Page images
PDF
EPUB

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.” Under 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 inspection, only 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 2 shippers of the same commodity between the same points, is able to negotiate a new contact for a higher rate with 1 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. United States, et al., 101 F. Supp. 132 (D. C. Okla.) affirmed per curiam 343 U.S. 923; 72 S. Ct. 763.) The ('ommission 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 carrier 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 proceedinr and the Commission may require them to be raised. The raising of the minimum rates will require the changing of any contract which provides 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 commoncarrier competitors. As has been shown herein, 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 amendment to the act.

To permit motor contract carriers to file in lieu of a schedule a copy of their actual 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, et cetera, 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 there. with would seem to be inconsistent with this provision.

The Contract Carrier Conference is opposed to section 12a (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 and 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 business 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 betwern shippers. It was designed to compel every carrier to give equal rights to all shippers over its own road and to forbid it by any device to enforce higher charges against one than another.

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 serving all shippers.

In T. S. v. Hanley (71 Fed. 672, 673 (N. D., Ill., 1896)), the cour 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 traffie, 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 statute is to prevent one shipper from getting the advantage over his competitor in the matter of rates only where they both make substan. tially a like offering to the carrier.

It is apparent from the statement of the court in the Hanley case, supra, that every difference in rates does not constitute an unjust discrimination, 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 as special and individual as required by the new definition, then, it would not 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 Commiesion in finding certain rates to be unjustly discriminatory stated :

The tariffs which contain rates applicable only to the shipments of certain consiguees 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 inconsistent. This is true because the prohibition against unilne 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 particular class or classes of shippers and receivers. The conference, therefore, opposes that part of section 12 (a) which would make contract carrier rates subject to section 217.

Section 12 (b) of the bill would amend section 218 (b) part II of the act by (1) substituting the words "this act” for the words "this qart" and (2) striking from the second sentence of the paragraph the

quirement that the Commission in prescribing rates for contract carriers give due considerationto the effect of such minimum rate or charge, or such rule, regulation, or practice, Q*o the movement of traffic by such carriers.

Under 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 necessary 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 contract 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 reduction 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 rate making. "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 such rates on other forms of transportation, then the contract carriers feel 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 no relationship to the cost of private carriage and would, in all probability, prohibit 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 definition limits the contract carrier to this type of service the changes in the ratemaking rule would have the effect of destroying the contract carrier industry.

As previously indicated, section 12 (a) would require contract carriers to file their rates and charges, and no reference is made to any obligation on the part of a contract carrier to file a minimum rate or charge. Yet, under subsection (b) of section 12, the Commission would only be permitted to prescribe a minimum rate for a contract carrier if it "finds that any minimum rate or charge of any contract carrier is unlawful." Obviously, if a contract carrier is under no obligation to file a minimum rate or charge with the Commission, it would be impossible for the Commission to find such minimum rate or charge to be unlawful. It would appear, therefore, that the Commission under the language of the bill would never be able to make the necessary jurisdictional finding, in order to prescribe a rate for a contract carrier.

Section 12 (c) of the bill would change the suspension powers of the Commission over the rates of contract carriers in much the same way as other sections of the bill would change the suspension powers of the Commission over other carriers. Even though this section of the bill is designed to speed up the regulatory process the conference is opposed to it for the reasons stated by the Commission and the American Trucking Associations, Inc. Most rate litigation arises as the result of the Commission suspending rates. The issues involved in such litigation are often complex questions of law, fact, and administrative policy, and while it is of importance to have such cases completed as quickly as possible, it is of greater importance to have them decided wisely. We do not believe that any substantial number of these cases can be decided in 3 months' time, the suspension period provided for in this section. The conference, therefore, is opposed to this amendment.

Section 24 (a) would require all contract carriers, within 180 days after passage, to advise the Commission in writing whether they desired to continue operations as a contract carrier or operate as a common carrier, and the Commission would have the power to issue to the carriers either a confirmed or amended permit or a certificate of public convenience and necessity. We believe that if any change is made in the definition of contract carrier" which tends to eliminate carriers who operate in this class, a procedure should be set up which will enable them to obtain common carrier authority without proving public convenience and necessity. This section, however, goes far bevond protecting those carriers who may not fit the new definition, for it makes all contract carriers file the statement of intention and thus place in litigation the status of their permits. The Commission may change its permit even if there is no question as to the carrier meeting the new definition. The conference objects to this provision because it will place a great financial burden on many carriers, and put in jeopardy their permits without any valid reason for so doing. There are relatively few contract carriers whose present operations are even questioned and it would certainly serve no useful public purpose to subject them to the expense and hazards of making new filings with the Commission as provided in this section.

We recognize the need for a strong common-carrier transportation system, and believe that such a system has not only been developed, but is enjoying and has been enjoying for a number of years a high degree of prosperity. We do not believe that the contract carrier industry has to be hamstrung or destroyed, in order to assure the growth and improvement of the common carrier transportation system.

The late Mr. Fort in his statement submitted two tables designed to show that the railroad industry is not handling as large a perrent

« PreviousContinue »