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Commission upon complaint or on its own motion. While these contract carriers may not charge less than the filed minimum rates, they are free to charge more than such minimum rates to some shippers with whom they have contracts as long as the filed rates are "actually maintained and charged” on some part of their business. Common carriers by all forms of transportation, however, must publish their actual rates and adhere to them in all cases.
The Commission has taken little action under the statutuory provisions for the regulations of contract carrier rates. The few significant proceedings have involved interpretation of section 218 (b), the rule of rate making for contract motor carriers, which states, among other things, that contract carrier minimum rates prescribed by the Commission shall give no undue advantage to contract motor carriers as compared with competing common motor carriers. The Commission has held that this language does not require contract carrier minimum rates to be raised to the level of common motor carrier rates so long as contract carrier costs are lower than those of the common carrier. In so finding the Commission relied on other provisions in section 218 (b) directing it, in prescribing contract carrier minimum rates, to consider contract carrier costs of service and the effect of such rates on the movement of contract carrier traffic. However, the ICC has recently recommended revising section 218 (b) so as to remove from contract carriers this rate advantage over common carriers.
The character of contract motor carrier operations today varies considerably. Some contract carriers are close substitutes for private carriers serving only one or a few shippers under long-term contracts. These carriers often have specialized equipment to suit the shipper's needs and schedule their operations so as to be an integral part of the shipper's manufacturing or distribution operation. Such service may involve transportation to or from remote or small noncompetitive points which common carriers are not desirous of serving, or may require schedules tailored to the shipper's needs that common carriers might be unable to provide.
Other contract motor carriers serve great numbers of shippers and haul a great many diverse commodities, thus approximating the service offered by common carriers. In such cases, contract carriers can compete for common carrier business without being subjected to the regulatory restrictions imposed on common carriers. The common carrier spokesmen emphasized the competitive advantage given to such contract carriers because of the fact that the actual contract carrier rates charged particular shippers, as distinguished from the published minimum rates, cannot be ascertained, while the common carriers' rates are open to the public.
As to the extent to which contract motor carriers participate in for-hire interstate transportation, the Interstate Commerce Commission staff has compiled some comparative statistics on common and contract motor carrier operations derived from reports of the regulated carriers. In 1953 motor common carriers hauled some 56 billion ton-miles of freight, as compared to about 7.9 billion ton-miles for the contract carriers.
ACTION OF THE PANELS
The issues raised by this subject as presented to the panels were whether the present economic regulation of contract carriers should be modified in any way,
There was no recommendation in the panels that the present economic regulation of surface contract carriers be removed.
4 The original Motor Carrier Act, in a section which is not sec. 218. (a) of the Interstate Commerce Act, authorized the Commission at its discretion to require the publication of the actual transportation contracts as well as the minimum rate schedules and the Commission, finding that some contract carriers had made a practice of publishing minimum-rate schedules lower than any rates provided for in the contracts, was prepared to order that the contracts themselves be placed on public file. After contract carriers and some ship; pers had vigorously protested this proposed step, certain amendments were incorporated in the 1940 Transportation Act. Sec. 218 (a) was amended to eliminate all reference to the publication of contracts, and language added to sec. 220 (a) prohibited the Commission from putting any contracts on public file except contracts containing rates which fallito conform to the appropriate minimum-rate schedule and contracts involved in litigation before the Commission. At the same time, the words "actually maintained and charred" were added to sec. 218 (a) to describe the kind of minimum rates which must be filed and published in order to prevent contract carriers from publishing fictitious rates. above-described changes were also written into secs. 306 (e) and 313 (6) of pt. " III of the act and are applicable to contract water carriers.
These amendments did not affect the Commission's power under secs. 220 (a) and 313 (b) to order the filing with it of all contracts as long as they were not published, At the present time the Commission has exercised this authority only with respect to contracts of contract motor carriers.
Preliminary discussion in the coordinating committee on the detailed character of contract motor, air, water, and carrier regulation focused on three questions: first, whether contract carrier regulation should be further tightened ; Second, whether it would be desirable to impose the same kind of regulation on all for-hire carriers; and lastly, whether transportation agencies should be allowed to conduct both common and contract operations, a practice presently sererely restricted.
