(b) the so-called mixing rule, under which the exemption is unavailable if nonbulk commodities are transported in the same vessel or tow of barges with bulk commodities.

The pending bill would so amend section 303 (b) of the Interstate Commerce Act as to eliminate the conditions found in the present water carrier exemption and thus do away with the three-commodity rule and the mixing rule. It would amend section 303 (b) of the Interstate Commerce Act to read as follows, page 4, line 5:

Nothing in this part shall apply to the transportation by a water carrier of commodities in bulk which are loaded and carried without wrappers or containers and received and delivered by the carrier without transportation mark or count * * *.

This mendment would increase the discrimination and aggravate the competitive inequality found in present law. It would make absolute, instead of conditional, the complete exemption from regulation available to the water carriers, by repealing the three-commodity rule and the mixing rule. While railroads, under the pending bill, would be free of the three-commodity and mixing rules in the transportation of bulk commodities, it must be borne in mind that the railroads are not by any means being granted the complete regulatory exemption that water carriers have and will retain, but only exemption from minimum rate regulation. Railroads would continue, for example, as I have already indicated, to be subject to those provisions of the act relating to discrimination, maximum rates, long-and-short haul, notice, filing and publication of rates, et cetera.

As already noted, a principal basis for the President's recommendation that exemption from minimum rate control be extended to all modes of carriage in the case of bulk traffic is that water carriers are competitively favored under present law. Therefore, it would be wholly inconsistent with the objective of the President's message to achieve greater equality of competitive opportunity in transportation, as well as inconsistent with the general approach of H.R. 11583, to broaden the scope of the water carrier exemption. Observance of the three-commodity rule and the mixing rule should be retained as conditions of complete regulatory exemption for water carriers.

The freedom from minmum rate regulation without observance of the three-commodity rule or the mixing rule, provided in section 1 of the bill, would be applicable across-the-board to all carriers subject to the Interstate Commerce Act, including water carriers. Water carriers desiring to operate without observing the three-commodity rule and the mixing rule should be relieved from regulation only to the limited extent that it is proposed to relieve railroads under the same circumstances; that is, relief only from minimum rate controls.

Sec

There is no valid reason or justification for making the present bulk commodity exemption for water carriers less restriction. tion 2 of H.R. 11583 should, in all equity, be stricken.

With the several amendments I have mentioned, the railroads wholeheartedly endorse and support H.R. 11583.

The railroads also endorse and support H.R. 11584, the other bill being considered by this committee. I shall now discuss, in very brief compass, some of its principal features. Let me begin with two sections of the bill in connection with which I should like to urge clarifying amendments.

Section 2 of H.R. 11584 has to do with "experiments by common carriers in rate, classification and documentation systems." The Interstate Commerce Commission, the Civil Aeronautics Board, and the Federal Maritime Commission would be empowered to authorize controlled experiments by common carriers to test new service combinations or arrangements, simplified documentation, and plans for different or simplified rate bases and freight classifications.

These experiments could involve individual carriers, or two or more carriers. They could be intramode or intermode. They could be proposed by the carriers themselves, or by shippers or the regulatory agencies; and participation would be voluntary on the part of both carriers and shippers. The regulatory agencies would "control and carefully supervise such experiments," and would be directed to provide in each instance "terms and conditions covering the duration, location, number, scope, and type" of the experiments.

The railroads heartily favor this concept. If we are to have improvement and progress in transportation, there must be opportunity for innovation, the trial of new ideas and techniques, experimentation. There must be flexibility for change, and for adjustment to meet varying and constantly changing conditions. Exploratory attempts and efforts looking toward new or changed rates, services, and methods of a promising nature should be encouraged, not stifled. In a word there should be elbowroom, on the basis of controlled experiments, for test departures from established policies and principles.

There is a clarifying amendment that I would like to suggest. Some apprehension has been expressed that this section of the bill might be applied by regulatory agencies in such a way as to limit or restrict existing rights of carriers. While this would be inconsistent with what is proposed, any possible doubt should be resolved by inserting the following language after the word "agencies" on line 7 of page 3 of H.R. 11584:

or to restrict existing rights of carriers subject to the regulatory authority of such agencies.

