This amendment is designed to unshackle carriers from the uniform minimum fares fixed by the Commission for passenger travel. This will permit vigorous competition and innovation which in the long run should end chronic overcapacity and deficits in providing this service. To prevent the absence of minimum rate regulation under the above three proposals from resulting in predatory, discriminatory trade practices, or rate wars reflecting monopolistic ambitions rather than true efficiency, there is included in this section a provision making carriers who engage in such practices subject to applicable "antitrust" laws. However, in recognition that it is acceptable practice for a common carrier to establish through routes with other such carriers, or to consider, initiate, or establish jointly with other such carriers the rates, fares, classifications, divisions, allowances, or charges applicable solely to such reasonable through routes, a proviso has been included making it clear that such joint action shall not be construed as a violation of the antitrust laws. Section 1(b) would amend section 5a of the Interstate Commerce Act (which exempts agreements among carriers subject to the act, respecting rates or procedures for making rates, from the antitrust laws if the agreements are approved by the Commission) to withdraw the power of the Commission to approve agreements and thereby grant immunity from the application of the antitrust laws, for any party who makes an agreement with respect to any rate, charge, or fare for the transportation of passengers, bulk commodities, or agricultural or fishery products referred to in section 1(23) of the act. In short, a carrier exempt from minimum rate regulation in the transportation of passengers, bulk or agricultural or fishery products is subject to the antitust laws, except where an agreement as to rates is reached with other carriers on the carriage of those items on through routes. 2. Section 2 amends section 303 (b) of the Interstate Commerce Act, which is the present bulk commodities exemption, by removing the requirement that no more than three such commodities can be carried in one vessel or tow and by revising the definition of bulk commodities to eliminate the requirement that the commodities must have been treated as bulk commodities in 1939. This has the effect of exempting bulk commodities transported by water carrier from all regulation. 3. Section 3 amends section 418 of the Interstate Commerce Act to include all carriers authorized to transport bulk commodities as carriers, the services of which freight forwarders may utilize. The amendment merely takes account of the fact that the bulk commodities exemption has been extended to carriers other than by water. 4. Section 4 extends to intercoastal water carriers the same exemption from minimum rate control for the transportation of persons or bulk commodities or agricultural or fishery products as is proposed for carriers subject to the Interstate Commerce Act under section 1. 5. Section 5 would amend the Federal Aviation Act to limit the authority of the Civil Aeronautics Board to the determination and prescription of just and reasonable maximum rates or charges for the transportation of bulk commodities or agricultural or fishery products. As to these items of freight, air carriers would be as free from minimum rate control as carriers subject to the Interstate Commerce Commission or Federal Maritime Commission. Antitrust laws would be applicable in the same way. Such freedom from minimum rate control has not been extended to the carriage of passengers, as with the other carriers, in recognition of the need to proceed more gradually in the deregulation of passenger fares in air transportation. The intent of Congress to attain this freedom from minimum rate control is expressed in the last subsection so that business incentives and competition may play a more influential role in the pricing of air transportation. SECTION-BY-SECTION ANALYSIS OF PROPOSED TRANSPORTATION ACT OF 1962 1. The first section identifies the act as the "Transportation Act of 1962." (A separate bill is proposed to exempt certain carriers from minimum rate regulation in the transportation of bulk commodities, agricultural and fishery products, and passengers. 2. Experiments: Section 2 would empower the three regulatory agencies, the Interstate Commerce Commission, the Civil Aeronautics Board, and the Federal Maritime Commission, to authorize controlled experiments in rate, classification, and documentation systems. Participation by common carriers in the experiments would be voluntary and the experiments may be authorized intramode or jointly with carriers by different modes. The purpose of these experiments is to determine the best service/price transportation patterns by testing new services, service combinations or arrangements, simplified documentation, and different or simplified rate bases and freight classifications. Legislation to authorize these experiments is recommended in order to provide a clear statement of congressional intent that such experiments should be authorized by the regulatory agencies. 