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COMPTROLLER GENERAL OF THE UNITED STATES,

Washington, June 30, 1955. Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce,

House of Representatives, Washington, D. C. DEAR MR. CHAIRMAN: Reference is made to your letter dated May 11, 1955, with which there was enclosed a copy of bill H. R. 6141. You request a report together with any comment we may desire to make concerning this proposed legislation.

We understand that this bill is identical to bill S. 1920, introduced in the United States Senate on May 9, 1955. These bills are designed to implement the recommendations made to the President in a recent report by the Presidential Advisory Committee on Transport Policy and Organization, which was endorsed by the President when released on April 18, 1955. While H. R. 6141 is in the form of a single bill, there is included a series of important proposed changes in the Interstate Commerce Act, which apparently will have far-reaching effect upon the transportation industry and the users of transportation services. The preparation of a detailed report on all of the proposed changes in the Interstate Commerce Act would entail extensive study. It has been said that many of these changes are highly controversial and that extensive hearings are contemplated before any of the proposed changes can be enacted into law. Our pointments are limited to those provisions of H. R. 6141 which would seem to have a direct influence upon the United States Government in its capacity as a deer of transportation services.

Sertion 9 of the bill would amend section 22 of the Interstate Commerce Act, as amended by eliminating “the United States, State, or municipal govtonments" from the classes of shippers as to which section 22 provides that Dothing in part I of the act shall prevent the carriage, storage, or handling of property free or at reduced rates. It would eliminate also a similar provision of section 22 with respect to the transportation of persons for the United States free or at reduced rates. Section 8 of the bill would amend section 12 of the Interstate Commerce Act, as amended, so as to include in paragraph 15) of section 15a a provision which would authorize the establishment, mainteDadre, publication, and application of "rates, fares, charges, and rules and regt'ations of special application" for transportation service to the United States, States, and municipal governments. It is apparent that the mentioned proFision of section 8 of the bill is intended to preserve for the benefit of the desigmated classes of shippers at least some of the current benefits of section 22 of the Intertate Commerce Act, which would be eliminated by the enactment of xation 9 of H. R. 6141.

It is our view that the exclusion of the United States from the benefits of Bertion 22 is not required in the public interest, and we have recommended in a report dated March 17, 1955, against the enactment of another bill, H. R. 25 which was designed to accomplish that result. This view was predicated ipin the fact, among others, that the proposed amendment of section 22, without the inclusion elsewhere in the act of a compensating or mitigating provision, #old greatly increase the cost of Government operation. In that connection atration is invited to the fact that in a letter dated April 30, 1952, the Assistant Serretary of Defense, Charles A. Coolidge in reporting to the Committee on Interstate and Foreign Commerce, United States Senate, upon a bill then pending. estimated that annual Department of Defense costs would be increased by Ire than $1 million for transporting household goods alone, if the United Satu were to be excluded from the benefit of section 22 of the Interstate ('omDerre Act in relation to that commodity only. Later information, in letter of Iberember 10, 1953, from the Department of Defense to this Office, is to the tert that a subsequent statistical study of all movements of household goods by motor carriers shows that, if all traffic were required to move under rates frrorided in M. F.-I. C. C. No. 57, rather than at rates provided in other tariffs artnally used apparently by virtue of section 22 agreements, an increase of $11142 million annually in cost to that Department would result. It is believed here that the probability of rates being obtained below a compensatory level, as to any considerable amount of traffic, if any, under the authorization of section 2. is sufficiently negatived by the fact that the authorization in section 22 is permissive and not mandatory and by the further fact that the interests of perforting carriers would not seem to be served by any consistent policy of furnishing Government transportation at a loss.

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Obviously section 8 of the proposed bill, if its apparent purpose to afford the Government reduced rates is assured would compensate in some degree at least, for advantages that would be lost through the exclusion of the United States from the permitted concessions authorized in section 22. It is noted, however, that the authorization mentioned in section 8 of the bill extends only, in its terms, to rates, fares, charges, etc., "of special application" for transportation service to the United States, States, and municipal governments, and requires that such rates shall be subject with certain specified exceptions, “to all other applicable provisions of the Act." It is assumed it is the purpose of this provision to remove the rates, fares, etc., as so authorized, from attack on the grounds of being unjustly discriminatory or preferential when lower than other regularly established rates applicable commercially, but the omission from the bill of any express authorization of "reduced” rates for Government traffic and the indefiniteness possible of attachment to the phrases “of special application" and "all other applicable provisions" (emphasis supplied) are considered as justifying the suggestion that, if section 22 is to be amended so as to exclude the United States from its provision, then the authorization to be afforded under section 8 of the bill should be made clear as permitting reduced rates for Government traffic and providing that any discrimination in favor of the United States is not subject to attack per se. It would seem that, even with these specific provisions, section 8 of the bill, if enacted, would still require that such rates be subject to the minimum and maximum rate provisions of the bill.