The latter two suggestions were not explored further, and attention was directed to the three following proposals of the railroad panel designed to increase contract carrier regulation.
(1) Contract carriers by highway, water, and air should be required to publish just, reasonable, and nondiscriminatory rates and to adhere strictly to them, no change to be made therein except upon notice to the public such as is now required with respect to the minimum rates of contract motor and water carriers;
(2) The regulatory authority should be given power to prescribe for contract carriers just and reasonable rates which will not unjustly discriminate against persons or localities;
(3) Regulation of all contract carriers should be tightened by a statutory provision authorizing the granting of permits to enter business only where the proposed contract operation cannot adequately and economically be performed by existing common carrier service.
The user panel did not approve the proposals as stated. It suggested as a substitute a modified form of proposal 1, to the effect that contract carriers be required to file and publish the actual (instead of only minimum) rates charged, to which rates they would be obliged to adhere until new rates had been filed and had become effective. Contract carrier rate increases would be permitted to go into effect on 1 day's notice; rate reductions on 30 days' notice, the latter period to give the appropriate regulatory authority the opportunity to determine through the suspension procedure whether or not the reduced rates are unreasonably low. The regulatory agencies would have power to prescribe minimum rates only, and this authority would be identical to that now exercised by the Interstate Commerce Commission over the minimum rates of contract motor and water carriers.
It was the view of the user panel that contract carriage has a definite place in the transportation scheme as a substitute for private carriage and that the restrictions as proposed by the railroad panel would result in the virtual elimination of such carriage. While agreeable to the filing and publication of the atnal rates of contract carriers, so as to give other types of transportation an opportunity to know what their competitors are charging, this panel opposed publication of the full contracts on the ground that they often contain trade information of a confidential nature. The railroad panel, on reconsideration, adhered to its original three proposals. However, the panel stated that if the support of the Transportation Association of America could be obtained for the position of the user panel, it would then be willing to modify its position to conform to the suggestions of the user panel so far as proposals 1 and 2 are concerned. In any case, the railroad panel continued to advocate proposal 3 as an additional recommendation.
The air transport and investor panels supported the user panel proposal, while the waterway panel (with one dissent) and the pipeline panel opposed further regulation of contract carriers (except for extension of the existing kind of contract carrier regulation to air contract carriers). The freight forwarder panel favored effective regulation of all contract carriers but took no position on the ser panel proposal.
The highway panel report contains conflicting recommendations of the common and contract carrier members of that panel. The common carriers' position may be summarized as follows:
1. In issuing any contract motor carrier permit the Interstate Commerce Commission should list in the permit the names of shippers who have shown a need for contract carrier service, thus preventing the contract carrier involved from serving other shippers without obtaining a new permit. The Commission should also include in all permits a description of the kind of service being authorized.
2. The prohibition of the publication of motor contract carrier contracts should be repealed.
* The Interstate Commerce Commission has ordered that contract motor carrier contracts be filled with it. This permits the Commission staff to check the rates contained in sorb agreements against the filed and published minimum-rate schedules. However, the act forbids the Commission to make the contracts public except under certain conditions.
3. Contract motor carriers should not, in cases where the Commission finds their operations have unlawfully changed from those of a contract carrier to those of a common carrier, be granted common carrier certificates except after presenting proof of public convenience and necessity. This view was presumably put forward as the common carriers' answer to a contract carrier proposal made in the course of the Senate Resolution 50 hearings to the effect that automatic issuance of common carrier certificates should be required whenever the Commission holds that a contract carrier has become a common carrier.
The contract carrier members of the highway panel denied that there is any need for further regulation of contract motor carriers. These carriers contended that the present statutory provisions requiring them to publish and maintain reasonable minimum rates, coupled with the power of the Commission to prescribe reasonable minimum contract carrier rates if the published rates are found unreasonably low, furnish ample protection to common carrier competitors. They pointed out also that the Commission can suspend reductions in contract carrier rates and has authority to prevent unfair competitive practices on the part of contract carriers.
