include all costs properly attributable to parcel-post service. At periodic intervals the Interstate Commerce Commission shall prescribe such parcel-post rates and practices as are necessary to put parcel-post service on a self-supporting basis. (The last sentence of this proposal applies only to surface parcel post.) No panel opposed this proposal. Along the same lines, the Hoover Commission report on business enterprises recommends that the Postmaster General should seek a further increase in rates charged the public if current rates do not cover all costs of the parcel-post service (including indirect costs). Purpose is to prevent unfair Government competition with private enterprise. 8. Government economy in transportation The Federal Government should, to the extent consistent with the national transportation policy, use every available means to bring about efficiency and economy in its use of transportation services, and as supplier of such services as remain necessary under the statement of policy on Government competition in the transportation field, or as buyer of services within the framework of the association's position on section 22 rates (see 4 above) approved by the Transportation Association of America's board of directors. Many methods for achieving economy and efficiency in the Government's transportation activities have been recommended by the Hoover Commission. In the light of those and other recommendations, the association's board of directors adopted the policy statement summarized above. 9. Statutes of limitations The period in which shippers can institute claims against common carriers subject to ICC jurisdiction in connection with reparations for "unreasonable" or "discriminatory" rates should be reduced from 2 years to 1 year. All panels approved this proposal. Purpose is to prevent unnecessarily long delays by injured parties in commencing reparation actions, while at the same time providing adequate time for such actions. 10. Nonscheduled airlines Exemptions in the Civil Aeronautics Act under which nonscheduled airlines are permitted to operate should be amended to require appropriate hearings and findings that the service is needed in the public interest, and that the applicant is fit and able to provide the proposed service. All panels approved this proposal. Purpose is more equitable regulation of air carriers performing essentially the same type of service. 11. General rate increases The time lag between carrier requests for, and regulatory authority approval of, general rate increases to cover increases in costs should be reduced. All panels approved the objective of this proposal. Difficulties subsequently developed in regard to the exact legislation to carry it out, but members of the board from all groups except the Waterway Panel finally concurred in a specific proposal for legislation. Purpose of the proposal is to expedite regulatory machinery. In the past, there have been numerous instances where the Interstate Commerce Commission has eventually allowed increases in rates to offset increased costs; however, since the rates cannot be made retroactive and the Commission has taken a long time to reach its decisions, the carriers have suffered unjustifiable losses. 21. Intrastate rates If, within 45 days after the ICC has authorized an interstate general rate increase, a State which has been requested to take similar action with respect to intrastate rates has not rendered a decision, then the ICC shall assume jurisdiction over the intrastate rates in question. In such proceedings the proof burden on the carriers shall be eased. This proposal received general panel support, except for the user panel's belief that its application to rates of motor carriers and freight forwarders should receive further consideration before recommending changes. Purpose of the proposal is to speed up action by certain State Commissions which may take no action on petitions on rate increases as an indirect means of maintaining the status quo in rates. 13. Railroad consolidations Part I of the Interstate Commerce Act should specifically state the desirability in the public interest of the economies, simplifications, operating efficiencies, and other advantages which may reasonably be predicted to result from the combinations or consolidations of carriers, and certain unnecessary restrictions in the present law should be removed or modified. The five specific items under this proposal were, for the most part, supported by the investor, railroad and user panels. None of the other panels opposed any of the proposals. Purpose of these proposals is to stimulate railroad unifications by removing procedural handicaps. 14. Public aid "In the United States, which stands before the world as the principal exponent and the principal exhibit of the benefits of free private enterprise, the aim in all forms of transport should be that user charges be paid by all classes of domestic users of Government transport facilities sufficient to cover their fair share of the costs of building and maintaining the facilities which they need to use." The above is the first paragraph and key statement in the board of directors' policy on public aid. It was supported by all panels except the waterway panel. The full statement of policy runs some 3 pages in length in Sound Transportation for the National Welfare published by the association in 1953 and advocates some special policies in applying user charges to airways, airports, and waterways such as the nonrecovery of Government investment in existing waterways. The railroad panel differed on the timing of the application of user charges to waterways. Purpose is to combat socialistic tendencies and to do away with preferential treatment by the Government of one form of transport over another. 15. Contract carriers Contract motor and water carriers subject to the Interstate Commerce Act should be required to file, adhere to and make public the rates they actually charge. Contract air carriers should be subject to the same kind of economic regulation as contract motor and water carriers. This proposal was approved by four panels. The waterway and pipeline panels, though they would not oppose extending regulation to air contract carriers, did oppose the change in contract carrier regulation embodied in the recommendation. The freight forwarder panel took no position while the highway panel presented conflicting recommendations from its common and contract carrier groups. Purpose of the proposal is to enable closely regulated common carriers to compete with contract carriers more equitably. 