DOMESTIC LAND AND WATER TRANSPORTATION S. 2349, Extending Long- and Short-Haul Provisions to Motor Carriers [S. 2349, 82d Cong., 2d sess., by Mr. Johnson of Colorado (by request)] A BILL To extend to common carriers by motor vehicle the long- and short-haul provisions of the Interstate Commerce Act Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That (a) paragraph (1) of section 4 of the Interstate Commerce Act (49 U. S. C. 4 (1)) is amended by inserting after the words "this part" wherever they appear therein, a comma and the following: "part II,". (b) In the case of a carrier not heretofore subject to the provisions of such paragraph, no rate, fare, or charge lawfully in effect at the time of the enactment of this Act shall be required to be changed, by reason of the provisions of such paragraph, as amended by subsection (a) of this section, prior to six months after the enactment of this Act, or in case application for the continuance of any such existing rate, fare, or charge is filed with the Interstate Commerce Commission within such six months period, until the Commission has acted upon such application. UNITED STATES SENATE, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D. C., Monday, March 3, 1952. The committee met, pursuant to call, at 10 a. m. in the caucus room, Senate Office Building, Washington, D. C., Senator Edwin Johnson of Colorado (chairman) presiding. Present: Senators Johnson (chairman) presiding, O'Conor, Tobey, Capehart, and Bricker. Also present: E. R. Jelsma, staff director of Subcommittee on Domestic Land and Water Transportation, and F. J. Keenan, assistant clerk of the committee. STATEMENT OF JACK GARRETT SCOTT, GENERAL COUNSEL, NATIONAL ASSOCIATION OF MOTOR BUS OPERATORS Mr. Scort. This bill would extend to motor carriers for the first time the provisions of the so-called long- and short-haul clause contained in section 4 of the Interstate Commerce Act, now applicable only to rail and water carriers. We are not particularly concerned with the part of section 4 which would prohibit greater fares for a shorter than for a longer distance over the same route, as a survey which has been recently made discloses that such situations are practically nonexistent in our industry. Senator BRICKER. That is practically true of all hauling industries. The section is either outmoded or ought to be applied to all. Mr. SCOTT. That is my judgment in the matter. Wherever they have been found to exist in the past, largely by reason of mistake or inadvertence in compiling the quite complex tariff's existing in our industry they have been eliminated voluntarily, as soon as they have come to the attention of the carriers. We feel, therefore, that application of that provision to motor carriers of passengers is unnecessary, and would burden our members in the cases where they do happen to exist with charges of violation of the law, or the expense and bother of another type of Commission proceeding, or both, without any real benefit accruing to the public or to the carriers themselves. The second part of section 4, however, gives us serious concern. That provision forbids a carrier from charging a greater compensation as a through fare than the aggregate of the intermediate fares. There are two types of situations in the bus business which would make the provision both impractical and unfair. The first of these involves many of the several hundred bus operators who engage in mass transportation in the vicinity of metropolitan areas, and the small operators, who are also numerous, who have comparatively short routes entirely within a single State but who engage in interstate commerce and are parties to joint fares in interstate traffic. In the case of the mass transportation carrier, his rates per mile are comparatively low because of his high load factor and his frequent schedules. In respect of the short-haul intrastate operator, local considerations and low expenses often persuade him to maintain fares lower than the general level necessary to be maintained by a competing longhaul operator. If the latter is to compete for the short-haul business, he must conform his fares to and from the points involved, even though they are lower than the general level of his rates. By way of illustration, if a short-haul carrier has a fare of 25 cents between A and B, and his long-haul competitor has a 75-cent fare between A and C through B, the latter, in order to compete, must adopt the 25 cent fare between A and B although by the economics of the matter he is compelled to charge only 35 cents between B and C. The total of the aggregates, therefore, becomes 60 cents as against a through rate of 75 cents. The fare structure in the intercity bus industry is a very complicated matter. We maintain no uniform passenger-mile rates, because of the many differences in costs as between different routes in different parts of the country over quite different highways. There are something over 110,000 separate fares published in the largest of our general tariffs, of which some 30,000 are joint fares. This tariff covers the entire United States. In the case of any increase in interstate fares in any substantial area, it is impossible for the carriers involved to know or learn in advance of the effective date of the increase whether there are