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Since the foregoing provision became effective in 1920 it has been the practice of the Commission to specify in its rate orders that they shall continue in effect until the further order of the Commission. However, a continuous check of the older orders is carried on with a view to vacating those which have become obsolete.

Under section 25 of H. R. 6141, all outstanding orders, including those of both recent and remote dates, would automatically expire upon the publication and filing of such rates as carriers might choose to establish in lieu of those required by existing orders. The new rates would, of course, be subject to the proposed limited suspension powers or attack on complaint, the decision on which would be governed by the new rules of ratemaking proposed in H. R. 6141.

Similarly, if carriers subject to section 4 were to publish rates in lieu of those subject to outstanding orders issued under that section such orders would there upon become nugatory. The carriers would, of course, lose the benefit of the protection afforded by those orders.

Section 25 apparently would tend to throw a heavy burden of litigation on the carriers and shippers, as well as the Commission. Outstanding orders in many instances require the maintenance of numerous rate adjustments which have been established after exhaustive proceedings before the Commission, the most notable example being the uniform class-rate system in effect throughout the country east of the Rocky Mountains. The enactment of section 25 would enable the rail carriers, if they so desired, to substitute a completely new system, subject to the limited suspension period of 3 months, which would be wholly inadequate for consideration of the substitute. The present system was arrived at in the light of facts presented to the Commission by the railroads, shippers, and others in the expectation that the result would have some degree of permanence and would not be changed until a clear need for modification appeared. by The legislative policy of the Congress has always been understood to be one of reluctance to pass laws having retroactive effect in the absence of strong reasons therefor. We believe that no such reasons exist in the present instance and are therefore opposed to the enactment of section 25.

SECTION 26

No comments on this section are necessary.

INTERSTATE COMMERCE COMMISSION,

Washington March 16, 1955. Hon J. PERCY PRIEST, Chairman, Cominittce on Interstate and Foreign Commerce,

House of Representutives, Washington, D. C. DEAR CHAIRMAN PRIEST: Your letter of February 3, 1955, requesting a report and comment on a bill, H. R. 525, introduced by Congressman Hinshaw, to amend section 22 of the Interstate Commerce Act, as amended, and for other purposes, has been given careful consideration by the Commission, and I am authorized to submit the following comments:

Section 22 of the act now permits “the carriage, storage, or handling of property free or at reduced rates for the United States, State, or municipal governments," or for certain charitable purposes, and allows "the transportation of persons for the United States Government free or at reduced rates." The section also permits the issuance of mileage, excursion, or commutation tickets and provides for giving reduced rates to specified persons connected with religious, charitable, or governmental organizations, as well as armed services personnel, free carriage to their own employees by railroads, etc. The provisions of section 22 are made applicable to motor common carriers by section 217 (b), to water common carriers by section 306 (c), and to freight forwarders, as to transportation or service in the case of property, by section 405 (c).

H. 1. 525 proposes to amend section 22 by striking from the first clause of the first sentence thereof the words "for the United States, State, or municipal governments, or” and the words "or the transportation of persons for the United States Government free or at reduced rates,". If enacted, the bill would, in effect, eliminate the granting of reduced rates for transportation of Government property or personnel, except in certain minor respects such as armed service personnel traveling while on furlough.

JUSTIFICATION

The attached draft of proposed bill is intended to amend section 4 (1) of the Interstate Commerce Act so as to remove therefrom all unnecessary and unduly burdensome refinements of the long- and short-haul principle, which principle was originally designed to prevent the specific discriminatory practice of charging more for a shorter than for a longer haul. That principle is still valid today. I

Section 4 (1) of the act now prohibits any common carrier subject to part I or part III thereof from charging or receiving any greater compensation for the transportation of passengers, or 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 included within the longer distance, or from charging any greater compensation as a through rate than the aggregate of the intermediate rates subject to the provisions of part I or III. It further provides that upon application the Commission may, in special cases, after investigation, authorize such carriers to charge less for the longer than for the shorter distances, and that the Commission may from time to time prescribe the extent to which such designated carrier may be relieved from the operation of the section, except that in exercising such authority the Commission shall not permit the establishment of any charge to or from the more distant point that is not reasonably compensatory for the service performed.