In addition, the contract motor carriers stated in the highway panel report that the Interstate Commerce Act should be amended both to permit contract carriers to compete more effectively with private carriers and to correct certain errors committed by the Commission in its administration of the existing law. The exact amendments desired are not specified.
COMMENTS OF THE POLICY BOARD
The Policy Board, after reviewing the panels' positions, stated :
In our opinion, the making public of minimum rates does not give common carriers the information they are entitled to have as to the exact charges of their for-hire competitors, and hence we favor this proposal. Such a change in the law would not increase the jurisdiction of the regulatory agencies to regulate the level of contract carrier rates. Their power in this respect would remain limited to the prescription of minimum rates.
In summary, we propose: Contract motor and water carriers shall be required to file, adhere to, and make public the rates they actually charge.
RECOMMENDATION OF THE BOARD OF DIRECTORS
The board of directors of Transportation Association of America (with representatives of the water operators not voting or dissenting) agreed with the policy board and proposed that contract motor and water carriers be required to file, adhere to, and make public the rates they actually charge.
COMPARISON WITH H. R. 6141
H. R. 6141 would amend regulations governing contract carriers by motor and water as follows: Redefine “contract carriage” to require compliance with the standard that such service be conducted "on the basis of bilateral contracts for specialized or individualized service or services equivalent to bona fide private carriage.” It would grant "grandfather" operating rights as common carriers to present contract carriers who cannot come under the redefinition and require contract carriers to publish actual rates charged, or, at the carrier's option, the actual contract.
TAA takes no position on redefining "contract carriage" or on granting "grandfather rights" to present contract carriers who are in actual practice, operating as common carriers. TAA's policy at this time is limited to the requirement that contract motor and water carriers file, publish, and adhere to actual rates charged under contracts, subject to the usual Commission regulation of minimum rates.
Mr. BAKER. We next pass to the next green sheet which has a Roman III in the upper right-hand corner, which deals with the abandonment of unprofitable services.
TAA position: The TAA board of directors, after careful consideration of the views of its eight permanent policy formulating panels and its policy group, approved the following recommendation:
The Commission should be given the power, on appeal from adverse orders of State authorities, to authorize discontinuance of services which are a burden
upon interstate commerce because they are being carried on by interstate carriers at a francial loss. This power should be based upon the same reasoning which accounts for the Commission's power over intrastate rates in section 13 (4).
The board also approved giving the Interstate Commerce Commission jurisdiction when a State commission fails to act within 120 days.
Comparison with H. R. 6141: H. R. 6141 would permit the ICC to allow an abandonment of a service or facility that causes a net loss in revenue to the carrier involved, or otherwise unduly burdens interstate commerce, provided that reasonably adequate service is available in lieu thereof.
It would also permit the Commission to step in if State authorities fail to act within 6 months.
TAA is in agreement with H. R. 6141 on giving the ICC this additional authority over abandonment of unprofitable services. We have no position on the requirement that reasonably adequate substitute service be available, nor have we a position on amending this prorision for freight forwarders.
We agree that the Commission should be able to step in when States fail to act, although there is a relatively unimportant distinction in that we advocate a 4-month period, as compared with the 6-month period in the bill.
TAA strongly believes that the granting to the ICC of this added power will help materially in relieving our interstate shippers from this tremendous annual burden of millions of dollars resulting from un profitable passenger train operations. While some State commissions show a constructive attitude on this problem, we do not believe it proper for the interests of interstate shippers in this regard to be dealt with solely by State authorities.
(Additional statement on abandonment of unprofitable services is as follows:)
ABANDON MENT OF UNPROFITABLE SERVICES
NATURE OF THE SUBJECT Abandonment of the operation of railroad lines is now subject to regulation under the Interstate Commerce Act.'
Of equal importance is the related problem of what may be referred to as discontinuance of service, such as discontinuance of some or all of the passenger or freight service over a particular line without complete abandonment of all operations on the line. The Commission has held that its jurisdiction extends only to the abandonment of railroad line, that is, to complete abandonment of operations and not to discontinuances of service short of complete abandonment." However, where such discontinuances involve only intrastate service, they are almost uniformly subject to State regulation. In recent years, the reluctance of some State authorities to permit discontinuance or any significant curtailment of unprofitable rail passenger service has increased the burden on interstate freight traffic of making up such losses and has often caused severe financial hardship to the carriers.