The latter part of subsection (e) of section 2 of the bill would then read:

*** nothing in this section shall be deemed to diminish the existing regulatory powers of such agencies or to restrict existing rights of carriers subject to the regulatory authority of such agencies.

This is understood to be the intention of the draftsmen. On June 26, 1962, during the appearance before this committee of the Under Secretary of Commerce for Transportation, the chairman asked the following question:

Now, what I wanted to inquire about, and see if I am correct in understanding that section 2 of the bill would in any way restrict the existing rights of the carriers to change their rights (rates) and services.

Mr. Martin replied, "No, sir ***" (transcript p. 95). In his appearance before the Senate Committee on Commerce on June 29, 1962, in connection with S. 3242—an identical bill-the Under Secretary of Commerce for Transportation was asked:

On the subject of experimental rates, it has been explained that experiments would be voluntary on the part of either carriers or shippers and would not affect any of the present powers of the regulatory agencies. Would it be correct

that section 2 of the bill would not in any way operate to restrict the existing rights of carriers to change their rates and services?

Again the witness replied, "That is correct" (transcript pp. 191, 192).

Section 4 of H.R. 11584 would have Congress declare 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. Provision would be made for the creation of new joint boards, made up of designated members of the Civil Aeronautics Board, the Federal Maritime Commission, and the Interstate Commerce Commission. Such joint boards would exercise appropriate regulatory control over matters relating to such through service and joint rates, fares, and charges as might be established between carriers of different modes.

To the extent that these provisions would encourage and promote voluntary and permissive through service and joint rate arrangements between carriers of different modes, the objectives are desirable and the railroads endorse them.

We feel, however, that the language of the bill needs amendment to make it entirely clear that the arrangements contemplated are in all respects voluntary and permissive. The recommendation contained in the transportation message obviously contemplates voluntary arrangements, for it states they should be "encouraged," not prescribed. Section 4 of H.R. 11584 is likewise properly cast in permissive terms, for it provides that common carriers "may establish reasonable through service and joint rates, fares, and charges with any other such common carriers" section 4(b), line 9, page 5, of the bill.

A question arises, however, as to whether such arrangements may be freely terminated by the parties thereto. The provisions of the bill might perhaps be construed as imposing an obligation to continue them indefinitely or at least until regulatory sanction for termination has been secured. Such legal compulsion to continue joint rates in connection with through service, notwithstanding the possibility of regulatory action changing the level of the rates or the divisions thereof, would be arbitrary and would transform what was voluntary in inception to a mandatory relationship.

This would not only appear to be inconsistent with the recommendation in the message but also would actually defeat its objective of encouraging voluntary action. It would discourage the establishment of through service and joint rates. Establishment of through routes and joint rates under this section of the bill would involve a contractual relationship between business concerns engaged in different modes of transportation and, naturally, they would be most hesitant to enter into a contract if its provisions should be subject to change, and its term subject to indefinite extension, by regulatory action.

This is a subject of such importance that any doubt as to the intent of the bill should be removed. The following amendments would clarify the matter:

(a) Line 9, page 5, insert “voluntarily” after the word “may” and insert “and maintain" after the word "establish."

(b) Insert at the end of line 18, page 5: "Any joint rate, fares and charges thus established may be canceled by any party thereto by giving thirty days' notice to the other party or parties and by tariff cancellation notice to the agency or agencies referred to in subsection (C) of this section, notwithstanding any

order that may have been made with respect thereto under subsection (f) hereof."

This would carry out the intention of the bill's authors. When he appeared before this committee on June 26, 1962, the Under Secretary of Commerce for Transportation was asked by the Chairman:

Now, on the following page, on page 4, I believe, you discussed through service, joint rates, and joint boards. As I interpret what you have said, generally the purpose is to encourage through routes and joint rates. I would like to inquire if it is the intent of the bill that carriers which have voluntarily entered into such arrangements should also agree voluntarily to terminate such arrangements.

The reply was "Yes, sir" (transcript p. 96).

