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The amendment to section 306 (e) of the act relating to water contract carriers proposed in this section is substantially the same as that to section 218 (a) proposed in section 12 (a), relating to motor contract carriers.

At present section 306 (e) requires water contract carriers to publish schedules of 'minimum rates or charges only, and this requirement is sufficient from a regulatory standpoint since the only duty imposed on such carriers is to observe reasonable minimum rates. It is not proposed to modify that requirement, but by the amendment proposed in section 16 water contract carriers would have to publish either the rates which they actually maintain or in the alternative at their option the contracts actually in force.

This proposal apparently springs from a view that full publicity should be given to rates and charges of water contract carriers. It would create a conflict with the following sentence in section 313 (b), as to which no change is proposed:

“The Commission shall not, however, make public any contract, charter, or agreement between a contract carrier by water and a shipper, or any of the terms or conditions thereof, except as a part of the record in a formal proceeding where it considers such action consistent with the public interest: * * *"

If the proposal to permit the filing of actual contracts in lieu of schedules is adopted, there would have to be modification of section 307 (g), which both as now worded and as proposed to be worded authorizes the Commission to suspend schedules but not contracts.

We are not in favor of the enactment of section 16.

SECTION 17

The amendments proposed in this section are to section 307 of the act, “Commission's authority over rates, and so forth,” pertaining to water carriers.

(a) The comments on section 7 (a) of the bill are applicable here. (b) The comments on section 11 (g) of the bill are applicable here.

(c) The proposal here is to make important amendments to section 307 (d) which authorizes the Commission to establish through routes and joint rates to which common carriers by water are parties. At present the Commission may prescribe the precise joint rates, the maximum or minimum rates, or the maximum and minimum rates. Consistently with one of the main objectives of H. R. 6141 it is proposed to restrict the power to the establishment of maximum or minimum joint rates.

In cases involving rail-water rates arising under this section there is likely to be a difference of opinion between the water lines and the rail lines as to the measure of the prescribed joint rates. In order to permit a decision which completely settles the controversy it is desirable that the present wording be retained. However, if the existing power is restricted, the proposed wording is somewhat unwieldy. As a substitute for lines 21 to 25 on page 32 and lines 1 to 3 on page 33 we recommend the following:

"initiative without a complaint, establish through routes, joint classifications, and joint maximum or minimum rates, fares, or charges, applicable to the transportation of passengers or property by common carriers by water, or by such carriers and carriers by railroad, and the divisions.".

It is proposed to omit the following sentence now included in section 307 (d):

"In the case of a through route, where one of the carriers is a common carrier by water, the Commission shall prescribe such reasonable differentials as it may find to be justified between all-rail rates and the joint rates in connection with such common carrier by water."

This sentence was enacted in 1940, and we advised the Congress at that time that it was unnecessary but otherwise unobjectionable.

It is proposed to modify the last sentence in 307 (d) to read :

“No existing through route shall be canceled except by agreement of all carriers whose lines are embraced therein unless the Commission shall, upon application and after hearing, find that cancellation is consistent with the public interest without regard to the provisions of paragraph (4) of section 15, and the burden of proof shall be upon the carrier or carriers to show that the cancellation is consistent with such public interest."

This wording would omit the words “proposing such cancellation" which now follow "carrier or carriers.” Since there may be a difference of opinion among the carriers on this point, this omission is unwise.

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(d) This proposal to repeal section 307 (f) of the act, the rule of ratemaking for common carriers by water, is subject to the same criticism as section 8 (1) of the bill. We are opposed to this repeal.

(e) Our discussion of section 7 (c) of the bill applies equally to the proposed amendment of section 307 (g) relating to suspension of tariffs of com

mon carriers by water. Furthermore, if section 307 (g) is amended, the proviso, to beginning with the word “Providedand ending with “1940”, should be omitted.

(f) It is here proposed to make certain changes in section 307 (h) of the act, which pertains to the prescription of minimum rates for contract carriers by water.

