defined by the Motor Carrier Act of 1935 as a person other than a common carrier, who rendered transport service for hire "under special and individual contracts or agreements." The word "special" was omitted from the definition by the Transportation Act of 1940. However, as the Commission states in the report which it submitted to your committee on the bill now before you, it has interpreted the contract carrier definition as requiring some form of "special and individual" service different from ordinary transportation service, under bilateral contracts covering service over a period of time.

This position was first announced by the Commission in Pregler Extension of Operations (23 M. C. C. 691), in which it said at page 694:

As seen, a contract carrier is not only one who does not come within the definition of a common carrier by motor vehicle, that is, one who does not undertake to serve the general public, but one who also renders a transportation service for compensation "under special and individual contracts or agreements." This latter requirement is not merely that the transportation be performed under contract. Whatever the contract or agreement, it must be special and individual. It goes to the subject matter of the contract and means a special and individual service which is required by the peculiar needs of a particular shipper Contract carriage is a form of private car

riage

This position was amplified in Craig Contract Carrier Application (31 M. C. C. 705), in which the Commission stated that the term "contract carrier" was to be defined by applying the common-law test of whether or not there was a "holding out." The Commission added, however, that the "lack of one or the other forms of specialization above indicated conclusively negatives contract carriage as contemplated by section 203 (b) (15)."

The Commission further extended its position in Transportation Activities of Midwest Transfer Company (49 M. C. C., 383). Although the Commission admitted that it was prohibited by the provisions of section 209 (b) of the act from specifically limiting the number of contracts which contract carriers may hold, or the right of the carrier "to substitute or add contracts within the scope of the [its] permit," it concluded that a contract carrier could not add "so many contracts or substitute them so freely as to demonstrate that its service is available to the public and has been converted into what is in fact a public or common carrier service." The Commission further stated at page 404 that:

The right to add contracts is specifically limited by the statute to contracts "within the scope of the permit.' A permit authorized operation only as a contract carrier and when the number of shippers served or contracts held is such, either alone or with other considerations, as to show a common-carrier operation, it is clearly within our power to insist that the unlawful operation be discontinued even if it requires among other things a reduction in the number of contracts held.

As the Commission states in its report to your committee, a threejudge United States district court in Contract Steel Carriers, Inc., v. United States (128 F. Supp. 25), set aside the Commission's decision in Motor Ways Tariff Bureau v. Steel Transp. Co., Inc. (62 M. C. C. 413), applying the principles which the Interstate Commerce Commission had enunciated in the earlier cases. The court was of the opinion that the words "special and individual contracts or agreements" did not denote a specialized service required by the needs of a particular shipper, nor did they limit the number of contracts the carrier may have. The court said that the words simply required that:

a contract specifically negotiated with the particular shipper, the terms of which may or may not comport with other similar contracts held by the contracting carrier or other carriers of the same classification ***. "Special," in the phrase under discussion, distinguishes the personal relationship between the private carrier and each individual shipper from the impersonal relationship of the common carrier to each member of the general public who applies to him for service which he is required by the public nature of his undertaking to render indiscriminately.

The decision of the three-judge district court in the Contract Steel case was affirmed by the Supreme Court on March 12, 1956. The Supreme Court said in a per curiam opinion that:

the fact that appellee has actively solicited business within the bounds of his license does not support a finding that it was "holding itself out to the general public." A contract carrier is free to aggressively search for new business within the limits of his license. Because the ICC's order is not supported by evidence in the record and is contrary to the definitions of contract and common carriers in 303 (14) and (15), we affirm the district court.

The decision in the Contract Steel Carriers case would seem to make it even more necessary that the term "contract carrier by motor vehicle" be redefined if a definite and distinct line of demarcation is to be drawn between the activities of common and contract carriers. Under the decision the Commission would seem to be left without any power in this respect.

Although the redefinition proposed by section 10 (b) of the bill would not give the Commission authority to limit the number of contracts held by a contract carrier, it would require that the transporta

tion be

on the basis of bilateral contracts for specialized or individualized service or services equivalent to bona fide private carriage by motor vehicle.

The phrase "equivalent to bona fide private carriage" would place an additional limitation or safeguard on the "service or services to be furnished."

The Commission states in its report to your committee that, although it agrees generally with the purposes to be accomplished by the amendments, it is of the opinion that they will not accomplish the desired objectives. Specifically, the Commission criticizes the phrase "equivalent to bona fide private carriage" as being indefinite. It suggests in lieu thereof that the term "contract carrier" in section 203 (a) (15) of the act be defined so as to be applicable to one engaged in transportation

under continuing contracts with one person or a limited number of persons for the furnishing of transportation services of a special and individual nature required by the customer and not provided by common carrier.

In view of the decision of the Supreme Court in the Contract Steel case, the amendment by the Commission would seem to be preferable in the sense that it would limit the contracts of a carrier to "one person or a limited number of persons," but we question whether the words "and not provided by common carrier" should be applied as a part of the test.

FILING OF ACTUAL RATES OR PUBLICATION OF CONTRACTS BY CONTRACT CARRIER BY MOTOR VEHICLE

The purpose of the amendment made by section 12 (a) is to enable common carriers by motor vehicle to compete more effectively with contract carriers by motor vehicle who have greater flexibility in rates. Common carriers are required to publish their actual rates for the transportation of property and passengers, while contract carriers are only required to file their minimum rates. The common carrier does not know what his contract carrier competitor is actually charging and is at a distinct disadvantage in attempting to compete for the business which both of them are seeking to capture.

