nal regulations were written. The vessels, the commodities, the class of shippers, and the competitive position of dry-bulk freight are relatively the same. The railroads and regulated water carriers are better situated than ever before. So far as changed conditions are concerned, they bespeak the nonneed for this legislation rather than the need for it. It will be time enough to regulate the many hundreds of dry-bulk carriers when they have impinged upon the transportation economy to such an extent as to impair the efficiency or adequacy of other carriers, or when they indulge in unfair or unlawful trade practices, or when their service to the public is genuinely met by the competition of other carriers operating in a manner so as to produce reasonable profits (R. 1534-1536). The extension of regulation to the little water carriers of dry-bulk commodities would lay upon them intolerable burdens. ICC regulations relating to water carriers occupy 35 pages of print and include 41 regulatory proscriptions under which these carriers would have to operate. In addition, the burden of filing and prosecuting applications would cost these little carriers from $10,000 to $100,000 a case, besides the loss of time required to have the Commission determine the issue. These carriers are especitlly worried about the possibility that new entries in inland transportation, or extensions of existing authority, would be substantially eliminated by the proposed legislation. They would not be able to offer low-cost water transportation on the basis of open and uncontrolled competition in the future. In view of the position of the big carriers, who virtually blanket the waterways with certificated rights, and in view of the history of their repeated interventions and oppositions in obtaining of competitive rights by other carriers, along with the delays and costs involved in attempting to secure new rights in proceedings before the Interstate Commerce Commission and the courts, where necessary, the existing exempt carriers look with gerat misgiving upon the prospect of regulation (R. 1536– 1538). The ostensible purpose of the proposed legislation is to preserve American free enterprise, and to keep it as free from regulation as possible. The Cabinet committee is strongly in favor of lifting regulatory restraints from common carriers. It wants to lift regulation and at one and the same time it wants these little carriers, who are not under regulation, to be placed under control. The only reason it gives for regulating these hundreds of small water carriers is that such regulation will create a healthier common carrier service. However, facts do not bear out the alleged need for regulating the exempt carriers in order to improve the health of the common carrier, since neither the railroads nor the water common carriers show any ill effects as a consequence of the existence of the small water carriers. The motor carriers are not involved, because they are not in competition with the unregulated small water carriers in the hauling of coal, iron ore, grain, sand, phosphate, and similar commodities, in view of the different minimum loads handled by the two modes of transpor tation (R. 1539). Repeal of the dry-bulk commodity exemption will likely set in motion pressure for the repeal of many other exemptions contained in all parts of the act. The most important of these, in terms of volume, is the wet-bulk exemption. It is inconsistent to proposed repeal of the dry bulk, but not the liquid commodities exemption, or the exemption of the dry-bulk carriers operating on the Great Lakes. If it is a fact contrary to what has been shown, that the drybulk exemption works a hardship on railroads, why was repeal of the others not advocated (R. 1540)? WATERWAYS COUNCIL OPPOSED TO REGULATION EXTENSION (Dr. John H. Frederick) In considering the necessity of removing the bulk commodity exemption, the experience of shippers in paying rates for the transportation of "unregulated" and "regulated" commodities is pertinent. A study of rates on the Mississippi River system during the period 1942-55 indicates that the unregulated rates are not shown to be unreasonable. It further appears to show that the influence of the unregulated contract bulk carriers on the general water-rate structure supports the conclusion that free intra-agency competition makes for lower and more stable rates to shippers than does regulated intraagency competition in that— (a) Average rates on unregulated commodities were held down over a considerable period of time. (b) Average rates on unregulated commodities were less variable from year to year over a considerable period of time. From experience to date it would seem that the users of inland water transportation have had available transportation for dry bulk commodities at rates or charges as cheap as or cheaper than those which have characterized the regulated commodities; and