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5. The granting of authority to rail carriers to publish and charge volume freight rates.

6. The proposed redefinition of contract water carriers.

7. Section 14 of H. R. 6141 providing for repeal of section 303 (b) of the Interstate Commerce Act.

I hereby certify that the following resolution was unanimously adopted by members of the Upper Mississippi Waterway Association assembled in annual meeting in Minneapolis on October 5, 1955:

"In April 1955 the report and recommendations of the Cabinet Committee on Transport Policy and Organization' was issued. Legislation to implement the recommendations was introduced in May 1955.

"This legislation, if enacted, would appear to substitute a policy on the part of the Government 'to encourage and promote full competition between modes of transportation,' in place of the traditional Government policy to 'encourage and preserve the inherent advantages' of each type of transportation. The authority of the Interstate Commerce Commission to prevent ruinous rate wars between the several types of transportation would be greatly curtailed, to the very great disadvantage of all segments of water transportation. This association is strongly opposed to the enactment of any such legislation." Respectfully submitted.

UPPER MISSISSIPPI WATERWAY ASSOCIATION,
A. C. MILLS, Secretary.

WATERWAYS COUNCIL OPPOSED TO REGULATION EXTENSION,
New York, N. Y., February 2, 1956.

Hon. OREN HARRIS,
Chairman, Subcommittee on Transportation and Communications,
Interstate and Foreign Commerce Committee, Washington, D. C.
DEAR CHAIRMAN HARRIS: This letter concerns any prospective hearings on
legislation designed to implement the report to the President of the Presidential
Advisory Committee on Transport Policy and Organization and, in particular,
provisions designed to carry out recommendations B and C of the section entitled
"A Modernized and Financially Strong System of Common Carrier Transporta-
tion Must be Maintained." These recommendations call for the extension of
full-scale public utility regulation by the Interstate Commerce Commission
to the carriage of dry-bulk commodities in water transportation. Presumably
implementing legislation would be similar to sections 13, 14, and 18 of S. 1920
introduced on the Senate side in the first session of this Congress.

The Waterways Council Opposed to Regulation Extension is a temporary group formed on March 17, 1954, for the sole purpose of opposing legislation designed to eliminate the bulk commodity exemption in section 303 (b) of the Interstate Commerce Act which would be the effect of the recommendations referred to above. The membership of the Waterways Council consists of a large number of shippers, terminal operators, and water carriers.

Intermittently over the last 21 months this organization has been preparing to oppose this type of legislation which first emerged in S. 3111, a bill introduced in March 1954 and reintroduced as S. 951 in the 84th Congress on February 4, 1955. The Council has developed many allies among trade associations, chambers of commerce, national organizations, and shipper groups who wish to join in opposition.

Because no public hearings have ever been called on S. 3111 in the S3d Congress and S. 951 or S. 1920 in the 84th Congress the opposition to this proposal to remove the bulk commodity exemption for water transportation has never had an opportunity to present its case on the Senate side. Nor was any opportunity given for this group and its allies to present the case against the elimination of the exemption to the staff or members of the Presidential Advisory Committee prior to the submission of the Report on Transport Policy and Organization. Likewise, you will recall that last fall when brief hearings were held by your committee for the purpose of hearing a limited commentary on the report by one representative of each of the major segments of the transportation industry, it was unfeasible to present the fully developed case in opposition to this feature of the report.

Naturally it is our hope that the strong and unfavorable reaction from many segments of the economy affected by the proposed recommendations in the Report of the Presidential Advisory Committee will lead your committee to defer

indefinitely any action in the nature of hearings or other legislative proceedings designed to implement this report. We would hope that this decision to table indefinitely the recommendations on the elimination of the bulk commodity exemption on inland waterways would be taken and announced by your committee at the first opportunity because of the reasons disclosed in the hearing and summarized in my letter to you of September 15, 1955.

