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vehicle, operates it with his own employees and assumes complete responsibility and liability for the operation and use of the vehicle. In many of such transactions, however, the owner of the vehicle may undertake to furnish drivers for the leased vehicle, or retain some degree of control over the operation and use of the vehicle, or may assume liability for the operation of the vehicle on the highways or for the goods carried thereon. In some instances the arrangement involves the placing on the payroll of the alleged lessee for the duration of the lease of the drivers selected and employed by the owner of the vehicle. In many instances the wages paid the drivers is deductible from the compensation paid to the owner of the vehicle. In some instances the compensation to be paid to the owner of the vehicle is related to the amount and kinds of goods transported so that the alleged lessee is guaranteed services at a unit cost which may be related to the usual charge of for hire carriers for similar services. In many of these instances it is difficult to determine and more difficult to prove which person, lessor or lessee, should be regarded as performing the transportation. Many instances of subterfuges as well as honest differences of opinion arises regarding such transactions. It would be helpful to all concerned if the law can be clarified regarding these matters.
The second question involved in these relations is whether transportation is being performed “for compensation.” Of course, everyone who performs transportation in connection with the conduct of a commercial enterprise receives compensation for such transportation, through the sale price or otherwise. There should not, however, be any interference with such transportation as is incidental to the conduct of a bona fide commercial enterprise.
No person who is, in fact, transporting for himself should be declared to be a carrier for hire. As such, he would be required to publish, file, and observe rates assessable against himself, enter into contracts with himself, and issue freight bills and bills of lading to himself. What is needed, primarily, is some means of discovering and establishing that certain persons allegedly operating as private carriers are in reality not doing so, but are, in fact, transporting for others for compensation. In connection with the discussion of the proposed amendment of the definition of a common carrier by motor vehicle included in section 10 (a) of the bill we have proposed adding to the Interstate Commerce Act a new subsection 203 (c). The last two sentences of that proposed subsection are proposed as a means of tightening up the interpretation and the administering 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. For convenient reference we are here quoting these provisions :
“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, the buying or selling of property, or in any other manner by which compensation, reward, or a 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."
We recommend that the changes in the definition of a private carrier by motor vehicle proposed in section 10 (c) of the bill not be enacted and that in lieu thereof the above-quoted provisions be adopted as a part of the proposed new subsection 203 (c).
In this section various amendments are proposed to modify provisions of section 216 of the act entitled “Rates, Fares, and Charges of Common Carriers by Motor Vehicle."
Subsections (a) and (b) would make it the duty of common carriers by motor vehicle to establish rates, fares, and charges “which result in charges not less than just and reasonable minimum charges nor more than just and reason
able maximum charges" in lieu of the duty as presently worded "to establish just and reasonable rates, fares, and charges." Apparently this change is deemed necessary for consistency with the proposal to prohibit the Commission from prescribing maximum and minimum rates, etc.
The same observations are applicable also to subsections (c) and (d).
(e) The amendment proposed here is to section 216 (e), which defines our powers to prescribe rates, fares, and charges for motor common carriers. Our comments on section 7 (a) of H. R. 6141 are applicable also to section 11 (e), and for the reasons stated there we are not in favor of this amendment.
At present by section 216 (e) we are empowered to “establish through routes and joint rates, fares, charges, regulations, or practices, applicable to the transportation of passengers by common carriers by motor vehicle, or the maxima or minima, or maxima and minima, to be charged * * It is proposed to change this wording to "establish through routes and joint regulations or practices which when applied with joint rates, fares, or charges result in charges not less than just and reasonable minimum charges nor more than just and reasonable maximum charges, and just and reasonable minimum or maximum joint rates, fares, or charges applicable to the transportation of passengers by common carriers by motor vehicle * * *"
The language above quoted from the proposed amendment is obscure and if enacted in its present form would cause trouble. At present the Commission has no power to establish through routes and joint rates applicable to the transportation of property by common carriers by motor vehicle and is opposed to such grant of power, but the proposed amendment seems susceptible of an interpretation giving the Commission that authority. If such an interpretation is not intended, and it is decided to remove the Commission's authority to prescribe maximum-and-minimum passenger fares, the following should be substituted for lines 21–24 of page 21 and lines 1 and 2 of page 22: "without a complaint, establish through routes and just and reasonable minimum or maximum joint rates, fares, or charges applicable to the transportation of passengers by common carriers by motor vehicle over such routes, and the terms and conditions under which such through routes shall be operated."
We favor retention of the present wording of section 216 (e).
(f) It is here proposed to amend section 216 (g) of the act, which pertains to the suspension of tariffs filed by motor common carriers. Our comments on section 7 (c) of H. R. 6141 are applicable to section 11 (f). The proviso in lines 6-9 on page 24 is unnecessary.
(g) In this paragraph a minor verbal change is proposed in section 216 (h). We have no objection to this modification.