that, therefore, from the shipper's point of view there is no need for extending regulation. Based on the evidence in the accompanying tables and charts, it seems clear that if the dry-bulk exemption in the present law is removed, the future rates on this type of cargo will very likely be less stable than in the past, which will work to the disadvantage of bulk cargo shippers. Moreover, a statistical analysis indicates that shippers of petroleum products have benefited from savings resulting from technical improvements, as well as unregulated rate competition among the special types of carriers resulting in the payment of lower rates (R. 1573–1579). WATERWAYS COUNCIL OPPOSED TO REGULATION EXTENSION (Henry H. Fowler) In summarizing the record, it has been demonstrated by the fact that not a single water carrier, shipper, organization, or representative of the public supported it, while numerous organizations, carriers and others, opposed it, that the proposal should not be enacted. The only nongovernmental proponents have been railroad groups, and the testimony of representatives of the waterways industry have made it clear that railroads cannot compete on a cost basis for dry bulk traffic now moving by water. Testimony by the Department of Commerce that common carriers required such legislation to promote their growth and financial soundness was demolished by industry testimony showing the great pros perity which large water common carriers and rail lines paralleling waterways have enjoyed in recent years. The I. C. C.'s statement that regulation of dry bulk movements is needed to make overall regulation effective and do maintain stable rates is answered by the statements of the other witnesses for the Council. The fact is that overall regulation including dry bulk movements has never been deemed advisable or in the public interest by Congress. Moreover, it has been shown that rates on dry bulk shipments have been far more stable than the rates on regulated traffic. With respect to the statement of Secretary Weeks that the proposal should be enacted to provide common carriers the opportunity to furnish transportation at charges competitive to those made by the exempt carriers, it was pointed out that the exemption applies to all inland waterway carriers who transport dry bulk commodities, whether otherwise regulated or not. Since fair competition now exists, the statement can only mean that rates must be raised on the now-exempt traffic to make it more profitable for the already prosperous common carriers who seek such traffic (R. 1612-1613). Additional opponents American Association of Small Business, Inc., J. D. Henderson (R. 799). American Merchant Marine Institute, Inc., Alvin Shapiro (R. 1619). Appalachian Electric Power Co., H. A. Kammer (R. 1130). Burlington (Iowa) Shippers' Association, Inc., F. L. Partridge (R. 778). Dairyland Power Cooperative, John P. Madgett (R. 826). Inland Empire Waterways Association, Herbert G. West (R. 1706). J. D. Streett & Co., Inc., Kenneth C. Baker (R. 1605). National Rivers and Harbors Congress, Overton Brooks (Member of Congress), (R. 1607). New England Governors' Committee on Public Transportation, Donald W. Campbell (R. 859). New York State Waterways Association, Inc., J. Frank Bedford, Jr. (R. 1609). Ohio Power Co., H. A. Kammer (R. 1130). Ohio Valley Electric Corp., H. A. Kammer (R. 1132). Upper Mississippi Waterway Association, Inc., A. C. Mills (R. 1616). XI. EXEMPTION OF SHIPPER GROUPS OR ASSOCIATIONS Provisions of Interstate Commerce Act Section 402 (c) of the Interstate Commerce Act provides that the provisions of part IV, relating to the regulation of freight forwarders, shall not be construed to apply to the operations of shippers, or groups or associations of shippers, in consolidating or distributing freight for themselves or for their members, on a nonprofit basis, for the pur pose of securing the benefits of carload, truckload, or other volume rates, or to the operations of shippers' agents, in consolidating or distributing pool cars, whose services and responsibilities are confined to the terminal area in which the operations are performed. Amendments proposed by H. R. 6141 and H. R. 6142 Section 19 of H. R. 6141 and H. R. 6142 would amend section 402 (c) of the act so as to authorize the Commission to make the exemption of shippers' associations and shippers' agents inapplicable if it finds, after hearing and investigation, that the activities of such persons are not being conducted solely for the purposes, and within the limitations, specified in the act, or that such action is necessary to carry out the purposes of part IV and the national transportation policy. The Commission would be required in making its findings and determinations to consider, among other things, the facts and circumstances surrounding the organization and establishment of such activities; the scope of the activities, geographically and