whether or not the definitions of contract carriers by motor vehicle and water should continue to be uniform. FILING OF ACTUAL RATES OR PUBLICATION OF CONTRACTS BY CONTRACT CARRIER BY WATER The purpose of the amendment made by section 16 is to enable common carriers by water or other forms to compete more effectively with contract carriers by water. Contract carriers by water, just as contract carriers by motor vehicle, have greater flexibility in rates than their common carrier competitors since they are only required to file their minimum rates. Common carriers by water are, therefore, in no better position to ascertain the actual rates charged by contract carriers. In view of this, there would not seem to be any logical reason why identical treatment should not be accorded contract carriers by motor and water insofar as the filing of rates "actually maintained and charged" is concerned. The Commission itself has said that the provisions of section 306 (e) must be interpreted in the same maner as those of section 218 (a) relating to the filing of minimum rates by contract carriers by motor vehicle. Commenting on section 306 (e) in Atwacoal Transportation Company, Minimum Rates (283 I. C. C. 674), the Commission said at page 656 that contract carriers by water *** should establish *** the lowest rates and charges which are being collected under some shipper contracts. It should be understood that rates higher than the minimum rates and charges published may be charged other shippers without being filed with the Commission, provided *** those filed reflect the charges which are actually being collected from some shipper under a contract with such shipper. [Italic supplied.] Requiring contract carriers by water to file rates actually maintained and charged, or in the alternative the actual contracts covering the transportation, as proposed by section 16, would help stabilize the domestic water carrier industry and equalize the opportunity to bid for competitive traffic. The Commission states again in a report which it has submitted to your committee that it is not in favor of the enactment of section 16. However, it cites no reason in support of its position other than the fact that enactment of the section would, in their opinion, create a conflict with the provisions of section 313 (b) of the act. Our discussion above, of the same question as to motor-contract carriers, is applicable here. BULK-COMMODITY EXEMPTIONS Section 14 of the proposed bills implements the recommendation of the Advisory Committee Report relating to "bulk commodity exemption." This section revokes the exemption in section 303 (b) of the act applicable to the transportation by a water carrier of commodities in bulk when the cargo space of the vessels in which such commodities are transported is being used for the carrying of not more than three such commodities. This exemption is now applicable to transportation of dry bulk commodities by common and contract carriers on the inland waterways and the Great Lakes, and by contract carriers in the coastwise trade. As enacted, the dry-bulk commodity exemption was not extended to transportation subject at the time part III became effective to provisions of the Intercoastal Shipping Act 1933, as amended. Originally, only common and contract carriers operating in the intercoastal trade were made subject to the Intercoastal Act of 1933, but common carriers on the Great Lakes and in the deep-sea coastwise trades were brought within the scope of that act by the act of June 1938 (53 Stat. 155). However, the Interstate Commerce Commission held in Columbia Transportation Co. Contract Carrier Application (260 I. C. C. 135), that since the Maritime Commission had not asserted "jurisdiction" over Great Lakes carriers engaged in the transportation of bulk cargoes, such a carrier found to be a "common carrier" under part III of the Interstate Commerce Act was entitled to the exemption of section 303 (b). Notwithstanding the revocation of the exemption, transportation by contract carriers by water on the Great Lakes of not more than three such commodities would continue to be exempt under section 303 (c) of the act. I would like to insert here, for the record, that a suggestion has been made that the revocation of the bulk-commodity exemption and a revision of the definition of contract carriers might or would expose the Great Lakes carriers to the claim that they had become common carriers, and in that way the Great Lakes exemption as to some of them would be destroyed. I merely want to say at this point that I understand that the Advisory Committee had no such intention and if it should be the judgment of this committee in the course of these hearings that it would have that effect, I understand that the Department of Commerce and the committee would have no objection to making such change to obviate that proposal. Section 18 (a) and (b) of the bill, in accordance with the recommendations of the Advisory Committee report, amends section 309 (a) (f) of the act so as to provide for the granting by the Commission of appropriate operating authority to common and contract carriers by water