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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 oper

ate

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 1940, 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 transportation 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 specifically 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, and 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 any 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 generally 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 1 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

ing a common or contract carrier, nor would the suggested language by the Commission have such an effect. Therefore section 24 (b) of the proposed bill would serve no useful purpose, and would cause applications to be filed by persons who have no rights to protect. It is recommended that it not be enacted (R. 282–283).

LAKE CARRIERS ASSOCIATION

(Gilbert R. Johnson)

The definition of "contract carrier by water" in the present act would be deleted in favor of a more restrictive definition hinged upon specialization. With the proposed shifting of the qualification to service, instead of "under individual contracts or agreements", every Great Lakes operator would have to meet the specialization test to retain the status of a contract carrier by water.

The Commission might construe the words "specialized *** service" to mean a service by special equipment, and "individualized service" to mean service rendered by a vessel owner to meet the peculiar requirements of one shipper. Great Lakes vessels are usually capable of meeting the requirements of all shippers.

Part III of the act contains two separate exemptions of bulkcommodity transportation. The exemption relating to the Great Lakes should be stated first, and the general exemption second. Inasmuch as the carriage of bulk comodities on the Great Lakes is not competitive with common carriers either by land or by water, there is no need for bringing Great Lakes bulk transportation under statutory economic regulation. However, because the present Great Lakes exemption is limited to "contract carriers," the exemption might be of little effect if the general exemption is repealed. Such a result would not be in the national interest, and would contravene the express intent of Congress. The Great Lakes exemption in section 303 (c), in such event, should be modified to cover all water carriers engaged in bulk transportation on the Great Lakes (R. 1144–1146).

NATIONAL INDUSTRIAL TRAFFIC LEAGUE

(William M. Ott)

The proposed new definition of contract carriers offers a wide range of interpretation and is too indefinite to be a satisfactory legislative standard. The requirement of "bilateral contracts" is a part of the present interpretation, and the terms "specialized" or "individualized" are already used by the Commission in granting or denying contract authority. The inclusion of such language in the statute, however, would unduly restrict contract-carrier operations to the detriment. of the public. It is also doubtful whether such restriction would aid common carriers since a large part would become private carriage and would divert other traffic with it. The proposals, therefore, are opposed (R. 936).

The league is opposed to the proposals to change the definition of a private carrier as being unnecessary to accomplish the ends desired. There is no transportation which will qualify today as lawful private transportation under the present definition, which will not also qualify as lawful transportation under the proposed definition. The proviso

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