SEARS, ROEBUCK & CO. (John C. Allen) The proposal to require contract carriers to file all tariffs or contracts to provide notice of actual rates is not opposed, but strenuous objection is expressed to the indication that contract carrier rates shall be at the same level as those of common carriers. The latter provision violates the underlying principles of the Cabinet Committee report; namely, permitting dynamic competition to play a larger role in ratemaking, and eliminating the practice of allocating traffic between modes. Freedom to benefit from economic advantages should apply to all carriers (R. 1455). Additional opponents American Merchant Marine Institute, Inc., Alvin Shapiro (R. 1619-1620). American Retail Federation, Richard Webber (R. 1091). Burlington (Iowa) Shippers' Association, Inc., F. L. Partridge (R. 778). Fargo (North Dakota), Chamber of Commerce, J. I. Finsness (R. 1000). National Armored Car Association, Inc., Eugene E. Murphy (R. 1849-1852). National Coal Association, F. F. Estes (R. 874-876). National Grange, Lloyd C. Halvorson (R. 1335). National Retail Dry Goods Association, Robert H. Smith (R. 1004). X. REPEAL OF DRY-BULK COMMODITY EXEMPTION Provisions of Interstate Commerce Act Section 303 (b) of the Interstate Commerce Act exempts from economic regulation under part III transportation by a water carrier of commodities in bulk, loaded and carried without wrappers or containers and received and delivered without mark or count, when the cargo space of the vessel in which such commodities are transported is being used for the carrying of not more than three such commodities. The exemption is not applicable to transportation subject, at the time part III became effective, to the provisions of the Intercoastal Shipping Act, 1933, as amended. Amendments proposed by H. R. 6141 and H. R. 6142 Section 14 of H. R. 6141 and H. R. 6142 would repeal section 303 (b) of the act. Section 18 of H. R. 6141 and H. R. 6142 would amend section 309 (a) and (f) of the act by adding paragraphs providing for the granting of appropriate operating authority by the Commission to common and contract carriers by water transporting dry-bulk commodities on a specified date pursuant to the repealed exemption. Purpose of amendments The purpose of the amendments is to repeal the dry-bulk commodity presently applicable to certain operations of water carriers. Testimony DEPARTMENT OF COMMERCE (Sinclair Weeks, Secretary, and Philip A. Ray, General Counsel) These amendments would equalize the opportunity for regulated land and water carriers to compete for the transportation of dry-bulk commodities. Transportation on the inland waterways system, which is the principal area affected by the repeal of the bulk exemption, has increased substantially in the postwar period. For example, on the Mississippi River system, Corps of Engineers' data show that tonnage increased from 80.5 million short tons in 1946 to 136.4 million tons in 1954, the latest year for which figures are available. This transportation is largely of dry-bulk commodities. From all indications, traffic made further gains in 1955 (R. 201). The Interstate Commerce Commission has pointed out in reports to the Congress on legislation seeking to modify the dry-bulk commodity exemption that such exemption and others in part III of the act have left the greater part of all domestic water transportation free from regulation. In its 68th annual report, the Commission stated that the exemption "makes effective regulation of water transportation impossible.' Regulated rail, water, and motor carriers would appear to be at a distinct disadvantage in attempting to compete with unregulated water carriers who handle nothing except dry-bulk commodities. The regulated carriers must, among other things, adhere to their published tariffs. It would also appear that unregulated carriers need only to inspect published tariffs in order to determine how low they must quote rates in order to bid successfully for available traffic. Although regulated water carriers are permitted to handle dry-bulk commodities on an exempt basis, just as the unregulated carriers are, they encounter operating difficulties in conforming with the statutory requirement for segregating exempt and nonexempt commodities (R. 202). The dry-bulk commodity exemption in section 303 (b) was incorporated into the act of Congress on the theory that transportation of such commodities by unregulated carriers would not be substantially competitive with land or water common carriers. The exemption in fact stemmed from the one granted to contract carriers on the Great Lakes by section 303 (c) of the act. The latter exemption was based on (1) the competition which the contract carriers on the Great Lakes encountered from unregulated water carriers of a foreign country in the transportation of commodities in bulk, and (2) the fact that transportation of such commodities was not considered to be substantially competitive with land transportation (R. 202). Under the proposed amendment, transportation by contract carriers by water on the Great Lakes of not more than three "bulk" commodities would continue to be exempt under the act (R. 201). In addition, even though the bulk commodity exemption contained in section 303 (b) is revoked, the revocation will not affect the present scope of the operations of carriers who have been engaged in exempt transportation under such section. Section 18 (a) and (b) of the bill assures such carriers the right to continue in that business to the extent that they are now engaged in it, but requires that they obtain the approval of the Commission for further expansion of their activities (R. 203-204). The Department also calls attention to the fact that section 303 (e) of the act declares it to be the policy of the Congress that the Commission shall exempt transportation by contract carriers by water which, by reason of the inherent nature of the commodities transported, their requirement of special equipment, or their shipment in bulk, is not actually and substantially competitive with transportation by any rail, motor, or water common carriers. No change is suggested to section 303 (e). During the hearings the suggestion has been made that the revocation of the bulk commodity exemption and a revision of the definition of contract carriers might or would expose the Great Lakes carriers to the claim that they had become common carriers, and in that way the Great Lakes exemption as to some of them would be destroyed. As the Department understands the proposal, the advisory committee had no such intention. However, if the committee believes that it would have that effect, the Department of Commerce would have no objection to making such change as necessary to obviate that result (R. 201). Other proponents ASSOCIATION OF AMERICAN RAILROADS (J. Carter Fort) The exempt carrier has to meet none of the