Should there be a contrary decision to hold hearings and press forward with legislation designed to carry out this report and, in particular, the recommendations referred to concerning water transportation, then the waterways council and the shippers, water carriers, and terminal operators and allied trade groups will want to have a full opportunity for a complete hearing. In the view of those of us in the water-carrier industry who have studied this problem closely over the past 2 years, this is a matter of life and death for hundreds of the smaller operators who are engaged primarily in the hauling of bulk commodities on the inland waterways free from any public-utility regulation. Furthermore, the change of the law proposed in this regard would damage seriously the position of many communities and industries which depend upon this form of transportation. We submit that no legislation eliminating the bulk commodity exemption for water transportation contained in section 303 (b) of the Interstate Commerce Act should be reported out of the House Interstate and Foreign Commerce Committee or reported by your subcommittee to the full committee without the most complete examination of the facts and consequences in public hearings.

Accordingly, to assist you in determining whether such hearings should be held, what their subject matter should include, and what time should be scheduled for hearing witnesses in opposition to this feature of the report of the Presidential Advisory Committee, we have prepared an outline of the case in opposition to the elimination of the dry-bulk exemption by witness category which the waterways council and its allies would like to present when and if hearings are held. As can readily be seen from this outline of testimony which is attached, it contemplates appearances by witnesses in 20 separate categories dealing with as many different phases of the problem and would probably call for the appearance of from 50 to 75 persons.

I realize it may be impossible for you or your subcommittee to inform us now as to your plans for hearings and action in this session. However, I hope that it will be possible for you to advise me as to the procedure contemplated and an anticipated time schedule so that our plans for assembling witnesses for the hearing can be matured in adequate time. Any information you can give us on the procedural plans of the committee bearing on this problem will be greatly appreciated.

Sincerely yours,

DAVID A. WRIGHT,

Chairman, Waterways Council Opposed to Regulation Extension.

OUTLINE OF CASE IN OPPOSITION BY WITNESS CATEGORY

1. Testimony by official or officials of Waterways Council Opposed to Regulation Extension. This would outline the case in opposition to the legislation and provide an organized background into which the testimony of subsequent witnesses in opposition could be fitted.

2. Submission of brief by waterways council entiled "Analysis of Legislative History of Section 303 (b) of the Interstate Commerce Act of 1940." This consists of some 16 pages and has been prepared.

3. Brief to be submitted by waterways council developing the facts and law concerning the impact of regulation extension on the restriction of competition and developing the proposition that the legislation would substitute a regulated cartel for a system of free competitive enterprise.

4. Testimony of AWO representative. This testimony would analyze in detailed fashion the growth in traffic in bulk commodities on the inland waterways, since 1939, the savings incident thereto, and the entry into the business of many new operators, techniques of operation, and equipment.

5. Testimony of expert witness on comparative costs and rates. The principal point of this witness would be to demonstrate that the increase in cost per tonmile of bulk commodity movement on the inland waterways under free competition has been much less than the increase in costs of other forms of regulated transportation.

6. Testimony of technical expert from barge and towboat building industry. The point of this testimony would be to delineate developments in new types 78456-56-pt. 3——23

of equipment for the handling of dry-bulk tonnage and spell out their significance in cost savings and speed and quality of service.

7. Testimony of grain shippers.

8. Testimony of coal witnesses.

9. Testimony of petroleum witnesses.

10. Testimony of farm organizations.

11. Testimony of chemical industry witness.

12. Testimony of National Industrial Traffic League, Eastern Industrial Traffic League, and Ohio State Traffic League.

13. Testimony of National Association of Small Business.

14. Testimony of representatives of Northwest Towboat Association, American Merchant Marine Institute, New York Towboat Exchange and Harbor Carriers Association of the Port of New York, Transportation Association of America, Illinois Manufacturers Association, Illinois Agricultural Association.

15. Testimony of representatives of National Rivers and Harbors Congress, New York State Waterways Association, Mississippi Valley Association, Gulf Intracoastal Canal Association, Chicago District Waterways Association, Ohio Valley Improvement Association, Upper Mississippi Waterways Association, Red River Improvement Association, Inland Empire Waterway Association. 16. Testimony of witness from the Kansas City area, to discuss future waterway developments in that area and the need for open competition to reap full advantages of anticipated development.