(h) This proposal would repeal section 216 (i), which is the rule of ratemaking for motor common carriers. Our comments on section 8 (1) and (2) are applicable to this provision. Contracts of motor contraot carriers
Some time ago we invited interested persons to submit comment and suggestions on the motor contract-carrier question as an aid to determining what recommendation we should make to the Congress regarding changes in the statute. Many persons urged that the act be amended to give to the Commission power to restrict to a specific number the contracts which a contract carrier may have at any 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 services, 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. Often the power to fix such limits may facilitate the issuance of permits. We, therefore, suggest that the second sentence of section 209 (b) of the act be amended to read as follows:
"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 per
form 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 terms, conditions or limitations attached thereto, a the carrier shall have the right to substitute or add to its equipment and facilities zas the development of its business may require."
SECTION 12 & Section 12 (a) proposes to amend section 218 (a) of the act hy striking out the word "minimum" in the second sentence, by striking the last four sentences and by adding the following:
"Yo such contract carrier, unless otherwise provided by this part shall engage in the transportation of passengers or property in interstate or foreign commerce x unless the rates, fares, and charges actually maintained and charged for such transportation by said carrier have been published, filed, and posted in accordance with the provisions of this part, or in the alternative, at the carrier's option, unless the actual contract or contracts of such carrier covering such transportation have been published, filed and posted in lieu thereof, in accordance . with such regulations as the Commission shall prescribe. In all other respects, every such carrier shall be subject to section 217."
The provision for the alternative publication, posting and filing of contracts would conflict with section 220 (a) of the act, which provides that the Commission may require contract carriers to file with it copies of their contracts but, "The Commission shall not, however, make public any contract, agreement, or arrangement between a contract carrier by motor vehicle and a shipper, or any ..of the terms of conditions thereof, except as a part of the record in a formal proceeding where it considers such action consistent with the public interest : * * *.”
The proposed requirement that motor contract carriers publish and post the rates actually maintained and charged also is inconsistent with the quoted provision of section 220 (a). Contract carriers do not have one set of rates which they charge all shippers. They are not probibited from discriminating among shippers, and a contract carrier may charge different shippers different rates for identical services. In such a case, presumably the carrier would have to publish two or more sets of rates indicating in connection with each the shipper for whom the service is performed. If in such a situation the carrier is permitted to publish only one set of rates, presumably that would be the lowest. The result would be substantially the same as the present system of publishing the minimum rates actually maintained and charged. To identify different sets of rates as being for specified shippers would disclose at least some of the terms and conditions of the contract, which would be inconsistent with section 220 (a).
In addition to the above, section 222 (e) now provides that it shall be unlawful for “any motor carrier" (which by section 203 (a) (16) discloses motor contract carriers] knowingly to disclose or permit to be acquired by any person other than the shipper of the consignee any information concerning the nature, kind, quantity, destination, etc., of any property tendered or delivered to such carrier for transportation, which may improperly disclose his business transactions to a competitor. The receipt of such information also is made unlawful. Both the publication and posting of contracts and the publication of actual rates, if the names of shippers are shown in connection therewith, would seem to be inconsistent with this provision.
It is our opinion that no departure is warranted from the present policy of affording to shippers secrecy regarding their business transactions to the greatest extent possible. Contract carriers presently are required to publish and file, in schedules open to public inspection, the minimum rates which they are actually charging. The schedules also list the names of shippers with whom the carrier has contracts, but this listing is not connected with any rates. If any competing carrier or shipper is of the opinion that the published minimum rates are below the level of reasonableness, they may challenge those rates in a complaint proceeding and the Commission may require them to be raised. The raising of the minimum rates will require the changing of any contract which provides rates below the prescribed minimum. If other contracts contain rates above this minimum, the complainant is not harmed. Under the present law, as well as under the proposed amendments, the Commission would have only minimum-rate
powers over contract carrier charges, and the publication of the minimum rates actually maintained and charged would seem sufficient without disclosing the business transactions of shippers.
If the proposal to permit the filing of actual contracts in lieu of schedules is adopted, there would have to be a modification of section 218 (c), which both as now worded and as proposed to be worded authorizes the Commission to suspend schedules but not contracts.
We do not favor the amendment proposed in section 12 (a) of the bill.
Section 12 (b) of the bill proposes to amend the rule of ratemaking for motor contract carriers stated in section 218 (b) of the act. The principal change is the substitution of “this Act” for “this part". In some places, as in line 23 on page 25, this is confusing. Only the provisions of part II, by their terms, are applicable to motor contract carriers, and to say that contract carrier rates shall not be in contravention of any provision of "this Act”, makes the intention unclear. This change in line 7 on page 26 has the effect of relating contract carrier rates, not only to motor common carriers, but also to the rates of all other common carriers subject to the entire act, including the rates of freight forwarders.
We have interpreted the present rate provisions in section 218 (b) as requiring the use of the contract carrier's cost as the base in prescribing reasonable minimum rates for motor contract carriers (New England M. Rate Bureau, Inc., v. Lewers and McCauley, 30 M. C. C. 651, 663). This frequently results in minimum rates for contract carriers lower than the reasonable minimum rates for motor common carriers. This results from the fact that motor contract carriers are permitted to transport but are not under a duty to do so and they may, therefore, pick and choose the most desirable and the most profitable traffic. Also they generally are assured of traffic without any substantial solicitation expense and they have the privilege of refusing to enter into a contract unless they can arrange to have full loads in both directions. These reduced charges are one of the incentives to use of motor contract carriers instead of common carriers.