The proposed amendment is specifically designed to make the fourth section self-operating with respect to the right of a circuitous route to meet the rate or rates legally established between competitive points over the more direct routes. Vo further authorization from the Commission would be required other than the standards laid down by other sections of the act. As an incident of this suggested change we are proposing to remove from section 4 the so-called reasonably compensatory provision. This, in our opinion, would eliminate from section 4 all of the unnecessary refinements of the long- and short-haul principle. would terminate our responsibility with respect to fourth section departures over circuitous routes, and would limit our jurisdiction to authorizations of relief over direct routes, upon application and after investigation, where special justification for such relief is shown.

Experience has demonstrated that the public interest is not being served by the imposition of the restrictions in question. The history of their administration has proved them to be excessively burdensome to all concerned. Together they bare resulted in disproportionate expenditures of time, labor, and funds by both the carriers and the Commission in comparison with the relatively small benefits derived. Moreover, almost all of the dissatisfaction with section 4, which is expressed periodically by carriers and shippers alike, appears to stem from the same burdensome provisions.

Section 4 has been highly controversial since its inception both as to its substantive provisions and as to the manner and extent of its administration. In implementing this section the Commission initially adopted a vigorous policy, but due to the early attitude of the courts, especially the narrow interpretation given the words "under substantially similar circumstances and conditions” (which were contained in the original act) in I. 0. C. v. Alabama Midland Ry. Co. (168 V. S. 144 (1897)), the Commission was compelled to abandon at least temporarily, its forceful approach.

The enactment of the Mann-Elkins Act, June 8, 1910, however, gave new life to the section by eliminating the phrase "under substantially similar circumstances and conditions," and, as set forth in that act, section 4 appeared to contain all the essentials necessary for effective and efficient administration. The Transportation Act of 1920, however, added two refinements; viz, the “reasonably compensatory” provision and the so-called equidistant provision which proved to be troublesome. The latter provision was repealed by the Transportation Act of 1940, at which time the "reasonably compensatory” provision did not appear to he quite so objectionable by comparision. In retrospect, however, it is now equally clear that the carriers should not be required to secure our permission for the publication of rates over circuitous routes equivalent to the going rates over direct routes when in their managerial discretion such rates are necessary because of competitive factors.

The Commission is now firmly of the view that the “reasonably compensatory" provision no longer serves any useful purpose, and that it may well be eliminated from section 4 without jeopardizing the public interest. And, in this connection, we wish to point out that under other sections of the act the Commission is constantly seeking assurance that all rates subject to its jurisdiction, including

a bill which would make section 22 contracts binding on both parties, in the absence of fraud or clear error. We believe such amendments would, to a great extent, remove the causes of much of the present criticism of practices under this section.

Three members of the Commission favor the enactment of H. R. 525. One of the members of the Commission setting forth his views in a separate statement.

We do not recommend the enactment of H. R. 525 at this time.
Respectfully submitted.

RICHARD F. MITCHELL,

Chairman.

COMMISSIONER CROSS' SEPARATE VIEWS

This bill, in my judgment, does not provide a complete solution with respect to free transportation or reduced rates for governmental bodies. In addition to these exemptions, there are other exceptions written into the act which, when computed together, allow too many preferential and free riders. These burdens upon carriers are emphasized now that passenger deficits have amounted to such staggering proportions. I believe that a full study of the section 22 exemptions should be made to enable the Congress to approach the situation objectively, rather than merely to rescind the reduced rates provision as to the United States, State, and municipal governments as proposed in this bill. This matter is of magnitude and, in my opinion, fully warrants a thorough study by Congress as to the present day needs respecting the furnishing of transportation free or at reduced rates. Except in the case of war or any other national emergency the United States, State, or municipal governments should not be accorded reduced rates. It is reasonable to assume that the differences between the published tariff rates and such reduced rates in a large measure must be passed on to the shippers of commercial traffic or the users of passenger service. In view of the necessity of maintaining relatively high rates in order to provide adequate revenues for the carriers, I believe the national transportation policy would warrant the restriction of reduced rates to these agencies only during a period of national emergency. Furthermore, rates agreed upon under section 22 should be binding on both parties, in the absence of fraud or clear error.

