within such routes would bring about circuity. It would also open up new channels of trade and commerce and promote competition among railroads. In the light of the foregoing considerations, the Department of Justice favors the enactment of the bill. The Bureau of the Budget has advised that there is no objection to the submission of this report. Sincerely, WILLIAM P. ROGERS, Deputy Attorney General. GENERAL SERVICES ADMINISTRATION, Hon. WARREN G. MAGNUSON, Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington, D. C. DEAR MR. CHAIRMAN: Your letter of January 31, 1957, requests a report from General Services Administration on S. 943, a bill to amend section 218 (a) of the Interstate Commerce Act, as amended. to require contract carriers by motor vehicle to file with the Interstate Commerce Commission their actual rates or charges for transportation services. The bill S. 943 is identical with H. R. 3774 now pending in the House and has been recommended by the Interstate Commerce Commission as its Legislative Recommendation No. 15 (70th annual report, p. 168). Each of these bills incorporates substantially the proposals of the Presidential Advisory Committee on Transport Policy and Organization, which recommendations are incorporated in section 12 of H. R. 5522 and S. 1457, also pending before the 85th Congress. GSA's interest in this legislation stems from its statutory duties with respect to transportation and traffic management services performed for civilian executire agencies under section 201 of the Federal Property and Administrative Services Act of 1949, as amended (63 Stat. 383; 40 U. S. C. 381). In this regard GSA speaks for the Government solely from the viewpoint of a shipper. Relatively few contract carriers are utilized by the Federal Government. However, it should be pointed out that under section 22 of the Interstate Commerce Act common carriers are authorized to transport for the Government at reduced rates which are not published with the Interstate Commerce Commission. Legislation is pending to repeal or modify section 22 in that respect. It is assumed that the proposal to require the filing of actual rates by contract carriers so far as Government traffic is concerned, is considered to be related to section 22 legislation. While contract carriers would be made subject to the requirement of filing their actual rates with the Commission under S. 943, the Commission's authority over such rates is limited to prescribing minimum reasonable rates under section 218 (b). It is not proposed to increase the Commission's ratemaking authority under that section and it is doubtful that shippers would benefit from the proposal of S. 943 unless the Commission's authority were broadened. GSA perceives no objection to S. 943, and accordingly recommends the enactment. In view of the restricted use made of contract carriers, it is believed that during the first 5 years of its operation, S. 943, if enacted, would result in neither increased costs nor savings to the Government. 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. DEPARTMENT OF THE ARMY, Hon. WARREN G. MAGNUSON, Chairman, Committee on Interstate and Foreign Commerce, United States Senate. DEAR MR. CHAIRMAN: Reference is made to your request to the Secretary of Defense for the views of the Department of Defense with respect to S. 939, 85th Congress, a bill to amend section 22 of the Interstate Commerce Act, as amended. The Secretary of Defense has delegated to the Department of the Army the responsibility for expressing the views of the Department of Defense thereon. S. 939 would amend section 22 of the Interstate Commerce Act so that the granting of free or reduced rates to the United States, State or municipal governments, would be limited to times of war or national emergency, and would make section 22 quotations conclusively binding and not subject to reparation after acceptance by the Government. The Department of Defense strongly objects to enactment of S. 939. The proposed legislation recognizes the necessity for special provisions for the movement of military traffic in time of war or national emergency but would prohibit such special provisions for the movement of military traffic in peacetime. The same conditions which require special provisions for the handling and movement of military traffic in time of war or national emergency exist in peacetime. It is only the volume that varies. There are many reasons why laws and regulations applicable to commercial transportation should not be made applicable to miiltary traffic. Some of the principle benefits to both the carriers and the Department of Defense, in the utilization of the provisions of section 22 of the act, both in time of war or national emergency and in peacetime, are: (a) Reasonable rates, fares and charges, and rules and regulations may be established economically and expeditiously. Military traffic must be responsive to military requirements. It would be impossible to withhold critically needed military supplies until the establishment of reasonable rates through normal regulatory