There is considerable thought that, in order to protect the common carriers and competing shippers who do not have contract carrier service, this rate advantage should not be allowed. Some States have taken action with respect to this matter. In Stephenson v. Binford (287 U. S. 251), the Supreme Court upheld a Texas statute which required that the charges of contract carriers shall not be less than the charges of motor common carriers for the same service. See also General Mills v. Steele (154 F. 2d 367, 374-375). The imposition of such a requirement would remove the incentive to use motor contract carrier service because of lower rates and properly tend to restrict the use of contract carriage to those instances in which a specialized and individualized service is required. We therefore recommend that the following be substituted in lieu of the second sentence of section 218 (b), and that no further change be made in the subsection:
“No such minimum rates, fares, or charges which are lower than the rates, fares, or charges of competing common carriers subject to this Act, plus reasonable additional charges for any special services, privileges, or facilities furnished by the contract carrier by motor vehicle which are not furnished by the competing common carriers, shall be deemed to be reasonable unless the lower rate, fare, or charge of the contract carrier by motor vehicle will give no advantage or preference to such contract carrier in competition with any common carrier subject to this Act, will not prevent or endanger the maintenance of adequate and economical common carrier service, and otherwise will be consistent with the public interest and the national transportation policy declared in this Act."
Section 12 (c) of the bill proposes to amend the suspension provisions in section 218 (c) of the act which are applicable to contract carriers by motor vehicles. These changes are similar to the changes proposed with respect to section 15 (7) of the act by section 7 (c) of the bill, and the comment and recommendations with respect to that proposal are equally applicable to the proposed changes in section 218 (c).
In this section it is proposed to amend section 302 (d) and (e) of the act, relating to definitions of common and contract carriers by water, in the same manner as that proposed in section 10 of the bill with respect to common and contract carriers by motor vehicle. The principal effect of the enactment of section 13 would be to change the status of what are commonly known as trampship operators.
Unlike water carriers which operate between fixed termini over regular routes and carry general cargo in large or small quantities for any shipper fe wishing to utilize their service, tramp-ship operators transport full cargoes of
1 commodity or split cargoes consisting of not more than 2 or 3 commodities. As a general rule their traffic consists of low-grade commodities which move
in large quantities at low rates. They maintain no terminals for the receipt 12 and delivery of freight. Shippers generally provide the facilities for loading and unloading cargo.
Tramp ships do not operate on fixed schedules but move from port to port where cargo may be available under special contracts. For the most part, arrangements for their service are made through brokers. Carriers of this type may serve the larger industries in the movement of raw materials, assuring such industries vessel space for an extended period or for a large volume.
In our determination of "grandfather rights" of water carriers after the enactment of part III of the act, we held that the status of tramp-ship operators was that of contract carriers (American Range Lines, Inc., Contract Carrier Application, 260 I. C. C. 362). In the past tramp ships have principally been ocean carriers but have also had their counterpart in barge and towboat operations on the inland waterways. Since World War II their number has decreased in domestic transportation. At present of the approximate 300 water carriers holding operating authorities issued by this Commission, about 40 bold permits as contract carriers, including those on inland waterways. A considerable number of these 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 men or change their mode of operation and enter into bilateral contracts requiring
specialized services. We are in doubt whether such a requirement would be in all the public interest. In view of the difference between conditions in motor and 21 water transportation affecting contract carriers we believe that there would & be no harm in leaving the present definitions of common and contract carriers $1 by water unchanged, whatever changes in the definitions of such carriers by motor vehicle may be found desirable.
We are unable to recommend the enactment of section 13 on the basis of ti information now available.
In this section it is proposed to repeal section 303 (b) of the act, the first sentence of which explains its purpose and reads as follows: men "Nothing in this part shall apply to the transportation by a water carrier 18 of commodities in bulk when the cargo space of the vessel in which such com
modities are transported is being used for the carrying of not more than three such commodities."
This exemption and others in part III leave the greater part of all domestic 1 water transportation free from regulation. The most important of these is the
bulk-commodity exemption. The public interest in stable, reasonable, and propile erly regulated rates is disregarded in the complete absence of control over a | large part of the bulk-carrying trade.
As heretofore stated in our report of March 23, 1955, on S. 951, we favor the repeal of section 303 (b) as here proposed.
The amendments proposed in this section are to section 305 of the act, pertaining to rates, etc., of common carriers by water.
(a) and (b) The comments on section 3 of the bill are applicable here.
(c) It is proposed to strike out the last sentence of section 305 (c), reading as follows:
“Differences in the classifications, rates, fares, charges, rules, regulations, and practices of a water carrier in respect of water transportation from those in effect by a rail carrier with respect to rail transportation shall not be deemed to constitute unjust discrimination, prejudice, or disadvantage, or an unfair or destructive competitive practice, within the meaning of any provision of this Act."
This provision is substantially the same as that proposed in section 8 of the bill as the new section 15a (3) of the act.