not a contract carrier for purposes of regulation under part III. The Commisson further held, however, that Columbia in the transportation of bulk commodities was exempt from regulation by virtue of section 303 (b).

it is apparent from the Columbia case that the Commission is not disposed to follow the maritime law in construing the statutory term "contract carrier by water" The indication is that the latter term would be construed more narrowly thin the maritime law and more narrowly than the Congress intended.

Due consideration has been given the decision of the Commission in American Range Lines, Inc., Contract Carrier Application (260 I. C. C. 262), decided several months subsequent to the Columbia case, American Range Lines involved the application of a so-called tramp ocean operator for continuation of rights as a contract carrier under applicable provisions of part III. Its transportation consisted of the movement of full vessel cargoes either under period contracts er under voyage contracts. In that respect the facts of American Range Lines perations were substantially similar to those of Columbia. Holding that American Range Lines was a contract carrier, the Commission observed that: The carrier which engages in the specialized business of transporting full cargoes or large quantities of a single commodity so that the shipper has the e of the full reach of the vesssel does not serve the general public. Under Le common law it is well settled by Federal court decisions that vessel operators engaged in the transportation of full cargo loads for one shipper were not esmon carriers."

Nevertheless, the Commission, particularly in motor carrier enses, has consistently sought to graft upon the common law concept of contract carrier the further requirement of specilaization. See Pregler, Ertension of Operations (23 M. C. Č. 691); Craig, Contract Carrier Application (31 M. C. C. 705); and Transportation Activities of Midwest Transfer Company (49 M. C. C. 383). The effect of the "specilaization test," thus conceived, has lead the Commission to conclude that, where a carrier serves a number of shippers, specialization is necessarily absent and the absence of specialization constitutes a "holding out" of service to the general public.

Recently a three-judge district court, in Contract Steel Carriers, Inc. v. United States (DC ND Ind.) 128 F. Supp. 25), held that the only reasonable construction of the statutory term "special contract," originally used in the 1935 act, means no more than a contract specifically negotiated with a particular shipper. Special, the court said, “* * * distinguishes the personal relationship between the private carrier and each individual shipper from the impersonal relatonship of a common carrier to each member of the general public who applies to him for service which he is required by the public nature of his undertaking to render indiscriminately." The court went on to say, in effect, that the Transportation Act of 1940 is clear on its face and that the term "contract carrier" is there defined in terms of the well understood common law concept. Ambiguity enters into the picture only when dragged in to support a departure from that universal concept."

While the Supreme Court affirmed per curiam the decisions of the threeJudge court in that case (24 U. S. Law Week 4134), the discussion of the Supreme Court injected one element that indicates uncertainty of the full meaning of the decision. The lower court had held in effect that the definition of the term "contract carrier by motor vehicle" as used in part II was nothing more nor less than a codification of the term recognized by the common law. The Supreme Court may not have rested its decision solidly on the common law concept of the term as did the district court. The opinion states that if, as claimed by the Commission, specialization in the operation of the carrier was also necessary, the requirement was "satisfied here, since appellee (the carrier) hauls only strictly limited types of steel products under individual and continuing contractual agreements with a comparatively small number of shippers throughout a large area."

The definitions of the term "contract carrier by motor vehicle" and the term "contract carrier by water," as used in the act, are substantially the same. If specialization is to be a requisite in the one, as may have been implied by the Supreme Court, specialization may very well have been an ingredient of the other. While the transportation of commodities in bulk on the Great Lakes by vessels especially designed for the trades has always been regarded as a specialty within Great Lakes trades, there is no assurance that the Commission and the courts would recognize that fact. The only certain way of holding the traditional exemption of Great Lakes bulk transportation from economic regu

lation is to retain the status quo in the legislation and that would require continuance of the law as it exists with respect to the Great Lakes.

