If transportation history teaches any one thing, it is that while competitive forces generally are effective in keeping prices at a reasonable level, these same competitive forces, if unleased, and not made subject to reasonable restraints, will result in eliminating competition, through unfair and destructive competitive rate cutting to the detriment of the transportation system as a whole and in disrupting reasonable and fair rate relationships as between competing shippers, geographical areas, and territories. Railroad testimony The railroad witnesses left unclear the answer to a number of questions which we believe they should be requested to clarify. It is difficult to ascertain from the testimony of their principal witnesses, several of whom spoke only for their own companies on specific points, just where they stand on antitrust coverage to replace the ICC controls which are to be removed. It is also difficult to discover just what their policy is to be on making rate reductions applicable across the board. The Southern Railroad claims that it intends to do so but the other testimony raises doubts as to the intentions of the industry at large. These questions should be answered, clearly and unequivocally. S. 3242 This omnibus bill, which was introduced with S. 3243, covers other recommendations in the President's transportation message. Some of them are of great importance but they have received very little attention in the hearings because of the paramount importance of the minimum rate deregulation bill just discussed. In the expectation that before action is taken by this committee further hearings will be held, I shall only summarize our position on those of the recommendations in S. 3242 in which we have an interest. Obviously the pressures attendant upon all in these closing days of this Congress make inadvisable an attempt to go into the lengthy discussion that they deserve. The bill has 14 sections. Our interest is in sections 2, 3, 4, 5, 6, and 9. Section 2—Experimental rates Section 2 of S. 3242 would authorize radically new and different ratemaking procedures. The section calls for rate experimentation through the devices of "simplified documentation, and plans for different or simplified bases and freight classifications." We endorse and entirely agree with the ICC's comment in which they stated: "We seriously question the wisdom of lending legitimacy to a basically unlawful proposal merely because it is characterized as an 'experiment'." The Interstate Commerce Act is a flexible law under which much has been accomplished in the area of experimental rates as well as in experimental services, etc., and we see no need specifically to authorize rate experiments which could apparently take place outside of the law. We oppose section 2 of S. 3242. Section 3-Piggyback Section 3 is designed to implement the President's recommendation that legislation be enacted to "assure all carriers the right to ship vehicles or containers on the carriers of other branches of the transportation industry at the same rates available to noncarrier shippers." We support this objective. Section 3 will, in our opinion, need some further safeguards and amendments, and we are at the present time working with other interested groups under the auspices of the Transportation Association of America to try to work out a satisfactory solution on this particular section of the bill. Section 4-Through service and joint rates Subsection (a) of section 4 declares it to be in the national interest "that the establishment of through service and joint rates, fares, and charges between carriers of all modes of transport be encouraged and promoted." We support this principle and have supported it for many years. Subsection (b) of this section provides for the establishment of joint boards on which the Civil Aeronautics Board, Federal Maritime Commission, and the Interstate Commerce Commission will be represented and which will have jurisdiction over and control of through service and joint rate arrangements of carriers subject to the several agencies' jurisdictions. While we have no objection to the creation of such a joint board arrangement, it seems to us a rather complex and unwieldy procedure when it is possible at the moment for almost all of the modes to make joint rate arrangements with other modes under existing provisions of the Interstate Commerce Act. The only gap of significance has been that it was impossible for motor carriers to make through service and joint rate agreements with water carriers subject to Federal Maritime Commission jurisdiction in service to Alaska and Hawaii. This deficiency has been remedied by H.R. 11643 which has passed both Houses and has been signed by the President. It would appear that the purpose of the President's recommendation has been accomplished. Section 5-ICC cooperation with States Section 5 would authorize the Commission to make cooperative agreements with States in order to better enforce "the economic and safety laws and regulations of the various States and the United States concerning highway transportation." Similar language to that contained in this section also appears as section 5 of S. 2560 which has passed the Senate this year. The purpose of this is to enhance further cooperation and exchange of information between the ICC and State regulatory authorities in order to bring about better enforcement of the Motor Carrier Act. This is a subject of great interest to the motor carrier industry and we are wholeheartedly in favor of this proposal. Section 6-Civil forfeiture The Interstate Commerce Act presently allows the ICC to bring civil proceedings against motor carriers for certain types of administrative violations of the Interstate Commerce Act. Motor carriers found to be violating these administrative provisions may be fined $100 for each offense and $50 for each day of a continuing violation. Section 6 of the bill