At present in passing upon such rates the Commission is required to consider whether the rates in issue are in contravention of "any provision of this part” [III]. It is proposed to substitute “Act” for “part”, and the effect would be to enlarge the possibilities of attacking such rates. The Commission would also be required to fix rates which "shall give no advantage or preference to any such [contract] carrier in competition with any common carrier subject to this Act.” As 307 (h) is now worded the competition so to be considered is that of common carriers subject to part III, i. e., water common carriers. The proposed amendment would therefore broaden section 307 (h) considerably.

This section now requires the Commission to consider the effect of the rates “upon the movement of traffic by such [water contract] carriers." The proposal is to remove this requirement.

Elsewhere we have pointed out that there are comparatively few water contract carriers now in operation and that many of them are tramp ships. The amendments proposed in section 17 (f) would have a tendency to restrict the activities of such carriers, and the question presented is one of policy for the Congress. Upon the basis of presently available information we are not now prepared to recommend the enactment of section 17 (f).

(g) Our comments on section 17 (e) are applicable here.

SECTION 18

This section is intended to protect the rights of water carriers which would be affected by the repeal of the bulk-commodities exemption proposed in section 14 of the bill. Such protection is desirable, and section 18 is adequately worded for that purpose.

SECTION 19

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In this section it is proposed to amend section 402 (c) of the act, which provides that

“The provisions of this part (IV (relating to freight forwarders)] shall not be construed to apply (1) to the operations of a shipper, or a group or association of shippers, in consolidating or distributing freight for themselves or for the members thereof, on a nonprofit basis, for the purpose of securing the benefits of carload, truckload, or other volume rates, or (2) to the operations of a warehouseman or other shippers' agent, in consolidating or distributing pool cars, whose services and responsibilities to shippers in connection with such operations are confined to the terminal area in which such operations are performed."

In our annual reports for the past several years we have criticized this exemption, our comments at page 126 of our last annual report (1954) being as follows:

“To an increasing extent, complaints were received from freight forwarders relative to the operations by self-styled shippers' associations. Shippers become members of these so-called associations merely by turning over to them freight for transportation, by signing applications for membership, and by paying a nominal sum as an extrance fee. In many cases the associations are operated by individuals who are traffic or rate experts, and their duties consist of assembling and distributing freight and arranging transportation in quantity lots at carload and truckload rates. The arranging of transportation for account of shippers of merchandise freight in cities particularly in eastern, central, and southern territories by these associations is increasing, and large amounts of freight which would otherwise move in the service of authorized freight forwarders is now being transported in the services of these associations. Generally, the transportation price of the freight is the carload or truckload rate plus terminal, assembly, and distribution charges. The final total price is usually below the transportation charges of the freight forwarders. In view of the interpretation of section 402 (c) in Pacific Coast Wholesalers' Assn. v.

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United States (81 F. Supp. 99), and affirmed by the Supreme Court (338 U. S. 689), we have not been able to make any progress in dealing with these activities.”

For the reasons above indicated we have recommended that section 402 (c) be amended to make the exemption of shippers' associations and shippers' agents revocable by this Commission where it is found that the operation under consideration is not that of a bona fide association or agent as defined in that section. Section 19 of H. R. 6141 would carry out that recommendation and we' are therefore in favor of its enactment.

SECTION 20

In this section it is proposed to make changes of a formal nature in section 404 (a) of the act. Our comments on section 3 of the bill are applicable to these.

SECTION 21

In this section various amendments are proposed to section 406 of the act, pertaining to the Commission's authority over rates and practices of freight forwarders.

(a) The comments on section 7 (a) of the bill are applicable here.
(b) The comments on section 11 (g) of the bill are applicable here.
(c) The comments on section 8 of the bill are applicable here.
(d) The comments on section 7 (c) of the bill are applicable here.

Editorially, it appears that the word "wherever" in line 24, page 44, of the bill should be changed to “whenever."

(e) The comments on section 5 (b) of the bill are applicable here.

SECTION 22

If section 303 (b) of the Interstate Commerce Act is repealed, as proposed in H. R. 6141, it would be necessary also to make the change in section 418 proposed in this section.

SECTION 23

We have no criticism of the proposed amendment of section 321 of the Transportation Act of 1940, but doubt the necessity of the substitution of “tariff” for "commercial” as well as the saving clause proposed in section 23 (b).

