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I am engaged in the private practice of law in Washington, D. C., under the firm name of Todd & Dillon. Our firm specializes in handling cases before the Interstate Commerce Commission, other regulatory bodies, and the Federal courts. I have specialized in handling legal matters for motor carriers since 1937 when I graduated from law school and started to practice law in St. Louis, Mo. A substantial part of our clientele has always been made up of contract carriers. Our experience, therefore, with this type of motor carrier goes not only to their problems on an industrywide basis, which are handled through the trade association, but to their individual problems which we handle on an individual basis.
The Contract Carrier Conference of the American Trucking Associations is a Delaware corporation, affiliated with the parent association as one of the so-called natural divisions of the industry. It is the purpose of the conference to foster and protect the best interests of the contract motor carriers as an industry. These activities the association has been carrying on since July of 1937.
The Contract Carrier Conference is in complete agreement with the position taken by the American trucking associations with respect to H. R. 6141, and concurs in the statements made by previous witnesses presented by the American trucking associations. The conference, like the parent organization, is opposed to the entire bill. However, my assignment is limited to voicing opposition to those portions of the bill which deal with contract motor carriers, and my statement and testimony will be so limited.
Section 10 (b) of the bill would amend section 203 (a) (15), part II, of the Interstate Commerce Act by changing the definition of "contract carrier by motor vehicle" to include only those who operate "* * * on the basis of bilateral contmcts for specialized or individualized service or services equivalent to bona fide private carriage by motor vehicle." This amendment is opposed by the conference for the following reasons:
1 The amended definition, as pointed out by the Interstate Commerce Commission in its statement to the committee, would exclude from the scope of the definition of a contract carrier certain classes of carriers who were formerly included. The common carrier definition has not been amended to include these classes. For this reason, if these amendments were made to the act, there would be certain classes of carriers who would fit neither the common nor the contract carrier definitions and would, therefore, be completely unregulated. The conference is unalterably opposed to this inequitable result.
2. The amendment would limit contract carriers to performing services which are a substitute for private carriage. The contract carrier if so limited would lop in direct competition with private carriage and only in competition with common carriage to the same extent as is private transportation. The contract carrier would find it difficult, if not impossible, to successfully compete with private carriage because of the economic regulations imposed upon contract carriers which are not imposed upon private carriers.
The Association of American Railroads through its spokesman, the late J. Carter Fort, attempted to justify the change in the definition of contract carrier by contending that the contract carrier obtains its authority from the Commission monsiderably easier than does the common carrier. While it is true the statute provides that a contract carrier need only prove a proposed service "consistent with the public interest and the national transportation policy," and that a comni in carrier must prove that public convenience and necessity requires the propred service, the Commission, by administrative decision, requires a showing of inadequacy of existing facilities to sustain a finding of "consistency with the publlo interest," which is tantamount to requiring proof of public convenience and necessity. To illustrate the type of showing which a contract carrier must make to obtain new authority, we quote from Walter C. Benson Company ExtenNON--New York, New Jersey, and Pennsylvania (No. MC-73613 (Sub No. 3), 61 M. C. C. 128, 130):
"While shipper professes a need for the proposed service it has not tried all of the existing services and has made no investigation to ascertain the extent that single-line and interline motor carrier services are in fact, available in the territory. It fully admits that there has been no failure by existing motor carriers to transport less-than-truckload shipments and in the only instance that it has employed a motor common carrier to handle truckload traffic the service performed was satisfactory. It seems apparent that applicant proposes nothing in the way of transportation that is not available over the lines of existing carTiers. It is not material that none of these carriers can perform the proposed
service in its entirety in the absence of any convincing showing that the interchange service is inadequate to handle the traffic involved
“The proposed service would be limited to a single shipper, but that degree of specialization alone is insufficient to justify a grant of contract carrier authority where, as here, there is no real defect in the common carrier services available to the shipper * * *"
From the above quotation of the commission, it is quite apparent that a contract carrier, to obtain new authority, must show that the available transportation services are inadequate. Since the private carrier need have no permit it does not need to make such a showing.
