Page images

law, interagency competition (between railroads and trucklines, for example) will be radically reduced or will vanish altogether, to the eventual detriment of the fresh fruit and vegetable industry.

Specifically, the United Fresh Fruit & Vegetable Association is opposed to proposed changes in these pending bills to the extent they deal with (1) the transportation policy; (2) the fourth section; (3) the suspension provisions; and (4) the ratemaking rules. In closing this statement it will be my purpose to note the approval by the United Fresh Fruit & Vegetable Association of the proposal to empower the Commission to order the curtailment or discontinuance of railroad passenger services or facilities in intrastate commerce.


[ocr errors]

We are more than a little perplexed over the purpose to be served by the proposed amendment of the transportation policy, for so far as we have been able to determine, there is nothing which could be done under the proposed revised transportation policy which could not be done under the present provisions, except as the proposed policy would seemingly encourage by silence the "unfair or destructive competitive practices” which are now prohibited. This prohibition has been many times considered by the Commission and by the courts and has come to have a definite and certain meaning. In lieu of it we should have under the pending bills a number of phrases or clauses which, unless we are misinformed, have never been administratively or judicially construed. Those which have forced themselves unfavorably upon our attention are, to name but a few, “the free enterprise system of dynamic competition," "technical innovations,” “new rate and service techniques," "the highest standards of service, safety, economy, efficiency, and benefit to the transportation user and the ultimate consumer," and “full competitive economic capabilities." We are apprehensive that the net result of such generalized terms would be the aggrandizement of the strong and the submergence of the weak. Differently stated, we are fearful that the railroads would be able to drive their competitors out of the transportation field, thus terminate the salutary benefits of competition between railroads and motor carriers, and thereby increase their charges to an unreasonably high level while permitting their service to deteriorate. We should make it entirely plain that we do not favor any one transportation agency over another but that we do feel that each must be kept in existence to play its part, both as carrier and as deterrent to unreasonable rates and practices and inefficient service on the part of its competitors. Any other policy could not fail to militate against the long-range interests of our members.

We respectfully request that the present transportation policy, which is understandable and has been successfully applied since 1910, be left unaltered.


The United Fresh Fruit and Vegetable Association makes no representation concerning the proposed amendment of the long-and-shorthaul clause of section 4 of the Interstate Commerce Act, but it wishes to voice its earnest opposition to the repeal of the aggregate-of-theintermediates clause of that section.

This is by no means the first time that an effort has been made to repeal the aggregate of the intermediates clause of the fourth section.

It will be recalled that in 1952, for example, in his testimony respecting S. 2754, Mr. Joseph G. Kerr, speaking for the Association of American Railroads, urged that the aggregate of the intermediates clause be stricken from the fourth section, just as now proposed. According to Mr. Kerr, the effect of such elimination of the clause in question would have been to restore what he denominated the integrity of the published single-factor through rates. But such restoration could only be accomplished at heavy expense to the shippers, and we can conceive of no sound reason why they should be put to that expense.

As the section now reads, the rail carrier is expressly forbidden tocharge any greater compensation as a through rate than the aggregate of the intermediate rateswith the right, however, to apply to the Commission for relief from the operation of section 4. Prior to the enactment of the aggregate of the intermediates clause, the Commission had held that it could make no general ruling that through rates should not exceed the sum of the locals and that each case could only be disposed of upon its own merits (Coffeysville Vitrified Brick & Tile Co. case (12 I. C. C. 498)), but uniformly since the enactment of that clause it has held that through rates which are in excess of the sum of the intermediate rates bet ween the same points over the same route are prima facie unreasonable.

This principle has become so firmly embedded in the law and so generally accepted that the Commission maintains a rule, rule No. 56, in its Tariff Circular No. 20, which governs the construction and filing of freight-rate publications, under which the rail carriers are given express authority, on not less than 1 day's notice to the public and to the Commission, to reduce to the actual aggregate of the intermediate rates any rate by a given route from point of origin to destination which is higher than the aggregate of the intermediate rates from and to same points by the same or another route.

