ciated to furnish a witness and to furnish more detailed evidence why it should not be enacted. In general, it is believed that advocacy of such legislation by some shippers and carriers group arises from misunderstanding of the effect of section 22. As a matter of information for the committee the Department of Defense in its comments on S. 543, a bill to establish the finality of contracts between the Government and common carriers of passengers and freight subject to the Interstate Commerce Act, recommended the substitution for S. 543 of a bill to amend the act so as to specify that the 2-year statute of limitations on action involving undercharges and overcharges applied to transportation of persons or property for the United States Government. This was consistent with the President's announcement that he was not approving S. 906 (the predecessor of S. 543) and recommended enactment of a bill making the statute of limitations applicable to the United States Government. The Department of Defense would have no objection to proposed legislation similar to the mentioned report on S. 543. This report has been coordinated within the Department of Defense in accordance with procedures prescribed by the Secretary of Defense. The Bureau of the Budget has advised that it has no objection to the submission of this report for the consideration of Congress. Sincerely yours, WILBER M. BRUCKER, Comparison of rail carload revenue earnings average load and mileage of sec. 22 quotation freight traffic with like factors on total rail carload freight traffic and manufacturers and miscellaneous items Source: Interstate Commerce Commission-Carload Waybill Analysis. THE SECRETARY OF COMMERCE, Washington, D. C. Hon. WARREN G. MAGNUSON, Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. DEAR Mr. CHAIRMAN: This letter is in reply to your request of June 1, 1955, for the views of this Department with respect to S. 2114, a bill to amend section 22 of the Interstate Commerce Act in order to discontinue the authority under such section which authorizes the carriage, storage, or handling of property free or at reduced rates for the United States and the transportation of persons for the United States free or at reduced rates. Section 22 of the Interstate Commerce Act authorizes carriers subject to the act to provide free or reduced rate transportation, storage, and handling of property for the United States, State, or municipal governments, and free or reduced rate transportation of persons for the United States Government. On May 5, 1955, the Department of Commerce transmitted draft legislation to the Congress which implements the report of the Presidential Advisory Committee on Transport Policy and Organization. This legislation, introduced as S. 1920, would, among other things, repeal the referred to provisions of section 22, but would in addition provide authority for carriers to establish rates of special application for the movement of Government traffic. However, rates established under this authority would be subject to all the applicable provisions of the act except those relating to suspension and the long-and-short-haul clause. Where circumstances warranted, the rates could be filed on short notice or made retroactive, and, when the security of the Nation so required, the filing and publication requirements could be waived. Outstanding contracts providing for reduced rates under section 22 would have to be filed and published, and would be made subject to applicable provisions of the act. This Department recommends against enactment of S. 2114 and urges instead that the Congress give favorable consideration to the provisions relating to specia Government rates in S. 1920. These amendments would subject Government rate tenders to more regulatory control, as required in the public interest, but would nevertheless accommodate the special requirements of Government traffic movements. ASSISTANT COMPTROLLER GENERAL OF THE UNITED STATES, Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: Reference is made to your letter of February 3, 1955 acknowledged by telephone on February 4, 1955, requesting a report, together with any comment that we may care to make, concerning a pending bill, H. R. 525 which would amend section 22 of the Interstate Commerce Act, as amended. The bill would eliminate the "United States, State, or municipal governments' from the classes of shippers exempted by that section from any provision of the Act which would prevent the carriage, storage, or handling of property free or at reduced rates and would strke from the designated section a similar provision with respect to the transportation of persons for the United States Government free or at reduced rates. There are a number of reasons why we are of the opinion that this bill should not be enacted. Section 22 has been a part of the Interstate Commerce Act since its inception and has proven satisfactory, from a practical standpoint, as a vehicle for permitting the fixing, by agreement, of the charges to be collected by the carriers and paid by the United States Government on a considerable volume of traffic in the past. Rates established under section 22 presently are not required to be published in tariffs and filed with the Interstate Commerce Commission, but it seems reasonably certain that many such rates are established only after consideration by the committees of representatives of the carriers who fix the rates to be published in tariffs for general application on all traffic, including that of the Federal Government. One of the most impelling reasons why rates are established on Government traffic pursuant to section 22 is the flexibility of this method of establishing rates as compared to the publication of rates in tariffs conforming to the requirements of section 6 of the Interstate Commerce Act and to the regulations promulgated by the Commission pursuant to the act. It frequently happens that traffic for account of the United States originates or terminates at points isolated from the more populous centers to and from which there is a normal flow of commercial traffic. Consequently, existing commodity rates that have been tailored to meet the requirements of the shipping public, to and from such centers, are not available for application on Government traffic from