DECLINE OF COASTWISE AND INTERCOASTAL SHIPPING INDUSTRY FRIDAY, JUNE 17, 1960 U.S. SENATE, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D.C. The subcommittee was called to order at 10:45 a.m., in room 5110, New Senate Office Building, the Honorable E. L. Bartlett presiding. Senator BARTLETT. Today we have the resumption of the hearings on the decline of coastal and intercoastal shipping industry. We will hear now from Mr. John H. Winchell, Chairman of the Interstate Commerce Commission. We are glad to have you here, Mr. Winchell. The committee will be glad to hear you. STATEMENT OF HON. JOHN H. WINCHELL, CHAIRMAN, INTERSTATE COMMERCE COMMISSION; ACCOMPANIED BY HOWARD G. FREAS, COMMISSIONER, AND GEORGE HILTON, CHAIRMAN, BOARD OF SUSPENSION, INTERSTATE COMMERCE COMMISSION Mr. WINCHELL. Mr. Chairman and members of the subcommittee, my name is John H. Winchell. I am the present Chairman of the Interstate Commerce Commission and have served in that capacity since January 1 of this year. I am generally familiar with the testimony of previous witnesses before this subcommittee who have expressed their views as to the reasons for the decline of the coastwise and intercoastal shipping industry. I am appearing today to testify on the Commission's behalf, and to outline some of the factors which we believe contributed to the circumstances described by many of the witnesses who have already appeared before this subcommittee. I shall also comment on some of the criticisms that have been leveled at the Commission, its procedures and personnel. No effort will be made, however, to answer charges of a vague and irresponsible nature. My comments will be generally directed to suspension power procedure, Suspension Board personnel, prescription of compulsory joint rates, rate differentials, and a general discussion of the decline in coastal and intercoastal shipping industry. 557 1. GENERAL SUSPENSION PROCEDURE Under the present provisions of the Interstate Commerce Act carriers which are required to file their schedules of rates, classifications, regulations, and practices with the Commission make the initial determination themselves as to whether such rates, et cetera, meet the standards of the act. In other words, it is they who in the first instance must determine whether such rates are just and reasonable, nondiscriminatory, do not result in undue preference and prejudice, and are in conformity with the national transportation policy. No change may be made in rates except upon 30 days' notice, although the Commission may, in its discretion, and for good cause shown, allow changes on less notice. However, once the rate adjustment has become effective neither the Board of Suspension nor the Commission has the power to suspend. The tariffs must be published, filed, and posted in the manner and form prescribed by the regulations established by the Commission. During the fiscal year ended June 30, 1959, over 193,000 publications containing hundreds of thousands of newly established or changed freight, express, pipeline, or freight forwarder rates, passenger fares, or contract carrier rate schedules were received at the Commission for filing. About 3,350, or slightly over 12 percent, of such tariffs and rate schedules were rejected for failure to give notice as required by the statute or for nonconformity with the Commission's tariff publishing regulations; the remainder were accepted for filing. Acceptance for filing does not mean that the Commission has considered and approved the rates or charges in the publications. The limited number of employees in the Section of Tariffs will permit only a cursory examination, prior to the effective date, of the thousands of tariffs and schedules tendered annually for filing. About all that can be done is to ascertain whether they are filed on proper notice, conform to the Commission's regulations, and that they do not violate outstanding orders of the Commission. I might point out that even a detailed tariff check might not uncover all unlawfulness, as, for example, where undue prejudice to a shipper or locality would be created by the proposed tariff; or even where it would be unjust and unreasonable, unless there is something wrong on its face. Various sections of the Interstate Commerce Act authorize the filing of complaints alleging that something has been done or has not been done by a regulated carrier in violation of the provisions of the act. It is under these sections that investigations into the lawfulness of existing rates ordinarily are instituted. Insofar as new or changed rate schedules are concerned, the Commission is authorized either upon complaint or upon its own initiative to enter upon a hearing concerning the lawfulness of such rates, classifications, regulations, or practices, and, pending a decision, to suspend the operation of such rates for a period not exceeding 7 months. Protests looking toward suspension of a proposed rate must be in writing or by telegram in an emergency-and must be filed with the Commission in Washington at least 12 days before the effective date of schedules filed on the statutory 30 days' notice, and not less than 5 days before the effective date of schedules filed on less than statutory notice. Copies must be served by the protestant upon the respondent and other persons known to be interested. THE BOARD OF SUSPENSION This is a Board of employees authorized by section 17 of the act. The present membership of the Board is five-a Chairman and four Board members. The appointment of Board members is a matter for action by the entire Commission. Initially, selection is made by the Director of the Bureau of Traffic, who has administrative supervision over the Board. His selection is made from eligible and qualified employees certified by the personnel office under the Commission's established promotion program. The Bureau Director, in making his selection, consults