mission safety regulations, has been discredited in the eyes of numerons transportation experts. It is to be noted that the Cabinet Committee recommendations purport to stress more competition. In cold fact, however, these recommendations amount to restrictions upon and perhaps elimination of the healthy competitive conditions which now exist. They dismember private carriage in order to provide an assist to common carriage. It should be added also that the help which is being molded by these recommendations at the expense of private carriage is clearly not intended so much for the benefit of all common carriage as it is for the benefit of one particular type of common carriage-for within the specific provisions and from the whole tenor of the report can clearly be seen the heavy hand of the railroads as the guiding inspiration thereof. And it appears that the Weeks Committee proposal is now serving a completely sinister purpose of its railroad proponents by initiating new and even more radical proposals relating to private truck operations. I should add that the Private Carrier Conference, Inc., recognizes, along with the Cabinet Committee, the vital importance of the railroads and all common carriers to the defense and welfare of this Nation, both in peace and war. We have no quarrel with common carriers, and surely we have no desire to impair their status in the transportation field, nor do we wish to hamper the efficiency of their important service to our country. On the other hand, certainly the private carrier contributions to the national defense and to the Nation's economy are indispensable. That has been proven beyond any question of a doubt. Therefore, the Cabinet Committee, the ICC, and Congress should regard the legitimate role of the private carrier and must be careful indeed in tampering with the definition that now exists in the Interstate Commerce Act. MAY 31, 1956. Mr. ANTHONY F. ARPAIA, Chairman, Interstate Commerce Commission, Washington, D. C. MY DEAR COMMISSIONER: The Private Carrier Conference, Inc., is deeply disturbed because of the many statements originating from the Commission which constitute unwarranted attacks upon private carriage in the United States. As you know, you yourself have been openly critical of private carriage and have publicly expressed yourself on this subject. Commissioner Freas has also been actively criticizing private carriers and Commissioner Clark has upon occasion been openly critical. In addition, "buy and sell" activities of certain truck operators were discussed in some detail in the 67th Annual Report of the ICC to the Federal Congress. Commissioner Tuggle has expressed himself publicly but his comments have been in a constructive approach to the problem whereas the other statements in our view have been distorted and destructive in their nature. Much of the criticism of private carriage, as expressed by the Commissioners above mentioned, is leveled at the so-called buy and sell problem. Commissioner Tuggle has confirmed this fact in a recent talk before the National Tank Truck Carriers, Inc., in which he said that, in his opinion, this criticism and this clamor for additional regulation of private carriers would be "abated somewhat, perhaps even satisfied, if this subterfuge problem were cured." The Private Carrier Conference, Inc., has always vigorously opposed any "buy and sell" operations. As long ago as October 26, 1954, at its annual meeting at the Waldorf-Astoria Hotel in New York City, this conference unanimously passed a resolution condemning “buy and sell” operations as being illegal and inviting the Commission to enforce its own regulations and eliminate said "buy and sell” operations under the guise of "private carriage." A copy of this resolution is submitted herewith. It is the position of the Private Carrier Conference, and we unequivocally state, that no private carrier in the United States engages in "buy and sell" operations because if he does so he is not a private carrier. There is adequate administrative machinery within the Interstate Commerce Commission now to deal with improper "buy and sell" agreements which would completely eliminate the purported evils decried by the Commission and which render unnecessary the unfortunate legislative proposals which are embodied in the legislation implementing the Weeks report, as well as the even more restric tive legislative proposals suggested by your Commission in its comments on the Weeks report bills. The Interstate Commerce Commission is derelict in its responsibilities under the Motor Carrier Act if it does not deal vigorously and promptly with any "buy and sell" operations of which it has cognizance. It would seem that all of the hue and cry about "buy and sell" operations would disclose an unfortunate failure on the part of the Commission to discharge official obligations under the act in this respect. If there are facts about "buy and sell" operations that the Commission is not now dealing with, then that should be corrected immediately. If sufficient facts are not known, then the Commission should act promptly to initiate a factfinding inquiry into the true circumstances about the so-called buy and sell evil and the Private Carrier Conference herewith pledges its wholehearted support to the Commission in connection with such an inquiry. Commissioner Tuggle, in an address on October 25, 1954, said that the "exact extent of the problem is of course entirely speculative. The trend, perhaps rather than its present frequency, is the main cause for