16. Rule of ratemaking Section 15a, the rule of ratemaking applicable to railroads and other carriers subject to part I of the Interstate Commerce Act should be amended by deleting the requirement that the ICC give consideration "to the effect of rates on the movement of traffic by the carrier or carriers for which the rates are prescribed," and by adding language to emphasize the intention of Congress to permit the maintenance of carrier credit and the attraction of equity capital. No panel opposed the additional language at some point in the Interstate Commerce Act. Deletion of the phrase noted above was designed to give more freedom to carrier management in the setting of rates. It was specifically understood that the recommendation was in no way to diminish the importance of the concept of "value of service" in the setting of rates. It was a midway position between the user and investor panels which had advocated the repeal of section 15a, and the highway and waterway panels which had opposed any change. 17. Suspension powers The present period of 7 months during which the ICC can suspend changes in rates should be cut to 3 months, plus a 3-month extension period when requested by any party of interest. In addition, the language found only in the suspension provisions applicable to carriers subject to part I of the Interstate Commerce Act, which authorizes the Commission to direct these carriers under certain circumstances to account for and refund rate increases, shall be repealed. This proposal had support from the user, investor, railroad and pipeline panels, was opposed by the waterway and highway panels, while the freight forwarder panel took no position. Purpose is to have Congress specifically indicate to the ICC that it should reduce the time during which rate applications are suspended and especially to discourage the Commission from seeking the agreement of applicants to extensions beyond the legal period. (In this respect see also policy 3 above.) 18. Bulk commodity exemption The exemption from regulation under which bulk commodities are transported by water should not be repealed. While the railroad and investor panels favored repeal, the other panels supported the proposal as stated or took no position, on the basis that repeal would mean an unnecessary extension of regulation. Purpose is to prevent extension of regulation where not vitally necessary. 19. Differential rail-water rates Those provisions of the Interstate Commerce Act which relate to the prescription of differential joint rail-water rates in connection with through routes between rail and water carriers shall be amended so that the Interstate Commerce Commission will consider all relevant factors, including costs of service, before prescribing such differential rates. The user, investor, railroad and freight forwarder panels had favored repeal of all provisions relating to compulsory through routes between railroads and water carriers, while the waterway panel opposed any change and other panels took no specific position. The Board's position is an intermediate one. Purpose is to give the ICC the right to consider cost when setting rates for rail-water routes. 20. Commodities clause The commodities clause, which prohibits railroads from transporting in interstate commerce commodities which they own, produce or in which they have an interest, should be repealed. All panels except the railroad, approved or did not oppose this proposal; while the railroad panel preferred extending the restriction to for-hire water and motor carriers. Purpose of the proposal is to repeal a legal restriction which is no longer necessary and which creates inequality in regulation. 21. Shippers' associations Congress should provide definite statutory standards for determining which shippers or shipper associations involved in consolidation or distribution of volume freight on a nonprofit basis for securing lower rates are entitled to exempt status. Five panels supported this proposal and the others indicated no objections. Purpose is to clarify the present law which has loopholes permitting abuses by certain types of associations under section 402 (c) of the Interstate Commerce Act. 22. Transfer of functions from regulatory agencies Proposals to transfer to the courts certain functions of the Interstate Commerce Commission and the Civil Aeronautics Board, and to limit the jurisdiction of these agencies over hearing examiners, should be opposed. Panels, except the waterways panel which took no position on the subject, supported the above position insofar as the ICC was concerned. As regards the CAB, the proposal was actively supported by the air transport board and not opposed by the remaining panels. Need for these proposals, which were included in the Hoover Commission report on Legal Services and Procedure and were part of recommendations involving many regulatory agencies, has not been demonstrated. The advantages are outweighed by the disadvantage of having transportation matters handled by men unfamiliar with the transportation industry. Mr. HARRIS. I notice you have here Information Memo Sheet, Why Section 22 of the Interstate Commerce Act Should Be Amended. Would you like that to be included in the record? Mr. BAKER. We would, sir. Mr. HARRIS. It may be received for the record at this point. (The information referred to is as follows:) CUT-RATE GOVERNMENT TRANSPORTATION AND WHY SECTION 22 OF THE INTERSTATE COMMERCE ACT SHOULD BE AMENDED (First of a series of information bulletins on Current Major Transportation Topics Covered by Policies of TAA) (Reading time: 6 minutes) CUT-RATE GOVERNMENT TRANSPORTATION The United States Govenment, the Nation's largest user of public transportation, in many instances is not paying its fair share for that service. Why? Because it can bargain for special, low rates, rather than pay the lawfully established rates that the rest of us are required to pay. Why bargain rates? How can this happen in the public transportation industry, where rates are regulated in the public interest so that all will be treated alike? Because a special provision of the Interstate Commerce Act permits the Government to obtain reduced rates from carriers on an exclusive basis. Sometimes the Government is given a "blanket special reduction" in rates. Example.