(b) H. R. 6141 and H. R. 6142 would place Great Lakes bulk transportatum under regulation of Interstate Commerce Commission.-These bills propose tat section 302 be amended by redefining the terms "common carrier by water" and "contract carrier by water" as follows (changes are shown by enclosinZ 2 black brackets the language that would be deleted and by italicizing the prope-ed new language):

"(d) The term 'common carrier by water' means any person which holds itsef out to the general public to engage in the transportation by water in interstate or foreign commerce of passengers or property or any class or classes thereof for compensation, [except] including any person heretofore engaged in transportation as a contract carrier by water which the Commission skall find in appropriate proceedings not to be engaged in transportation as a contract currum by water as defined hereby, but excluding transportation by water by an expreÉS company subject to Part I in the conduct of its express business, which sti be considered to be and shall be regulated as transportation subject to Par- 1 "(e) The term 'contract carrier by water' means any person which 【 1, der individual contracts or agreements] engages in transportation by water of passengers or property in interstate or foreign commerce for compensation cother than transportation referred to in paragraph (d) and the exemption therein on the basis of bilateral contracts for specialized or individualized servÁCH UP services equivalent to bona fide private carriage by water.”

The ostensible purpose of these proposed definitions is to assist the C-ter mission in drawing a line of demarcation between common carriers and contract carriers. The definition of "contract carrier by water" contained in the present act would be deleted in favor of a much more restrictive definition hingel -;a specialization in order to carry out the recommendations of the Presideti ini Advisory Committee. The definition would be completely recast and would be much more restricted than the concept prevailing under the general mai de law. As stated above, the term “contract carrier by water" now means “any person which, under individual contracts or agreements, engages in the transportati

by water of*** property * *." It will be noted that the word “individual” modifies "contracts or agreements." The proposed defin tiễn ≥ w. ever, would shift the qualification to the service, the language being on the basis of bilateral contracts for specialized or individualized service or services equivalent to bona fide private carriage by water."

While the requirement as to "bilateral contracts" would not be restrictive the requirement that the contract shall pertain to "specialized or indiv dua saed service or services" is most restrictive. To retain the status of a contract car -I by water, every Great Lakes operator would have to meet the "specta':za'i»@ test." Specialization may take many forms.

Some indication of the meaning which the Commission would give the w "specialized" and “individualized" may be found in decisions of the Comar as a construing section 303 (e) which confers upon the Commission authority t exempt from regulation "transportation by contract carriers by water which be reason of the inherent nature of the commodities transported, their requirene t of special equipment, or their shipment in bulk, is not actually and substan" a f competitive with transportation by any common carrier" by rail or motor veb de One case involved a water carrier making application for grandfather rigs shortly after the enactment of part III. That carrier sought to have exen, pied from regulation services rendered by certain barges, which were equipped bins for holding sand, gravel, and cement and with a concrete mixer and derrig for the handling of concrete. The barge operator mixed the concrete aboar barge for customers according to their specifications and delivered the evi tita so specified to the jobs where the concrete was desired. The evidence siz resi that the concrete was always furnished under individual contracts precvije] 15 negotiations and that only a limited number of persons was served. The e dence further showed that there was no substantial competition with ev carriers by rail or motor vehicle. The Commission held that the operation » the barge owner under those circumstances were those of a contract carrier 1. individual contracts with a limited number of customers, according to Pert specifications for a particular kind of concrete, and that those operai užs sa' » fied the requirement with respect to special equipment necessary to ex-up i operator as a contract carrier. Union Barge Line Application (230 L C. C 3 Fed. Carr. Cases, sec. 30,276).

Another decision of the Commission casts some light on the meaning of the term "individualized service." A barge operator initially sought grandfather rights as a contract carrier. Upon consideration of his application, it appeared that the operator served 7 shippers under separate contracts with each, but had no equipment designed especially to meet the needs of any particular shipper. The same vessels were used for all shippers, according to the convenience of the operator. During consideration of his application, the operator amended it to seek operating rights as a common carrier. The Commission held that the application so amended should be allowed for the reason that there was nothing individual about the services which the operator rendered his customers. Walter D. Martinson, Contract Carrier Application ((Div. 4, I. C. C.) 7 Fed. Carr. Cases, sec. 31,630).