transporting dry-bulk commodities pursuant to the repealed exemption. The purpose of these amendments is to equalize the opportunity for regulated land and water carriers to compete for the transportation of dry-bulk commodities. As indicated previously, transportation on the inland waterways system, which is the principal area affected by the repeal of the bulk exemption, has increased substantially in the postwar period. For example, on the Mississippi River System, Corps of Engineer data show that tonnage increased from 80.5 million short tons in 1946 to 136.4 million tons in 1954, the latest year for which figures are available. From all indications, traffic made further gains in 1955. This transportation is largely of dry-bulk commodities as shown by the following figures: To this list of dry-bulk commodities, which represents 55 percent of the total traffic on the Mississippi River system, may be added other commodities which move in bulk but are less significant individually from the tonnage point of view. Dry-bulk commodities represent a large proportion of the traffic moved by class A and B water carriers operating on the Mississippi River system, such carriers being subject to regulation under the Interstate Commerce Act. In 1954 these carriers transported a total of 34.4 million tons, according to Interstate Commerce Commission figures. It has been mentioned that about 50 percent of such traffic was exempted from regulation. The following figures show the movement of specific drybulk commodities: To this list which represents about 56 percent of the total may be added other commodities which move in bulk but in less significant amounts on an individual basis. The Interstate Commerce Commission has pointed out in reports to the Congress on legislation seeking to modify the dry-bulk commodity exemption that such exemption and others in part III of the act have left the greater part of all domestic water transportation free from regulation. Regulated rail, water, and motor carriers would appear to be at a distinct disadvantage in attempting to compete with unregulated water carriers who handle nothing except dry-bulk commodities. The regulated carriers must among other things, adhere to their published tariffs. It would also appear that unregulated carriers need only to inspect published tariffs in order to determine how low they must quote rates in order to bid successfully for available traffic. Although regulated water carriers are permitted to handle dry-bulk commodities on an exempt basis, just as the unregulated carriers are, they encounter operating difficulties in conforming with the statutory requirement for segregating exempt and nonexempt commodities. The Commission stated in its 68th annual report, that the exemption "makes effective regulation of water transportation impossible.' The dry-bulk commodity exemption in section 303 (b) was incorporated in to the act of Congress on the theory that transportation of such commodities by unregulated carriers would not be substantially competitive with land or water common carriers. The exemption in fact stemmed from the one granted to contract carriers on the Great Lakes by section 303 (c) of the act, a matter of which I have spoken previously. The latter exemption was based on (1) the competition which the contract carriers on the Great Lakes encountered from unregulated water carriers of a foreign country in the transportation of commodities in bulk, and (2) the fact that transportation of such commodities was not considered to be substantially competitive with land transportation. The Interstate Commerce Commission did not take exception to the proposed exemption for contract carriers on the Great Lakes in submitting its views to the Committee on Interstate and Foreign Commerce of the House in a letter dated January 29, 1940, with respect to S. 2009, 76th Congress, which became the Transportation Act, 1940, but said: We see no reason also why regulation of water carriers should not be comparable to present regulation of railroads and motor carriers covering not only rates and accounting but also control over new operations through certificates or permits over unifications over issue of securities, etc., as in the case of motor carriers, jurisdiction should also embrace contract as well as common carriers at least to the extent that the former are in close competition with the latter. Contract carriers are a very important factor in water carriage and it is unfair to tie the hands of common carriers in a measure by regulation without affording them some protection against unfair and destructive competition from the contract carriers. There are contract carriers, such as those which carry iron ore, coal, and grain in bulk on the Great Lakes who are practically noncompetitive with common carriers and could be relieved from regulations without harm. [Italic supplied.] S. 2009 was reported by the House Committee on Interstate and Foreign Commerce with an amendment providing for an exemption with respect to contract carriers by water transporting 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, and the bill was passed