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The requirement that contract carriers by water and motor file their actual rates or, in the alternative, contracts covering the transportation involved is intended to assist common carriers in competing with contract carriers. The present requirement that contract carriers file only their minimum rates, fares or charges makes it difficult for common carriers to compete effectively because they are unable to determine the actual rates being charged by such carriers.

Under part III of the act, transportation by a water carrier of dry-bulk commodities is exempt from regulation when the space in the vessel in which such commodities are transported is being used for the carrying of not more than three such commodities. Barges in tow are considered single vessels for the purpose of this exemption.

Repeal of this exemption would subject common and contract carriers engaged in dry-bulk transportation on the inland waterways, coastal waters, deep sea routes, and the Great Lakes to regulation by the Commission. Such repeal would not affect the separate exemption applicable to transportation of liquid cargoes in bulk in specially designed tank vessels, or exemption applicable to transportation of dry-bulk commodities by contract carriers in non-ocean-going vessels on international waters. Provision is made for granting appropriate operating authority on a “grandfather” basis to carriers whose operations would no longer be exempt because of repeal of the exemption.

Subjecting these exempt operations to regulation by the Commission would equalize the opportunity for regulated carriers to compete for a large segment of dry-bulk traffic. Regulated carriers must, among other things, adhere to their published tariff rates, and are at a distinct disadvantage in competing with wholly unregulated carriers who handle nothing except dry-bulk commodities. These latter carriers need only to inspect published tariffs of regulated carriers to determine how low they must quote rates in order to bid successfully for available traffic. Furthermore, regulated carriers by water experience difficult operating problems in attempting to separate tows in an effort to qualify for the bulk exemption.

Operations of a shipper, or group or association of shippers, in consolidating or distributing freight for themselves, or for members thereof, on a nonprofit basis, for the purpose of securing carload, truckload, or other volume rates, are exempt from the regulation applicable to freight forwarders under part IV of the act. For years the Commission has reported great difficulty in distinguishing between operations of such shipper associations which claim to be exempt and those of regulated freight forwarders.

The bill would give the Commission authority to make the exemption inapplicable, after hearing and investigation, where it finds that activities are not being conducted solely for the purpose, and within the limitations, specified in the act. In making its findings and determinations, the Commission would be required to consider, among other things, the facts and circumstances surrounding the organization and establishment of the activities, the scope of the activities, geographically and as to commodities handled and persons served, basis of charges for services, and the extent to which such activities are in competition with the services of regulated freight forwarders.

The Commission does not have authority under the act to order the curtailment or discontinuance of any unprofitable intrastate transportation service. Such auhority is usually within the jurisdiction of State regulatory commissions. These commissions are generally reluctant to grant permission for such curtailment because of opposition from local interests and employees of the carriers.

The bill provides that the Commission may order the discontinuance or curtailment of service under State service requirements where it finds that such requirements cause a net loss in revenue to carriers and persons subject to parts I and IV of the act, or otherwise unduly burden interstate or foreign commerce. However, the Commission must find that reasonably adequate service would be available to the public in lieu of the discontinued or curtailed service.

The passenger train service deficit continues year after year as one of the railroads' most serious financial problems. So long as railroads cannot obtain authority to eliminate unprofitable passenger services, the losses will continue to be borne from earnings realized from freight service.

Section 22 of the act authorizes carriers to provide free or reduced-rate transportation of property for the United States, State or municipal governments, and free or reduced-rate transportation of persons for the United States Govern

ment. These rates are not subject to the filing and publication requirements of the act.

The bill would delete this authority from section 22 but would authorize carriers to establish rates of special application for the United States, State and municipal governments. These rates would be subject to all of the applicable provisions of the act except those relating to suspension and the long-and-shorthaul clause. Such rates could be filed on short notice or made retroactive, where the circumstances warranted. Also, the filing and publication requirements of the act could be waived when the security of the United States required it. Outstanding contracts exending reduced rates under section 22 to Federal, State, and municipal governmens would have to be filed and published and would be made subject to applicable provisions of the act.

Authority for rates of special application is continued because of the peculiarities of governmental procurement practices, the differences between transportation for the Government and that for the general public, and national security considerations.

The Department suggests that the following clerical or technical changes be made in H. R. 6141.