It would seem, also, that the provision in section 8 of the bill, making the rates on Government traffic subject to all other applicable provisions of the act, except as specifically provided by section 8 of the bill, would render questionable whether the provisions of section 16 of the Interstate Commerce Act might not be considered as applicable to proceedings instituted by the Government. We considered the question of a proposal to prescribe limitations upon actions involving rates upon Government traffic in a report to the Committee on Interstate and Foreign Commerce, United States Senate, May 31, 1955, upon bill S. 543, and we expressed the view that any limitation of less than 3 years for instituting proceedings before the Interstate Commerce Commission to seek reparation as for unreasonable rates, with respect to transactions occurring during times of emergency, would be wholly inadequate to the due protection of the Government's interests. It is believed proper also to call attention to the fact that if the provisions of section 16 of the Interstate Commerce Act, with respect to limitations upon suits to recover overcharges, were to be considered applicable to the Government, the incongruous result would ensue that under judicial interpretations of section 16 of the act the carriers would be permitted 6 years within which to bring suit against the Government for collection of undercharges, as compared, with the shorter period of 2 years prescribed in section 16 with respect to suits by shippers for recovery of overcharges. It is believed the provisions of the bill should be clarified in this respect. We have no other recommendations to make at this time. Sincerely yours,

FRANK H. WEITZEL, A88istant Comptroller General of the United States.

DEPARTMENT OF THE ARMY,

Washington, D. C., April 24, 1956. Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce,

House of Representatives, Washington, D. C. DEAR MR. PRIEST: Reference is made to your request to the Secretary of Defense for the views of the tment of Defense with respect to H. R. 6141, 84th Congress, a bill to amend the Interstate Commerce Act, as amended, so as to provide for a stronger national transportation industry, and for other purposes. The Secretary of Defense has delegated to the Department of the Army the responsibility for expressing the views of the Department of Defense.

The purpose of H. R. 6141 is to carry out recommendations made by the Presidential Advisory Committee on Transport Policy and Organization in its report released by the White House on April 18, 1955. The Department of Defense is interested in the effect that such legislation would have on the movement and cost of military traffic, and upon the the effect it might have on the health of a national transportation system adequate to meet the needs of national defense.

Both interests are considered quite important. The comments in this report deal almost wholly with implementive particulars. The Secretary of Defense participated in the basic study of the existing regulatory scheme and was well aware of the need to (a) strengthen the common-carrier transportation industry, and m) to relax the shackles of regulation so that competitive forces, which have played such a vital part in the development of this country, would again assert themselves in the transportation industry. The proposed legislation is designed to accomplish these objectives and, in principle, has the wholehearted support of the Department of Defense.

The Presidential Advisory Committee recommended removal of the requirement for prior approral (italic sic] for departure from both the long-and-short-haul elause and the aggregate-of-intermediates clause, appearing in section 4 of the act Section 4 of the bill (p. 5, line 21, et seq.) makes two principal changes in section 4 of the act:

(a) Repeals the aggregate-of-intermediates clause without any replacement.

di Permits departure from the long-hand-short-haul clause if necessary to meet actual competition and if the charge to or from the more distant point is Dot less than a just and reasonable minimum charge.