I also call attention to section 1 (7) of the act which relates to free passes and free transportation.

Hugh W. Cross.

(NOTE.—The following recommendation for legislation was introduced as H. R. 6208 and is submitted as the Commission's report thereon :)

INTERSTATE COMMERCE COMMISSION,

Washington, May 3, 1955. Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce,

House of Representatives, Washington, D. C. DEAR CHAIRMAN PRIEST: I am submitting herewith for your consideration 20 copies of a draft of bill to amend section 4 of the Interstate Commerce Act, together with a statement of justification of the bill.

After an intensive review of the operation of the fourth section of the act, with particular reference to its impact on the work of the Commission and the ratemaking function of the rail carriers, the Commission has come to the definite conclusion that this section should be amended so as to eliminate therefrom all unnecessary refinements of the long- and short-haul principle, but at the same time retain the central objective of the fourth section, i. e., departures from the longand short-haul principle over direct routes.

The Commission would be very grateful for your assistance in introducing the
bill and giving it early consideration.
With kindest regards, I remain,
Sincerely,

RICHARD F. MITCHELL, Chairman. Enclosures.

JUSTIFICATION

The attached draft of proposed bill is intended to amend section 4 (1) of the Interstate Commerce Act so as to remove therefrom all unnecessary and unduly burdensome refinements of the long- and short-haul principle, which principle was originally designed to prevent the specific discriminatory practice of charging more for a shorter than for a longer haul. That principle is still valid today. I

Section 4 (1) of the act now prohibits any common carrier subject to part I or part III thereof from charging or receiving any greater compensation for the transportation of passengers, or 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 included within the longer distance, or from charging any greater compensation as a through rate than the aggregate of the intermediate rates subject to the provisions of part I or III. It further provides that upon application the Commission may, in special cases, after investigation, authorize such carriers to charge less for the longer than for the shorter distances, and that the Commission may from time to time prescribe the extent to which such designated carrier may be relieved from the operation of the section, except that in exercising such authority the Commission shall not permit the establishment of any charge to or from the more distant point that is not reasonably compensatory for the service performed.

The proposed amendment is specifically designed to make the fourth section self-operating with respect to the right of a circuitous route to meet the rate or rates legally established between competitive points over the more direct routes. No further authorization from the Commission would be required other than the standards laid down by other sections of the act. As an incident of this suggested change we are proposing to remove from section 4 the so-called reasonably compensatory provision. This, in our opinion, would eliminate from section 4 all of the unnecessary refinements of the long- and short-haul principle. would termiDate our responsibility with respect to fourth section departures over circuitous routes, and would limit our jurisdiction to authorizations of relief over direct routes, upon application and after investigation, where special justification for such relief is shown.

Experience has demonstrated that the public interest is not being served by the imposition of the restrictions in question. The history of their administration has proved them to be excessively burdensome to all concerned. Together they have resulted in disproportionate expenditures of time, labor, and funds by both the carriers and the Commission in comparison with the relatively small benefits derived. Moreover, almost all of the dissatisfaction with section 4, which is expressed periodically by carriers and shippers alike, appears to stem from the samne burdensome provisions.

Section 4 has been highly controversial since its inception both as to its substantive provisions and as to the manner and extent of its administration. In implementing this section the Commission initially adopted a vigorous policy, but due to the early attitude of the courts, especially the narrow interpretation given the words "under substantially similar circumstances and conditions” (which were contained in the original act) in 1. 0. C. v. Alabama Midland Ry. Co. (168 T. S. 144 (1897)), the Commission was compelled to abandon at least temporarily, its forceful approach.

The enactment of the Mann-Elkins Act, June 8, 1910, however, gave new life to the section by eliminating the phrase “under substantially similar circumstances and conditions," and, as set forth in that act, section 4 appeared to contain all the essentials necessary for effective and efficient administration. The Transportation Act of 1920, however, added two refinements; viz, the "reasonably compensatory” provision and the so-called equidistant provision which proved to be troublesome. The latter provision was repealed by the Transportation Act of 1940, at which time the “reasonably compensatory' provision did not appear to be quite so objectionable by comparision. In retrospect, however, it is now equally clear that the carriers should not be required to secure our permission for the publication of rates over circuitous routes equivalent to the going rates over direct routes when in their managerial discretion such rates are necessary becamise of competitive factors.