17. Testimony of witnesses representing chambers of commerce, port authorities, or municipal representatives along the upper Mississippi. The principal point of testimony of these witnesses would be the discrimination their communities would suffer if the act extending regulation to bulk movement on the inland waterways was passed with the exemption being maintained for the Great Lakes. It is suggested that the following cities be represented:

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18. Testimony or statements from various local chambers of commerce along the inland waterways system concerning the economic injury their communities fear from the elimination of the bulk-commodity exemption-this group of witnesses should be from points along the Ohio and lower Mississippi River system, particularly where industrial plants have located because of the waterways or there are active community programs designed to develop industrial location.

19. Testimony of several large shippers who do not operate their own fleets to testify that they will have to acquire fleets or suffer severe competitive disadvantages in event the bulk-commodity exemption is eliminated.

20. Testimony of representatives of several small- or moderate-sized chemical companies, small- or moderate-sized steel companies concerning the disadvantages that would accrue to them in event regulation is extended because their larger competitors have or will acquire private fleets.

STATEMENT OF ALVIN SHAPIRO, VICE PRESIDENT, AMERICAN MERCHANT MARINE INSTITUTE, INC.

The American Merchant Marine Institute is an organization representing 55 steamship companies which operate vessels of all categories in the foreign and domestic trades. A substantial number of our members operate vessels in the domestic commerce and therefore have a direct interest in the national transportation policy enunciated in these bills.

Those of our members who are certificated water carriers in intercoastal service are also members of the Intercoastal Steamship Freight Association. The Intercoastal Steamship Freight Association has submitted its views separately on the proposed legislation. We wish to endorse and support most of the views presented by the ISFA. In addition, in connection with trades other than the intercoastal trade, we submit specific comment with respect to five aspects of H. R. 6141.

REPEAL OF BULK COMMODITY EXEMPTION

The institute is unalterably and vigorously opposed to section 14 of H. R. 6141 which would repeal the dry bulk commodity exemption contained in section 303 (b) of the Interstate Commerce Act, as amended.

The Presidential Advisory Committee on Transport Policy and Organization aims at relaxing Federal regulation of railroads. This, it believes, is reasonable in light of the fact that transportation media are in vigorous competition one with the other. It also has as its basic theme the notion that the fundamental economic aspects of any transportation media should be allowed to manifest themselves to their greatest possible advantage. In connection with the bulk commodity exemption, however, H. R. 6141 reverses the course and aims at increased regulation. It would, in fact, burden water carriers engaged in trades other than the intercoastal trade and prevent them from servicing shippers on the basis of fundamental economies water transportation offers for a dry bulk commodity. Moreover, removal of the dry bulk commodity exemption ignores the fact that such deep-sea water carriers in the domestic trade frequently operate in the unregulated deep-sea foreign trade in direct competition with foreign-flag vessels. Imposing greater regulation on such carriers, including the filing of actual rates, would tend to make it more attractive for such carriers to operate in the foreign trade. Thereby, potential service in our domestic area may be reduced. Repeal of the dry bulk commodity exemption would, of course, seriously limit the area of operational choice now available to a shipowner as between domestic and foreign trade.

The dry bulk commodity exemption should not be repealed since this type of commodity is carried to a far lesser extent by the railroads than by the water carriers on account of the ability of the water carriers to transport large quantities of dry bulk commodities at rates substantially lower than those which the railroads would be obliged to charge because of their greatly higher operating costs. Most of these commodities could not stand a higher rate. To repeal the dry bulk commodity exemption applicable to water carriers, in order that the railroads might participate in such transportation, would only result in increasing the price to the consumer and decreasing the return to the producer. Certainly this could not be construed as a regulation of the transportation industry in the interest of the national economy.

DEFINITION AND RATE PUBLICATION OF CONTRACT CARRIERS BY WATER

The institute is opposed to the redefinition of the term "contract carrier by water" as contained in section 13 (b) of this bill. Such a redefinition would have the effect of reclassifying for the purposes of the act certain contract carrier services as common carrier operations. As the result of such reclassification, numerous contract services would no longer be eligible for exemption by the Interstate Commerce Commission from regulation which is now accorded them by section 303 (e) of the act. Such services would thereby be exposed to unfair rate competition on the part of the railroads.