and to such isolated origins and destinations and no proper tariff adjustment of the rate structure is afforded from or to the points of origin and destination of the Government shipments. Frequently, the exigencies of the situation require the movement of the Government's traffic before adequate measures can be taken to secure the proper adjustments in the rate structure through changes in tariff publication. In such situations, rates can be established under section 22 for application both prospectively, on future movements, and retroactively, on shipments that are required to be moved before the negotiations for the proper rate adjustments are completed. This flexibility is important, since it operates to permit agreed reductions to become immediately available and to obviate the necessity of formal proceedings before the Commission, which often are timeconsuming and expensive to both the shippers and the carriers, in order to have applied, on past shipments, rates which meet the requirements for justness and reasonableness required by the other provisions of the act. If H. R. 525 is enacted, the number of formal proceedings before the Interstate Commerce Commission by the Government will no doubt be increased greatly with corresponding increased costs and delays to all concerned. Proponents of the proposal to amend the Interstate Commerce Act, as outlined in H. R. 525 and in identical proposals presented to the 83d Congress, advance the theory that the provisions of section 22 are being improperly used by the Government to auction its traffic to the lowest bidder, and that, frequently, rates below a compensatory level are required to be made by the carriers in order to secure the business. Aside from the fact that few, if any, concrete examples have been found to have been cited to establish that, in fact, Government traffic has been handled at a loss by the carriers, the theory advanced completely ignores the fact that the terms of section 22 are permissive rather than mandatory and that no carrier can be required by the Government, except pursuant to procedures available to the public as well, to establish a reduction in rates for application on past or future traffic for the Government. The principal traffic-procuring services of the Government are understood to have denied the allegations that they engage in the practices to which complaint has been voiced by some of the proponents of this legislation, and it is believed that, if any abuses have resulted from tenders of individual carriers, those carriers reasonably may be expected to be the prime victims of any noncompensatory rates tendered by them. It is not believed that such instances as may accur in this respect would justify changing the law by eliminating a most useful and wholesome procedure for securing proper rate adjustments designed to benefit both the carriers and the Government. Some idea of the magnitude and importance of this matter to the Government financially is indicated by a report received from the Department of Defense in December 1953, which states that a statistical study of all movements of household goods by motor carrier shows that, as to that commodity alone, an increase of $11 million annually in cost to that Department would result if all traffic were required to be moved at rates provided in MF-ICC No. 57 rather than at rates provided in other tariffs actually used, apparently by virtue of section 22 agreements. For the reasons outlined above, it is recommended that H. R. 525 not be given favorable consideration by your committee. Sincerely yours, FRANK H. WEITZEL, Assistant Comptroller General of the United States. THE SECRETARY OF COMMERCE, Hon. J. PERCY PRIEST, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This letter is in reply to your request of May 16, 1955, for the views of the Department with respect to H. R. 6208, a bill to amend paragraph (1) of section 4 of the Interstate Commerce Act, as amended. Section 4 (1) of the Interstate Commerce Act prohibits any common carrier subject to part I or part III thereof from charging or receiving any greater compensation for the transportation of persons, 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. The section pro vides, however, that upon application and after investigation, the Interstate Commerce Commission may in special cases relieve such carriers from this prohibition and from time to time prescribe the extent of such relief. In exercising this authority, the Interstate Commerce Commission may not permit the establishment of any charge to or from the more distant point that is not reasonably compensatory for the service performed. The section also prohibits such carriers from charging any greater compensation as a through rate than the aggregate of the intermediate rates. The bill, which was sponsored by the Interstate Commerce Commission, would amend the long-and-short-haul clause of the Interstate Commerce Act (sec. 4 (1)) by deleting the so-called reasonable compensatory proviso. A new proviso would be added to authorize carriers subject to the section operating over circuitous lines or routes to meet the charges of other such carriers operating over more direct lines or routes, to or from competitive points, without special authorization. They would be subject only to the standards of lawfulness set forth in part I or part III of the act. No change is proposed in the aggregate of intermediates clause. The bill no doubt resulted from an Interstate Commerce Commission proceeding, Fourth Section, Application No. 28580, Rates and Charges Over Circuitous Routes in the United States, decided April 26, 1955, wherein all carriers in the United States subject to section 4, part 1, of the act sought general relief to establish and maintain the same rates via circuitous routes beween any two points as those applicable between the same points via more direct routes. Competition between rail transportation and other forms of transportation was not involved. The Interstate Commerce Commission denied relief on the basis of lack of statutory authority stating that the matter did not constitute a special case to which its jurisdiction is confined, and that it was impossible in a proceeding of such scope to show that the departure rates are reasonably compensatory. In its statement of