These two decisions indicate that the Commission might very well construe the words "specialized * * * service" to mean a service by special equipment and “individualized service" to mean service rendered by a vessel owner to meet the peculiar requirements of a shipper as distinguished from the requirements of other shippers whom such vessel owner served. That the transportation of comnodities in bulk on the Great Lakes is a "specialized” and “individualized” servlee could be questioned by the Commission, inasmuch as it is the conventional or general trade of the Great Lakes and the vessels are generally designed to meet the requirements of the trade. The vessel or vessels used for one customer are usually capable of meeting the requirements of all other customers. Finally, there remains to be considered the meaning of the term "service or services equivalent to bona fide private carriage by water." The report of the Presidential Advisory Committee observes that the definition of the term “contract carrier" should be reframed so that a vessel owner would be regarded as a contract carrier only if the carrier clearly substitutes for feasible private carriage operation. The term "private carriage by water," as applied in part III, would not be expressly defined by the bills, although that term would be defined in the redefinition of terms under part II, applicable to motor carriers. There the definition would be restricted to the situation where the owner of the vehicle and the owner of the property transported are the same, either by direct ownership, lease, or bailment, but the ownership, lease, or bailment of the goods could not be accomplished for the purpose of transportation.

As mentioned, the view of the Presidential Advisory Committee is that a contract carrier should be regarded as such only if he substitutes his service for that of the owner of the goods were he moving them himself. The Presidential Adrisory Committee further states in effect that no carrier should be regarded as a contract carrier where a particular service could be performed by a common carrier. If the true meaning of the language "specialized or individualized service or services equivalent to bona fide private carriage by water" is to be found in the report of the Presidential Advisory Committee, it might be held that a vessel owner would be regarded as performing services equivalent to bona fide Private carriage only if his vessels serve the interests of one shipper or customer. (c) Modification of Great Lakes bulk exemption necessary with repeal of general bulk exemption.-As previously noted, part III contains two separate exemptions of the transportation of commodities in bulk by water carriers. Placed in the order in which those exemptions were originally considered by the Congress, the exemption relating to the Great Lakes should be stated first and the general exemption second. As S. 2009 was finally enacted and the exemptions written into section 303 of the act, they read, in the order in which considered by the Congress:

"(e) Nothing in this part shall apply to transportation by a contract carrier by water of commodities in bulk in a nonoceangoing vessel on a normal voyage during which (1) the cargo space of such vessel is used for the carrying of not more than three such commodities, and (2) such vessel passes within or through waters which are made international for navigation purposes by any treaty to which the United States is a party."

"(b) Nothing in this part shall apply to the transportation by a water carrier of commodities in bulk when the cargo space of the vessel in which such commodities are transported is being used for the carrying of not more than three such commodities. This subsection shall apply only in the case of commodities in bulk which are (in accordance with the existing custom of the trade in the handling and transportation of such commodities as of June 1, 1939) loaded and carried without wrappers or containers and received and delivered by the carrier without transportation and delivered by the carrier without transportation mark

or count. For the purposes of this subsection two or more vessels while navi gated as a unit shall be considered to be a single vessel. This subsection shall not apply to transportation subject, at the time this part takes effect, to the provisions of the Intercoastal Shipping Act, 1933, as amended."

H. R. 6141 and H. R. 6142 would repeal paragraph (b), the general bulk om modity exemption, but would leave in effect paragraph (c), the Great Lais exemption. Thus the bills recognize, as did the Congress in enacting the Sp ping Act of 1916, the Intercoastal Shipping Act of 1933 and the Transportati-c Act of 1940, that the competitive forces affecting Great Lakes bulk commodity transportation do not call for an adjustment through the extension of regulatory programs and policies to such transportation. Indeed, it appears to be the primary purpose of these bills to equalize the opportunity for regulated land and water carriers through the equality of regulation among competitors. Whatever may be the merits of such a proposal, the fact remains that, inasmuch as the carriage of bulk commodities on the Great Lakes is not competitive with common carriers either by land or by water, there is no need for bringag Great Lakes bulk transportation under statutory economic regulation.

