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Mr. HARRIS. That is true.

Mr. ARPAIA. In order to develop his business regardless of the effect on the competing carrier.

Mr. HARRIS. He does not, under present procedure, have the burden of showing that it will adversely affect the competing carrier ? Mr. ARPAIA. No; that is not the way the burden arises.

For instance, the competing carrier will say, "At this rate I would not get a pound of this traffic. I could not possibly participate in any of this movement. ." Then they are at issue.

It may well be that cost is the only consideration which the shipper cares about in a particular instance. It is not flexibility, it is not speed of movement, it is not anything of that kind.

In that event, a railroad will come in and say, "We are under service disability. Our services are slower; therefore, we should have a differential lower than the existing rate and the proposed motor carrier rate cuts or eliminates the existing differential. We would not be able to continue to carry this traffic and therefore we are opposed to the reduction even if it is full compensatory to the motor carrier.

And they might even show, as a matter of fact, “We are losing traffic now.

,, In that case, we would say that rate is not competitively necessary. There is no reason why that rate should be lowered because the traffic is moving at the present rates and all carriers are having an opportunity to compete for that traffic.

Mr. HARRIS. Well, that is true, but we have to keep in mind occasionally the welfare of the shipping public, too.

Mr. ARPAIA. Yes.

Mr. HARRIS. To me, the transportation act is not set up primarily and principally for the various modes or the different carriers.

Mr. ARPAIA. Not at all. As I stated earlier, the carriers only incidentally benefit because the national welfare needs strong and competent public transportation.

Mr. HARRIS. Of course, we have to maintain a sound transportation program with each mode of carrier, but, at the same time, it seems to me that wherever advantages can be given to the shipping public, that that should

be the policy, too. Mr. ARPAIA. These figures show that they do enjoy such advantages; that rates have not advanced as much as ordinary prices. The public does at present enjoy good service and reasonable rates. The fact that the shippers do not have to come in and protest rates as being unreasonably high is proof of that, in my opinion. We receive very few protests from shippers.

Mr. HARRIS. I have just one other thing here and I think we are going to have to break up this committee for the present. We did want to try to let you go before we did.

Do you have the bill before you, H. R. 6141 ? I wish you would turn to page 10, line 18. Mr. ARPAIA. Yes. Mr. HARRIS. Where it says: No existing through route shall be canceled except by agreement of all carriers whose lines are embraced therein unless the Commission shall, upon application and after hearing, find that cancellation is consistent with the public interest withont regard to the provisions of paragraph (4) of this section, and the burden of proof shall be upon the carrier or carriers to show that the cancellation is consistent with such public interest.

Have you had an opportunity to give any thought to that language?

Mr. ARPAIA. Frankly, I do not quite understand that language. I think the people who should explain this are the people who proposed it. It is very, very obscure.

A through route once opened stays open. The section as proposed does not refer to joint rates, which is probably the important feature of the present section.

Mr. HARRIS. Well, it seems to me, if I understand the language correctly and maybe I do not, the effect of it would be to freeze all existing routes because the single carrier who is cut out of participation in that route or short-changed in some way could block the change and then compel the carrier or carriers seeking the change to undertake longdrawn-out proceedings before your Commission, during which time they would have to prove that the changes in routing are consistent with the public interest.

Mr. ARPAIA. The existing statute refers to both rates and routes. This one refers only to routes. Frankly, I do not understand it.

Mr. HARRIS. Where there are millions and millions of joint routes, published tariffs, it seems to me, like the amendment agreed to, would certainly cover a tremendous scope, probably an impossible task for the Commission.

I may be wrong, but I just wondered a little on the subject.

Mr. ÅRPAIA. Do you want the existing language for the record on that?

Mr. HARRIS. It might be helpful to have it right here. Mr. ARPAIA. As it reads now: If any tariff or schedule canceling any through route or joint rate, fare charge, or classification without the consent of all carrier parties thereto or authorization by the Commission is suspended by the Commission for investigation, the burden of proof shall be upon the carrier or carriers proposing such cancellation to show that it is consistent with the public interest, without regard to the provisions of paragraph 4 of this section.

That is one of the provisions in this bill which is obscure, very difficult to understand, and which poses the problem which would face the entire public and transportation industry.

If this bill were enacted, you would have a whole series of litigation which would follow because of need for interpretation.

Mr. HARRIS. Well, thank you very much, Commissioner, and all of you members of the Commission and staff who are here. We appreciate your coming up and giving us this testimony and explanation.

May I inquire, will you have someone who will be present at the hearing this afternoon

Mr. ARPAIA. Yes.

