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Mr. BAKER. Our next position deals with suspension which has a roman IV in the upper right-hand corner.
TAA position: The TXA 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 suspension period applicable to rates of railroads, common motor and water carriers, and freight forwarders shall be reduced from 7 to 3 months, plus a 3-month extension at the request of any party of interest.
In addition, the language found only in the suspension provisions applicable ! to railroads and other carriers subject to part I of the Interstate Commerce Act
which authorizes the Commission to direct these carriers under certain circumstances to account for and refund rate increases, shall be repealed.
Comparison with H. R. 6141: The TAA recommendation, like H. R. 6141, would shorten the suspension period from the present 7 months.
7 However, H. R. 6141 provides for a 3-month period whereas TAA recommends 3 months, plus a 3-month extension at the request of any Party of interest.
TXA has no position on the changes in H. R. 6141 which would tighten the standards for granting suspension of rate changes, nor on the proposed shift of the burden of proof to the complainant if he is a carrier. We likewise do not cover contract carriers in our policy. On the other hand, TAA proposes to strike out the provision requiring carriers subject to part I of the act to keep detailed accounts of and to refund increases in rates later found to be too high by the Commission.
As was pointed out in panel discussions, even under our proposal it would still be possible for the Commission to request the carriers proposing the rate changes to agree to an extension of the suspension period beyond the statutory limit.
However, we believe that the reduction in the statutory suspension period might be useful as a clear indication of congressional direction to shorten the time in which the Commission is to act.
TAA lays great stress on a companion policy, not requiring amendment to any law, that the Congress appropriate adequate funds to the Commission so that it may be staffed to properly carry out its obligations. With adequate funds and a directive from the Congress such as we here suggest, we believe the situation can be materially improved.
(Additional statement on suspension powers is as follows:)
The Mann-Elkins Act of 1910 substantially extended the Commission's power by empowering it at its discretion to suspend proposed changes in rates (that is, postpone their effective date) for a limited period pene ng its decision as to their lawfulness.
The original provisions of the Mann-Elkins Act authorized suspension for a 4-month period but provided for a 6-month extension of time if the case could not be decided in the first 4 months. In the Transportation Act of 1920 the E-month extension was reduced to 1 month, making the total possible suspension period 5 months. At the same time language was added to section 15 (7) authorizing the Commission to direct railroads (a) to keep special accounts of rate increases going into effect at the end of the suspension period because of the failure of the Commission to render its decision during that period; and (6) to refund to shippers such proportions of these increases as might be found unjustifed when the Commission eventually reached its decision.
In 1927 the suspension period was changed to 7 months without any provisio for extension, and this is how the matter stands today. The 7-month period (but not the provisions relating to an accounting for and refunding of certain rate increases) has been carried over into the suspension provisions of parts II III, and IV of the Interstate Commerce Act.
ACTION OF THE PANELS
The investor panel originally advocated that all suspension powers of the regulatory agencies be eliminated, but no other panel supported such action. Next, consideration was given to the possibility of eliminating the power to suspend in the case of proposed rate reductions where the only complaint against the contemplated reductions is that the new rates would be unreasonably low. The effect of this proposal would be to prevent competing carriers from asking for and receiving suspension of each other's proposed rate reductions, though shippers would still be able to obtain suspension if they could make a showing of preference or discrimination.
This suggestion was likewise not endorsed by any other panel. As a result of further discussions, panel representatives proposed to amend the provisions of parts I, II, III, and IV of the Interstate Commerce Act relating to the suspension of common carrier rate changes by reducing the suspension period from 7 months to 90 days, but with provision for a 90-day extension of the period at the request of an interested party. Such a proposal was approved by the user, investor, railroad, and pipeline panels and was not opposed by the air transport panel. Spokesmen for these panels thought that this amendment, in addition to requiring by its terms some shortening of the suspension period, would be significant as an expression of the will of Congress to speed up the disposition of suspension cases. They felt that the Commission might make more strenuous efforts to expedite decisions and to curb its present practice of asking carriers to agree to extensions of the suspension period if this evidence of congressional intent were enacted into law.
The highway panel opposed any diminution of the suspension period in the case or rate reductions and in its report suggests statutory changes authorizing the Interstate Commerce Commission “to order the postponement of proposed rate reductions beyond the original 7 months' suspension period for whatever time may be required to dispose of the proceeding.” In support of this recoumendation the highway panel contended that the suspension procedure is the only protection some motor carriers, and particularly carriers of a limited number of commodities, have against railroad rate reductions and the complete loss of their business which some such reductions would cause. Consequently, it is their view that sufficient time should be allowed to assure decisions of these rate reduction cases on an adequate record.
The waterway panel did not believe that the length of the suspension period should be changed in any way.
