Amendment to Section 15a, Interstate Commerce Act 87-1

The committee met, pursuant to notice, at 10:15 a.m. in room 5110, New Senate Office Building, Hon. Warren G. Magnuson (chairman of the committee) presiding.

The CHAIRMAN. The committee will come to order.

We have a very tight agenda. The chairman has a short opening statement which he would like to read at this time.

Today's hearing, the first one on S. 1197, will raise some very fundamental policy questions about our national transportation system and the direction it will take in the future. Competitive ratemaking is at the heart of our privately owned transportation services and the bill under consideration would amend the rule of ratemaking in section 15a (3) of the Interstate Commerce Act.

The present rule was passed after some 15 weeks of hearings and study in the 85th Congress and it appeared to the committee at the time that the language adopted had the approval of all modes of transportation. Currently, however, the earlier agreement has given way to some very sharp differences of opinion as to the meaning of 15a (3) and the ICC's stewardship over that provision.

Last year, in 1960, the Merchant Marine Subcommittee of this committee held long hearings on this matter and discovered that the railroads, trucks, and water carriers each had a different interpretation. A review of the 11 Commission decisions under 15a (3) reveals that the ICC has 11 different opinions.

Consequently, five members of the committee-Senators Bartlett, Hartke, Cotton, Monroney, and Yarborough-introduced S. 1197 in order to bring this controversial matter to a hearing. Such a procedure, it is hoped, will clear the air by carefully considering all of the intricate principles and policies to be followed by the regulatory agency in connection with competitive ratemaking.

Each Senator and Congressman has received a great accumulation of letters on this matter. About one-half support the bill in the name of free enterprise and, interestingly enough, another half oppose the bill for the same reason.

NOTE. Staff counsel assigned to this hearing: Gerald B. Grinstein.

The rule of ratemaking is, of course, a technical and detailed problem and this hearing is being held in the hope to hear from all parties interested in this matter.

The bill will be carefully considered, not because of any particular number of letters we have had but because it is our congressional responsibility and duty to take a look at these matters.

(The bill follows:)

[S. 1197, 87th Cong., 1st sess.]

A BILL To amend the Interstate Commerce Act with respect to the rule of ratemaking where competition between carriers of different modes of transportation is involved

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 15a (3) of the Interstate Commerce Act (49 U.S.C. 15a (3)) is amended to read as follows:

"(3) In a proceeding involving competition between carriers of different modes of transportation subject to this Act, the Commission, in determining whether a rate is lower than a reasonable minimum rate, shall consider, among other factors, the facts and circumstances attending the movement of the traffic by, and the effect upon the earnings of, the carrier or carriers to which the rate is applicable, the competitive necessity for the rate, its effect upon a lawful rate structure or adjustment, and its tendency, if any, to cast an unjust burden upon other traffic. Rates of a carrier shall not be held up to a particular level solely to protect the traffic of any other mode of transportation, giving due consideration to all the objectives of the national transportation policy declared in this Act."

The CHAIRMAN. We will proceed today as expeditiously as possible. We are going to hear first Mr. Beardsley, the general counsel of the American Trucking Associations, and Mr. Frederick Freund, and then they will be followed by other representatives of the trucking industry, both management and labor.

The railroad witnesses will be heard tomorrow.

The water carriers are going to be heard at a later date.

As a matter of fact, we want to hear from all interested parties, and, in particular, the modes of transportation that are involved in this very complex matter.

The committee is here not to prejudge anything at all, but we do have legislation before us and we try to conduct hearings on all pieces of legislation that involve such important matters as this. The Senator from Alaska.

Senator BARTLETT. Mr. Chairman, I should like the privilege of making a short statement because I introduced this bill in cosponsorship with others.

First I want to say, Mr. Chairman, for the record, on account of statements that have been made throughout the land, that prior to the introduction of this bill I had no conversation concerning it with Mr. Hoffa or any member of his union. They did not ask me to introduce the bill. It would have been perfectly appropriate for them to have done so; however, they did not.

This bill has generated a considerable volume of mail coming to all Members of the Senate. I recall that some years ago we were seeking to enact the Alaska mental health law when Alaska was still a Territory, and I recall that a Senator told me at that time that he had received more mail on this subject than on any legislation since the Lend-Lease Act. I think both those records have been broken since the introduction of S. 1197.

Senator MCGEE. Would the Senator yield on that point?

Senator BARTLETT. On that point, yes.

Senator MCGEE. Merely to add that I have had to add an extra secretary for these 2 weeks just to handle the mail that has come in on this question.

Senator BARTLETT. Perhaps I will turn out to have been the man who diminished unemployment substantially.