3. Nondiscriminatory rates to all shippers: Section 3 would require railroads or common carriers by motor vehicle or water, subject to the Interstate Commerce Act, to accept shipment by any carrier, whether regulated or not, of loaded or empty vehicles or shipping containers without discrimination as to service or rates. The purpose of this legislation is to provide the carrier shipper-as in piggyback-with the same competitive opportunities as noncarrier shippers. Basic laws underpinning the Civil Aeronautics Board and the Federal Maritime Commission do not permit carriers regulated by these agencies to discriminate against other carriers who desire to ship vehicles or containers, hence no change in those laws is required. 4. Through service, joint rates, and joint boards: In section 4, Congress would declare it to be a matter of public policy that through routes and joint rates should be encouraged and promoted by use of joint boards to act on proposals for intercarrier services. New joint boards, comprised of the Interstate Commerce Commission, the Civil Aeronautics Board, and the Federal Maritime Commission, would supersede the joint boards of the ICC and CAB, which is presently authorized in the Federal Aviation Act. In the case of through service, the duty is placed on the carriers to establish just and reasonable rates and equitable divisions thereof between the participating carriers. Complaint as to these matters may be referred to the joint board. which is empowered to fix the rates, after notice and hearing, if it finds that the rates fixed by the carriers are or will be unjust or unreasonable, or unjustly discriminatory or unduly preferential or unduly prejudicial. 5. Enforcement, highway transportation: Section 5 would authorize the Interstate Commerce Commission to make agreements with States to cooperate in the enforcement of the economic or safety laws and regulations of the various States or of the Federal Government with respect to highway transportation. This law would be consistent with collateral efforts to develop and adopt uniform State registration laws for motor carriers operating within States but handling interstate commerce. The purpose of both of these efforts is to help eliminate unlawful (gray area) trucking operations which abound because of diverse, ambiguous laws and practical limitations in enforcement. 6. Civil penalties for operating without authority; increase in penalties: Section 6 extends the civil forfeiture provisions of the Interstate Commerce Act, as increased hereunder, to any person who operates a motor vehicle in interstate or foreign commerce without the operating authority required under the act. The civil penalty applies upon "failure or refusal" to comply with applicable provisions requiring operating authority. Previously, such persons were subject only to the criminal penalty provisions of section 222 of the act if they "knowingly and willfully" violated the applicable provisions. The purpose of the amendment is to make the increased civil penalties a significant deterrent to unlawful motor carrier operations and to assist in policing unscrupulous operators who have persisted in such unlawful operations in the knowledge that the more demanding requirements for proof under the criminal sanctions, as compared to civil penalties, make enforcement considerably more difficult. 7. Civil liability for violations of Federal Aviation Act by air carriers: Section 7, which would make air carriers subject to payment of reparations to shippers charged unlawfully high rates, is consistent with H.R. 5596 and S. 1283 presently before the Congress which propose that motor carriers and freight forwarders be subject to the same liability. Similar authority already exists with respect to railroads and water carriers. The existing and proposed legislation would make all common carriers liable to any person for the full amount of damages (together with reasonable counsel's fees) sustained as a consequence of such carriers charging an unlawfully high rate. Such injured person may sue, alternatively, in an appropriate district court of the United States, or he may bring an action before the regulatory agency having cognizance of the carrier in violation. Under the latter procedure, after hearing, the agency is empowered to order the carrier to pay the damages to which he is entitled. If the carrier does not pay as ordered, the injured person may sue for payment in an appro priate Federal district court or any State court of general jurisdiction having jurisdiction of the parties and the order must be accepted as prima facie evidence of the facts involved. This amendment is another of those whose purpose it is to strengthen enforcement of applicable laws in interstate and foreign transportation. Primarily, however, it provides a way to recover damages. 8. Reparations orders to be reviewed by district court: Section 8 amends section 1006 of the Federal Aviation Act. It is necessary to make orders of the Civil Aeronautics Board, concerned with reparations by air carriers to a shipper charged unlawfully high rates, reviewable by a Federal district court, as provided in the reparations statute, rather than by a court of appeals, which is the court to which orders of the Board are usually referred. 