In addition, by paragraph (c) of rule 56 of Tariff Circular No. 20, the rail carriers are given authority to maintain in their tariffs a general holding out to apply to the Commission for authority to award reparation on the basis of the aggregate of the intermediate rates over the route of movement whenever the applicable rate is higher than the aggregate of the intermediate rates over the route of movement.

The rail carriers, furthermore, in recognition of the intendment of the aggregate of the intermediates clause of section 4 of the act, publish in many of their tariffs applicable to the movement of fresh fruits and vegetables, as well as all other commodities, a provision that, whenever the joint through rate exceeds the aggregate of the intermediate rates maintained in that tariff or any other tariff over the route of movement or over another route, the applicable rate will be such lower aggregate of the intermediate rates.

The tariff provision comes into play in a vast number of instances on the movement of fresh fruits and vegetables moving by rail throughout the entire country. If it were not maintained in the tariffs, the rail carriers would be required to file with the Commission great numbers of so-called special-docket applications for leave to

award reparation to the basis of the lower aggregate of the intermediates, or the shippers would be forced to file with the Commission formal complaints attacking the reasonableness of the applicable through rates.

Thus a heavy burden would be cast upon rail carriers, shippers, and the Commission personnel. Cancellation of the aforementioned tariff provisions for application of the aggregate of the intermediates would result in collection by the railroads of hundreds of thousands, and perhaps millions of dollars of added revenue to be subsequently involved in litigation. And such cancellation would be brought about merely because of the view, which we sincerely believe to be a mistaken view, that tariff simplification would result.

The pending bills seem to contemplate that the railroads may publish at their pleasure through rates which exceed the aggregate of the intermediates over the route of movement or over any other route and that the actual burden of procedure is thereupon cast upon the shippers to seek suspension of such publication, to oppose the joint rates if they are suspended by the Commission, and to bring complaints assailing the lawfulness of the applicable rates if suspension is refused by the Commission. This burden would be a heavy one. Many of the members of our association-probably the majority of them-do not maintain traffic departments equipped to prosecute complaints against the railroads in an effort to establish that described rates have been, are, or will be unreasonable, unjustly discriminatory, or unduly prejudicial and preferential, because in violation of the aggregate of the intermediates clause of the fourth section. Not only are our members not in position to bear the burden of the described procedure, but it is our view that they should not have to do so. The circumstances would be even more aggravated if the proposed revised suspension provisions should become effective.


Our objection to the proposed amendment of the suspension provi: sions of the act runs principally to (a) the shortening to 3 months of the present 7-month period for which newly published rates may be suspended and (b) to the setting up of specific standards by which the Commission must be governed in determining whether or not to suspend such newly published rates.

Beginning in 1910, when the Commission was given suspension authority, the suspension period was 120 days, with power in the Commission to extend it to a total of not more than 6 months. Subsequently the total became 5 months. The suspension period was found too short, and in 1927 it was lengthened to 7 months. Yet now, when regulation is far more complicated than in the earlier days, it would be shortened to less than it has ever been. This seems to us to be all out of reason. It would be utterly impossible to conclude a proceeding in the stated period of 3 months.

Unfortunately, morever, because of the brevity of the suspension period, a faulty record would almost inevitably ensue. Let us assume, for example, that at a formal hearing following suspension the railroad respondents should place in evidence their supposed costs for the transportation under consideration. In the present states of the law


the protestants would be afforded an opportunity, following a continuance of the hearing for a reasonable length of time, to rebut that evidence. They would be given that opportunity because, as we all know, cost finding is not an exact science and transportation costs are not as readily ascertainable as the uninitiated might believe. But, with only 3 months from the date of suspension in which to bring the proceeding to rest, we may be certain that the protestants would be deprived of that opportunity. It is obvious that a miscarriage of justice would frequently result.

And although the Commission, if increased rates take effect at the end of the proposed 3-month period, may by order require the interested carriers to impound and record accurately the amounts received by reason of such records, with a view to refunding the portions found not justified, such power in the Commission would be meaningless in the case of reduced rates and resulting discrimination between shippers and receivers of fresh fruits and vegetables. Even in the case of increases, moreover, it is easy to visualize many questions arising as to the proper party to whom refunds should be made, and there is the further fact that the majority of the members of this association are not equipped to keep the requisite records or to file the requisite claims for refund. To sum up, then, the shortened suspension period would be definitely unworkable.