procedures. (b) Retroactive applications may be authorized where justified. Urgency often requires the movement of military traffic prior to completion of negotiations as to the level of rates. Under section 22 these negotiated rates may be made retroactive, however, under tariff provisions this would be prohibited. This provision is beneficial to the military in that shipments may move immediately, and a reasonable rate structure can be established under section 22 during the actual movement, or upon completion of the movement, on a retroactive basis. In addition it is beneficial to the carriers since it obviates the undue administrative and legal burden that would result through formal proceedings for reparation. (c) Cancellation of quotations may be accomplished quickly and economically when the need for the quotations no longer exist. It is apparent that rates to cover one-time moves can be more readily and less expensively established and canceled through the medium of rate tenders than by costly tariff specifications and procedures. (d) Section 4 of the Interest Commerce Act does not apply to inhibit the military departments using rates over circuitous routes more advantageous to the Department for security and for other purposes. (e) Security as to the commodity, movement, and other conditions often required in movement of highly classified materials can more effectively be provided through the medium of section 22 quotations. Information as to such movements would be an aid and comfort to the enemy and could jeopardize our national security. A means must be provided for the movement of these security classified shipments in the interest of national defense. The greatest bulk of rate tenders for the military, however, are not secret but are accessible to interested parties. (f) Rates negotiated between the carriers and the Department of Defense which are published pursuant to section 22 are fully compensatory to the carriers and do not place a burden on commercial shippers. The assertion in (f) above is amply supported by reports of the Bureau of Transport Economics and Statistics of the Interstate Commerce Commission for August, September, and December 1955, which show that the average level of section 22 quotations was about 13 percent above the corresponding level of commodity rates on comparable (but not identical) traffic. In the recent Western Class Rate cases (296 I. C. C. 555), involving Mountain Pacific interstate and interterritorial rail traffic, the record shows that the car-mile earnings on section 22 traffic were considerably higher than the car-mile earnings on commodity and "exceptions" rates. A study made by the Interstate Commerce Commission in the above-cited cases indicated that section 22 traffic actually had but a negligible impact on the Nation's total traffic. Section 22 traffic constitutes only about 1 percent of the total commercial rail traffic of the Nation. Interstate Commerce Commission Statement No. ES-1 year 1955 shows average earnings of 61 cents per car-mile for 146 commodity classes comprising all rail carload manufactured and miscellaneous traffic for the calendar year 1955. A study of Army traffic prepared by the Transport Economics Division, Military Traffic Management Agency, covering exactly the same commodity groups (Nos. 501 through 799) moving under section 22 rates during the fiscal year 1956 shows that the average earnings were $1.75 per car-mile. The latter study was prepared on the same statistical basis as the former, and includes commodities which comprise more than 95 percent of all Army section 22 rail traffic. Moreover, the section 22 traffic moved an average of 788 miles per car, whereas the same commodities moving for all shippers averaged only 528 miles per car. It is well established, of course, that shorter hauls cost the carrier more per mile to perform than do longer hauls. While the Department of Defense is strongly opposed to section (a) of S. 939 in its present form it would interpose no objection to an amendment of section 22 of the Interstate Commerce Act which would preserve the existing provisions of this section with certain modifications, such as proposed in section 9 of H. R. 5521, 85th Congress, a bill to amend the Interstate Commerce Act, as amended, so as to provide for a stronger national transportation industry and for other purposes. Accordingly it is recommended that section 9 of H. R. 5521, 85th Congress, a copy of which is attached hereto, be substituted for section (a) of S. 939. Section (b) of the proposed bill would add a subsection to section 22 of the act which would, in brief, provide that reduced rates offered or negotiated under the provisions of section 22, when accepted or agreed to by the designated representative of the Government, would be conclusively presumed to be just, reasonable, and otherwise lawful, and not subject to attack or reparation after the date of such acceptance or agreement upon any grounds whatsoever except for actual fraud or deceit or clerical mistake. This section of the proposed bill is also objectionable. It