with the Chairman of the Board, other officials of the Bureau whose employees may also be under consideration, and the Commissioner who is the Chairman of Division 2 of the Commission. The recommendation of the Bureau Director is then submitted to the Managing Director of the Commission for approval. If the Managing Director is satisfied that the employee recommended meets the requirements and is the best qualified of those employees eligible to fill the vacancy, he can either concur in the recommendation, or submit any additional recommendations of his own. In either event, the entire matter is then submitted by the Managing Director to the Chairman of the Commission, and the final decision is made as a result of full Commission action. Before passing upon the appointment of a Board member, the Commission has before it the entire background and qualifications of the recommended employee and, in many instances, the background and qualifications of other employees who were considered. In order to qualify for appointment to the Board an employee must have had a minimum of 6 years' experience in progressively responsible work in the field of traffic and transportation. This must have included the handling of technical assignments requiring a practical working knowledge of traffic or transportation problems and activities. Three years of this experience must have been in one or more of the major fields of transportation in such activities as classification, rates, and routing, or comparable work in regulatory agencies. It must also have included substantial responsibility in the analysis of motor, water, freight forwarder, or rail-rate adjustments and their conformity with statutory requirements. I might add that the present membership of the Commission's Board of Suspension has a combined total experience of 187 years in the field of traffic and transportation, both in private industry and Government service, or an average of about 37 years per man. I believe it is abundantly clear that every precaution is taken and great care is exercised in the selection of people to serve on our Suspension Board. The Board is authorized by the Commission to consider upon protest or upon its own motion, new or changed rates, classifications, regulations, et cetera, in the exercise of its jurisdiction. The Board may (1) decline to suspend and institute an investigation; (2) enter an order of investigation and suspension; or (3) enter an order of investigation without suspension. In this connection I refer you to exhibit I which I have attached to my statement. Its authority also includes the institution of investigations into existing or proposed rates, as ancillary to investigations ordered by the Board in the manner in which I have just described. The authority of the Board, however, does not include the consideration or disposition of (1) petitions or requests related to schedules or tariffs filed in purported compliance with any Commission or division decision or order; (2) petitions or requests for suspension of proposed general increases for application throughout a rate territory or region; nor (3) any action in connection with suspensions to be taken during or after formal hearings or investigations. These three exceptions involve situations which are reserved for the consideration of Division 2. The Board may, and does, certify to Division 2 any matter which, in the Board's judgment, should be passed upon initially by that Division. When the Board has declined to suspend a proposed tariff or schedule, any protestant may file in writing a petition for reconsideration by an appellate division. Such petition must reach the Commission at least 2 workdays prior to the effective date of the tariff or schedule in question. Telegraphic notice must be given to the respondents by the petitioners. It is apparent that, if such an appeal procedure is to be practical and effective, the Board of Suspension must make such an initial decision at least 2 or more days prior to the effective date of the protested tariff or schedule. Consideration of such appeals is assigned to Division 2, which acts as an appellate division. When acting in this capacity, Division 2 has the authority to sustain, reverse, or modify the action of the Board. Decisions of the Appellate Division are administratively final and are not subject to review by the Commission. On the other hand when the Board has entered an order to suspend and investigate, or to investigate without suspension, petitions for reconsideration of such orders may be filed by any interested party within 20 days after the date of service of the order, and replies to the petition may be filed within 20 days after the petition is filed with the Commission. These petitions are also assigned to Division 2 acting as an appellate division. When the Appellate Division has denied a petition seeking a reversal, change, or modification of an original determination by the Board, any further petition for reconsideration by the same party upon substantially the same ground will not be entertained. If, how ever, upon consideration of a petition for reconsideration, the Appellate Division reverses, changes, or modifies the previous determination of the Board, a further petition may be filed by any party to the proceeding adversely affected by the decision of the Appellate Division, and this petition will be considered and disposed of by the same Appellate Division which passed upon the initial petition. THE FOURTH SECTION BOARD This is also a Board of employees created pursuant to section 17 of the act. It consists of three Board members, who are appointed by the Commission in a manner similar to that involving the Board of Suspension. One of them is designated as Chairman. This Board has been authorized to consider matters relating to relief from the long-and-short haul and aggregate-of-intermediate-rates provisions |