any instances of the aggregates exceeding the through fares, and, if so, where or why they exist. It is equally impossible for the Interstate Commerce Commission to make such a determination, except possibly piecemeal and by spot check. Before the longer-haul carriers could learn the facts, therefore, there would possibly be many instances of technical violations of the second part of section 4, and the necessity for probably hundreds of applications for fourth-section relief. Senator BRICKER. The example you give at the bottom of page 3 would not be a violation, would it? Mr. SCOTT. It would be a violation of the second part of section 4. Senator BRICKER. This is actually less than your through rate. Mr. Scorт. That is the second part of section 4, which forbids a through rate higher than the sum of the aggregates. That is the point that we object to, and section 4 is applicable to us. The second situation which creates impracticability in the imposition of the provisions of section 4 on motor carriers of passengers arises out of the fact that part II of the Interstate Commerce Act does not grant any authority to the Interstate Commerce Commission over interstate rates and fares which unduly discriminate against interstate traffic. On the contrary, the exercise of any such authority by the Commission over the intrastate rates and fares of motor carriers is specifically prohibited by two separate provisions of the Interstate Commerce Act, sections 202 (b) and 216 (e). As a consequence, there have been many instances in recent years where it has been found necessary, because of constantly increasing costs of operation, for our carriers to increase interstate fares, which increases have been approved by the Interstate Commerce Commission or otherwise put into effect without undue delays. But when corresponding increases in intrastate fares have been applied for, our members have been confronted by adverse decisions. by some of the State commissions, or unreasonable delays, which are tantamount to disapprovals. The commission of one State, for example, has declined to act upon a petition for a passenger fare increase for more than 3 years, admittedly for political reasons. Senator BRICKER. Would you recommend the provision in regard to motorbus operation comparable to sections 13 and 15? Mr. SCOTT. Specifically the association and I make that recommendation in this paper subsequently. Some of the State commissions have declined to grant applications for fare increases because of adherence to the quite archaic standard of rate making based upon return on investment or value, which is entirely inappropriate to motor carrier rates. In some cases this is required by State laws which were originally designed to regulate the rates of ordinary public utilities such as electric light and power, gas, telephone, and the like, wherein investments are much greater than annual revenues. In other States, such adherence is compelled by the force of judicial decisions. In still others, it is a matter of policy, mistakenly, as we think, adopted by the commissions themselves. But in practically all of the cases, regardless of the cause, the result is depressed intrastate fares without the authority in anyone to do anything about it, and regardless of the irrationality and unfairness of the resulting rate structure. As opposed to this view and policy concerning motor carrier rates and fares, the Interstate Commerce Commission has rejected the rateLaking standard of return on investment or value, in respect of motor carriers, and has placed primary emphasis in such cases on the relation between revenues and costs. In a quite recent case involving motorbus fares, a three-judge United States district court has unanimously and emphatically upheld the Commission's policy in applying the operating ratio theory to such charges. County Board of Arlington County et al. v. United States et al., United States District Court, Eastern District of Virginia, decided November 15, 1951. Senator BRICKER. I think in some States the motorbus and motortruck companies are classed as public utilities. Mr. SCOTT. Yes, sir; specifically under the statutes. Senator BRICKER. In that case these would under the State law be entitled to a return on investment. Mr. SCOTT. Yes, sir; in some States, because of the statute, they have to adhere to that standard of ratemaking. Senator BRICKER. The whole thing is picayune. Mr. SCOTT. It seems ridiculous to us when we have an industry where the annual revenue exceeds by many times the total of investment in property. There are several places in the country now where a passenger, traveling from one State to another through an intervening State, may buy one ticket from the point of origin to the first town in the middle State, a second ticket through the State at a low intrastate fare, and a third from the last point in the middle State to destination, thus obtaining a somewhat lower fare than the through rate. That would constitute a violation by the carrier of the second part of the fourth section, even though he is helpless to do anything about it except to lower his interstate fares at a grave risk of noncompensatory transportation and the danger of ultimate insolvency. Senator BRICKER. The only relief would be the appellate relief that you