The Motor Carrier Act of 1935 originally required contract carriers to file only minimum rates. However, the act was amended by the Transportation Act of 1940 so as to require that contract carriers file minimum rates "actually maintained and charged." The amendment was added in order to enable common carriers to meet the difficulties which they faced. However, this has not been the result. The Interstate Commerce Commission has pointed out in various decisions that the minimum rates filed by the contract carriers are more in the nature of paper rates, and that they are not representative of the rates that are actually charged to shippers.

All that the Commission and the courts have required of a contract carrier filing a minimum rate is that such rate be actually maintained and charged by the carrier for the traffic of at least one shipper (Auto Transports, Inc., Suspension of Permit, 51 M. C. C. 600, Auto Transports, Inc. v. United States, 101 F. Supp. 132, affirmed, 343 U. S. 923). The carrier under such circumstances is free to charge higher rates to any other or additional shippers, among which it may pick and choose as it pleases. The true character of the rates actually charged by contract carriers is best described by the Commission itself. Speaking of a contract carrier's minimum rates, the Commission said in Petroleum Products, Wyoming Points to Missoula, Mont. (32 M. C. C. 453, at p. 455), that

A contract carrier's minimum rates, unlike common-carrier rates, do not represent a stated price for which a shipper can demand service. The minimum rates of contract carriers are, in fact, not rates at all in the commoncarrier sense of the term. They are simply a floor for the charges actually to be made, [Italic supplied.]

Obviously, if the competitive opportunity of common and contract carriers is to be put on a more realistic basis, the contract carrier's actual charges to shippers should be made public. The amendment proposed by section 12 (a) would accomplish this by requiring that the rates, fares, and charges actually maintained and charged" by the carrier be published, filed, and posted, or, in the alternative, that "the actual contract or contracts" of the carrier be published, filed, and posted.

The Commission states in the report submitted to your committee on the bill that it does not favor the amendment proposed by section 12 (a). It cites as the principal reasons for its position the fact that publication and posting of the rates actually maintained and charged, or the alternative publication of the contracts, would be inconsistent or in conflict with the provisions of section 220 (a) and section 222 (e) of the act.

We do not believe that publication of the rates actually charged, or of the contracts, would be inconsistent with the provisions of section 220 (a), since the affirmative provision for publication in this proposal would override the provisions of section 220 (a) in this respect. This section provides that the Commission may require contract carriers to file with it copies of their contracts, but the Commission is prohibited from making public any such contracts except as a part of the record in a formal proceeding where it considers such action consistent with the public interest. No amendment was proposed to the section for the reason that in those instances where the carrier files the rates actually charged rather than its contracts, the Commission

still might desire to have the contracts filed under the provisions of section 220 (a). Since publication of the rates actually charged would provide full disclosure with respect to the activity of the carrier, there would be no necessity for publication of the contracts. However, if your committee believes that there is any conflict, it can be overcome by changing the last sentence of section 220 (a) governing the publication of contracts to make it clear that the limitation on the publication of the contracts would not apply if the contract carrier elected merely to file his contracts and not his rates.

We also do not believe that publication and posting of contracts or the publication of actual rates would necessarily be in conflict with the provisions of section 222 (e). This section prohibits any motor carrier, including the contract carrier, from disclosing to any person other than the shipper or the consignee any information concerning the nature, kind, quantity, distinction, et cetera, of any property delivered to the carrier which may improperly disclose business transactions to a competitor. Information obtained from the publication of actual rates or contracts which are affirmatively required to be published under the provisions of the act would not appear to fall within the prohibition of section 222 (e). However, if your committee feels that there is a conflict, it can be resolved by inserting the words "Except as required by section 218 (a) of this act," at the beginning of the first sentence in section 222 (e).

The Commission also states in its report that in its opinion "no departure is warranted from the present policy of affording to shippers secrecy regarding their business transactions to the greatest extent possible." We do not agree since we feel that we have shown that this secrecy must be removed if common and contract carriers are to be placed on a truly competitive basis. There is one statement in this connection by the Commission which we desire to mention.

The Commission states with reference to contract rates higher than the minimum rate:

If other contracts contain rates above this minimum, the complainant (i. e. a competing carrier) is not harmed.

The fact is that a competing carrier is harmed by "rates above this minimum" for these are the rates that are actually being charged to shippers. The competing carrier may not be able to meet the minimum rate actually charged to one shipper, but he may very well be able to meet rates charged to other shippers if he knew what those

rates were.

CONTRACT CARRIERS (WATER)

Section 13 (b) of the bill implements the recommendation of the Advisory Committee report relating to a redefinition of the term "contract carrier by water" by amending section 302 (e) of the act. It would define the term as meaning any person which engages in transportation by water of passengers or property in interstate or foreign commerce for compensation (other than transportation by common carriers) on the basis of bilateral contracts for specialized or individualized service or services equivalent to bona fide private carriage by water, rather than on the basis of individual contracts or agreements. The amendments are similar to those proposed by seetion 10 (a) with respect to the definition of a "contract carrier by motor vehicle."