Various reasons, other than competition, may be ascribed for the establishIL-nt of rates which when aggregated result in a rate lower than the through rate tn. from, and between specified points. Consequently, outright unconditional repeal of the aggregate-of-intermediates clause will permit carriers to (a) raise many through rates to exceed the aggregate of intermediates, (6) continue, when located, through rates higher than the aggregate of intermediates, and (c) establish new rates in excess of the aggregate of intermediates. Maintaining a through rate higher than the aggregate of intermediates cannot be justified on any ground except where one or all of the factors making up the aggregate of intermediates have been established to meet some type of competition. In general, rates are limited to the aggregate-of-intermediate rates merely by the insertion of a clause in tariffs. To repeal the aggregate-of-intermediates clause, leavng shippers only recourse under other provisions of the act, is likely to work id quities and unduly increase litigation under section 3 of the act without accomplishing any substantial improvement in regulation as a whole. It may also Focourage travelers and shippers to adopt or attempt various devices to interrupt their travel, or the transportation of their goods, so as to obtain the benefit of the eum of the intermediate fares or rates, a result not in the direction of transportathat efficiency or orderliness.

The proposed outright exceptions to the long-and-short-haul clause (p. 6, lines 7-12 of the bill) also go beyond the intent of the recommendations of the Presidential Advisory Committee. However, the conditions established conform to thrise named in those recommendations and coincide with standards under which tb- loterstate Commerce Commission today generally grants relief from the longald-short-haul provisions. Apparently, the proviso in section 4 of the bill intends to preserve all standards and remedies provided in other sections of the act. However, under the principle, expressio unius est exclusio alterius, construction of the act could become uncertain because of this proposed proviso. In order to remove the possibility of varying legal construction in this connection, it is sacgested that the imposition or a lesser charge for longer than for shorter hauls bestbjert to the standards of lawfulness set forth in other sections of the act.

The following quoted paragraph is suggested to meet the objections of the Prh eding paragraphs. Except for the italicizing of the phrase "Provided, howEter," italic indicates additions with respect to the aggregate of intermediates and the long- and short-haul clauses.

“SEC. 4. Paragraph (1) of section 4 of the Interstate Commerce Act, as aner.ded, is amended to read as follows:

***11) It shall be unlawful for any common carrier subject to this part or part III to charge or receive any greater compensation in the aggregate for the transIrtation of passengers, or of like kind of property, for a shorter than for a longer distance over the same line or route in the same direction, the shorter being in(luded within the longer distance, or to charge any greater compensation as a Through rate than the aggregate of the intermediate rates subject to the provi. sums of this part or part III ercept in cases where any or all of the single factor rites used to make up the aggregate-of-intermediates rate has been established by the carrier to meet competition, but this shall not be construed as authorizing any common carrier within the terms of this part or part III to charge or receive as got compensation for a shorter as for a longer distance :Provided, however, that such common carrier may charge less for longer than for shorter distances for the transportation of passengers or property if the charge established to or from the more distant point (a) is necessary to meet actual competition of another carrier or carriers, (b) is not less than a just and reasonable minimum charge, and (c) is not otherwise in violation of this part or part III.'"

In line 16, page 7 of the bill the word "interstate“ should be “intrastate."
On page 14, line 2, the word "mode" should be "made."

The proposed new section 15a (5) (p. 15, line 10, et seq.) which supersedes section 22 of the act provides for transportation service to the United States Government. It would appear reasonable and consistent with the authorization for rates, fares, charges, and rules and regulations of special application to substitute the word "for” for the word “to” mentioned above. It is therefore recommended that the said first sentence be changed to read as follows:

“The establishment, maintenance, publication, and application of rates, fare, charges, and rules and regulations of special application to transportation services for the United States, State, and municipal governments by carriers subject to this Act is hereby authorized.”

On page 16, line 21 of the bill, the words "tenders or" should be added before the word "contracts." This change is required by the fact that very few actual contracts providing for free or reduced rates exist, whereas, thousands of unilateral rate tenders have been filed under section 22 of the act.

The fiscal effects of the bill cannot be estimated. This report has been coordinated among the departments in the Department of Defense in accordance with procedures prescribed by the Secretary of Defense.

The Bureau of the Budget advises that there is no objection to the submission of this report for the consideration of Congress. Sincerely yours,

WILBER M. BRUCKER,

Secretary of the Army.

OFFICE OF THE POSTMASTER GENERAL,

Washington, D. O., November 17, 1955. Hon, J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce,

House of Representatives, Washington, D. C. DEAR MR. CHAIRMAN : Reference is made to your request for a report on H. R. 6141, a bill to amend the Interstate Commerce Act, as amended, so as to provide for a stronger national transportation industry, and for other purposes.

This bill is related to the transportation of persons and property by railways, motor carriers, and water carriers, and has but limited relation to the transportation of mail.