justification for H. R. 6208, the Interstate Commerce Commission states: "Experience has demonstrated that the public interest is not being served by the imposition of the restrictions in question. The history of their administration has proved them to be excessively burdensome to all concerned. Together they have resulted in disproportionate expenditures of time, labor, and funds by both the carriers and the Commission in comparison with the relatively small benefits derived." Moreover, the Interstate Commerce Commission believes that the deletion of the reasonably compensatory proviso would allow it greater administrative discretion without jeopardizing the public interest because of its other rate supervision authorities. The Department believes that H. R. 6208 is a step in the direction of relieving shippers, carriers, and the Interstate Commerce Commission of unnecessary and burdensome procedures. However, we are in favor of liberalizing the fourth section as recommended by the President's Advisory Committee on Transport Policy and Organization, and included in section 4 of H. R. 6141 and H. R. 6142. Under the Advisory Committee's recommendation which retains the general longand-short-haul prohibition, rail and water common carriers could establish departure rates without prior approval of the Interstate Commerce Commission provided the rates were necessary to meet actual competition and did not result in less than just and reasonable minimum charges. Accordingly, it proposes more extensive procedural relief than that provided by H. R. 6208, for it includes direct route as well as circuitous route competitive situations. There seems to be little difference in principle whether such situations are created by competition between like or unlike carriers, particularly in view of the carrier's initial responsibility to establish reasonable and nondscriminatory rates and the Interstate Commerce Commission's other rate control authorities under the present law or as proposed by the Advisory Committee. Although this Department favors revision of the long-and-short-haul clause so as to eliminate unnecessary procedural requirements, it believes that the amendments made by H. R. 6141 and H. R. 6142 are better designed to accomplish this purpose than those proposed by H. R. 6208. We have been advised by the Bureau of the Budget that it would interpose no objection to the submission of this report to your committee. Sincerely yours, SINCLAIR WEEKS, Secretary of Commerce. Hon. J. PERCY PRIEST, COMPTROLLER GENERAL OF THE UNITED STATES, Chairman, Committee on Interstate and Foreign Commerce, House of Representatives, Washington, D. C. DEAR MR. CHAIRMAN: Reference is made to your letter dated May 16, 1955, acknowledged by telephone on May 18, 1955, requesting a report, together with such comment as we may desire to make, concerning a pending bill, H. R. 6208, which would amend paragraph (1) of section 4 of the Interstate Commerce Act as amended (49 U. S. C. 4 (1)). It is understood here that the enactment of this bill was proposed by the Interstate Commerce Commission, the agency charged with enforcement of the Interstate Commerce Act, with the view toward making this section of the act self-executing, insofar as certain competitive rate adjustments are concerned, and thus considerably lessening the administrative burden of enforcing this section of the act. Under the act as it now reads, no carrier is permitted to charge more for a shorter distance than for a longer distance in the same direction over a given route, when the shorter distance is encompassed within the longer distance, without first securing specific authority from the Interstate Commerce Commission for the establishment of such lower rate or charge from or to the more distanct point. This means, from a practical standpoint, that application for relief from the long-and-short-haul provisions must first be obtained before a rate which violates such provision can be made effective. Before granting such permission to depart from these provisions, the Commission is required to determine, after investigation, that the lower rate to be established to or from the more distant point shall not be less than reasonably compensatory for the service to be performed. It is proposed in this bill to eliminate this requirement for a determination by the Commission that the proposed rate is not less than reasonably compensatory, and to allow carriers operating over circuitous lines or routes to meet the charges of other carriers operating over direct lines or routes, without further authorization, but subject to the standards of lawfulness prescribed in other provisions in part I and in part III of the Interstate Commerce Act. We consider that the enactment of this proposal would not necessarily affect the United States Government adversely as a shipper, or have any direct effect upon the audit procedures of the General Accounting Office. If found otherwise consistent with the public interest, we would not object to the favorable consideration of H. R. 6208 by your commmittee. 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. CHAIRMAN: Reference is made to your recent request to the Secretary of Defense for the views of the Department of Defense with respect to H. R. 6208, 84th Congress, 1st session, a bill to amend paragraph 1 of section 4 of the Interstate Commerce Act as amended. The Secretary of Defense has delegated to the Department of the Army the responsibility for expressing the views of the Department of Defense. An apparent purpose of H. R. 6208, which is understood to have been recommended by the Interstate Commerce Commission, is to simply relief from the long-and-short-haul clause of section 4 of the Interstate Commerce Act as amended (49 U. S. C. 4 (1)), thus expediting tariff publication. It also increases to some extent the latitude for managerial discretion on the part of carriers in making rates, and places carriers regulated under parts I and III of the Interstate Commerce Act more nearly on a parity with those under part II, which does not contain a long-and-short-haul clause. A principal objective of H. R. 6208 is to eliminate and simplify certain controls exercised through approvals which have become practically automatic but which consume time and administrative effort. |