would extend the civil forfeiture provisions of the act to include violations of operating authority and the Commission's safety regulations and, in addition, would increase the penalty to $500 for each offense and $250 per day for continuing violations. The trucking industry supports extension of the civil forfeiture procedure to cover violations of operating authority, and we support an increase in the fines from their present level up to $200 for a single violation and $100 for a continuing violation. However, we do not feel that the civil forfeiture procedure should be extended to violations of the ICC's safety regulations. It seems unconscionable to us to require a motor carrier to pay a fine of $500 simply because he has unintentionally violated some obscure and highly technical provision of the ICC's detailed safety regulations. S. 2560, as passed by the Senate, is in line with our recommendation except to the extent that it applies the civil forfeiture procedure to safety regulations. In your hearings on S. 2560 we stated fully the reasons for our objections to the inclusion of safety regulations. Section 9-Government procurement, rate simplification, and transportation of mail Subsection (a)(1) of section 9 relates to Government procurement and the transportation of mail by motor carriers. The proposal is to amend section 321 of the Transportation Act of 1940. That section, as here applicable, now provides that except as to rates under section 22 the Government shall pay tariff rates for transportation and that the Government need not advertise for bids for transportation service when common carrier service is available. The revision would place in the hands of any head of a Government agency the authority to create an entirely new system of transportation procurement. in addition to tariff rates and section 22 rates, an agency for the first time would have authority to "negotiate the provisions and prices of contracts, agreements, or other instruments for the purpose of procuring transportation." We oppose placing such authority in the hands of the Government in its capacity as a shipper. This proposal violates the basic ideas of the national transportation policy. The Government, already favored by the free or reduced rate language of section 22, would under section 9 have a further advantage over all other shippers. Subsection (a) (1) also deals with the transportation of mail by motor carriers. The Post Office Department today is severely curtailed in its use of motor carrier service, as it must today deal with motor carriers largely under the antiquated star route procedures established many, many years ago. The motor carrier industry believes that the best interests of the Post Office Department and of our industry would be best served by enactment of legislation, similar to that contained in the Railway Mail Pay Act, which motor carriers would have an obligation to transport the mail at rates which are established by the ICC. Legislation to implement this idea was drafted jointly by the industry and the Post Office Department in the 86th Congress and was introduced as H.R. 2752. We invite the committee's attention to that legislation which was before the Post Office and Civil Service Committee of the House. We feel that an approach of that nature is far superior to the proposal in this bill which would simply allow the Post Office Department to make contracts with motor carriers, at negotiated rates, for the transportation of mail. Subsection (a) (2) of section 9 of the omnibus bill would authorize the General Services Administration and the Department of Defense to establish simplified rate structures suited to the needs of modern data-processing machines. The language contains a directive to the effect that the prospective simplified rate structure shall be found to be in the public and the Government interest. To our minds this presents two extremely unappealing prospects. One is the idea of tailoring our rates and services to conform to the requirements of machine processing. The other, and much more drastic, is the placing in the hands of a shipper, albeit the Government, the right to decide what is in the shipper's best interest and what is in the public interest. It is difficult to conceive of a traffic manager, even a Government traffic manager, who can make such a dual determination. How can any one man whose main responsibility is arranging for transportation services maintain the detached point of view necessary for a "public interest" finding? This measure smacks too much of leaving the cat to mind the canary. But, assuming that the Government traffic managers could achieve a complete impartiality of approach, what argues for them as substitutes for the Interstate Commerce Commission in an area where the Commission has spent three generations developing the techniques requisite to such a key judgment? For example, while they are undoubtedly expert in securing transportation for the Government, what do they know about carrier costs? We join with the ICC in questioning the soundness of such a proposal and we join with the ICC in again recommending to this committee that the Government be treated as all other shippers are treated today. To accomplish this equality, we reiterate our longstanding position in favor of repeal of that portion of section 22 of the Interstate Commerce Act which provides for free or reduced rates for Government. APPENDIX A Percentage of inbound and outbound freight moved by truck by 1,359 newly located plants 1-Selected States 1 Plants constructed in period July 1955 through 1959. Source: Special survey by Department of Research and Transport Economics, American Trucking Associations, Inc. APPENDIX B [Excerpt from Daily Traffic World, Washington, D.C., Aug. 13, 1962] PROPOSED RAIL RATE ON CORN IN MULTIPLE-CAR LOTS IS PROTESTED BY SHIPPERS Many shippers and processors of grain and grain products have