SEC. 2. Add the following new subparagraph to section 16 (3) as subparagraph (i): "(i) The provisions of this paragraph (3) shall extend to and embrace all shipments of property for or on behalf of the United States." SEC. 3. Add the following sentence at the end of section 204a (4): "With respect to shipments for or on behalf of the United States as to which a subsequent deduction has been made, the cause of action shall be deemed to accrue from the date of such deduction." SEC. 4. Add the following new paragraph (7) to section 204a: "(7) The provisions of this section shall extend to and embrace all shipments of property for or on behalf of the United States." SEC. 5. Add the following sentence at the end of section 308 (f) (2): “With respect to shipments for or on behalf of the United States as to which a subsequent deduction has been made, the cause shall be deemed to accrue from the date of such deduction." SEC. 6. Add the following new subparagraph (5) to section 308 (f): "(5) The provisions of this paragraph (f) shall extend to and embrace all shipments of property for or on behalf of the United States." SEC. 7. Add the following sentence at the end of section 406a (4): “With respect to shipments for or on behalf of the United States as to which a subsequent deduction of overpayment has been made, the cause of action shall be deemed to accrue from the date of such deduction." SEC. 8. Add the following paragraph (7) to section 406a : “(7) The provisions of this section shall extend to and embrace all shipments of property for or on behalf of the United States." SEC. 9. The provisions of this act shall apply only to causes of action which accrue on or after the effective date of this act. APPENDIX 2 COMMENTS ON JUSTIFICATION OF THE INTERSTATE COMMERCE COMMISSION FOR S. 939 The basic reasons advanced by the Interstate Commerce Commission in its justification for Legislative Recommendation No. 3, now incorporated in S. 939, is indicated in the following excerpts from that justificaion: "***Government traffic, however, moves largely at reduced rates under the aforementioned provisions of section 22 which are not available to the commercial shipper. This has a strong tendency to increase the cost of regulated transportation service to commercial users, who, when their rates become too high, resort to private carriage, all to the detriment of the common carriers, the hard core of the Nation's transportation system." Reference is also made to further deterioration of the common carrier system because of this situation. The statement quoted could be correct only if the section 22 rates were below cost to the carriers. If this situation should exist, it would of course be of policy concern to the Congress, and to operation of shippers generally. The experience of GSA, however, does not confirm such a conclusion. Repeated studies have been made which indicate that the section 22 rates serve the same purpose as so-called commodity rates regularly and normally published by the common carriers in their tariffs. The section 22 rates generally, while approaching the level of the commodity rates available to commercial shippers, are relatively higher. There are of course two types of cost to be considered-the so-called out-ofpocket or direct costs and the so-called fully distributed cost. The Commission has held in effect that the recovery of anything over out-of-pocket cost results in compensatory rates to the carriers. See All American Airways, Inc. v. Abilene & S. Ry. Co. (297 I. C. C. 313), in which the Commission stated as follows: "*** On the contrary, the record is convincing that the defendants' procedures and practices have not resulted in quotations by them which are noncompensatory, nor is it convincing that so long as the military agencies continue their practices of issuing cost requests for specific group movements. and awarding the travel to the lowest bidder, they are lower than necessary to meet the competition. Defendants obtain therefrom some return above outof-pocket cost which aids in reducing to that extent the deficit from their pas senger operations and in keeping the budget of the military agencies for travel by rail lower than it would otherwise be. ** In these circumstances, it cannot be said that the procedures assailed constitute unfair or destructive competitive practices nor that they have an adverse effect upon the national defense, in contravention of the national transportation policy * * *." A recent proceeding of the Commission considered many aspects of section 22 rates. See Ex Parte 192, Reduced Rates under Section 22. Special Filing Rule. Although the Commission in its Decision of November 23, 1956, acknowledged that substantial evidence as to the relationship between section 22 quotations and published tariff rates available to commercial shippers had been offered in the course of the proceeding, its report disclosed no factual