Furthermore, while undoubtedly not so intended, subsection (c) of section 4 is subject to the possible construction that a legal obligation to establish joint rates would be created by the voluntary action of carriers in agreeing on a through service arrangement. Such an arrangement, however, might very well provide for single billing from point of origin to destination and physical interchange of equipment, even though the transportation service involved were to be covered by a combination of the rates of the participating carriers. The apparent inadvertency in draftsmanship should be corrected, and it is suggested that the following be substituted for lines 21 through 24 and all of line 25 on page 5 of the bill from the word "charges" through the word "thereunder":

Such joint rates, fares or charges and classifications, rules, regulations, and practices relating thereto as may be established pursuant to subsection (b) of this section shall be just and reasonable.

Section 5 of H.R. 11584 would authorize the Interstate Commerce Commission to make cooperative agreements with several States to enforce the economic and safety laws and regulations of the various States and the Federal Government concerning highway transporta

tion.

Section 6 of the bill would extend the civil forfeiture provision of part II of the Interstate Commerce Act to reach any failure or refusal to comply with requirements for certificates or permits to operate in the for-hire motor transportation business, and any failure or refusal to comply with the motor vehicle safety regulations promulgated by the Commission. At present these civil forfeiture provisions relate only to the failure or refusal to make reports, keep records, and the like. There would also be increases in the amounts of the forfeitures prescribed.

The purpose of these two sections of H.R. 11584 is to aid in the elimination of unlawful highway operations (the so-called "gray area" of trucking) through strengthening the enforcement machinery and reinforcing the regulatory statutes.

The railroads solidly endorse and support these two proposals. Sections 7 and 8 of H.R. 11584 would extend to air carriers liability for the payment of reparations to shippers charged unlawfully high rates. Railroads and water carriers already have statutory liability for reparations where unlawful rates have been charged. A separate bill (H.R. 5596) now pending before this committee would subject motor carriers and freight forwarders to similar liability.

Consistent with our adherence to the principle of equality of regulation for all modes of transportation, we support this proposal.

Section 9 of the bill is designed to implement a recommendation of the President that such legislation as is necessary be enacted encouraging experimental rates and services for Government transportation and encouraging, also, in connection with Government transportation, the development of systems that will make rate ascertainment and publication less costly and more convenient.

The transportation message stated that

These experiments will be pilot studies for a more general simplification of rates and for the application of new kinds of service to transportation in general.

The railroads endorse these objectives of H.R. 11584.

The final sections of the bill would transfer to the Department of Commerce the railroad loan guarantee authority of the Interstate Commerce Commission and the aviation loan guarantee authority of the Civil Aeronautics Board. There is merit to this proposal and since, as the transportation message points out, "these problems are not regulatory in nature and are clearly separable from the chief functions of the Interstate Commerce Commission and the Civil Aeronautics Board," we endorse it.

Shippers, as well as the railroads, have been heartened by the President's transportation message and by the recommendations it contains, and their support for the message and its recommendations is wholehearted and enthusiastic.

This reaction is echoed by the response of the general public and the near-unanimous endorsement of the Nation's press, which have hailed the recommendations as a long overdue action in the public welfare. H.R. 11583 and H.R. 11584 embody some very important features of the program of recommended legislative actions and are so drafted, in general, as to implement in appropriate fashion the proposals to which they are directed. The railroads therefore support these two bills and urge this committee's favorable consideration of them at the earliest practicable time.

The central theme of the transportation message is that a sound transportation policy can best be achieved by placing greater reliance on competition than on regulation, and by equalizing opportunities for all forms of transportation. To the extent that these objectives are reflected in the two bills this committee is now considering, the focal point is the minimum rate proposal contained in H.R. 11583. It is of vital importance to the railroads that the Congress accept and adopt this proposal that there be extended to all carriers the exemption from minimum rate regulation now, and for many years past, enjoyed by motor carriers in the transportation of agricultural commodities and by water carriers in the transportation of bulk commodities. This Nation cannot enjoy a healthy economic body if the right arm is withered and bound up. The railroads are the right arm of a prosperous economy, and they must be freed of the long outmoded restrictions that bind them if America is to realize its fullest economic potential.

Railroads are hard pressed and steadily losing ground in the competitive struggle for traffic. In this competition the scales are weighted against them, for they are subject to comprehensive and rigid rate regulation on substantially all of their traffic while two-thirds of intercity highway ton-miles and nine-tenths of inland waterway tonnage move wholly free of any Interstate Commerce Commission rate