The showing required of a contract carrier must be made at a public hearing and existing carriers given an opportunity to defend their services. In addition to a hearing, several subsequent procedural steps must be taken to afford all parties “due process.” This takes considerable time with the result that very often as much as 3 years are required for a contract to obtain authority to serve a shipper. To illustrate this point, our office in March of this year obtained an extension of a contract carrier's permit, whose services were a true substitute for private carriage. The application was filed in March 13, 1953, and it was not until March 29, 1956, that the permit was finally issued. The shipper who needed the service could not wait 3 years and 16 days, for the extension was sought to meet an existing competitive condition. The shipper, therefore, leased a fleet of trucks which it operated in private carriage. These trucks were used not only in the extended territory, but in the territory which the contract carrier was authorized to service. The contract carrier, therefore, not only lost the business in the extended territory while the application was being processed, but lost some business in the territory it was authorized to serve. Obviously, the economic regulation, which requires a permit to operate, places the contract carrier at a real disadvantage in competing with private carriage.
The amendment would not only limit contract carriers to a substitute for private carriage, but would make it necessary for them to only substitute their services when the private transportation was specialized or individualized. There are innumerable private carrier operations which are neither individual. ized nor specialized. For example, one of the Nation's largest textile firms operates a fleet of over-the-road vehicles in excess of 200, which do nothing but transport truckloads of cotton piece goods from their plants to their warehouses; and, on return trips, transport raw materials into their plants. There is nothing specialized or individualized about this transportation service. For this reason, under the definition set forth in the bill, a contract carrier could not perform this type of service.
There is further objection to the use of the terms individualized and specialized in defining contract carriers. As the commission pointed out in its statement, there are many common carriers who perform specialized services, such as carriers of automobiles, carriers of liquid freight, carries of household goods, and many othes. Therefore, the specialized nature of the service is not a distinguishing feature of contract carriage. Furthermore, in the motor carrier industry there is a constant change in the types of services performed, so that what may be a specialized service today may be a commonplace one tomorrow. For example, less than 10 years ago the furnishing of mechanically refrigerated vehicles for the transportation of perishable products was considered to be a specialized service and was performed primarily by contract motor carriers who specialized in this type of transportation. This is no longer true today, for many of the regular route, generally commodity common carriers, own and operate vehicles which are equipped with mechanically refrigerated devices and are used in the transportation of perishable commodities. Under the new definition those contract carriers who pioneered this form of service would have to discontinue performing the same as contract carriers.
The amendment to the definition of the term "contract carrier," as set forth in H. R. 6141, is unworkable in that it would relieve from regulation classes of carriers now subject to regulation. The use of the terms "specialized" and "individualized" to modify the type of private carriage which may be conducted by a contract carrier would cause undue confusion and make it impossible for contract carriers to substitute their services for many types of private carriage. To limit contract carriers to substituting their services for private carriage and making it necessay for such carriers to obtain permits on the basis of the inadequacy of existing services would impose a tremendous hardship on contract motor
carriers, for they would not be in a position to compete for private carriage business. The conference, therefore, is unalterably opposed to section 10 (b) of H. R. 6141.
Section 12 (a) of H. R. 6141 would amend section 218 (part II of the Interstate Commerce Act) in such a way as to require contract carriers to file their "rates or charges" instead of "minimum rates or charges actually maintained and charged.” In support of this amendment, a representative of the Association of American Railroads stated "the actual charges of contract carriers may be concealed, since only their schedules of minimum rates are required to be filed and published." This is not true under the law as it now exists. Under the Motor Carrier Act of 1935, prior to the amendment of September 18, 1940, it is true that a contract carrier was only required to publish and keep open for public inspection its minimum rates. However, the amendments to the act, passed September 18, 1940, made it necessary for contract carriers to file minimum rates "actually maintained and charged." Cnder the present statute, if a contract carrier transports the same commodities for two or more shippers between the same points, he is required to publish in his schedule-filed with the Commission, and available for public inspectiononly the lowest charge which he actually makes to either one of the shippers for the services. The instances where this actually occurs are rare.
My associates and I have represented contract carriers for the past 17 years and are familiar with the published schedules and the supporting contracts of numerous contract carriers, both large and small. The charges set forth in the published schedules, with very few exceptions, are the only charges made to any shipper for the described transportation. There are occasions when a contract carrier, serving two shippers of the same commodity, between the same points, is able to negotiate a new contract for a higher rate with one of the shippers before a similar increase can be negotiated with the other shipper. Since the Commission will not accept a schedule naming two different rates for the same service, the contract carrier is not permitted to show the increase in his schedule until both shippers have executed contracts covering such increase.