concern." As we stated in an editorial in our bulletin dated April 22, 1954: "An attack upon private carriage as a whole, with generalized examples of illegitimate and borderline operations as it main supports, is 'guilt by association' in its strongest sense. Enforcement of present tested and proven laws is the answer-not restrictive legislation which would bind and shackle a vast segment of the American economy for the dubious benefit of the public transportation agencies." Until such facts are disclosed if they are presently known, or until they are assembled if they are not now available to the Commission, we feel that these unfair and unsupported attacks upon private carriage should cease and desist and the same fair and impartial attitude which the Commission has traditionally disclosed to all carriers be extended to the private carriers in the United States who make such a significant contribution to our American transportation system and to our cherished way of life. Very truly yours, PRIVATE CARRIER CONFERENCE, INC., Mr. JOSEPH E. KELLER, INTERSTATE COMMERCE COMMISSION, Washington, June 5, 1956. General Counsel, Private Carrier Conference of 1424 16th Street NW., Washington, D. C. DEAR MR. KELLER: This will acknowledge receipt of your letter of May 31, 1956. If you will analyze the statements of the individual Commissioners or the annual reports of the Commission, I think you will discover that what has been stated is the fact that private carriage is growing. This is true. Also that the transportation tax on freight of 3 percent is an inducement for individuals or corporations to enter private carriage. You will also find that the entire subject matter has been factually discussed and analyzed showing the relationship and function of each form of transportation. It has been pointed out that private transportation is sometimes due to poor service by public carriers and that public carriers should take steps to meet shippers' needs. There has never been a suggestion that legitimate activities of carriers of any type be restricted. The practices of certain persons in using the guise of private carriage to conduct transportation for hire through phony invoices of purchase and sale are growing. Our field reports substantiate this fact. We know that your conference on October 26, 1954, adopted a resolution concerning our comments in our 67th annual report, in which you expressed the view that the Commission has sufficient power under the present law and your conference opposed any legislation on the subject. Our comments are merely factual reports of practices and trends with the statement that these matters are called to the attention of Congress because of their possible impact on the national transportation policy, "to foster sound economic conditions in transpor tation and among the several carriers." There was no recommendation that private carriage be restricted nor any opinion that all truck merchandising or all buy and sell operations are unlawful. In the latter part of the last paragraph there is a condemnation of "instances where so-called private carriage is a subterfuge for engaging in public transportation, it constitutes a growing menace to shippers and to carriers alike." Your own letter makes the sweeping statement that no buy and sell operations are private carriage. The Commission's statement was much more temperate. In referring to merchandising by motortruck, it said, "Sometimes the purchase and sale is a bona fide merchandising venture," meaning that it is proper private carriage. It further said, "In other cases, arrangements are made with the consignee of such merchandise for the buy and sell arrangement in order that the consignee may receive transportation at a reduced cost.' Despite your expressions to the contrary, it has been the experience of the Commission that the discovery and the development of evidence that transportation under the guise of private carriage is, in fact, for hire transportation, is very difficult. The Commission has the burden of overcoming the prima facie documents indicating private carriage and establishing that the documents do not represent the true transaction between the parties. Many persons seem still to believe (and sometimes are so advised by persons who should know better or who should not give advice on the subject) that they may engage in transportation for hire without a certificate or permit, if the transaction is blessed by the execution of certain papers. The purpose of the Commission's recommendations concerning the private carrier provisions of H. R. 6141 was to clarify this matter of subterfuge and make clear to would be carriers and to the courts that for hire carriage under the guise of private carriage is, nevertheless, for hire carriage and requires a certificate or permit. The resolution and your letter implies that unjust and unwarranted accusations have been made against private carriers as a whole. There is no support for such a statement. Private carriers should be anxious to preserve their legitimate status as such and no one to my knowledge objects to advocacy. In none of your communications have I noticed that your conference has taken any steps to help improve the act with respect to the illegitimate practices under the guise of private carriage. You do not agree that common carriage is the "hard core of transportation" as expressed by the Cabinet Committee. This naturally is a subject of importance and it is not the purpose of this letter to argue its merits. I think, however, that