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The unequal and unfair basis of regulation has placed common carriers at a severe competitive handicap (R. 568–570).
The railroads support the aims of the proposals but there is doubt that the manner of redefinition would accomplish the purpose. The railroads agree with the Commission that the proposed definitions are indefinite, and support substitute section 203 (a) (15) proposed by the Commission.
The railroads also endorse the Commission's suggestion regarding a limitation in permits of the number of people a carrier could serve, to avoid the situation where a contract carrier gets so many contracts that it is impossible to tell whether it is a contract or common carrier (R. 571-572).
Much for-hire transportation is performed under the guise of private carriage and in that way escapes economic regulation. The subterfuges and the destructive effect of pseudo-private carriage on common carriers have been clearly described by the Commission (quoting from 67th Annual Report, 1953, p. 55). Not only do they escape regulation, but they avoid payment of the transportation excise tax.
While the railroads endorse and support the purposes of the proposal regarding the definition of private carriers, it seems clear that the proposed provisions would not accomplish the objective of regulating fictitious private carriers. Their exemption from economic regulation is claimed not under the private carrier definition, but under those of common and contract carriers. The Commission made a similar observation and suggested amendatory language (R. 565–568).
The witness responded to certain questions as follows: As to the question of whether the act should contain a prohibition against the subterfuge practices of private carriers, the railroads take no position. Apparently the ICC believes there should be some form of prohibition in the statute. However, the railroads believe that at a bare minimum common and contract carrier definitions should be revised so that private carriers may be regulated when they are, in fact, operating as common or contract carriers. The railroads offer no specific language as to how the subsections should be reworded. However, it should be noted that the ICC, which has had more experience with the subterfuge practices, suggests in its report certain statutory language intended to correct the situation. Due consideration should be given to the Commission's proposals on this inatter (R. 577,583).
NEW ENGLAND GOVERNORS' COMMITTEE ON PUBLIC
(Donald W. Campbell)
Based partly on a study of the motor-carrier industry, it is concluded that the threat to common carriers from existing regulations and practices with respect to contract and private carriage is not sufficiently great to warrant action penalizing the noncommon carriers. It would be well to await the results of the proposed relaxation of restrictions on ratemaking before approving proposals that would further restrict noncommon carriers (R. 864).
CONTRACT CARRIER CONFERENCE
(Clarence D. Todd)
The conference is opposed to the proposed legislation in its entirety. Specifically, it is concerned about the proposed change in the definition of "contract carrier by motor vehicle” to include only those who operate
on the basis of bilateral contracts for specialized or individualized service or services equivalent to bona fide private carriage by motor vehicle.
The amended definition would exclude certain classes of carriers who were formerly included and who would fit neither the common nor the contract carrier definitions, and would, therefore, be completely unregulated. In addition, the amendment would limit contract carriers to performing specialized or individualized services which are a substitute for private carriage. The contract carrier, if so limited, would be in direct competition with unregulated carriage, and in competition with common carriage only to the same extent as is private transportation (R. 1275).
There are innumerable private carrier operations which are neither individualized nor specialized. Furthermore, there are many common carriers who perform specialized services, such as carriers of automobiles, of liquid freight, of household goods, and many others, and therefore the specialized nature of the service should not be a distinguishing feature of contract carriage. In the motor carrier industry there is a constant change in the type of services performed, so that what may be a specialized service today may become a commonplace service tomorrow. For example, formerly the operation of vehicles equipped with mechanical refrigeration was considered to be a specialized service. At present the same equipment is used by many general commodity common carriers in the transportation of perishable commodities, and it has ceased to be a specialized service. Under the proposed definition those contract carriers who pioneered this form of service would have to discontinue performing it as contract carriers (R. 1276).
The provision which would require all contract carriers to advise the Commission in writing within 180 days after passage whether they desired to continue operations as contract carriers or operate as common carriers with the Commission powered to issue either confirmed or amended permits, or certificates of public convenience and necessity, is opposed. If a change in definition eliminates carriers operating as contract carriers, a procedure should be set up to enable them to obtain common carrier authority without proving public convenience and necessity. The proposal makes all contract carriers file statements. It will place a great financial burden on many carriers, and put their permits in jeopardy without any valid reason for so doing (R, 1280).