basis for the statement now contained in its justification for S. 939. Further, the Commission made a series of studies which are set forth in the Monthly Comments of its Bureau of Transport Economics and Statistics for August, September, and December, 1955. Those studies indicated that the level of section 22 rates for the years 1950, 1952, 1953, and 1954 was about 13 to 14 percent above those for comparable commodity rates. Accordingly, the statement of the Commission in its jurisdiction could be correct only if the comparable commodity rates are too low. In these circumstances, GSA cannot concur in the conclusions of the Interstate Commerce Commission which led to its recommendation for the proposed legislation. Hon. WARREN G. MAGNUSON, DEPARTMENT OF AGRICULTURE, Washington 25, D. C., April 18, 1957. Chairman, Committee on Interstate and Foreign Commerce, United States Senate. DEAR SENATOR MAGNUSON: This is in reply to your letter dated January 14, 1957, requesting our comments on S. 377, a bill to establish the finality of contracts between the Government and common carriers of passengers and freight subject to the Interstate Commerce Act. We oppose the enactment of bill. The general shipping public has established definite patterns for production, storage and transportation. The tariffs of the carriers are established to serve the commercial patterns as to the transportation movements, rate bases, transit privileges and other services. While commercial patterns may change, such changes are not so rapid, but that adequate adjustments in the tariffs can be made within the provisions of the Interstate Commerce Act. In event of inequity in the interpretation or publication of rates, fares, charges, etc., the general public may secure redress through formal or informal complaints filed with the Interstate Commerce Commission or by recourse to the courts. The transportation requirements of the Government must, however, conform to various factors not encountered by commercial shippers and often require immediate or retroactive adjustments. In connection with agricultural commodities acquired under price support operations, facilities are frequently utilized for storage which are not used by commercial shippers. The transportation to the new storage facilities may be required immediately and without the necessary time to secure the establishment of transit privileges by tariff. Arrangement for transit privileges and extensions of storage-in-transit time limits are obtained under section 22 of the Interstate Commerce Act. Obviously, in negotiating with the carriers for rates, transit privileges or other concessions under section 22 occasional errors occur. At present such errors can be readily adjusted through an amendment to initial quotation. However, if S. 377 were enacted the Government would be deprived of the opportunity to secure any redress after the expiration of the 2-year period provided in the bill. This feature would work to the disadvantage of this Department. The Bureau of the Budget advises that there is no objection to the submission of this report. Sincerely yours, E. T. BENSON, Secretary. Hon. WARREN G. MAGNUSON, DEPARTMENT OF AGRICULTURE, Washington 25, D. C., April 12, 1957. Chairman, Committee on Interstate and Foreign Commerce, United States Senate. DEAR SENATOR MAGNUSON: This is in reply to your letter of March 20, 1957, requesting our comments on S. 939, a bill to amend section 22 of the Interstate Commerce Act, as amended. The bill proposes to limit the application of section 22 of the act, to the movement of Government freight or passengers to apply in time of war or national emergency only, also to finalize contracts made between the Government and the carriers under this section. We oppose the enactment of this bill, primarily because it would remove many benefits which may be presently negotiated under section 22 of the Interstate Commerce Act, such as (a) extension of storage-in-transit time limits, (b) revalidation of expired freight bills, (c) establishment of transit privileges at points not covered by published tariffs, (d) waiver of out-of-route and/or backhaul charges, (e) processing or repacking of commodities in transit, and (f) storage-in-transit privileges on grain stored in Liberty ships. The provision as to the finality of contracts negotiated under section 22 of the act would be detrimental to our operations, as this would prevent the Department from securing redress in cases where unreasonable rates were assessed. Tariffs published by the carriers do not, in many cases, provide adequate flexibility for the unusual moves and services required by the Department. Due to the nationwide extent of our operations, the development of new commodities, loading practices, scarcity of commercial storage space, processing of commodities, repackaging requirements, unusual movements, extension of transit time limits, etc., the Department