in your desire to protect the status of true private carriage, you are unduly sensitive about the whole subject. No one should endeavor to close the door on full, free, and frank discussions of this basic problem. Sincerely yours, ANTHONY ARPAIA, Chairman. ASSOCIATION OF AMERICAN RAILROADS, Hon. OREN HARRIS, Chairman, Transportation and Communications Subcommittee, Committee on Interstate and Foreign Commerce, United States House of Representatives, Washington, D. C. DEAR MR. HARRIS: I enclose a statement of the Association of American Railroads in opposition to amendment of section 15 (3) and (4) of the Interstate Commerce Act, with the request that it be incorporated in the record of the hearings now being conducted in connection with H. R. 6141 (and related bills), incorporating recommendations contained in the report of the Presidential Advisory Committee on Transport Policy and Organization. The subject matter of this statement was not touched upon during the course of the presentation made before your subcommittee by Messrs. Fort and Langdon on May 8, 1956. Because of the testimony of a subsequent witness, however, it seems appropriate that the subcommittee now be acquainted with our views on the matter. I shall greatly appreciate your indulgence in this regard; and I ask that the enclosed statement be considered by the committee in its deliberations on the pending legislation. Respectfully yours, THOMAS L. PRESTON. 78456-56-pt. 3- -29 STATEMENT OF ASSOCIATION OF AMERICAN RAILROADS IN OPPOSITION TO AMENDMENT OF SECTION 15 (3) AND (4) OF THE INTERSTATE COMMERCE ACT On May 8, 1956, during the course of the hearings now being conducted by the Transportation and Communications Subcommittee of the House Committee on Interstate and Foreign Commerce on H. R. 6141 (and related bills), incorporating recommendations contained in the report of the Presidential Advisory Committee on Transport Policy and Organization, Messrs. J. Carter Fort and Jervis Langdon, Jr., stated the views of the Association of American Railroads with respect to most of the recommendations of the Advisory Committee as they are reflected in the bills under consideration; and on June 8, 1956, there was submitted and received for the record a supplementary statement by Mr. Langdon on behalf of the association, bearing particularly upon testimony given by Messrs. Turney and Aitchison, as witnesses for the American Trucking Associations, Inc., on May 9-10, 1956. There remains another feature of the pending bills (H. R. 6141 and H. R. 6142) as to which the views of the Association of American Railroads ought briefly to be made known to the subcommittee. It relates to the cancellation of through routes. Although the subject does not appear to have been dealt with at all in the report or recommendations of the Presidential Advisory Committee on Transport Policy and Organization, the bills referred to-purporting to implement those recommendations-would, in section 7 (b), amend the final sentence of section 15 (3) of the Interstate Commerce Act as follows (new language italicized; omitted matter in brackets): "[If any tariff or schedule canceling any through route or joint rate, fare, charge, or classification, without the consent of all carriers parties thereto or authorization by the Commission, is suspended by the Commission for investigation, the burden of proof shall be upon the carrier or carriers proposing such cancellation to show that it is consistent with the public interest, without regard to the provisions of paragraph (4) of this section.] No existing through route shall be canceled except by agreement of all carriers whose lines are embraced therein unless the Commission shall, upon application and after hearing, find that cancellation is consistent with the public interest without regard to the provisions of para graph (4) of this section, and the burden of proof shall be upon the carrier or carriers to show that the cancellation is consistent with such public interest." The Association of American Railroads opposes this proposed change in the law. The Supreme Court has defined the statutory term "through route" as follows: "A through route' is an arrangement, express or implied, between connecting railroads for the continuous carriage of goods from the originating point on the line of one carrier to destination on the line of another" St. Louis Southwestern Ry. Co. v. United States (245 U. S. 136, 139, note 2 (1917)). It has said that: "*** the test of the existence of a 'through route' is whether the participating carriers hold themselves out as offering through transportation service" Thompson v. United States (343 U. S. 549, 557 (1952)). In Denver & R. G. W. R. Co. v. Union Pac. R. Co., decided June 11, 1956 U. S.), the Supreme Court just this week adhered to the "holding out" test and in so doing said: "*** a through route is ordinarily a voluntary arrangement, express or implied, between connecting carriers, and * * the existence of such an arrangement depends on the circumstances of particular cases. Findings of through routes can therefore be made on the basis of express agreements between carriers or on the basis of inferences drawn from continuous practices sufficient to show that through routes exist even though not provided for in formal contracts or tariffs. The question in each case is one of fact." It is frequently in the public interest to cancel through routes. See, e. g., Cancellation of Rates and Routes Over Akron, C. & Y. R. (276 I. C. C. 473, 481). (“Many of such routes