We are opposed also, as already stated, to the restrictions which would be laid upon the discretionary suspension powers now vested in the Commission. As the law now reads, the Commission may exercise the suspension powereither upon complaint or upon its own initiative without complaint, at once, and if it so orders without answer or other formal pleading by the interested carrier or carriers * * * Under the pending bills, however, the Commission could exercise the suspension poweronly if it determines on the basis of factual information by sworn complaint, affidavit, or other evidence, furnished by the complainant, or as a result of its own investigation (a) that the rate, fare, charge, classification, regulation, or practice would probably be unlawful, and (b) that making such rate, fare, charge, classification, regulation, or practice effective would result in injury to the complainant, and (c) that remedies available to the complainant would, in the absence of suspension be inadequate * * *

It must be remembered that under the Commission's rules of practice anyone seeking suspension of a proposed rate, fare, charge, et cetera (effective on 30 days' notice) has at most only 18 days (12 days prior to the published effective date) in which to file a protest with the Commission. In that short time it would be quite impossible in the majority of cases for a protestant to assemble and adduce each of the 3 required types of proof. Not only is this true, but it is generally recognized that in statutes of this character it is preferable that standards be set forth in general terms, with broad discretion left in the regulatory tribunal. As indicated by the Commission, furthermore, in its comments on the proposed bills, there is a serious question whether the public interest, of which the Commission is the guardian, as distinguished from private interests, could be protected adequately if the pending bills should so sharply curtail the Commission's suspension power.


Since it is our understanding that a number of other witnesses have gone at length into the subject of the proposed revised ratemaking rules, we shall speak of this only briefly, although we hope that it will not be concluded from this that we have no great interest in this feature of the pending bills. To the contrary, we are vitally interested in this for the same reasons, substantially, that actuated our expressed opposition to the proposed revised transportation policy. That is, we are immediately and deeply concerned with the proposed provision of section 15 (a) thatIn determining whether a rate, fare, or charge, or classification, regulation, or practice to be applied in connection therewith, results in a charge which is less than a reasonable minimum charge, as used in this act, the Commission shall not consider the effect of such charge on the traffic of any other mode of transportation; or the relation of such charge to the charge of any other mode of transportation; or whether such charge is lower than necessary to meet the competition of any other mode of transportation * * *

Who can doubt that the effect of this provision would be to free the railroads and the motor carriers of all competitive restraints and thus actually, paraphrasing the language of the present transportation policy, to encourage unfair or destructive competitive practices? And who can doubt, in recognition of the overwhelmingly greater financial resources of the railroads, that eventually these unfair and destructive competitive practices would drive the motor carriers to the wall and deprive the shippers and receivers of fresh fruits and vegetables of the healthful competition which they now have available to them?

We repeat that we hold no brief for any form of transportation. We do firmly believe, and here urge, however, that in the public interest we are entitled to have all forms of transportation at our disposal. We are convinced that such will not be our privilege if these pending bills be enacted into law. Our best long-range interests cannot possibly be subserved by a railroad monopoly. Doubtless our members would reap temporary benefits in the way of reduced rates and charges, but inevitably they would suffer immeasurably in the long run.

We respectfully ask that the proposed amendments of section 15a be categorically rejected.


That brings me to a proposed amendment with which we are in hearty accord, namely, the suggestion that the Interstate Commerce Commission be authorized to require discontinuance or curtailment of railroad services or facilities in intrastate commerce.

The United Fresh Fruit and Vegetable Association has repeatedly urged upon the Commission, in opposition to the continuing petitions of the railroads for nationwide general freight-rate increases, that greater consideration be given to the rail-passenger deficits. For example, in my verified statement of June 30, 1955, in the proceeding entitled "Increased Freight Rates, 1951," I had the following, in part, to say to the Commission:

1. It is reliably forecast by qualified economists that the railroads will experience a boom year in 1956, which will find them worrying about where the

« PreviousContinue »