-As late as June 1954, one Government agency was using a 1942 tariff for determining rates on shipments in the East, while commercial shippers were obliged to use current tariffs with rates 40 percent or more higher. Users don't like it The commercial users of these public carriers aren't happy about this special privilege for the Government. They point out that any losses the carriers face because of this inequity will eventaully be passed on to them. Example.-A 1952 Senate Commerce Committee report said: "this committee may not ignore convincing evidence presented by the household goods carriers *** wherein lost revenue suffered by the moving industry *** is being passed on to such members of the general public who employ the services of household goods carriers through lawfully filed tariffs." Carriers don't like it Practically every carrier group objects to the practice of exempting Government traffic from regulations applicable to commercial traffic. One danger they recognize is cut-throat competition for a larger share of the tremendous volume of Government business (the Government spent $3 billion for transportation in fiscal 1953). With such an inducement to make concessions, rates may even be quoted that are below the carriers' costs, just to keep the Government as a customer. While some individual carriers may gain in the short-run by competing for Government traffic with nonregulated rates, the carriers stand to lose as a whole. This is because only so much Government traffic is available. Rate reductions do not increase the total volume, but merely redistribute the traffic among different carriers-with an overall loss in revenues. ICC doesn't like it An ICC report to Congress last December on pending transport legislation, in reference to complaints about this Government exemption from rate regulation, said: "In our opinion that dissatisfaction is justified, and we are therefore in favor of amending this section." TAA doesn't like it TAA's Board, a cross section of executives in the agriculture, education, transport, and general business fields, voted in favor of repealing this Government privilege. This followed study of the problem by its 8 advisory panels, with 6 recommending repeal and 2 taking no position. Progressive reductions Since the Interstate Commerce Commission has no jurisdiction over competition for Government traffic, it is powerless to stop what can be called "progressive reductions" in rates such as shown below. Example.-On June 21, 1953, carriers quoted the Government a rate of 150 cents for 100 pounds to move wool and nylon shirts from Anderson, S. C., to Memphis, Tenn. On March 12, 1954, the rate was lowered to 110 cents; on May 4, to 90 cents; on June 13, to 80 cents; and on July 30, to 75 cents. Thus, in just 13 months the rate was cut in half, while the commercial rate remained far greater than even the original rate quoted the Government. What's wrong with this? The primary objection to competition of this sort is that it discriminates in favor of the Government. If the reductions are warranted, why not let shippers enjoy them too? If these shippers, on the other hand, obtain a rate from a carrier that is lower than the officially published rate, they are subject to a fine and imprisonment. No one should be against free competition when it is clearly in the public interest. However, regulation of rates and services of public carriers engaged in interstate commerce has been considered a "must" in this country since 1887. While many changes have been made in the original act, and many changes are being sought by different groups today, the fact remains that no recognized transport group, carrier or shipper, seeks to destroy the principle of regulation itself. Two sets of rules? Today, we have two sets of rules in public carrier rate making. The one for the Government says that complete freedom of competition is all right. The one for the public says that it must govern itself according to established rules and regulations considered necessary for the good of all. Under our present transportation statutes, the Interstate Commerce Commission is directed, among other things, to foster sound economic conditions in transportation and to prevent unjust discriminations, undue preferences or advantages, or unfair or destructive competitive practices. Unfortunately, there is a difference of opinion about whether these principles apply to Government traffic. Example.-Despite an admonition by the Senate Appropriations Committee last year to executive agencies "to pay full heed to the national transportation policy in their dealings with carriers," a high traffic official of GSA stated last August that these agencies have no such responsibility. The States get in the act To make matters worse, this right to get special reduced rates from otherwise regulated carriers extends to the State and local governments as well, and they are taking advantage of the situation to get a cheaper ride. Example.-A special report, in 1953, to the distillers industry traffic executives pointed out that so-called monopoly States (State controlled liquor monopolies) were using this privilege to gain an advantage over open States, thereby disrupting the industry's rate structure. Why this Government right? The records indicate that this right was granted in the original Interstate Commerce Act of 1887 to sanction previous agreements between the Government and carriers for reduced rates. Many railroads, prior to passage of this act, received land-grants from the Federal Government and other benefits from State and local governments. These roads, in return, had to move Government traffic at reduced rates over the land-grant mileage. Other railroads wishing to share in this Government traffic had to meet the lower rates. The specific provision permitted such competition without violating the act. It also permitted other forms of transport, who later came under the ICC, to compete for the Government's traffic. The reason disappears Government-sponsored studies in the thirties and early forties clearly proved that the railroads had through rate preferences repaid the Government for these land-grants. As a result, Congress repealed the land-grant provision, stating in 1945 that: "***the full commercial rates, fares, or charges shall be paid for transportation by any common carrier subject to the Interstate Commerce Act of any persons or property for the United States. * * *" The right remains Unfortunately, at the same time, Congress left the door open for continuing cutrates to the Government by keeping in the act the provision that: "***nothing in this part shall prevent the carriage, storage, or handling of property free or at reduced rates for the United States, State, or municipal gov |