(1) On page 6, line 16, delete the words “proportional rates, or”. The words were incorrectly retained when the amended section was drafted. Retention of the words would result in an ambiguity with respect to the purpose of the section to limit the authority of the Commission to the establishment of just and reasonable minimum or maximum proportional rates.

(2) On page 7, line 16 delete "interstate" and substitute "intrastate” therefor.

(3) On page 9, line 23, delete "wherever" and substitute “whenever” therefor.

(4) On page 18, line 21, delete the words "thereto and”.

(5) On page 18, line 22, delete “personnel” and substitute “personal” therefor.

(6) On page 19, line 15, delete “thereto”.
(7) On page 19, line 16, delete "and" as it first appears therein.
(8) On page 29, line 16, delete the words “thereto, and”.
(9) On page 43, line 17, delete the words “thereto and”.
(10) On page 47, line 18, delete "fare”.

This Department believes that H. R. 6141 is a complete and accurate implemention of the recommendations contained in the Report of the Presidential Advisory Committee on Transport Policy and Organization. The Department also believes that enactment of the bill would be in the public interest because it amends the Interstate Commerce Act so as to provide a sound national transportation policy for the regulation of carriers subject to the act. We urge that your committee give favorable consideration to the bill.

We have been advised by the Bureau of the Budget that it would interpose no objection to the submission of this report to the committee. Sincerely yours,

SINCLAIR WEEKS, Secretary of Commerce.

EXECUTIVE OFFICE OF THE PRESIDENT,

BUREAU OF THE BUDGET,

Washington, D. C., October 28, 1955. Hon. J. PERCY PRIEST, Chairman, House Committee on Interstate and Foreign Commerce,

House of Representatives, Washington, D.O. MY DEAR MR. CHAIRMAN: This is in reply to your letter of May 11, 1955, requesting the views of this office with respect to H. R. 6141, a bill to amend the Interstate Commerce Act, as amended, so as to provide for a stronger national transportation industry, and for other purposes.

H. R. 6141 was proposed to implement the various recommendations of the Advisory Committee on Transport Policy and Organization and it would seem that it substantially carries out these recommendations.

The Bureau of the Budget believes that the purposes and objectives of the report are sound, and we would have no objection to enactment of legislation along the lines of H. R. 6141. Sincerely yours,

ROWLAND HUGHES, Director.

COMPTROLLER GENERAL OF THE UNITED STATES,

Washington, June 30, 1955. Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce,

House of Representatives, Washington, D.C. DEAR MR. CHAIRMAN : Reference is made to your letter dated May 11, 1955, with which there was enclosed a copy of bill H. R. 6141. You request a report together with any comment we may desire to make concerning this proposed legislation.

We understand that this bill is identical to bill S. 1920, introduced in the United States Senate on May 9, 1955. These bills are designed to implement the recommendations made to the President in a recent report by the Presidential Advisory Committee on Transport Policy and Organization, which was endorsed by the President when released on April 18, 1955. While H. R. 6141 is in the form of a single bill, there is included a series of important proposed changes in the Interstate Commerce Act, which apparently will have far-reaching effect upon the transportation industry and the users of transportation services. The preparation of a detailed report on all of the proposed changes in the Interstate Commerce Act would entail extensive study. It has been said that many of these changes are highly controversial and that extensive hearings are contemplated before any of the proposed changes can be enacted into law. Our comments are limited to those provisions of H. R. 6141 which would seem to have a direct influence upon the United States Government in its capacity as a user of transportation services.

Section 9 of the bill would amend section 22 of the Interstate Commerce Act, as amended by eliminating "the United States, State, or municipal governments” from the classes of shippers as to which section 22 provides that nothing in part I of the act shall prevent the carriage, storage, or handling of property free or at reduced rates. It would eliminate also a similar provision of section 22 with respect to the transportation of persons for the United States free or at reduced rates. Section 8 of the bill would amend section 15a of the Interstate Commerce Act, as amended, so as to include in paragraph (5) of section 15a a provision which would authorize the establishment, maintenance, publication, and application of "rates, fares, charges, and rules and regulations of special application” for transportation service to the United States, States, and municipal governments. It is apparent that the mentioned provision of section 8 of the bill is intended to preserve for the benefit of the designated classes of shippers at least some of the current benefits of section 22 of the Interstate Commerce Act, which would be eliminated by the enactment of section 9 of H. R. 6141.