SECTION 24

This section would provide grandfather clauses for contract carriers either by motor vehicle or by water whose operations would be affected by the proposed changes in definitions applicable to those carriers. We have recommended against the enactment of section 13, and if that recommendation followed, it will be unnecessary to consider the effect of section 24 on water contract carriers. However, if section 13 is enacted, we agree that the inclusion of such carriers in section 24 would be proper. We shall not discuss this section from the standpoint of water carriers.

Paragraph (a) of section 24 would provide that any person holding a permit to operate as a contract carrier by motor vehicle when this section takes effect may elect either to continue to operate as a contract carrier under the revised definition in this bill or to become a common carrier by motor vehicle. In the event that contract carrier elected to become a common carrier, the Commission would be required to determine, after reasonable opportunity for hearing, the character of operations "authorized by each such permit, and shall, after giving due consideration to the statement of election filed by each such carrier as required by this section, and without further proceedings, issue to the carrier a confirmed or amended permit, or a certificate of public convenience and necessity, whichever is appropriate, authorizing the continuance of such operations in conformity with the amended definitions hereof."

We understand the object of this subsection is to allow each contract carrier to continue the operations heretofore authorized by its permit and, if those operations exceeded those permitted under the revised definition of a contract carrier, a certificate could be issued in lieu of the permit. The provision would not allow any contract carrier, merely upon his election, to become a common carrier. A certificate could be issued in lieu of the held permit only if that were necessary to preserve the rights of the contract carrier to continue the opera

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tions authorized by its permit. Holders of permits which authorize only the type of operations described in the amended definition of a contract carrier would not receive certificates but would continue their operations under permits. Where the issuance of a certificate was necessary to allow the permit holder to continue the operations authorized by the permit, the carrier obviously would be authorized to conduct operations in a manner not heretofore authorized, but we understand that this provision is intended to authorize the issuance of certificates under those circumstances without proof of public convenience and necessity.

We are of the opinion that the provisions of section 24 (a) are appropriate. A possible alternative approach would be to provide for the issuance of a certificate or a permit authorizing the continuance of the operations conducted under the permit rather than the operations authorized by the permit. Each of these plans has merits. There are permits under which the greatest possible operations are not being conducted, but the potential right exists, and we are willing that the authority to be issued be based upon the existing rights as stated in the permit rather than upon the actual operations conducted by the carriers.

There are outstanding 2,645 motor-carrier permits authorizing the transportation of property and 18 motor-carrier

authorizing the transportation of passengers. The effect of this bill would be to place upon the Commission the burden of possibly 2,663 proceedings in which the parties are entitled to a hearing, in addition to the normal load of proceedings. Additional appropriations would be absolutely necessary to enable the Commission to employ additional personnel to handle this increase in workload.

Paragraph (b) of section 24 of the bill would provide that any person engaged in transportation as a private carrier by motor vehicle when this section takes effect, but which becomes subject to part II of the act because of the amendments herein, shall be issued a certificate or a permit authorizing the continuance of such operations.

We have previously expressed the opinion that the amendment to the privatecarrier definition in section 203 (a) (17) proposed in section 10 of the bill would not result in any private carrier becoming a common or a contract carrier. Based upon that proposed amendment we are of the opinion that this subsection will serve no purpose. We, however, recommended that certain provisions be added as section 203 (c) of the act. It will be necessary, therefore, to consider whether the addition of those provisions change the existing law in such a way that persons heretofore lawfully operating as private carrier now will

be common or contract motor carriers under part II of the act. Those providsions were intended to facilitate proof where persons, under the guise of op

erating as private carriers or by pretending not to be carriers, actually are transporting for compensation. We did not intend them to have that meaning and do not believe that the suggested language will have the effect of changing to a carrier for hire any person who was lawfully operating as other than a carrier for hire. It is, therefore, our opinion that section 24 (b) would not serve any good purpose but would cause the filing of thousands of applications by persons who have no rights to protect and who, if a certificate or permit were issued, would have to abandon the enterprise they are conducting and institute an entirely new operation if the certificate or permit is used. We recommend that section 24 (b) of the bill not be enacted.