is not in a position to operate in a manner similar to that of commercial shippers. Accordingly, section 22 quotations are used to meet shipping problems which are not covered by published tariffs. These quotations are of great benefit to the Department in its operations due to the fact that they can be secured within a reasonable time, they can be made retroactive, and they provide for more flexible operations. The Bureau of the Budget advises that there is no objection to the submission of this report. Sincerely yours, E. T. BENSON, Secretary. GENERAL SERVICES ADMINISTRATION, Hon. WARREN G. MAGNUSON, Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington 25, D. C. DEAR MR. CHAIRMAN: Your letter of January 14, 1957, requests comments of General Services Administration on S. 377, a bill to establish the finality of contracts between the Government and common carriers of passengers and freight subject to the Interstate Commerce Act. This bill is similar to S. 939 now pending in the Senate, which was Legislative Recommendation No. 3 of the Interstate Commerce Commission (70th annual report, p. 160). GSA's comments on S. 939 have already been supplied to your committee. S. 377 differs from S. 939 in that it does not include the provision limiting section 22 use to periods of war or national emergency. But each contains the "finality" feature. S. 377 is identical to S. 543, 84th Congress, and S. 906, 83d Congress. GSA submitted its objections to the former on July 7, 1954. The President withheld his approval of S. 906 following its enactment, for the reasons stated in his Memorandum of Disapproval dated September 2, 1954. The reasons stated in the Memorandum of Disapproval apply equally to S. 377 now being considered by your committee. Effect could be given to the suggestion contained in that memorandum that section 16 (3) of the Interstate Commerce Act be amended to make the 2-year statute of limitation effective on Government shipments, by the enactment of a substitute measure. A draft of such a bill, which was also submitted with our comments on S. 939, is attached as an appendix hereto. For the foregoing reasons, GSA opposes the adoption of S. 377. The Bureau of the Budget has advised that there is no objection to the submission of this report to your Committee. Sincerely yours, FRANKLIN G. FLOETE, Administrator. APPENDIX 1 A BILL To amend the Interstate Commerce Act to specify that the 2-year statute of limitations on actions involving undercharges and overcharges applies to shipments of property of the United States Government Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Interstate Commerce Act be amended as follows: SECTION 1. Add at the end of section 16 (3) (e), the following sentence: "With respect to shipments for or on behalf of the United States as to which a subsequent deduction has been made, the cause of action shall be deemed to accrue from the date of such deduction." SEC. 2. Add the following new subparagraph to section 16 (3) as subparagraph. (1): "(i). The provisions of this paragraph (3) shall extend to and embrace all shipments of property for or on behalf of the United States." SEC. 3. Add the following sentence at the end of section 204a (4), "With respect to shipments for or on behalf of the United States as to which a subsequent deduction has been made, the cause of action shall be deemed to accrue from the date of such deduction." SEC. 4. Add the following new paragraph (7) to section 204a: "(7). The provisions of this section shall extend to and embrace all shipments of property for or on behalf of the United States." SEC. 5. Add the following sentence at the end of section 308 (f) (2): "With respect to shipments for or on behalf of the United States as to which a subsequent deduction has been made, the cause shall be deemed to accrue from the date of such deduction." SEC. 6. Add the following new subparagraph (5) to section 308 (f): "(5). The provisions of this paragraph (f) shall extend to and embrace all shipments of property for or on behalf of the United States." SEC. 7. Add the following sentence at the end of section 406a (4): "With respect to shipments for or on behalf of the United States as to which a subsequent deduction of overpayment has been made, the cause of action shall be deemed to accrue from the date of such deduction." SEC. 8. Add the following paragraph (7) to section 406a : "(7). The provisions of this section shall extend to and embrace all shipments of property for or on behalf of the United States." SEC. 9. The provisions of this act shall apply only to causes of action which accrue on or after the effective date of this act. GENERAL SERVICES ADMINISTRATION, Washington 25, D. C., April 15, 1957. Hon. WARREN G. MAGNUSON, Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington 25, D. C. DEAR MR. CHAIRMAN: Your letter dated January 31, 1957, requests GSA's views on S. 937, a bill to amend section 