Mr. HARRIS. There may be some things we will want to inquire about.

Mr. ARPAIA. We are excused for the time being ?
Mr. HARRIS. Yes.
The committee will adjourn until 2 o'clock.

(Whereupon, at 11:55 a. m., the subcommittee recessed, to reconvene at 2 p. m. of the same day.)

AFTER RECESS

Mr. HARRIS. The committee will come to order, please.

We have with us this afternoon Mr. Herbert K. Hyde, Commissioner, General Services Administration.

Mr. Hyde, we are very glad to welcome you to this committee and very glad to have your comments and views and any expressions you care to make regarding this highly important legislation. STATEMENTS OF HERBERT K. HYDE, COMMISSIONER, TRANSPOR

TATION AND PUBLIC UTILITIES SERVICE; F. W. DENNISTON, LEGAL DIVISION; G. N. SMULL, DEPUTY COMMISSIONER; S. E. MULLIKIN, CHIEF, PLANNING BRANCH; AND J. S. PETERS, ACTING DIRECTOR, RATES AND ROUTES DIVISION, GENERAL SERVICES ADMINISTRATION

Mr. HYDE. Thank you, Mr. Chairman.

Mr. Chairman and members of the committee, we are happy to come over here and undertake to be of some service to you in the solution of the many problems that arise in the movement of Government traffic in this country.

I am now the Commissioner of Transportation and Public Utilities of the General Services Administration, and have been for approximately 10 months.

Previous to that time, I was a country lawyer down in the Indian country next to the chairman's home State, Oklahoma.

We have requested the opportunity of presenting to this subcommittee the views of GSA on three of the pending bills, H. R. 525, H. R. 6141, and H. R. 6208.

As to all of the bills mentioned above, GSA's comments are submitted under its responsibilities under section 201 (a) of the Federal Property and Administrative Services Act of 1949, as amended (63 Stat. 377, 383; 40 U.S. C. 481), under which it operates as traffic manager for the use of the executive agencies of the Federal Government, as shippers.

It does not include the Department of Defense, however, which has exempted itself from these activities in the interest of national security.

H. R. 525

On February 28, 1956, a report was submitted by GSA on H. R. 525. This report took no specific position as to whether section 22 of the Interstate Commerce Act should be repealed as proposed by that bill. Certain comments on the repeal were set out in an enclosure to that bill

, which we ask to be incorporated and made a part of this record. It is assumed that that report will be reproduced in the transcript of these hearings and therefore has not been copied in this statement.

It should be added that following the February 28 report, and on further study, GSA desires to go on record in opposition to the bill.

The Bureau of the Budget has informally advised that there is no objection to this supplemental statement.

A letter confirming this is in process of clearance and will be filed with the committee in the next few days.

Mr. Harris. I think at this point we might note that both your letter of February 28 of this year and the letter that you just referred to, which will be coming forth in the next few days, may be filed in the record.

Mr. HYDE. Thank you, Mr. Chairman. (The information referred to follows:)

GENERAL SERVICES ADMINISTRATION,

Washington 25, D. C., February 28, 1956.
Re H. R. 525
Hon. J. PERCY PRIEST,
Chairman, Committee on Interstate and Foreion Commerce,

House of Representatives, Washington 25, D. C. DEAR CONGRESSMAN PRIEST: Your letter of February 3 requests our comments on H. R. 525, a bill to amend section 22 of the Interstate Commerce Act, as amended, and for other purposes.

This bill proposes to delete from the Interstate Commerce Act (49 U. S. C. 22), the provision which permits common carriers to transport property or passengers for the United States, State or municipal Governments “free or at reduced rates."

The present provision has been in effect for many years and as a result the rates on a portion of Government traffic are established by the carriers through so-called section 22 quotations rather than by publication in the usual tariffs. The enactment of the proposed legislation would change this system and would have the effect of requiring that all Government traffic be shipped at published tariff rates.

The interest of GSA in this legislation is based on its responsibility to provide traffic management services on Government shipments for the use of the executive agencies of the United States (63 Stat. 383; 40 U. S. C. 481).

The GSA takes no position as to whether the present system of ratemaking on Government traffic should be changed. In order to assist your committee, however, in making a determination on this question, we believe that it is important that your committee have the most accurate and factual information available concerning this subject matter. Accordingly, there is attached hereto for consideration a statement relating to this matter compiled on the basis of the experience of GSA.

The attention of your committee is respectfully invited to the report of the Presidential Advisory Committee on Transport Policy and Organization, issued on April 18, 1955. Its recommendations are incorporated in H. R. 6141 and S. 1920, now pending before the Congress.