The Commission is now firmly of the view that the “reasonably compensatory” provision no longer serves any useful purpose, and that it may well be eliminated from section 4 without jeopardizing the public interest. And, in this connection, we wish to point out that under other sections of the act the Commission is constantly seeking assurance that all rates subject to its jurisdiction, including those published under section 4, are not unjust or unreasonable, unjustly discriminatory, nor unduly prejudicial or preferential. For this reason we do not believe that the proposed amendment would detract substantially from our jurisdiction, but would, on the other hand, allow us greater discretion in the administration of this section, which should inure to the benefit of the carriers and the public as well.

It is our view that the central principle of the fourth section, i. e., control of departures from the long- and short-haul principle over the direct routes—is sound and should be retained, and that enactment of the proposed amendment would serve to streamline section 4. It would likewise enhance our administrative effectiveness and relieve the carriers of an unnecessary burden.

INTERSTATE COMMERCE COMMISSION,

Washington, May 3, 1955. Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce,

House of Representatives, Washington, D. C. DEAR CHAIRMAN PRIEST: Your letter of February 10, 1956, addressed to the chairman of the Commission and requesting a report and comments on a bill, H. R. 9177, introduced by Congressman Hinshaw, to amend section 405 (a), part IV, of the Interstate Commerce Act, has been referred to our Committee on Legislation. After careful consideration by that Committee, I am authorized to submit the following comments in its behalf :

Section 405. (a) of the Interstate Commerce Act, which H. R. 9177 would amend, provides, in general, that freight forwarders shall file with this Com mission tariffs showing rates, charges, rules and regulations with respect to the transportation service subject to the act. Every forwarder subject to the Commission's jurisdiction should, therefore, have on file tariffs showing the rates and charges for all services covered by its permit. The proposed measure would amend this section by adding a proviso to paragraph (a) to the effect that a forwarder shall not be required to publish tariffs stating rates and charges to and from points or places at which the forwarder has no agent.

Under section 404 (a) of the act, it is the duty of every freight forwarder to provide and furnish, upon reasonable request therefor, the service covered by its permit, and to establish, observe, and enforce just and reasonable rates and charges for that service. A forwarder, however, could not very well provide such service upon reasonable request unless it has on file with the Commission tariffs containing rates and charges for the service, since under the provision: of section 405 (e) a forwarder is prohibited from engaging in service subjec to the act unless the rates and charges for such service have been filed and published. We also wish to point out that section 405 (a) requires 30 days notice for the establishment of rates and charges.

If H. R. 9177 were enacted, it would relieve the forwarder, in its discretion from publishing rates and charges from and to certain points covered by it permit, solely on the basis of whether or not it has an agent at such points Thus, a forwarder could curtail or extend its service at will, within the scop of its operating authority, merely by discontinuing or creating an agency. 11 for example, a forwarder uses a motor carrier as its agent to serve certain points, it could discontinue that agency by canceling its arrangements with th motor carrier. The forwarder would thereby be relieved 'under the propose amendment of the duty of publishing rates to and from those points, and als of the obligation of serving the points involved, notwithstanding that they ar covered by its operating authority and that it has a duty under section 404 (a to provide service upon reasonable request.

We do not believe that it would be in the public interest to leave to the dis cretion of the freight forwarder the extent to which it would choose to exercis the authority granted to it by the Commission. If forwarders were permitte to shift their service at will in such manner, shippers could never be certain a to what services would be available to them. The establishment of rates an the performance of services to or from some, but not all, of the points withi the scope of the forwarder's permit could also result in prejudices or preference which are forbidden by section 404 (b) of the act. If a forwarder does no wish to render service to and from all of the points covered by its operatin authority, it should request that its permit be restricted accordingly.

It is not clear from the proposed measure what is intended by the term “agent, Freight forwarders do not as a rule use their own employees as agents except

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