are going to suggest? Mr. SCOTT. That is right, and that would have to be sanctioned, as I take it, by statute. Senator BRICKER. Yes, if there is a prohibition against it. Mr. SCOTT. There are two specific ones in part 2 of the Interstate Commerce Act. For these reasons, our position is that section 4 be not made applicable to motor carriers of passengers, as unnecessary for public protection and unfair to the carriers under the circumstances described; but if, contrary to our opposing convictions, the Congress should determine that section 4 should be made applicable to motor carriers, it should be conditioned upon the enactment in part II of the act of the substantial equivalent of section 13 and the repeal of the present prohibitions contained in that part. We take the liberty of suggesting some language which, in our judgment, will accomplish that purpose. Whenever a State regulatory authority shall have failed to approve an application for an increase in the intrastate rates, fares, or charges of common carriers by motor vehicle in an amount sufficient to bring them to a level reasonably comparable with existing, prescribed, or approved interstate rates, fares, and charges, within 60 days after the filing of such application, the Interstate Commerce Commission is authorized and directed, upon the request of any party in interest, to assume jurisdiction over such intrastate rates, fares, and charges; and if the Commission shall find that the existing intrastate rates, fares, or charges, are unduly or unreasonably discriminatory against interstate or foreign commerce or unduly or unreasonably preferential as between persons or localities in intrastate commerce, on the one hand, and interstate or foreign commerce, on the other, it is authorized and directed to prescribe such intrastate rates, fares, and charges as it may find necessary to remove such discrimination or preference. Provisions of part II of the Interstate Commerce Act which are inconsistent with the foregoing should be appropriately amended or repealed. Care has been taken to place in here at least three limitations upon the exercise of that power of the Interstate Commerce Commission. The first would be the failure to approve application for an intrastate fare increase within a limited time by a State commission. The second would be a finding of the Interstate Commerce Commission that the existing State fares are unduly discriminatory or preferential and the third would be that the Commission could increase the intrastate fares only insofar as is necessary to bring parity and to remove the discrimination and the preferences. Senator BRICKER. That would put you on equality with other carriers as to rates. Mr. Scort. That is correct, sir. That is the aim of that suggestion. Senator BRICKER. Do you have the relative number of passengers carried by air, rail, and bus transportation? Mr. SCOTT. I do not have them in definite figures, Senator, but I do know that in the interstate field the bus industry carries more passengers than the railroads. That is not true, in all fairness, as to passenger miles becuase the ordinary rail transportation of passengers is somewhat lower than the ordinary bus transportation, ordinary or average. But in number of passengers, excluding commuter service, we carry more passengers in the rail in intercity service. The CHAIRMAN. That would be a variable figure anyway. The CHAIRMAN. And State to State. Mr. SCOTT. Yes, sir. The CHAIRMAN. For instance, between Los Angeles and San Francisco I am told that the air carriers carry more passengers than the railroads and the bus carriers combined. I do not know whether that is true or not, but airlines claim it is true. Mr. SCOTT. I do not know, either. My figures are total figures for the entire United States. They are not limited to any particular section or territory or route. STATEMENT OF EDGAR S. IDOL, GENERAL COUNSEL, AMERICAN TRUCKING ASSOCIATIONS, INC. Mr. IDOL. S. 2349 proposes to extend the provisions of section 4, of part I of the Interstate Commerce Act to part II. We are at a loss to account for the introduction of this bill. To the best of our knowledge, no such proposal was made by any witness testifying under Senate Resolution 50. act. The subject was treated during the hearings in Senate Resolution 50 by Mr. Grubbs for the railroads, beginning at page 247_ of the record, who recommended elimination of the clause from part I of the The subject was also treated at pages 12 and 13 of the progress report, where it was indicated that fair and impartial regulation of rail, motor, and water carriers might be attained through extension of the fourth section to part II of the act. The conclusion was reached, however, that this action would not accomplish the desired result and that the proper change would be to eliminate the fourth section from part I of the act. Objections to the elimination of the fourth section were registered during the hearings by Mr. Thompson, representing water carriers. At page 1273 of the record he advocated strengthening the fourth section rather than its repeal. The position of the motor carriers on the subject is the same as that of the water carriers. Even with the many exceptions granted by the Interstate Commerce Commission, the clause is something of an 96736-52-6 |