In the event of hearings on this legislation, GSA would cooperate with your committee in the event any information is desired.

The Bureau of the Budget has advised that there is no objection to the submission of this report to your committee. Cordially yours,

EDMUND F. MANSURE,

Administrator. Points To BE CONSIDERED IN THE REPEAL OF SECTION 22 OF INTERSTATE COMMERCE

Аст 1. Government transportation operations are not comparable with those of commercial concerns. The Government with its farflung operations and large volume of traffic must often meet emergencies that cannot be anticipated.

Such action calls for an immediate movement of traffic and a subsequent adjustment in rates. Section 22 gives flexibility and allows movements of traffic to be made on a few hours' notice with rate adjustments being made retroactively under section 22. It should be emphasized that Government traffic often moves from origins to destinations in large volume where there is no commercial movement of traffic in existence and therefore only high class rates are available for movement of this traffic.

The rate committees of the carriers are often slow in making their decisions. They are allowed to operate free from the antitrust laws and establish rates on

what they consider to be fair and reasonable levels. Often these groups take many months or even years to reach a decision. While private industry can plan in advance and obtain action from the rate bureaus, often the Government is forced to move without the advance information that is available to industry. Section 22 allows Government business to be carried on expeditiously and the rate adjustments to be made later.

2. Repeal of section 22 will increase the cost of Government transportation operations. In addition to requiring the taxpayers to foot bills on unreasonably high rate levels, there will be a number of other increases in Government costs. An increase in personnel will be needed in Government transportation organizations to comb carefully all tariffs issued for transportation services-a tremendous job. The staffs of regulatory bodies, particularly the Interstate Commerce Commission, will also require substantial increases. There will be an increase in litigation requiring more legal work and more lawyers because most of what was formerly handled by negotiation would have to be handled by litigation before regulatory bodies and the courts if section 22 is repealed. This cost would fall both on the Government and the carriers. Another increased cost would be that of publishing tariffs which cost would fall on the carriers. To handle, review, and file these tariffs would be an added cost to the Government as pointed out above.

3. The present rates made by GSA on Government traffic on the whole compare more than favorably with rates paid on similar classification of traffic by commercial shippers. This is borne out by exhibit 3 of Witness Hudson in ICC Ex parte No. 192 and exhibits filed in the published. Senate hearings on S. 906, 83d Congress, 2d session. Testimony to the contrary was confined to claims not based on facts. Repeated invitations have been given to bring to GSA for consideration, rates that are unduly low which the carriers wish to have canceled, but no response has been made.

4. There is no unanimity of opinion among the carriers concerning the repeal of section 22. Some favor it while others state that it gives them an area in which they may operate free from Government regulation and thereby render the service in which they have a natural advantage.

5. The present attitude generally is to lessen the amount of Government regulation over business. The repeal of section 22 extends substantially the jurisdiction of regulatory bodies over the business of transportation. In view of this, does the Hoover Commission wish to deprive the carriers of an area in which they are now free to make rates subject to the forces of free competition and render it subject to more Government regulation?

6. Section 22 of the Interstate Commerce Act, under which the carriers may give free or reduced rates to the Government, is a purely voluntary procedure. There is no requirement that rates be quoted under section 22 unless the carriers choose to do so. GSA follows the policy of asking only for fair and reasonable rates but, under the rulings of the Comptroller General, must accept all reduced rates under which adequate service can be rendered.

7. The Hoover Commission in its efforts to obtain simplification of Government operations and reduction of cost will not attain such ends by recommending repeal of section 22 which will add to the complexity of procedures and increase the burden for the Government as a shipper, for the carriers, and for the regulatory bodies.

8. When the Government alone is the complainant, the ICC has in several cases enunciated the policy that no rate adjustment is necessary because there is no "commercial necessity” for an adjustment.

With repeal of section 22, the Government would find it increasingly difficult, in view of this announced policy of the Commission, to obtain rates comparable to the commercial traffic levels. Quotations from the following cases are offered to illustrate the attitude of the Commission:

** • With respect to complainant's request for alternative rates made on basis of column 27.5, minimum, 80,000 pounds, it is sufficient to state that there is Do showing of commercial necessity or desirability for such an adjustment. * * *

**** Also we are not unmindful of the fact that the Federal Government is at present the sole shipper of the commodities, but that this situation need not Decessarily obtain after the termination of the present emergency **. Our conclusions (to deny reparations) might well be otherwise if we were considering the complaints of numerous shippers, all interested in the same class of traffic. Here we have but one shipper (the Government ***" Stimson v. Akron C. & Y. Ry. Co. (262 I. C. C. 418, 423).

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