It is our view that the exclusion of the United States from the benefits of section 22 is not required in the public interest, and we have recommended in a report dated March 17, 1955, against the enactment of another bill, H. R. 525 which was designed to accomplish that result. This view was predicated upon the fact, among others, that the proposed amendment of section 22, without the inclusion elsewhere in the act of a compensating or mitigating provision, would greatly increase the cost of Government operation. In that connection attention is invited to the fact that in a letter dated April 30, 1952, the Assistant Secretary of Defense, Charles A. Coolidge in reporting to the Committee on Interstate and Foreign Commerce, United States Senate, upon a bill then pending, estimated that annual Department of Defense costs would be increased by more than $1 million for transporting household goods alone, if the United States were to be excluded from the benefit of section 22 of the Interstate Commerce Act in relation to that commodity only. Later information, in letter of December 10, 1953, from the Department of Defense to this Office, is to the effect that a subsequent statistical study of all movements of household goods by motor carriers shows that, if all traffic were required to move under rates provided in M. F.-I. C. C. No. 57, rather than at rates provided in other tariffs actually used apparently by virtue of section 22 agreements, an increase of $1142 million annually in cost to that Department would result. It is believed here that the probability of rates being obtained below a compensatory level, as to any considerable amount of traffic, if any, under the authorization of section 22, is sufficiently negatived by the fact that the authorization in section 22 is permissive and not mandatory and by the further fact that the interests of performing carriers would not seem to be served by any consistent policy of furnishing Government transportation at a loss.

Obviously section 8 of the proposed bill, if its apparent purpose to afford the Government reduced rates is assured would compensate in some degree at least, for advantages that would be lost through the exclusion of the United States from the permitted concessions authorized in section 22. It is noted, however, that the authorization mentioned in section 8 of the bill extends only, in its terms, to rates, fares, charges, etc., "of special application” for transportation service to the United States, States, and municipal governments, and requires that such rates shall be subject with certain specified exceptions, “to all other applicable provisions of the Act.” It is assumed it is the purpose of this provision to remove the rates, fares, etc., as so authorized, from attack on the grounds of being unjustly discriminatory or preferential when lower than other regularly established rates applicable commercially, but the omission from the bill of any express authorization of "reduced” rates for Government traffic and the indefiniteness possible of attachment to the phrases “of special application" and "all other applicable provisions" (emphasis supplied] are considered as justifying the suggestion that, if section 22 is to be amended so as to exclude the United States from its provision, then the authorization to be afforded under section 8 of the bill should be made clear as permitting reduced rates for Government traffic and providing that any discrimination in favor of the United States is not subject to attack per se. It would seem that, even with these specific provisions, section 8 of the bill, if enacted, would still require that such rates be subject to the minimum and maximum rate provisions of the bill.

It would seem, also, that the provision in section 8 of the bill, making the rates on Government traffic subject to all other applicable provisions of the act, except as specifically provided by section 8 of the bill, would render questionable whether the provisions of section 16 of the Interstate Commerce Act might not be considered as applicable to proceedings instituted by the Government. We considered the question of a proposal to prescribe limitations upon actions involving rates upon Government traffic in a report to the Committee on Interstate and Foreign Commerce, United States Senate, May 31, 1955, upon bill S. 543, and we expressed the view that any limitation of less than 3 years for instituting proceedings before the Interstate Commerce Commission to seek reparation as for unreasonable rates, with respect to transactions occurring during times of emergency, would be wholly inadequate to the due protection of the Government's interests. It is believed proper also to call attention to the fact that if the provisions of section 16 of the Interstate Commerce Act, with respect to limitations upon suits to recover overcharges, were to be considered applicable to the Government, the incongruous result would ensue that under judicial interpretations of section 16 of the act the carriers would be permitted 6 years within which to bring suit against the Government for collection of undercharges, as compared, with the shorter period of 2 years prescribed in section 16 with respect to suits by shippers for recovery of overcharges. It is believed the provisions of the bill should be clarified in this respect. We have no other recommendations to make at this time. Sincerely yours,

FRANK H. WEITZEL, Assistant Comptroller General of the United States.

DEPARTMENT OF THE ARMY,

Washington, D. C., April 24, 1956. Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce,

House of Representatives, Washington, D. C. DEAR MR. PRIEST: Reference is made to your request to the Secretary of Defense for the views of the Department of Defense with respect to H. R. 6141, 84th Congress, a bill to amend the Interstate Commerce Act, as amended, so as to provide for a stronger national transportation industry, and for other purposes. The Secretary of Defense has delegated to the Department of the Army the responsibility for expressing the views of the Department of Defense.