9. Simplification of Government transportation rates and procurement; transportation of mail by motor vehicle common carriers: The purpose of section 9 is to simplify rate structures for the procurement of Government transportation and by experiments to develop systems that will make rate ascertainment and publication less costly and more convenient. In addition, it will give the Post Office Department greater flexibility in the use of motor vehicle common carriers for the transportation of mail. The simplification and automation of the common carrier's transportation rates offer a means to remedy the complex pricing system presently employed. Such simplification does not appear to be feasible under the present commercial tariff system, consisting largely of special commodity rates which are subject to too frequent changes to be practical for automatic data processing. Therefore, any changes in this regard require that such a simplified system for Government transportation be established separate from commercial transportation. In order to provide a broad base for such a system, the first subsection of the amendment would authorize the procurement of Government transportation, including mail transportation services by common carrier motor carriers, and accessorial services, from all modes of transportation, without regard to any law requiring formal advertised bidding procedures. Under existing law, the negotiating authority extends only to transportation services by common carriers. The second subsection would provide for the initiation and establishment, through progressive research and development, of a system of simplified rate structures for Government traffic. The first proviso would require a determination that the proposed simplified rate structure is in the public interest and may be expected to result in lower overall costs to the Government, or at least no increase in costs. The second proviso prescribes the initial direction to be taken in research and experimentation; viz, diminished differentiation among commodities, simplified methods for determination of distances adaptable to automate data processing, and improved procedures for evaluation of charges. These experiments are to be pilot studies for a more general simplification of rates and for the application of new kinds of service to transportation in general. 10. Transfer of loan guarantee authority: Sections 10 through 14 would transfer the railroad loan guarantee authority of the ICC and the aviation loan guarantee authority of the CAB, to the Department of Commerce. Provisions are included for the continuance of actions taken by the Civil Aeronautics Board and the Interstate Commerce Commission unless or until changed by the Secretary of Commerce, and for the transfer of persons, property, records, and unexpended appropriations from those agencies to the Department of Commerce. The purpose of these amendments is to achieve a better balance of Federal promotional programs by transferring this authority to the Department of Commerce, which is already a focal point for Government transportation activities, and which, because it is an executive agency, can act upon guarantee loan applications more expeditiously than the regulatory agencies. Hon. OREN HARRIS, GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: This is in reply to your request for the views of the Department of Defense on H.R. 11583, 87th Congress, a bill "to exempt certain Carriers from minimum rate regulation in the transportation of bulk commodities, agricultural and fishery products, and passengers, and for other purposes." H.R. 11583 is one of two omnibus bills designed to strengthen and rationalize U.S. transportation by carrying out those recommendations in the President's recent transportation message which called for legislative action. The purposes of H.R. 11583 are to be accomplished by appropriate amendments to the Interstate Commerce Act, as amended; the Intercoastal Shipping Act, 1933, as amended; the Shipping Act, 1916, as amended; and the Federal Aviation Act of 1958. Certain groups of carriers would be exempted from minimum rate regulation in the transportation of bulk commodities, agricultural and fishery products, and passengers. The practical effect of the extension would be to place the several modes on a substantially equal basis in competing for the business concerned. In the case of passenger transportation by air, minimum fare regulation would not be removed, but the bill includes an expression of the intent of Congress that regulatory control over minimum passenger fares of air carriers be reduced to the greatest extent consistent with the public interest. It is believed that, in the long run, competition among modes on an equitable basis will better promote efficiency and health in the transportation industry than competition under unequal conditions. The Department of Defense favors early enactment of H.R. 11583 as a measure which should better accomplish in pertinent part the recommendations in the President's recent transportation message. The fiscal effects of the enactment of H.R. 11583 cannot be ascertained at this time. The Bureau of the Budget advises that, from the standpoint of the adminis tration's program, there is no objection to the presentation of this report for the consideration of the committee. Sincerely, JOHN T. MCNAUGHTON. DEPARTMENT OF AGRICULTURE, Hon. OREN HARRIS, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. HARRIS: This is in reply to your request of May 9, 1962, for our comments on H.R. 11584, a bill "to provide for strengthening and improving the national transportation system, and for other purposes." We believe this bill ought to be passed. It is consistent with the goals set forth in the President's transportation message which emphasized the need for fast, safe, and economical transportation at the lowest cost consistent with the health, convenience, national security, and other broad public objectives. Passage of this bill would (1) encourage experimentation by the carriers in matters of rates, charges, and services, (2) discourage discrimination by the carriers, (3) encourage the creation of through service and joint rates for freight, (4) discourage illegal motor carrier operations, (5) increase civil liabilities for violation of the transportation laws, and (6) would transfer the financial assistance programs now under the jurisdiction of the Civil Aeronautics Board and Interstate Commerce Commission to the U. S. Department of Commerce. Our only reservation concerning the provisions of this bill has to do with the proposed change in section 222(h). We agree that the penalty provisions in the section are too low, but we believe the penalties being proposed in section 6 of the bill are too high for some circumstances. It is our opinion that the initial penalty of $500 plus as much as $250 per day is much too severe for minor safety violations and for failure to file various and sundry reports required by the Interstate Commerce Commission. We think the $500 penalty should be modified to allow the size of the penalty to reflect the severity of the violation. We agree that the penalty of $500 for the original violation is a reasonable maximum. Inasmuch as this bill bears directly on the transportation of virtually all farm products and supplies, we will continue to discuss it with farm representatives. If, after we have reviewed this bill more thoroughly, we find that we have additional comments, we will forward them to you promptly. The Bureau of the Budget advises that there is no objection to the presentation of this report and that enactment of the proposed legislation would be in accord with the President's program. Sincerely yours, ORVILLE L. FREEMAN, Secretary. GENERAL COUNSEL OF THE DEPARTMENT OF DEFENSE, Hon. OREN HARRIS, Chairman, Committee on Interstate and Foreign Commerce, DEAR MR. CHAIRMAN: Reference is made to your request for the views of the Department of Defense on H.R. 11584, 87th Congress, a bill "to provide for strengthening and improving the national transportation system, and for other purposes.' H.R. 11584 is one of two omnibus bills designed to strengthen U.S. transportation by carrying out those recommendations in the President's recent transportation message which called for legislative action. The Department of Defense favors the early enactment of H.R. 11584. Section 9 of H.R. 11584, providing for simplification of Government transportation rates and procurement, is of direct interest to the Department of Defense. Enactment of this section can lead to significant acceleration and savings in the administrative processes involved in moving defense materiel and personnel. The enactment of section 9 and section 2, which calls for somewhat similar experimentation extending beyond Government traffic, should lead to a major reduction in transportation paper work by shippers, carriers, and Government agencies. The fiscal effects of the enactment of H.R. 11584 cannot be ascertained at this time. The Bureau of the Budget advises that, from the standpoint of the administration's program, there is no objection to the presentation of this report for the consideration of the committee and that the enactment of H.R. 11584 would be in accord wih the program of the President. Sincerely, CYRUS R. VANCE. Hon. OREN HARRIS, COMPTROLLER GENERAL OF THE UNITED STATES, Chairman, Interstate and Foreign Commerce Committee, DEAR MR. CHAIRMAN: We refer again to your letter of May 9, 1962, with enclosures, requesting our comments on H.R. 11584, a bill to provide for strengthening and improving the national transportation system, and for other purposes. An identical bill, S. 3242, has been introduced in the U.S. Senate. H.R. 11584 is one of various bills introduced in the 87th Congress with the objective of developing a more efficient and dynamic transportation system, vital to domestic economic growth, productivity and progress. Most of the provisions of H.R. 11584 are based on recommendations contained in the President's message on the "Transportation System of Our Nation," House Document No. 384, 87th Congress, 2d session, April 5, 1962, hereinafter referred to as the President's message. Our comments on the various sections of the bill are as follows: SECTION 2 This section of the bill, authorizing experiments by common carriers in rate, classification and documentation systems, implements the presidential recommendation, contained in part I (A) (6) of the President's message, for legislation directing the regulatory agencies to sanction experimental freight rates, modifications and variations in existing systems of classification and new kinds or combinations of service. The section sets forth a proposal which in our opinion has considerable merit; it should serve as a spur for all concerned in transportation to capitalize on the rapid advances in technological knowledge in recent years. We would have a particular interest in any experiments concerning simplified documentation, different or simplified rate bases or freight classifications since they could affect our audit of payments for transportation services under section 322 of the Transportation Act of 1940, as amended, 49 U.S.C. 66. Our Office is constantly concerned with the simplification of all types of Government accounting documents and has cooperated with the Department of Defense and the General Services Administration in a number of projects for the better utilization |