Since the charges set forth in the schedule are those actually charged some shipper, there are no hidden charges. Many contract carriers publish a separate schedule for each contracting shipper, because they find it makes for better customer relations to keep the schedule provisions current with those in each contract. We know of no contract carrier who uses the minimum rate provision to conceal his actual charges and thus gain an advantage over a common carrier competitor. As a matter of fact, such concealment would be in direct conflict with section 218 (a) of the Interstate Commerce Act, as interpreted by the Supreme Court of the United States. (See Auto Transport, Inc. v. 0.8., et al, 101 F. Supp. 132 (D. C. Okla.), affirmed per curiam, 343 U. S., 923; 72 S. Ct. 763.) The Commission in commenting on the proposed amendment said:
contract carriers presently are required to publish and file in schedules open to public inspection, the minimum rates which they are actually charging. The schedules also list the names of shippers with whom the carrier has contracts, but this listing is not connected with any rates. If any competing carsier or shipper is of the opinion that the published minimum rates are below the level of reasonableness, they may challenge those rates in a complaint proceeding and the Commission may require them to be raised. The raising of the minimum rates will require the changing of any contract which proTides rates below the prescribed minimum. If other contracts contain rates above this minimum, the complainant is not harmed. Under the present law, as well as under the proposed amendments, the Commission would have only minimum-rate powers over contract carrier charges, and the publication of the minimum rates actually maintained and charged would seem sufficient without disclosing the business transactions of shippers."
The only reason which has been advanced for the change in section 218 (a) is that the contract carriers, under existing law, have an opportunity to conceal their rates to the detriment of common-carrier competitors. As has been shown berein, the contract carriers under existing law are not in a position to conceal their rates from their competitors. There is no reason, therefore, for this amendwent to the act.
To permit motor contract carriers to file in lieu of a schedule a copy of their Ketual contract for public inspection would be in violation of section 222 (e).
The Commission in commenting on this amendment to the act recognized this fact and said :
"In addition to the above, section 222 (e) now provides that it shall be unlawful for 'any motor carrier' (which by section 203 (a) (16) includes motor contract carriers] knowingly to disclose or permit to be acquired by any person other than the shipper of the consignee any information concerning the nature, kind, quantity, destination, etc., of any property tendered or delivered to such carrier for transportation, which may improperly disclose his business transactions to a competitor. The receipt of such information also is made unlawful. Both the publication and posting of contracts and the publication of actual rates, if the names of shippers are shown in connection therewith, would seem to be inconsistent with this provision."
The contract-carrier conference is opposed to section 12 (a) of H. R. 6141 not only because the amendments are unnecessary, but also because they provide for a method of rate filing which would clearly be in violation of other provisions of the act.
The conference is also opposed to amending section 218 of the act so as to make contract carriers subject to section 217 of the act, as provided in section 12 (a) of the bill. Such an amendment would give the Commission power to prescribe "nondiscriminatory rates and charges" for contract carriers. To give the Commission power to prescribe nondiscriminatory charges would be inconsistent with the definition of a contract carrier and the regulations which the Commission has imposed on such carriers.
Section 2, part I, of the Interstate Commerce Act makes it unlawful for a rail carrier to unjustly discriminate between shippers. What constitutes unjust discrimination has been passed upon by the courts and the Commission. A consideration of these decisions and the law and regulations governing contract carriers clearly shows that the concept of unjust discrimination is incompatible with contract carriage.
In Wight v. U.S. (167 U. S. 512 (1897)), the Baltimore & Ohio Railroad offered a shipper a rebate to compensate for drayage costs in an effort to attract the shipper's business from another railroad which had a siding at the shipper's plant. In condemning the practice as an unjust discrimination, because the rebate was not offered to all shippers, the Court stated (p. 517):
"Whatever the Baltimore & Ohio Co. might lawfully do to draw busines from a competing line, whatever inducements it might offer to the customers of that competing line to induce them to change their carrier, is not a question involved in this case. The wrong prohibited by the section is a discrimination between shippers. It was designed to compel erery carrier to gire equal rights to all shippers over its own road and to forbid it by any device to enforce higher charges against one than another.” [Emphasis added.]
The definition of a contract carrier requires that the service offered must not be held out to the general public. This being true such carriers could not lawfully "give equal rights to all shippers” because they are prohibited by law from serring all shippers.
In U. 8. v. Hanley (71 Fed. 672, 673 (N. 1., Ill. 1896)), the Court in passing upon the question of unjust discrimination stated :
"The language of the statute recognizes that a uniform rate between different shippers is not always possible or proper; that the time of service, the kind of traffic, and the circumstances and conditions under which it is transported may materially change the just obligations and duties of the carrier to his patrons. Equality and uniformity of rate, disassociated from considerations of the time, kind, and circumstances of the transaction, is, therefore, not the object aimed at. The object of the statue is to prevent one shipper from getting the advantage over his competitor in the matter of rates only where they both make substantially a like offering to the carrier. [Emphasis added.]