The purpose of H. R. 6141 is to carry out recommendations made by the Presidential Advisory Committee on Transport Policy and Organization in its report released by the White House on April 18, 1955. The Department of Defense is interested in the effect that such legislation would have on the movement and cost of military traffic, and upon the the effect it might have on the health of a national transportation system adequate to meet the needs of national defense.

Both interests are considered quite important. The comments in this report deal almost wholly with implementive particulars. The Secretary of Defense participated in the basic study of the existing regulatory scheme and was well aware of the need to (a) strengthen the common-carrier transportation industry, and (0) to relax the shackles of regulation so that competitive forces, which have played such a vital part in the development of this country, would again assert themselves in the transportation industry. The proposed legislation is designed to accomplish these objectives and, in principle, has the wholehearted support of the Department of Defense.

The Presidential Advisory Committee recommended removal of the requirement for prior approval [italic sic] for departure from both the long-and-short-haul clause and the aggregate-of-intermediates clause, appearing in section 4 of the act. Section 4 of the bill (p. 5, line 21, et seq.) makes two principal changes in section 4 of the act:

(a) Repeals the aggregate-of-intermediates clause without any replacement.

(6) Permits departure from the long-hand-short-haul clause if necessary to meet actual competition and if the charge to or from the more distant point is not less than a just and reasonable minimum charge.

Various reasons, other than competition, may be ascribed for the establishment of rates which when aggregated result in a rate lower than the through rate to, from, and between specified points. Consequently, outright unconditional repeal of the aggregate-of-intermediates clause will permit carriers to (a) raise many through rates to exceed the aggregate of intermediates, (b) continue, when located, through rates higher than the aggregate of intermediates, and (c) establish new rates in excess of the aggregate of intermediates. Maintaining a through rate higher than the aggregate of intermediates cannot be justified on any ground except where one or all of the factors making up the aggregate of intermediates have been established to meet some type of competition. In general, rates are limited to the aggregate-of-intermediate rates merely by the insertion of a clause in tariffs. To repeal the aggregate-of-intermediates clause, leaving shippers only recourse under other provisions of the act, is likely to work inequities and unduly increase litigation under section 3 of the act without accomplishing any substantial improvement in regulation as a whole. It may also encourage travelers and shippers to adopt or attempt various devices to interrupt their travel, or the transportation of their goods, so as to obtain the benefit of the sum of the intermediate fares or rates, a result not in the direction of transportation efficiency or orderliness.

The proposed outright exceptions to the long-and-short-haul clause (p. 6, lines 7-12 of the bill) also go beyond the intent of the recommendations of the Presidential Advisory Committee. However, the conditions established conform to those named in those recommendations and coincide with standards under which the Interstate Commerce Commission today generally grants relief from the longand-short-haul provisions. Apparently, the proviso in section 4 of the bill intends to preserve all standards and remedies provided in other sections of the act. However, under the principle, expressio unius est exclusio alterius, construction of the act could become uncertain because of this proposed proviso. In order to remove the possibility of varying legal construction in this connection, it is suggested that the imposition or a lesser charge for longer than for shorter hauls be subject to the standards of lawfulness set forth in other sections of the act.

The following quoted paragraph is suggested to meet the objections of the preceding paragraphs. Except for the italicizing of the phrase "Provided, however," italic indicates additions with respect to the aggregate of intermediates and the long- and short-haul clauses.

"SEC. 4. Paragraph (1) of section 4 of the Interstate Commerce Act, as amended, is amended to read as follows:

“(1) It shall be unlawful for any common carrier subject to this part or part III to charge or receive any greater compensation in the aggregate for the transportation of passengers, or of like kind of property, for a shorter than for a longer distance over the same line or route in the same direction, the shorter being included within the longer distance, or to charge any greater compensation as a through rate than the aggregate of the intermediate rates subject to the provisions of this part or part III except in cases where any or all of the single factor rates used to make up the aggregate-of-intermediates rate has been established by the carrier to meet competition, but this shall not be construed as authorizing any common carrier within the terms of this part or part III to charge or receive as great compensation for a shorter as for a longer distance :Provided, however,

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