SECTION 25 This section is as follows:

“Outstanding effective orders prescribing minimum, maximum, or maximumand-minimum rates, fares, or charges, or issued under section 4 of the Interstate Commerce Act, as amended, prior to its amendment by this Act, shall not have any force and effect with respect to rates, fares, or charges filed one hundred and eighty days after the enactment hereof."

If this provision were to be enacted, it would have drastic effects. At present under section 15 (2) of the act

"Except as otherwise provided in this part, all orders of the Commission, other than orders for the payment of money, shall take effect within such reasonable time, not less than thirty days, and shall continue in force until its further order, or for a specified period of time, according as shall be prescribed in the order, unless the same shall be suspended or set aside by a court of competent jurisdiction."

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Since the foregoing provision became effective in 1920 it has been the practice of the Commission to specify in its rate orders that they shall continue in effect until the further order of the Commission. However, a continuous check of the older orders is carried on with a view to vacating those which have become obsolete.

Under section 25 of H. R. 6141, all' outstanding orders, including those of both recent and remote dates, would automatically expire upon the publication and filing of such rates as carriers might choose to establish in lieu of those required by existing orders. The new rates would, of course, be subject to the proposed limited suspension powers or attack on complaint, the decision on which would be governed by the new rules of ratemaking proposed in H. R. 6141.

Similarly, if carriers subject to section 4 were to publish rates in lieu of those subject to outstanding orders issued under that section such orders would thereupon become nugatory. The carriers would, of course, lose the benefit of the protection afforded by those orders.

Section 25 apparently would tend to throw a heavy burden of litigation on the carriers and shippers, as well as the Commission. Outstanding orders in many instances require the maintenance of numerous rate adjustments which have been established after exhaustive proceedings before the Commission, the most notable example being the uniform class-rate system in effect throughout the country east of the Rocky Mountains. The enactment of section 25 would enable the rail carriers, if they so desired, to substitute a completely new system, subject to the limited suspension period of 3 months, which would be wholly inadequate for consideration of the substitute. The present system was arrived at in the light of facts presented to the Commission by the railroads, shippers, and others in the expectation that the result would have some degree of permanence and would not be changed until a clear need for modification appeared.

The legislative policy of the Congress has always been understood to be one of reluctance to pass laws having retroactive effect in the absence of strong reasons therefor. We believe that no such reasons exist in the present instance and are therefore opposed to the enactment of section 25.

SECTION 26

No comments on this section are necessary.

INTERSTATE COMMERCE COMMISSION,

Washington, March 16, 1955. Hon J. PERCY PRIEST, Chairman, Committee on Interstate and F'oreign Commerce,

House of Representatives, Washington, D. C. DEAR CHAIRMAN PRIEST: Your letter of February 3, 1955, requesting a report and comment on a bill, H. R. 525, introduced by Congressman Hinshaw, to amend section 22 of the Interstate Commerce Act, as amended, and for other purposes, has been given careful consideration by the Commission, and I am authorized to submit the following comments:

Section 22 of the act now permits “the carriage, storage, or handling of property free or at reduced rates for the United States, State, or municipal governments," or for certain charitable purposes, and allows “the transportation of persons for the United States Government free or at reduced rates.” The section also permits the issuance of mileage, excursion, or commutation tickets and provides for giving reduced rates to specified persons connected with religious, charitable, or governmental organizations, as well as armed services personnel, free carriage to their own employees by railroads, etc. The provisions of section 22 are made applicable to motor common carriers by section 217 (b), to water common carriers by section 306 (c), and to freight forwarders, as to transportation or service in the case of property, by section 405 (c).

H. R. 525 proposes to amend section 22 by striking from the first clause of the first sentence thereof the words “for the United States, State, or municipal governments, or” and the words “or the transportation of persons for the United States Government free or at reduced rates,". If enacted, the bill would, in effect, eliminate the granting of reduced rates for transportation of Government property or personnel, except in certain minor respects such as armed service personnel traveling while on furlough.

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