However, the highway and waterway panels were in agreement with the user, investor, railroad, and pipeline panels in proposing to repeal the provisions of section 15 (7) authorizing the Commission to require railroads and other carriers subject to part 1 of the act to keep account of and to refund rate increases which, after going into effect at the end of the suspension period be. cause of the failure of the Commission to render its decision during that period, are later found to be unreasonable or are otherwise in violation of the act. This language is not included in the suspension provisions of part II, III, or IV of the act, and panel representatives did not believe that it had served any useful purpose in part 1. They noted that its existence in part I has constituted a potential means of forcing railroads to agree to voluntary extensions of the suspension period for proposed rate increases, since a carrier refusing a Commission request that it agree to an extension of the period is faced with the possibility of an order under these provisions involving a very burdensome accounting task.
To illustrate the statutory changes required by these two proposals as advocated by the majority of the panels, part of section 15 (7) is reproduced below (language to be deleted is in black brackets and new language italicized) ::
"* * * pending such hearing and the decision thereon (on proposed new rates) the Commission * * * may from time to time suspend the operation of such
1 The same changes would be made in secs. 216 (8), 307 (8), and 406 (e) of parts 11, Ill, and IV of the act, except that these sections do not contain any accounting provisions similar to those deleted in sec. 15 (7).
schedule and defer the use of such rate, fare, charge, classification, regulations, or practice, but not for a longer period than [seven months] ninety days beyond the time when it would otherwise go into effect, provided that, such period shall be estended for an additional ninety days at the request of any party in interest.
After full hearing, whether completed before or after the rate, charge, classification, regulation, or practice goes into effect, the Commission may make such order with reference thereto as would be proper in a proceeding initiated after it had become effective. If the proceeding has not been concluded and an order made within the period of suspension, the proposed change of rate, fare, charge, classification, regulation, or practice shall go into effect at the end of such period; [out in case of a proposed increased rate or charge for or in respect to the transportation of property, the Commission may by order require the interested carrier or carriers to keep accurate account in detail of all amounts received by reason of such increase, specifying by whom and in whose behalf such amounts are paid, and upon completion of the hearing and decisions may by further order require the interested carrier or carriers to refund, with interest, to the persons in whose behalf such amounts were paid, such portion of such increased rates or charges as by its decisions shall be found not justified * * *]"
COMMENTS OF THE POLICY BOARD
The recommendation to delete the accounting and refunding provisions in section 15 (7) has not been opposed by any panel. It has our support and requires no further comment here.
As to the reduction of the suspension period, its length has been modified three times. The latest change, in 1927, increased it from a maximum of 5 to 7 months. In actual practice and particularly in the more complex and important suspension cases the Commission, finding that it cannot meet the deadline of the statute, often requested the carrier proposing the rate changes in issue to agree to an extension of the suspension period beyond the 7-month limit. There is no statutory basis for this Commission action. On the contrary, the statutory language indicates a congressional intent that the suspension period should not be prolonged beyond 7 months even though a decision has not been reached by the Commission in that time. Nevertheless, proponent carriers faced with such a request and fearing an adverse decision should they refuse to accede have in the past usually agreed to postponements of the effective date of rate changes which in many cases have resulted in extensions far beyond the 7-month period.
The extent to which this practice has been carried by the Commission seems unjustifiable to us. Any delay due to the dilatory tactics of the parties can be curbed by appropriate action by the Commission. On the other hand, the basic cause of delays in the suspension docket may lie in insufficient Commission staff or inefficient Commission organization, or inability to get a quorum of Commissioners. Since these voluntary extensions of the suspension period are a matter between the Commission and the carriers and outside the scope of the statute, it is not clear that amendments to the suspension provisions will prevent their continuance. However, as some panel representatives have pointed out, a reduction of the statutory 7-month extension might be useful as an indication of congressional intent to shorten suspension proceedings.
Any reduction in the suspension period, even if it is nullified in many cases by voluntary extensions, would, we think, benefit the carriers in the numerous proceedings where the Commission, after holding up the effective date of proposed rates for 7 months or more, eventually finds them justified and vacates the suspension order. On proposed rate increases it would mean quicker receipt of additional revenue. In the case of rate reductions to meet the competition of other carriers, which in recent years have made up the great majority
The following data on the number of suspension proceedings in which the Commission held the proposed rates justified are based on a survey of the reported cases in vols. 263 to 281 of the Interstate Commerce Commission Reports (decisions involving railroad rates from May 1945 to July 1951) and in vols. 44 to 49 of the Motor Carrier Reports (decisions lorolving motor carrier rates from October 1944 to March 1949).
It was found that out of a total of 186 suspensions of railroad rates, in 75 (or 40 percent of tbe total) the suspension order was vacated and the rates finally permitted to become effective. Ag to motor carrier cases, in 8 proceedings out of 66 (or 12 percent of the total) the suspension order was vacated. In substantially if not all of these proceedings the vacation of the suspension came only after the effective date of the rates in question had been postponed for at least 7 months.
of suspension procedings, the shorter the suspension period is, the greater th ability of all carriers to act quickly in the face of changes in competitiv conditions.