as to commodities handled and persons served; the basis of charges, if any, for the service or services provided; and the extent to which such activities are in competition with the services of regulated freight forwarders. Purpose of amendments The purpose of the amendments is to give the Commission authority and discretion to revoke the exemption of shippers' associations and shippers' agents provided in section 402 (c) where it finds that the operation under consideration is not that of a bona fide association or agent as defined in such section. Testimony DEPARTMENT OF COMMERCE (Sinclair Weeks, Secretary, Louis S. Rothschild, Under Secretary for Transportation) The proposed amendment would vest the Commission with authority necessary to cope with the numerous individuals and groups claiming to be exempt from regulation as shippers' associations but who are in actuality nonregulated forwarding enterprises for profit. The Commission has pointed out in its annual reports for the past several years, including its 69th annual report, November 1, 1955, that it has been unable to make any progress in dealing with these activities since the courts have held that the provisions of section 402 (c) constitute an outright exemption rather than a clarifying provision. The Commission for many successive years has recommended to the Congress that corrective legislation be enacted. It is clear from the legislative history of the Freight Forwarder Act, which added part IV to the Interstate Commerce Act, that the Congress did not intend the provisions of section 402 (c) to constitute anything more than a clarification of the definition of the term "freight forwarder" as used therein. This is apparent not only from the language in section 402 (c) which reads that "The provisions of this part IV shall not be construed to apply" to the operations described herein, but also from the various committee reports (R. 205). The Congress was simply attempting to make it clear to the administrative agency that it should not bring within the scope of the definition those persons who were not doing the things required of a freight forwarder (R. 206). However, the Commission was stymied in its efforts to control the operations of associations engaged in consolidating or distributing freight when the Supreme Court held in U. S. v. Pacific Coast Wholesalers' Association (338 U. S. 689), that the provisions of section 402 (c) constituted an outright exemption from the provisions of part IV and were not merely clarifying in nature. The effect of the decision is to prohibit the Commission from going into the activities actually conducted by associations of this nature. Obviously, there is no limit as to the number of persons that may be served by associations of this nature, so long as such services are performed at the request of a member. No extended discussion is required to determine the effect of the operations of associations of this nature on regulated freight forwarders and the public. These associations, or unregulated forwarders, can select profitable hauls. They publish and file no tariffs and can, therefore, fix their rates so as to undercut the regulated forwarder. The result is that traffic is diverted from the regulated forwarder who is required to serve the public at established rates (R. 206). The Department should like to emphasize that legitimate and bona fide associations engaged in consolidating or distributing freight for their members on a nonprofit basis have nothing to fear from the amendment which is proposed by section 19 of the bill. The amendment does no more than insure that the provisions of section 402 (c) will be confined to their original purpose (R. 205). The Department believes that the recommendation of the Commission which is charged with the administration and enforcement of the act, to the effect that corrective legislation be enacted, should be given a great deal of weight. The Department would accept any suggestions which will accomplish its objectives of providing the Commission with authority necessary to cope with this problem (R. 1755). Other proponents AMERICAN SHORT LINE RAILROAD ASSOCIATION (J. M. Hood) It is urged that as a minimum the Congress define shipper associations as recommended by the Commission (R. 892). FREIGHT FORWARDERS INSTITUTE (Giles Morrow) The proposal with respect to shipper groups or associations is essential to the well-being of the freight forwarding industry. While the present provision was enacted in clarification of the definition of freight forwarding and not as an exemption, as indicated by the language in the House committee report, the courts have held that it is an exemption. The Commission has been recommending corrective legislation for the past 10 years. It undertook to pierce the structure of these socalled nonprofit operations and exercise its powers under the present law, but was reversed by the Supreme Court. |