4 of the Interstate Commerce Act, as amended. This bill is identical with H. R. 2808 pending before the 84th Congress. This bill is identical with H. R. 2808 pending before the present session of Congress and is similar to H. R. 6208, which was pending before the 84th Congress. its legislative recommendation No. 2 set forth in its 1956 annual report (70th annual report, Interstate Commerce Commission, p. 160). The bill makes two primary changes in the so-called long-and-short-haul provisions of the Interstate Commerce Act. First, there would be removed from the present act the following quoted language: * the Commission shall not permit the establishment of any charge to or from the more distant point that is not reasonably compensatory for the services performed; Second, carriers over circuitous routes would be given complete authority to meet the rates established over direct routes, subject only to the standards of lawfulness set forth in other sections of the act. This would eliminate the present requirement that any departures from the basic provisions of the section must be authorized by the Commission. Whether the removal of these two present requirements would result in wasteful transportation is a matter of conjecture. In addition, the bill includes the following proviso: "*** provided that rates so established over circuitous routes shall not be evidence on the issue of the compensatory character of rates involved in other proceedings." The Commission urges these changes on the grounds that experience has shown that administration of this section has proven to be excessively burdensome. The interest of GSA in this legislation is based on its responsibilities under section 201 (a) of the Federal Property and Administrative Services Act of 1949, as amended (63 Stat. 383; 40 U. S. C. 481), under which it performs functions relating to transportation and traffic management for the use of executive agencies and represents them in negotiations with carriers and other public utilities and in proceedings before Federal regulatory bodies. In this capacity, GSA perceives no objection to the basic purposes of this legislation. Further, if administration of the act by the Commission will be simplified, this is unquestionably a desirable objective. The quoted proviso restricting the use of competitively established rates as evidence in rate proceedings, however, is objectionable. One of the primary tests of the reasonableness of rates is the relationship between rates, whether voluntarily established or prescribed by the Commission. While the language of the proviso would indicate that these rates would not be proper evidence of the "compensatory character" of the rates, nevertheless the justification statement of the Commission indicates that it construes this provision as preventing their use "as criteria." The evidentiary value of the rate comparisons should not be a matter of statute, but should be weighed by the ICC in accordance with the general rules of evidence. No reason for this exclusion is offered and in the judgment of GSA such a provision would be unwarranted. Subject to the foregoing comment and the elimination of the quoted proviso, GSA recommends that the bill be enacted. The Bureau of the Budget has advised that there is no objection to the submission of this report to your Committee. Sincerely yours, FRANKLIN J. FLOETE, Administrator. UNITED STATES DEPARTMENT OF JUSTICE, Hon. WARREN G. MAGNUSON, Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. DEAR SENATOR: This is in response to your request for the views of the Department of Justice concerning the bill (S. 937) to amend section 4 of the Interstate Commerce Act, as amended. Paragraph (1) of section 4 of the Interstate Commerce Act, as amended (49 U. S. C. 4 (1)) provides, in part, that without the approval of the Interstate Commerce Commission, neither rail nor water carriers shall charge more for a shorter than a longer distance haul over the same line or route in the same direction, the shorter being within the longer distance, or charge for a long haul more than the aggregate of the intermediate rates. The paragraph also provides that the Commission shall not permit the establishment of any charge that is not reasonably compensatory for the service performed. The bill would amend section 4 (1) so as to authorize, subject only to the standards of lawfulness set forth in other provisions of the act, carriers operating over a circuitous line or route to meet the charges of carriers of the same type operating over a more direct line or route to or from the competitive points, provided that rates so established over circuitous routes shall not be evidence on the issue of the compensatory character of rates involved in other proceedings. The bill would promote the welfare of the short line roads which are sometimes eliminated in making up through routes on the theory that their presence |