petitioned the Commission to suspend a proposed multiple-car rail rate of 48 cents per 100 pounds on corn, in bulk, carload minimum 110,000 pounds per car, in not less than 500-ton lots, applying from origins in portions of Ohio, Pennsylvania, and Michigan to Augusta and Portland, Maine. The petitions are directed to various items in supplement No. 204 to Central Territory Railroads Tariff Bureau freight tariff No. 245-H, ICC No. 4403, Traffic Executive Association-Eastern Railroads, published to become effective August 20. In a reply to the petitions, the railroads said the protested rate was published for the purpose of meeting water competition specifically shipments via rail or truck from origins to Toledo, Ohio, thence by barge via Lake Erie, the New York State Barge Canal, the Hudson River, Long Island Sound, and along the Atlantic coast to the Kennebec River and to Farmingdale, Maine, thence by truck to Augusta, Maine. They said the rates were published so as not to apply during the closed season of navigation, and would not apply on export traffic. In connection with the proposal, relief from the long-and-short haul provision of the Interstate Commerce Act was sought in fourth section application No. 37837, the railroads said. In its protest, the New England Millers & Shippers Association said the proposal could only result in disrupting present market relationships on grain and grain products applicable to and within eastern territory, “which for many years has been based on the single carload unit of sale as developed and incorporated in the present eastbound domestic grain and grain products rate structure, thus permitting equal opportunity for all to compete for the available business on an equitable basis." The association said any deviation from present methods of rate publications to and within eastern territory could only result in decentralization of the feed milling industry at a tremendous cost to the feed manufacturers. Should the proposed rate basis become effective, the association said numerous requests for similar adjustments to other points in the territory would follow. TOLEDO BOARD The Toledo Board of Trade said the rate and minimum proposed discriminated between shippers and receivers who could not purchase such an amount of grain as against those who could, in violation of sections 2 and 3 of the Interstate Commerce Act. It said many of the country elevators in the origin territory did not have the facilities or the train service to take advantage of the rates, while many of their nearby competitors did. The board said the rate would also discriminate against processors at points competitive to Augusta and Portland. John W. Eshelman & Sons, described as a feed manufacturer at Lancaster, and York, Pa., and Circleville, Ohio, contended that the proposed rate would result in violations of the Interstate Commerce Act. Beacon Feeds, Beacon Division of Textron, Inc., of Cayuga, N.Y., said that shippers, manufacturers, and receivers in the Northeast asked the railroads about 4 years ago for relief in freight rates to combat competition from southern territory. It asked how the railroads could grant relief to manufacturers at Portland and Augusta without granting relief to all manufacturers including transit operators in trunkline territory. The Eastern States Farmers' Exchange, Inc., operating facilities at Buffalo, N.Y., and Huron, Ohio, said the fact that the proposed rate had a specific destination restriction preferred feed processors at the two locations; that the proposed rate was restricted as to milling in transit, and therefore prejudiced interests of feed processors with facilities within intermediate territory; that the adjustment would go far toward breaking down the grain and grain products rate structure, and that market relationships would be both financially affected and adversely influenced by the proposal. CARGILL, INC. Cargill, Inc., with headquarters at Minneapolis, said the present grain rate structure within the East had been in effect since 1907 and was developed to facilitate the orderly marketing of grain from the territory to eastern destination territory. It said that under the present system, all grain firms and processors in all areas were allowed to compete with one another, but that such competition under the proposed rates would be eliminated. Also, it said the restrictions applying on the proposed rate would lead to confusion. The Corn Exchange of Buffalo said that if the proposal were permitted to become effective, feed manufacturers at Augusta and Portland would be able to purchase corn in the origin areas at a price based on transportation costs of 92 to 122 cents per 100 pounds less than manufacturers at Buffalo. It said that for the rail carrier to single out a specific processor or area for relief was unfair and discriminatory. The Trunk Line Grain and Grain Products Traffic Council, located at Buffalo, also referred to a request made of the eastern rail carriers for an overall downward adjustment in grain rates applying within official and New England territories. It said it was still patiently awaiting a decision by the carrier. It said the justification set forth by the railroads that the reduced rates were to meet water competition was unrealistic and purely a guise to benefit one destination area. It added that if it were agreed that the protested rate level was reasonable, then it followed that the present rate level in the rest of official and New England territories was unreasonable. CHICAGO BOARD The Board of Trade of the City of Chicago said the proposed rate would result in destructive competition defeating established all-rail rates. It said the proposed rate would have the effect of transferring the movement of Illinois corn from rail to truck for a substantial portion of the movement to New England in order for shippers to utilize the proposed rate. The board asserted that the |