by the House with this amendment. The basis for the exemption was stated in House Report No. 1217, 76th Congress, as being the fact "that such transportation is not substantially competitive with land transportation." This exemption was extended, without explanation, by the conferees on S. 2009 so as "to cover common carriers by water as well as contract carriers by water." However, Senator Wheeler, in presenting the conference report to the Senate, stated on the floor that: The Senate bill contained certain exemptions from the regulation proposed for water carriers. *** Section 303 of the conference substitute contains these and certain more liberal exemptions. The conferees felt that these more liberal amendments should be adopted at this time on the theory that if experience should show that more extensive regulation is necessary that can be accomplished at a future time. [Italic supplied.] The following statements by the Commission in a letter dated March 23, 1955, to the chairman of the Senate Committee on Interstate and Foreign Commerce with respect to S. 951, 84th Congress, 1st session, which would have amended section 303 (b) of the act so as to limit the exemption contained therein to the transportation on the Great Lakes or coastwise by water carrier of commodities in bulk would appear to lend support to this recommendation: During the first few years of operation under part III of the act, this country was at war and conditions were such that every carrier had more than it could do to keep up with the demands for service. With the return to more normal conditions, however, the competitive situation has become intense. It is now apparent that effective overall regulation is not possible as long as bulk commodities can be moved by exempt carriers. [Italic supplied.] I would call your attention to the fact that even though the bulk commodity exemption contained in section 303 (b) is revoked, the revocation will not affect the present scope of the operations of carriers who have been engaged in exempt transportation under such section. As pointed out, section 18 (a) and (b) of the bill assures such carriers 78456-56-pt. 1—14 the right to continue in that business to the extent that they are now engaged in it, but requires that they obtain the approval of the Commission for further expansion of their activities. I also call to your attention the fact that section 303 (e) of the act declares it to be the policy of the Congress that the Commission shall exempt transportation by contract carriers by water which, by reason of the inherent nature of the commodities transported, their requirement of special equipment or their shipment in bulk, is not actually and substantially competitive with transportation by any rail, motor or water common carriers. No change is suggested to section 303 (e). So that, in fact, the achieving of this proposal for equality of regulation among competitors is unnecessary in any given case, because in the absence of competition, exempt status can be continued under this section. Mr. WILLIAMS. Thank you, Mr. Ray. I believe under the proceedings announced yesterday by the chairman (Mr. Harris), it was agreed that upon completion of your statement we would go back to Mr. Rothschild's statement and let him pick up there. Then, when the prepared statements of the representatives of the Commerce Department and the Commission and the Department of Defense had been completed, they would submit to questions. Am I correct in that— questioning would await the completion of your statements? Mr. RAY. That is substantially correct. We ourselves, or in the Commerce Department, made no presentation on section 22, and we consider that the Defense Department presentation, which will be made by Mr. Earl Smith, as part of our overall presentation, and I think Mr. WILLIAMS. I believe they have witnesses here to testify. Mr. RAY. Mr. Smith is here and we had thought that perhaps he should go on also before questioning was undetraken. Mr. WILLIAMS. That was my understanding. Mr. RAY. And, the Secretary, as you know, had another testifying engagement this morning, and when that is finished he will be here. That will probably be before we have finished the presentation we refer to. Mr. PRIEST. Mr. Chairman, may I inquire whether the Defense Department is confining its testimony primarily to section 22 or discussing the entire bill? Mr. SMITH. Section 22 entirely. Mr. RAY. Section 22. Mr. PRIEST. Thank you. Mr. RAY. Could I mention one further matter at this point? Mr. RAY. We have prepared at the suggestion of the committee a comparative print of the entire bill. I wonder whether I should offer that for the record or whether you would want to have it in the record. Mr. WILLIAMS. We would like to have that made available to the members of the committee. I do not think it will be necessary to include it as a part of your testimony. Mr. RAY. I think we have delivered sufficient copies and I will not offer it again as part of the record. Mr. WILLIAMS. I believe on yesterday you were interrupted, Mr. Rothschild. So, if you will, you may proceed and pick up where you left off yesterday. |