ACTION OF THE PANELS
The railroad panel at the request of the coordinating committee presented mommendations which became the basis for the discussion of the panels.
Sec. 1 (18) of the Interstate Commerce Act. Sec. 410 (i) provides similar regulation of the abandonment of the operations of freight forwarders controlled by common carriers subject to pts. I, II, or III of the Interstate Commerce Act.
* Except as provided under car-service regulation, secs. 1 (11) through 1 (17) of the Interstate Commerce Act. These provisions give the Commission some authority over Interstate freight service and the supply of freight trains.
The user and investor panels gave extensive consideration to these proposals. Both panels appointed subcommittees to study and report their findings. The user panel's interest is twofold: First, as users of branch-line services where abandonment situations are most usual; and second, as the interstate shippers whose rates must support uneconomical operations. The investor panel's interest stems largely from a feeling that the continued operation of unprofitable services is a drain on the finances of the railroads involved.
The railroad panel proposed : The Commission should be given the power, on appeal from adverse orders of State authorities, to authorize discontinuance of services which are a burden upon interstate commerce because they are being carried on by interstate carriers at an out-of-pocket loss. This power should be based upon the same reasoning which accounts for the Commission's power over intrastate rates in section 13 (4).
The user panel disapproved of the wording of the clause "because they are being carried on by interstate carriers at an out-of-pocket loss" because the panel felt the directive should be more broadly stated and also because out-ofpocket loss would be susceptible of argument as to interpretation and standards of cost. Their objections were met by changing the clause in question to "because they are being carried on at a financial loss." This wording is the same as is used in proposal 2 above. The user, investor, and railroad panels then approved the proposal with this change.
The air transport, highway, waterway, and pipeline panels opposed extension of abandonment regulation to other forms of transportation. As to the ques. tion of railroad abandonment, they felt that the railroad, user, and investor panels were better qualified to decide on appropirate changes in the law. The air transport, freight forwarder, and pipeline panels approved the action taken by the railroad, user, and investor panels on the proposals discussed above, while the highway and waterway panels did not oppose any of these proposals.
COMMENTS OF THE POLICY BOARD
The policy board, after reviewing the panels' positions, stated :
“The propriety of vesting in the Interstate Commerce Commission jurisdiction over the discontinuance of intrastate railroad services similar to its present jurisdiction in section 13 (4) of the Interstate Commerce Act with respect to intrastate rate seems to us self-evident. We therefore concur in the panels' recommendation under proposal 3 and urge its enactment into law.”
In summary, we propose :
“The Commission should be given the power, on appeal from adverse orders of State authorities, to authorize discontinuance of (rail) services which are a burden upon interstate commerce because they are being carried on by interstate carriers at a financial loss. This power should be based upon the same reasoning which accounts for the Commission's power over intrastate rates in section 13 (4).”
RECOMMENDATION OF THE BOARD OF DIRECTORS The board is convinced that the adoption of the proposal is of paramount importance if vital segments of the transportation industry are to be maintained in a sound, solvent position.
The board at a later date also approved giving the ICC jurisdiction when & State commission failed to act within 120 days.
COMPARISON WITH H. R. 6141 H. R. 6141 would amend paragraph (4) of section 13 (railroads) and subsection (f) of section 406 (freight forwarders) to permit the ICC to allow an abandonment of a service or facility that causes a net loss in revenue to the carrier involved, or otherwise unduly burdens interstate commerce, provided there is or will be available to the public reasonably adequate service in lieu thereof by other carriers, including private carriage.
TAA's position agrees with H. R. 6141 on giving the ICC this power over abandonment of unprofitable services, although we have no position on the requirement that reasonably adequate substitute service be available. We do not have any position on amending this provision for freight forwarders.
TAA agrees with the provision that would permit the ICC to step in when States fail to act. There is a relatively unimportant distinction in that we advocate a 4-month period for such action as compared with the 6-month period in H. R. 6141.