The institute also is opposed to the amendment in section 16 of the bill which would require the filing and publication by contract carriers of their actual rates, charges, and regulations affecting transportation under their contracts. This appears to us to be another means of removing part of the exemption to which contract carriers are now justifiably entitled. The filing and publication of actual rates is intended for the benefit and protection of the shippers. This protection is not required by shippers using contract carriers, in view of the fact that the shippers know with a high degree of accuracy the level of reasonable charges. They are able, therefore, to arrange or refuse transportation offered by contract carriers depending on whether or not the charge is considered reasonable or unreasonable. The proposed amendment to require contract carriers to file and publish their actual rates would be impracticable for the reason that most agreements for contract carriage are negotiated and the prices fixed on short notice. The factors governing the fixing of the rate vary and consequently cannot be anticipated by the shipowner. Unless the shipowners acts quickly, he may lose a return cargo. The publication and filing of rates is a time-consuming process, sometimes involving many days, and shippers cannot always await the publication and filing of such rates.

The proposed amendment to require filing of rates by contract carriers would also subject charter hire rates to review by the Interstate Commerce Commission. Under section 302 (e) a shipowner becomes a contract carrier by chartering

his vessel to a person; i. e., to a shipper or a carrier not subject to regulation under the act. The shipowner would be required to file his charter hire rate with the ICC. Such shipowner might normally be engaged in foreign commerce or he might be a tramp or intercoastal operator. The institute believes it would be extremely undesirable to require the charter hire rate of such a shipowner to be filed with and reviewed by the ICC.

REPEAL OF SECTION 22 PRIVILEGES

Section 9 (a) would amend section 22 of the Interstate Commerce Act by striking the preference presently granted the United States, State, or municipal governments for transportation at free or reduced rates. To the extent that this would remove such undesirable preference, we support such action. However, it is noted that elsewhere in the bill a new section 15a (5) would authorize the establishment of special rate treatment for the United States, State, and municipal governments. Thus, what is being taken out with one hand is being put back in with the other.

Nor do we believe that the recommendation made by the Interstate Commerce Commission fulfills the desired objective. The ICC approach would retain section 22, but make it applicable only during time of war or threatened war or other national emergency. This proposal appears too broad.

Adoption of H. R. 525 urged

We believe a more realistic approach to this matter is contained in H. R. 525. H. R. 525 would provide a straightforward elimination of the section 22 privileges. It is our understanding that almost all segments of the transportation industry have agreed upon desirability of the section 22 elimination as expressed in H. R. 525. Even with certain limitations possibly desired by the Government agencies there would appear to be no real differences which are incapable of being worked out. We urge that every effort be made to take advantage of this unanimity and report out the section 22 matter separately if it should not appear possible to obtain action on the overall legislation during this session of Congress.

LONG AND SHORT HAUL CLAUSE

The steamship industry is opposed to any removal of the present requirement for prior approval in connection with rates established under section 4. The protection afforded water carriers by section 4 from ruthless and discriminatory rate cutting, which would otherwise be practiced by the railroads, is indispensable to the existence of the water carriers. It is obvious that if section 4 is repealed, the railroads could engage in a program of selective rate cutting, whereby rates could be reduced, even to noncompensatory levels, on certain commodities normally transported by the water carriers—not for the purpose of merely meeting water-carrier competition, but to eliminate such competition. The railroads because of their vast resources would be able to embark on such a program. Water carriers, however, most of whose traffic is of a highly competitive nature, are not in a position to reduce their rates to noncompensatory levels, or below their actual operating costs, in order to compete with potential railroad rate cutting.

SUSPENSION POWERS

This legislation includes in section 7 (c) amendments to the Commission's authority to suspend proposed changes in rates. We wish to record our opposition to the proposed shortening of the maximum period of suspension from 7 to 3 months. The suspension period has been changed from time to time throughout the years and the present term of 7 months has been found by experience to be an appropriate period. Further, we do not see any necessity for the other two proposed changes; i. e., burden of proof and injury in wording dealing with this portion of the act. The principles enunciated therein can be carried out under the law as presently worded.

Mr. HARRIS. The committee will recess at this point until 10 o'clock in the morning.

(Thereupon, at 3: 47 p. m., the committee recessed, to reconvene the following day at 10 a. m.)

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