However, because the present exemption pertaining to the transportation of commodities in bulk on the Great Lakes is limited to "contract carriers," this exemption might be of little effect and purpose should the general commod ty exemption be repealed. As indicated previously, the Congress, in earlier enactments, always regarded the Great Lakes vessel operator as a contract carrier in terms of the general maritime law. By redefining the term "contract carrier by water" and, in effect, abandoning the general maritime law in favor of a much more restricted relationship, these bills would take the Great Lakes vesori operator out of his natural role as a contract carrier. Disregarding the intent of the Congress as expressed in the Shipping Act of 1916, the Intercoastal Shipping Act of 1933 and the Transportation Act of 1940, these bills would, by legis lative fiat, impose upon Great Lakes contract carriers all of the regulatory provisions applicable to common carriers under the act. While the Congress may well have the constitutional power under the commerce clause to impose upt contract carriers requirements and restrictions applicable to common carriers, such treatment of contract carriers would be, to say the least, unreasonable and arbitrary. Wolff v. Industrial Court (262 U. S. 522); Michigan CommissioN V Duke (266 U. S. 570).

Even if the present definition of "contract carrier by water" is retained, there is considerable doubt, in view of the recent decision in Contract Steel Carrera, Inc., v. United States, supra, that the Commission would continue to construe that term in accordance with the general maritime law. Consequently, if the general bulk commodity exemption is repealed, the present Great Lakes eIer ¦ tion would be an exemption in name only. Many Great Lakes vessel operators, whom Congress heretofore has always regarded as contract carriers, wesid probably be held to be common carriers and thus subjected to regulation.

Such a result would not be in the best interests of the Nation and would cottravene the express intent of Congress. It would seem that, if the general commodity exemption contained in paragraph (b) of section 303 is repealed, the Great Lakes bulk exemption contained in paragraph (c) should be modified su as to make it clear that the exemption is to apply to all water carriers engaged in the transportation of commodities in bulk on the Great Lakes. This end be accomplished by deleting the word "contract" so that the exemption would apply to all Great Lakes carriers by water engaged in the transportation of cour modities in bulk.

CONCLUSION

The transportation of commodities in bulk on the Great Lakes is condo ted by contract and private carriers. It is a homogeneous mode of transporta"; @ and is not competitive with common carriers either by land or water It s however, highly competitive among the bulk carriers themselves and between them and foreign carriers. By excluding such transportation from stature economic regulation, the Congress has already accomplished for the Great Lak one of the stated objectives of the Presidential Advisory Committee. The forces of free competition and no other regulate this segment of the Nations transpor tation.

In the event the general bulk exemption contained in paragraph (b) of section 303 were repealed without adequate modification of the Great Lakes bra exemption contained in paragraph (c), inequalities would occur in the trane portation of bulk commodities on the Great Lakes in that: (1) At the presett

time neither United States nor foreign carriers, especially Canadian, which compete in international trade on the Great Lakes, are regulated. They obtain their cargoes on a free competitive basis. Statutory economic regulation is not contemplated for such foreign carriers so that, if United States carriers were so regulated, foreign carriers would be free and United States carriers controlled. (2) Some carriers would qualify as "contract carriers" and so would be exempt. Thus, for the first time there would be disparity among bulk carriers on the Great Lakes in that, of the water carriers who would be in competition with each other, some would be regulated and some would not.

Repeal of the general bulk exemption would clearly imperil the policy established by the Congress in the transportation of bulk commodities on the Great Lakes. Standing alone in its present form, the Great Lakes exemption would pot serve to effectuate established congressional policy. The redefinitions of the terms "common carrier by water" and "contract carrier by water,” as recommended by the Presidential Advisory Committee and as proposed by these bills, would, in all probability, bring under the provisions of part III most Great Lakes Vessel owners whose business is exclusively the transportation of commodities in bulk for others.

In order to preserve established congressional policy, it is proposed, therefore, that the Great Lakes exemption be amended by deletion of the word "contract" so that such exemption would "apply to transportation by a carrier by water of commodities in bulk in a nonoceangoing vessel on a normal voyage during which (1) the cargo space of such vessel is used for the carrying of not more than three such commodities, and (2) such vessel passes within or through waters which are made international for navigation purposes by any treaty to which the United States is a party."

Mr. WILLIAMS. Are there any questions?

Accordingly, the committee will adjourn until 10 o'clock in the morning.

(Whereupon, at 4: 40 p. m., the hearing was recessed until 10 a. m., Wednesday, June 6, 1956.)