INTERSTATE COMMERCE COMMISSION
(Anthony F. Arpaia) Agreement is expressed with the purposes of the proposed changes in the definitions of the types of motor carriers, but it is not believed
that they will accomplish their objectives, and in some respects are undesirable.
The proposed amendment to the definition of a motor common carrier would not include all carriers excluded from the proposed contract carrier definition, and some carriers would therefore not be subject to regulation under either definition. Since the objective is to limit the classes of carriers who may operate as contract carriers and since it appears undesirable to declare all other for-hire carriers to be common carriers, it is our opinion that the desired results may best be achieved by the following provision:
Sec. 203. (c) Except as provided in section 202 (c), section 203 (b), in the exception in section 203 (a) (14), and in the second proviso of section 206 (a) (1), no person shall engage in any transportation for compensation, by motor vehicle, in interstate or foreign commerce, on any public highway or within any reservation under the exclusive jurisdiction of the United States, unless there is in force with respect to such person a certificate or a permit issued by the Commission authorizing such transportation.
A person shall be deemed to be engaged in transportation if, through the selection, approval, or employment of drivers or other employees (other than as a bona fide officer or employee), through the control over facilities, or through other means, directly or indirectly, he exercises direction or control over the movement of passengers or property, or assumes responsibility for the persons or property being transported or for the operation of the vehicles over the highways.
A person shall be deemed to be engaged in transportation for compensation if he receives for such services a reward or consideration, regardless as to whether the compensation, reward, or consideration is received directly or indirectly, through the device of leasing or renting vehicles, employment, the furnishing of drivers or other employees, or management services, in buying or selling of property, or in any other manner by which compensation, reward, or consideration is received in return for the direction or control of or the responsibility for vehicles used in transportation by motor vehicle in interstate or foreign commerce.
Except for adding "engages in or” to make the section read "any person which engages in or holds itself out to engage in * * *”, no change is recommended in the existing definition of a motor common carrier (R. 271-273).
The proposed definition of a contract carrier by motor vehicle is indefinite, particularly the added clause, “equivalent to bona fide private carriage by motor vehicle.” The distinction between contract and private carriage is that the former is for-hire and the latter is not. Private carriage is not limited to specialized or individualized service. There is no transportation that may not be performed by private carriage. The definition of a contract carrier by motor vehicle should describe the services which a contract carrier may perform in the clearest possible terms, and distinguish between contract carrier serv. ice and common carrier service.
The original definition in the Motor Carrier Act of 1935, defined a contract carrier by motor vehicle as one who transports for compensation "under special and individual contracts or agreements." This was amended in 1910, but before and after that date, the Commission interpreted the contract carrier definition as requiring some form of "special and individual” service different from ordinary transporta; tion service, under bilateral contracts covering service over a period of time. A three-judge Federal court set aside one of our cases involving this definition, holding that we had misconstrued the contract-carrier definition. This case is now on appeal to the Supreme
Court. The proposed amendment is an improvement, but it is believed that the following would be preferable (R. 273-274):
(15) The term “contract carrier by motor vehicle" means any person which engages in transportation by motor vehicle of passengers or property in interstate or foreign commerce, for compensation (other than transportation referred to in par. (14) and the exception therein), under continuing contracts with one person or a limited number of persons for the furnishing of transportation services of a special and individual nature required by the customer and not provided by common carriers.