For the reasons above outlined, we favor reduction of the suspension period Not that we disagree with the highway panel view that rate reductions shoul be thoroughly reviewed, but we can see no reason why this panel's recommenda tion to lengthen the suspension period further in such cases is necessary to accom plish this purpose. On the contrary, it is hard to believe that full consideratio of the propriety of new rates could not be accomplished in a period of less tha 7 months if these cases were handled efficiently. Extension of the period would we think, only encourage delay by the parties concerned and by the Commission and its staff.
In summary, we recommend :
The suspension period applicable to rates of railroads, common motor water carriers, and freight forwarders shall be reduced from 7 to 3 months, plus a 3-month extension at the request of any party of interest. In addition, the language found only in the suspension provisions applicable to railroads and other carriers subject to part I of the Interstate Commerce Act which authorizes the Commission to direct these carriers under certain circumstances to account for and refund rate increases, shall be repealed.
RECOMMANDATION OF THE BOARD OF DIRECTORS
The Board recommended the adoption of this proposal.
COMPARISON WITH H. R. 6141 H. R. 6141 would amend the suspension powers of the ICC in all parts of the act as follows: Shorten from 7 to 3 months the period a rate may be suspended by the Commission before it would otherwise go into effect. Tighten standards for suspension by requiring the complainant to present factual information showing (a) that the rate would probably be unlawful, (b) that the rate would result in injury to the complainant, and (c) that remedies available to the complainant would, in the absence of suspension, be inadequate. This bill would retain the requirement that the carrier proposing the rate assume the burden of proof that it is lawful, but would pass this responsibility over to the complainant if it is also a carrier.
TAA favors the 3-month period, but would like to see another similar period permitted, if requested by the carriers or shippers concerned. We also want to strike out the provision requiring railroads to keep detailed records of revenues from the rates in question. We have no position on the new standards governing suspension orders or on the change of burden of proof to the complainant if it is a carrier. We likewise do not cover contract carriers in our "suspension" policy.
Mr. DeLLIVER. May I interject a question at this point?
Mr. DOLLIVER. You refer there to a party in interest who may cause a suspension of a rate. Now, would you define that term “party in interest” a little more clearly? Is it a shipper, a competitor?
Mr. Baker. That is correct. Most of these cases, as you will know, have to do with a carrier asking for the suspension of a rate put in by another carrier or a shipper asking for a suspension of a rate put in by a carrier. These are the parties of interest that are being thought of, I believe, in this statement.
Mr. DOLLIVER. Would it apply to a prospective passenger or prospective shipper?
Mr. BAKER. Yes.
Mr. DOLLIVER. Would it refer to the Government if the Government had any interest ?
Mr. BAKER. I thought you were coming to that question and I had not thought about it, where the Commission certainly has a right to suspend on its own motion.
I don't believe that was the intention, but the policy is not perfectly clear on that point. I would think it would have to be construed that if the Commission suspended the rate on its own motion that maybe it could request, as it were, itself, the extra 3 months.
Actually, I think, as I go back to the discussions that took place when this policy was being formed, it was pretty well taken for granted that the second 3 months would be asked for, but that if the second 3 months were considered clearly as an extension, then the Commission in the light of the change in the law in this regard and having given one extension as it were, was more likely to have that final extension than under the present arrangement, with the 7 months and parties agree to the extension under the pressure of the feeling that if they don't it will be decided against them.
Mr. DOLLIVER. Under the present law under certain circumstances a competitor is not allowed to ask for a suspension. In certain other instances the competitor can ask for suspension.
I assume from what you have said you would like a competitor, a party of interest, in every case regardless of whom he was competing with. I mean, between different forms of carriage, air against surface, truck against rails.
Mr. BAKER. To the extent that anyone had the right to come into the case as an interested party, I think this would envisage he would have the right to ask for an extension.
Mr. DOLLIVER. I think perhaps my questions have pointed up the proposition that the party of interest terminology needs clarification. Mr. BAKER. I think it would. Mr. DOLLIVER. Thank you. Mr. BAKER. That takes us on to the next one, "Shippers' associations" with the Roman V in the upper right-hand corner.
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: Congress should provide definite statutory standards for determining which shippers or shipper associations involved in consolidation or distribution of volume freight on a nonprofit basis for securing lower rates are entitled to exempt status.
Comparison with H. R. 6141: H. R. 6141 would provide definite standards intended to carry out the recommendation of the Cabinet Committee report.
TAA's position, which is a direct quote from this report, supports the general principle of having Congress provide definite standards governing the exempt status of shippers' associations. It does not include, however, any endorsement of the language in H. R. 6141, or any other specific legislative language.
It has been extremely difficult in the past to get freight forwarders and shippers to even agree on a statement that the law should be clarified in this respect.
Through our project operations we have succeeded in getting agreement that some action is desirable. That is as far as we have got. (Additional statement on "Shippers' associations" is as follows :)