It is apparent from the statement of the Court in the Hanley case, supra, that every difference in rates does not constitute an unjust descrimination, but that such discrimination only exists when the transportation performed and the circumstances surrounding the transaction are substantially the same.
If the service performed by a contract carrier is to be a special and individual as required by the new definition, then, it would appear that substantially the same service would be required by any other shipper. It would seem, therefore, that by the very nature of the contract carrier's individual service that it would not be able to unjustly discriminate between shippers even though it might be charging different shippers different rates.
In the Matter of Restricted Rates (20 I. C. C. 426, 437), the Commission in finding certain rates to be unjustly discriminatory stated :
"The tariffs which contain rates applicable only to the shipments of certain consignees or when a commodity is put to a particular use and the rates which are so restricted to the use of certain shippers alike are in violation of section 2 of the act, and unjustly discriminatory in violation of section 3 of the act, and therefore unlawful."
The Commission in issuing permits to contract carriers has restricted the service to certain classes of shippers, and has imposed restrictions which limit the transportation of certain commodities to a specified type of business or class of consignee. When rates are published pursuant to such permits the application of the rates must be so restricted. It would appear that rates so published by a contract carrier would be discriminatory through no fault of the carrier.
It is apparent from a review of Court and Commission decisions, that the concept of unjust discrimination, and that of contract carriage, are entirely inconsistant. This is true because the prohibition against undue discrimination is designed to require carriers who serve the public to treat all shippers alike under the same or similar circumstances, whereas the law and regulations governing contract carriers are designed to limit the service offered to a partieular class or classes of shippers and receivers. The conference, therefore, opposes that part of section 12 (a) which would make contact carrier rates mbject to section 217.
Section 12 (b) of the bill would amend section 218 (b), part II, of the act by ) substituting the words "this act" for the words “this part" and (2) striking from the second sentence of the paragraph the requirement that the Commission in prescribing rates for contract carriers give due consideration”* * * to the effect of such minimum rate or charge, or such rule, regulation, or practice, upon the movement of traffic by such carriers."
l'nder the existing law only the provisions of part II of the act apply to contract carriers. The first amendment to section 218 (b) would make it necesxury for the Commission, in prescribing a contract-carrier rate, to give consideration to the rates of all forms of transportation subject to the jurisdiction of the Interstate Commerce Commission. Such requirement is not only unnecessary but in direct conflict with other provisions of the bill. It is unnecessary because there is little or no relationship between the rates charged by contruet motor carriers and those charged by railroads, water carriers, and freight forwarders. It is in direct conflict with other provisions of the bill because in Section 2, which is a restatement of the national transportation policy, it is clear that free enterprise, full competition, the reducion of economic regulation, and the encouragement of fair and impartial regulation are all to be encouraged.
Mr. Jervis Langdon, Jr., appearing on behalf of the Association of American Railroads, supported the restatement of the national transportation policy alleging that competitive forces in ratemaking ** * * constitutes the cornerstone of a modernized regulatory program." To assure the increased reliance on competitive forces this witness suggested that the Commission be directed not to consider the effect of a prescribed rate on the traffic of any other mode of transportation.
The conference does not endorse the Cabinet Committee report, the restatement of the national transportation policy, or the position of the Association of American Railroads, but if all other forms of transportation are to be given a free rein" in ratemaking, and the Commission is not to consider the effect of wuch rates on other forms of transportation, then the contract carriers feel that they are entitled to the same opportunities and should not have their rates prescribed on the basis of the rates of other forms of transportation.
As heretofore pointed out, the change in the definition of a contract carrier would place such carriers in direct competition with private carriage and would practically eliminate the competition between common and contract carriers. If the contract carrier is to successfully compete with the private carrier it must be in a position to institute rates which are competitive with the cost of private transportation and the Commission in considering the reasonableness and lawfulness of such rates should be in a position to give consideration to the effect of prescribing a rate on the movement of the traffic by the contract carrier. Otherwise, the Commission might very well arbitrarily prescribe the common rail carrier rate for the contract carrier, and such rate, in all probability, would have do relationship to the cost of private carriage and would, in all probability, proAlbit the movement by contract carriage. This type of economic regulation, to which the private carrier is not subjected, would preclude contract carriers from substituting their services for private transportation and since the proposed