are excessively circuitous and their elimination therefore is consistent with the public interest.") Tariff simplification also calls for such cancellations on certain occasions. The Interstate Commerce Commission has condemned so-called open routing, and by rule 4 (k) of its tariff circular 20 has required carriers either to designate complete routing or definitely provide that the rates apply over all routes composed of lines of carriers parties to the tariff (Routing Soda Ash From Baton Rouge, La., 266 I. C. C. 323, 328). There are other reasons, too, why the cancellation of a through route is often in the public interest. When, under existing law, the cancellation of a through route is proposed as "consistent with the public interest," it is usually considered (assuming lack of agreement on the part of the participating carriers) in the following manner : (1) A tariff is filed, the effect of which is to cancel the route. (2) If the Commission does not suspend the tariff, the cancellation becomes effective. Sometimes the cancellation, although allowed to become effective, is made the subject of investigation, and the Commission may later order the restoration of the route. (3) If the Commission does suspend, the proponent of the cancellation assumes the burden of justifying it as "consistent with the public interest." The proposal contained in section 7 (b) of H. R. 6141 would terminate the Commission's authority to consider proposed cancellations on its suspension docket and to decide whether hearings are necessary or not. A hearing in every case would be mandatory. This would logjam the whole procedure. Many tariffs and tariff supplements are being filed-almost daily-in which through routes are canceled, but seldom is this done with the consent of all participating carriers. In many cases consent to cancel is withheld as a matter of routine for reasons which may or may not relate to the public interest. Under the present law, whether a hearing is justified or not can be decided when the Commission considers whether to suspend the tariff, and it may of course decide against suspension but institute an investigation. Under the proposed change this flexible procedure for protecting the public interest would be eliminated and a rigid requirement for hearings would be substituted in every case where there is lack of agreement on the part of all of the participating carriers. The Association of American Railroads is strongly opposed to this suggested change in procedure for determining whether or not the cancellation of through routes is "consistent with the public interest." In testimony before this subcommitee on May 23, 1956, Mr. James M. Hood, president of the American Short Line Railroad Association, supported the objective of the amendment of section 15 (3) of the Interstate Commerce Act proposed in section 7 (b) of the bills and suggested certain further restrictive language. We oppose the American Short Line Railroad Association's suggestion for the reasons already advanced against the basic proposal. Mr. Hood also suggested far-reaching amendment of section 15 (4) of the Interstate Commerce Act. That section sets forth limiting conditions for the prescription of through routes by the Interstate Commerce Commission. No amendment of section 15 (4) was suggested in the report of the Presidential Advisory Committee on Transport Policy and Organization, nor is any amendment thereof contemplated by the pending bills in their present form. The suggestion of the American Short Line Railroad Association is to repeal all of section 15 (4) with the exception of its final sentence. That is, the language shown within brackets below would be stricken; and only the concluding sentence would be retained in the law: "[In establishing any such through route the Commission shall not (except as provided in section 3, and except where one of the carriers is a water line) require any carrier by railroad, without its consent, to embrace in such route substantially less than the entire length of its railroad and of any intermediate railroad operated in conjunction and under a common management or control therewith, which lies between the termini of such proposed through route, (a) unless such inclusion of lines would make the through route unreasonably long as compared with another practicable through route which could otherwise be established, or (b) unless the Commission finds that the through route proposed to be established is needed in order to provide adequate, and more efficient or more economic, transportation: Provided, however, That in prescribing through routes the Commission shall, so far as is consistent with the public interest, and subject to the foregoing limitations in clauses (a) and (b), give reasonable preference to the carrier by railroad which originates the traffic. No through route and joint rates applicable thereto shall be established by the Commission for the purpose of assisting any carrier that would participate therein to meet its financial needs.] In time of shortage of equipment, congestion of traffic, or other emergency declared by the Commission, it may (either upon complaint or upon its own initiative without complaint, at once, if it so orders, without answer or other formal pleadings by the interested carrier or carriers, and with or without notice, hearing, or the making of filing of a report, according as the Commission may determine) establish temporarily such through routes as in its opinion are necessary or desirable in the public interest." |