Section 8 of this bill would amend section 15a of the Interstate Commerce Act so as to provide, among other things, for the "establishment, maintenance, publication, and application of rates, fares, charges, and rules and regulations of special application for transportation service to the United States, State, and municipal governments by carriers subject to this act' subject to certain conditions. The provisions of law embodied in section 542, title 39, United States Code, authorize the Interstate Commerce Commission to fix rates for the transportation of mail by railways. Rates so fixed, however, do not apply to mails transported under special arrangements in freight trains, for which rates not exceeding the usual and just freight rates may be paid (39 U. S. C. 555). Hence, section 15a of the Interstate Commerce Act, as it would be amended by this legislation, would open up a possibility that carriers would file special freight rates for transportation service to the United States, lower than comparable rates for other shippers, which rates would be available to this Department, for bulk shipment of mail by freight. At the present time, limited use is made by this Department of this authority to ship mail at freight rates.

Section 9 of this bill would amend section 22 of the Interstate Commerce Act by deleting the United States as one of the parties to whom common carriers may offer free carriage or reduced rate for the transportation of persons or property. However, no change would be made in the provisions of law embodied in section 1 (7), title 49, United States Code, wherein free transportation is authorized for "railway mail-service employees and persons in charge of the

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mails when on duty and traveling to and from duty, and all duly accredited agents and officers of the Post Office Department and the Railway Mail Service and post-office inspectors while traveling on official business, upon the exhibition of their credentials * # *." Thus, this bill does not affect the existing authority for free transportation of postal agents and officers traveling on official business.

This bill does not affect the authority of the Postmaster General to enter into contracts with railway common carriers for the transportation of mails, which is embodied in sections 565 and 571, title 39, United States Code, and section 65 (a), title 49, United States Code.

The Interstate Commerce Commission does not exercise control over rates for the transportation of mail by motor carriers or water carriers, and this bill does not affect the Postmaster General's authority to contract with such carriers.

It is not believed that the enactment of this legislation would have any appreciable effect upon the revenues or expenditures of this Department.

In view of the foregoing, this Department would interpose no objection to the enactment of this legislation.

In advising this Department with respect to its report to the chairman of the Senate Committee on Interstate and Foreign Commerce on S. 1920, a bill identical to H. R. 6141, the Bureau of the Budget stated that there would be no objection to the submission of the Department's report to the committee. Sincerely yours,

MAURICE H. STANS, Acting Postmaster General.

EXECUTIVE OFFICE OF THE PRESIDENT,

OFFICE OF DEFENSE MOBILIZATION,

Washington, D. C., October 28, 1955. Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce,

House of Representatives, Washington, D. O. DEAR ME PRIEST: Reference is made to your letter of October 25 in which you request our comments concerning H. R. 6141, a bill to amend the Interstate Commerce Act, as amended, so as to provide for a stronger national transportation industry, and for other purposes.

Inder conditions of full mobilization the transportation system of the United States would be under a severe and heavy burden and it is important that any Beberal transportation policy be designed to strengthen as soon as possible the various elements of that system so that they would be better equipped to handle ibat load. All segments of the transportation system have important emergency rules and should be economically capable of providing the maximum service and the technical development needed in time of war.

The report of the Presidential Advisory Committee on Transport Policy and (irzanization recognized that a strong and flexible transportation system is in the best interest of national defense and recommended a number of measures designed to achieve that objective. The provisions of H. R. 6141 appear to Fetet those recommendations for strengthening the system and we would be in faror of its enactment.

The Bureau of the Budget advises that it has no objection to the submission of
this report.
Sincerely yours,

ARTHUR S. FLEMMING, Director.
DEPARTMENT OF JUSTICE,

June 20, 1956.
Ho, J. PERCY PRIEST,
Chairman, House Interstate and Foreign Commerce Committee,

House of Representatives, Washington, D. C. DEAR ME. CHAIRMAN: It has come to the attention of this Department that Fotir committee is conducting hearings at the present time on H. R. 525, a bill designed to amend section 22 of the Interstate Commerce Act, as amended, and for other purposes. The bill would repeal that part of section 22 of the Interstate Commerce Act which enables the various Government agencies, particularly the Department of Defense, to negotiate rates for the carriage of Government property with the various classes of carriers.

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