Related to the motor contract-carrier question, comments from interested persons show that many would give the Commission power to restrict to a specific number the contracts which a contract carrier may have at one time, and the frequency with which they may be changed. Some would require specific approval by the Commission of each contract, or would limit permits to authorizing transportation for specitically named shippers. The purpose of these recommendations was to prevent contract carriers from expanding their services to the extent that they become common carriers serving the general public. To the extent that contract carriers are limited to specialized and individualized service, the need for such restrictions is reduced. There is, however, need to make clear the limits of the service which a contract carrier may perform, including the number of shippers which may be served. It is, therefore, suggested that the second sentence of section 209 (b) be amended to read as follows (R. 276-277):
The Commission shall specify in the permit the business of the contract carrier covered thereby and the scope thereof, and it shall attach to it at the time of issuance, aud from time to time thereafter, such reasonable terms, conditions, and limitations, consistent with the character of the holder as a contract carrier, including terms, conditions, and limitations respecting the person or persons and the number or class or classes thereof for which the contract carrier may perform transportation service, as may be necessary to assure that the business is that of a contract carrier and within the scope of the permit, and to carry out with respect to the operations of such carrier the requirements established by the Commission under section 204 (a) (2) and (6): Provided, That, within the scope of the permit and anr term, conditions or limitations attached thereto, the carrier shall have the right to substitute or add to its equipment and facilities as the development of its business may require.
The proposed amendment to the present definition of a private carrier by motor vehicle would eliminate the clause: when such transportation is for the purpose of sale, lease, rent, or bailment, or in furtherance of any commercial enterprise. In lieu of the above words, it would add: Provided, That such ownership, lease, or bailment was not for the purpose of such transportation.
The purpose of this definition is to indicate those transporters, other than common and contract carriers, who shall be subject to regulation. Presently, a person who transports his own property, other than for the purpose of sale, etc., is not subject to regulation with respect to safety, etc. Under the proposed definition, a person who transports in interstate or foreign commerce any property of which he is the owner, lessee, or bailee will be subject to those requirements, even if the property were merely some household article being transported in a private passenger car to or from a repair shop. It is the Commission's opinion that this definition should continue to be limited to what is renerally known as commercial or business hauling and, therefore, it does not agree with the changes proposed.
In connection with the discussion of the proposed amendment of the definition of a common carrier by motor vehicle, the Commission has recommended adding to the act a new subsection 203 (c). The last two paragraphs of that suggestion are intended to tighten up the interpretation and the administration of the act with respect to persons who, under the guise of operating as private carriers, or pretending not to be carriers of any kind, actually are transporting for compensation. It is recommended that in lieu of the proposed change with respect to private carriers, the recommended new subsection 203 (c) be adopted (R. 274–275).
It is proposed to amend 302 (d) and (e) relating to definitions of common and contract carriers by water, in the same manner as proposed with respect to common and contract carriers by motor vehicle. The principal effect would be to change the status of what are commonly known as tramp-ship operators. Tramp-ship operators transport full cargoes of i commodity or split cargoes consisting of not more than 2 or 3 commodities. They do not operate their ships on fixed schedules, but move them from port to port where cargoes may be available under special contracts. In the Commission's determination of "grandfather rights” of water carriers after the enactment of part III, it held that the status of tramp-ship operators was that of contract carriers. In past tramp ships were principally ocean carriers but now have counterparts in barge and towboat operators on inland waterways. Since World War II, their number has decreased in domestic transportation. Approximately 300 water carriers now hold permits, about 40 of which hold permits as contract carriers. Many of the 40 are inactive.
It appears that under the proposed amendments in this section most holders of water-carrier permits would be required to elect to become common carriers or to change their mode of operation and enter into bilateral contracts requiring specialized service. The Commission doubts whether such a requirement would be in the public interest. In view of the difference between conditions in motor and water transportation affecting contract carriers, it is believed that there would be no harm in leaving the present definitions of common and contract carriers by water unchanged (R. 278-279).
With respect to providing grandfather clauses for contract carriers whose operations would be affected by the proposed changes in definitions, it appears that each contract carrier would be permitted to continue the operations heretofore authorized by its permit and, if such operations exceeded those permitted under the revised definition of a contract carrier, a certificate could be issued in lieu of the permit, but only if that were necessary to preserve the rights of the contract carrier to continue the operations authorized by its permit. These provisions seem appropriate. An alternative approach would be to provide for the issuance of a certificate or permit authorizing the continuance of the operations conducted under the permit rather than the operations authorized by the permit. This bill would place upon the Commission the burden of possibly 2,663 proceedings in which the parties are entitled to a hearing, together with its normal workload. Additional personnel and appropriations would be necessary.
The amendment to the private carrier definition in 203 (a) (17) proposed in section 10 would not result in any private carrier becom