rate requirements and standards faced by common carriers. He can make whatever secret rate is necessary to get the business. Commodities covered by the exemption include coal and coke, grain, ore, sand, gravel, and sulfur. with respect to which there has been keen competition between rail and water carriers. The Commission itself has said in its two latest annual reports that the exemption "makes effective regulation of water transportation impossible." Tonnage on rivers and canals quadrupled between 1939 and 1955, and dry-bulk commodities dominate all traffic on the inland waterways. The railroads endorse the proposed repeal of this exemption (R. 572-574). Responding to questions, the witness stated that the railroads hope to get part of the dry-bulk commodity traffic from the unregulated water carriers once the exemption is repealed. At least, they would have a fair chance to get part of it. Under present circumstances, the unregulated water carriers almost always undersell the railroads in competing for these exempt commodities (R. 579). INTERSTATE COMMERCE COMMISSION (Anthony F. Arpaia) Repeal of the bulk commodity exemption is favored. The public interest in stable, reasonable, and properly regulated rates is disregarded in the complete absence of control over this trade (R. 279). The Commission favors the proposals to add new paragraphs to section 309, to protect the rights of water carriers which would be affected by the repeal of the bulk commodities exemption (R. 281). If 303 (b) of the act is repealed, it would be necessary to make the change in section 418 proposed in section 22 of the proposed bill (R. 282). Additional proponent Equitable Life Assurance Society of the United States, Hunter Holding (R. 1846). Opponents AMERICAN FARM BUREAU FEDERATION (Matt Triggs) The federation is opposed to termination of the water bulk-commodity exemption. Regulation should be primarily to protect the public. Competition on water bulk-commodity transportation is constantly present and is effective in protecting against excessive rates. Every extension of authority should be scrutinized to determine whether it is necessary in the public interest. No such showing has been made in this case (R. 1226–1227). AMERICAN WATERWAYS OPERATORS, INC. (Chester C. Thompson) By a vote of 5 to 1, the members of the represented industry oppose the repeal of section 303 (b) of the act. In enacting the exemption in 1940, Congress considered all the facts and arguments, and their validity has not changed. The major expansion of inland water carriage has been due to increased movements of dry and liquid bulk commodities (R. 468). In response to questions, the witness stated that while 90 percent of the traffic moving through the inland waterways is exempt from regulation, and the water-carrier industry can protect itself ratewise against competition without any intervention from a regulatory body, nevertheless, loss of traffic as a result of continual reductions in rates would adversely affect them in view of their limited service and geographical areas served; the water carriers could not recoup their losses at noncompetitive points, in the same manner as the railroads. A carrier proposing a rate reduction should assume the burden of showing that the rate would not adversely affect another mode of carriage (R. 471–473). CHAMBER OF COMMERCE OF THE UNITED STATES (Grant Arnold) The repeal of the dry-bulk commodity exemption is opposed, since it is not believed that the public interest requires this extension of regulation. Many industries have expended large sums of money to locate on water in reliance on this 1940 exemption (R. 963). ILLINOIS COAL TRAFFIC BUREAU; BELLEVILLE FUELS, INC.; MIDDLE STATES FUELS, INC.; NORTHERN ILLINOIS COAL TRADE ASSOCIATION (Charles W. Stadell) There is no proposal to repeal the exemption with respect to water carriage of liquid bulk commodities. Illinois coal producers en counter severe competition from fuel oil, a substantial part of which is transported in tank barges on the inland waterways or in tank vessels on the Great Lakes, either privately owned or exempt under section 303 (d). The exemption should remain unchanged as to both. Water bulk transportation is a specialized service and differs from private carriage only in the fact that receivers, like electric generating plants, are not engaged in the transportation business (R. 1719-1720). Alarming losses in Illinois coal production are attributable in no small measure to prohibitively high rates maintained by the railroads which have made it impossible to market coal at important points in the Midwestern States in competition with natural gas and fuel oil. The use of exempt barge transportation was begun, and the volume has increased in recent years. Because fuel costs represent the main part of their expenses, electric utility plants have invested millions in facilities on navigable waterways, and have come to depend upon the stability of rates charged by exempt water carriers. Elimination of the exemption will result in Commission-required increases to protect the railroads, and would immediately result in the diversion and loss of substantial tonnages of Illinois coal moving by barge to natural gas or oil. There commendations of the advisory committee are quite conflicting. It recommends reduction of economic regulation to a minimum, on the one hand, and, on the other, recommends the elimination of the dry-bulk exemption which subjects those water carriers to regulation (R. 1721-1722). MANUFACTURING CHEMISTS ASSOCIATION, INC. (D. G. Ward) The witness stated that the association is basically in agreement with the fundamental principles outlined in the Cabinet Committee Report and supports these principles with the exception of sections 13 and 14 of H. R. 6141 which propose to repeal the dry-bulk exemption and modify the definition of "common carriers by water and contract carriers by water." In excess of 500 million tons of bulk commodities are moving on the inland waterways, with many additional millions of tons moving coastwise. This business was primarily developed under the present laws and without regulations. A large proportion of bulk commodities moving by water are not susceptible to transportation by competing carriers, with the result that any regulation would retard the development of this type of water transportation without any great assistance to the regulated railroad and trucking industries. In fact, even the limited number of regulated common carrier barge lines who favor this legislation would not materially benefit, as extension of regulation would tend to develop and encourage private operations by large industrial users of the inland waterways to the disadvantage of the forhire carriers and small producers. No support appears for the view that the public interest would be served by this extension of regulation (R. 1606-1607). |