I want to say for my own part, Mr. Chairman, that my interest is basically the interest of the consumers of this country, so that they may obtain just as cheap transportation rates as possible.

I am not interested in participating in warfare among the various methods of transportation, nor in promoting it.

And finally, I want to say, Mr. Chairman, that I have heard that a vice president of a large meatpacking corporation is going about the land denouncing me in speeches for not inviting shippers to testify. Let the record show-I suspect he will read it-that I don't have anything to do with the making up of the witness list on this bill. I am not required to do that any more than he is required to take a sledge hammer and go out and kill a steer in the stockyards of his company. I might go out and make some speeches on that subject myself, except I don't think I could write them off in taxes.

As the chairman just stated, he intends to hear all interested in appearing on this bill; so that subject is taken care of.

Thank you, Mr. Chairman.

The CHAIRMAN. I want to say that we will be glad to hear anyone who is interested in this piece of legislation. We naturally had to start with the industries, the modes of transportation involved. We want to hear as much as we can, and, probably even more than the industries, the shippers, and the consumers who have a deep interest. I came down today in a taxicab from where I live, and there was a man in the taxicab who was on his way up here to testify against the bill. I asked him, "Have you read it?" He said, "No."

I said, "Why don't you just read it first and then you can get your testimony in a little better shape?"

I think probably the interest in the bill has been a little bit exaggerated because of the fact that a lot of people may be directly affected, and it is a difficult and complex problem. All we are trying to do is again take a look at the situation and lay it on the table, so that everybody can testify and see where we are in this matter.

This bill naturally involves the whole common carrier system. I want to say that the members of this committee are somewhat concerned about the future of the whole common carrier system, which we think is the real heart and core of our national transportation system. We have many, many problems. We want to keep the transportation system in free enterprise, and we want to be a party to such rules of the game as are fair. That is all this committee is interested in and directed toward-the consumer and shipper getting the best possible service at the lowest possible cost. We will proceed on that matter.

I want to say for the benefit of the Senator from Alaska, and the rest of the members of the committee, that none of us are wedded to any particular method of transportation. We have to deal with them all. They all have their problems. We are trying to keep a strong national transportation system in a free enterprise spirit alive. This is a really serious matter.

We are going to hear all witnesses. The witness list has been set up, I hope, to accommodate everybody. There is no priority in importance because certain people appear today and others tomorrow. Many of these people wanted to appear tomorrow, or to follow later on in other hearings.

I hope we will disabuse any suggestion that might have been made such as the Senator from Alaska has related to the committee. Mr. Beardsley we will be glad to hear from you.

STATEMENT OF PETER T. BEARDSLEY, GENERAL COUNSEL, AMERICAN TRUCKING ASSOCIATIONS, INC.

Mr. BEARDSLEY. Mr. Chairman and members of the committeeSenator MCGEE. Mr. Chairman, may I suggest there are as many people outside in the hallway as there are here in the room. I don't know if they can be reached in some way.

The CHAIRMAN. I don't know how they can.

This is the biggest room the committee has. I don't know what else we can do.

Senator MCGEE. The stadium isn't finished yet.

The CHAIRMAN. I will say, if we have the same number of people that have this interest in this matter tomorrow, we might try to get the caucus room where we can accommodate a few more people. We will proceed now.

Mr. BEARDSLEY. My name is Peter T. Beardsley and I am general counsel of American Trucking Associations, Inc., 1616 P Street NW., Washington, D.C. Most of you are probably familiar with our organization, but for the record let me say that ATA is the national trade association of the motor carrier industry. It represents all types of motor carriers, and has affiliated associations in every State (except Hawaii) and the District of Columbia.

In order to bring into proper perspective the issues involved in these hearings, it is necessary to review briefly what has gone before in the field of competitive ratemaking in transportation.

It is of utmost significance that we first distinguish clearly between the question of competitive ratemaking in the transportation business and the problem of competitive pricing in the case of business generally. Otherwise, the true issues become clouded with confusion created by impressionistic propaganda.

In the case of business generally, the general laws such as the antitrust statutes are relied upon to assure fair and proper pricing of goods and services for the purpose of safeguarding against unfair destruction of competition and the monopolistic abuses which inevitably flow from an abnormal concentration of control in any area of the economy.

Application of the principles of the antitrust statutes are no less important in the field of transportation. To the contrary, Congress long since recognized that such safeguards were doubly important in a field such as transportation which touches virtually every aspect of our national life.

This is the primary reason for the existence of the Interstate Commerce Act and the Interstate Commerce Commission-a special statute to be enforced by a special arm of Congress, to make especially

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