would place the Government in a position inferior to that of commercial shippers which have 2 years after the cause of action arises within which to seek reparations. Rate tenders, under this proposed bill, would be final and conclusive immediately upon acceptance and thereafter the Government would be forever barred from seeking reparations. The provisions of section (b) of S. 939 are similar to S. 543, 84th Congress, and S. 906, 83d Congress. However, S. 543 would have made section 22 rates final and conclusive 2 years after their acceptance and S. 906 would have made such rates final and conclusive 180 days after acceptance. The Department of Defense strongly opposed enactment of these bills. S. 906 was passed by the 83d Congress but was vetoed by the President, who on September 2, 1954, announced that he was withholding his approval for substantially the same reasons as outlined in preceding paragraph. In that same announcement the President stated: "I see no reason why the Government should not be subject to the same limitations on retroactive review of its freight charges as a commercial shipper. That result could be accomplished equitably by an amendment to section 16 (3) of the Interstate Commerce Act specifying that the Government shall be subject to the 2-year limitation presently applicable to commercial shippers ***. I recommend that such legislation be enacted at the next session of the Congress." Subsequent to the above announcement, representatives of several agencies of the Government prepared a draft of bill designed to implement the President's recommendations. A copy of that bill, revised to include passenger transportation and certain minor technical amendments, is attached hereto and recommended as a substitute for section (b) of S. 939. The substitute bill would insert a provision in section 16 (3) of part I of the Interstate Commerce Act and in related provisions of part II, III, and IV of that act specifying that the stated 2-year limitation applies to Government traffic. The present 6-year provision now applicable to suits by carriers against the Government would thereby be reduced to 2 years; and the period for action by the Government to obtain review of rates charged it, now contended to be unlimited in pending litigation, would also be fixed at 2 years. For the purpose of the limitation, Government traffic would then be on the same basis as commercial traffic. The added cost of transporting military traffic that would result from enactment of S. 939 cannot be accurately computed at this time. However, it will be millions of dollars. Figures bearing on this point are now being developed and are expected to be available when hearings are held on this bill. Opponents of section 22 have stated that it is "mutually exclusive" for the Department of Defense to assert that (i) section 22 revenue levels are higher than commodity rate levels and (ii) to deny the Department the use of section 22 rates would cost millions of dollars. This criticism is totally fallacious because, in the absence of section 22 rates, the military traffic would generally not revert to commodity rates, but to class rates, which are much higher. The general commodity rate structure is the product of many years of vigorous effort on the part of industry to reduce rates. This effort has employed weapons not available to military traffic managers, such as the use of private carriage in direct competition with common carriers, the withholding of traffic, and like measures. This report has been coordinated within the Department of Defense in accordance with procedures prescribed by the Secretary of Defense. The Bureau of the Budget advised with respect to an identical report on an identical bill, H. R. 3233, 85th Congress, that there was no objection to the submission of that report to the Congress. Sincerely yours, WILBER M. BRUCKER, Secretary of the Army. SECTION 9 OF H. R. 5521, 85TH CONGRESS (P. 15, line 20 through p. 17, line 10) SEC. 9. Section 22 of the Interstate Commerce Act, as amended, is amended as follows: (1) By inserting after the section designation the letter "(a)"; (2) By striking from the first clause thereof the words "for the United States, state, or municipal governments, or" and "or the transportation of persons for the United States Government free or at reduced rates,"; and (3) By adding at the end thereof the following new subsections: "(b) Notwithstanding any other provision of law, the establishment, maintenance, publication, and application of rates, fares, charges, rules and regulations of special application for the transportation of property for the United States, State, or municipal governments and of persons for the United States Government by carriers subject to this act is hereby authorized, subject to tariff rates, fares, charges, rules and regulations which would otherwise be applicable as maxima. Such rates, fares, charges, rules and regulations may be made retroactive or changed on less than 30 days' notice upon the filing with the Commission by the government agency concerned of a statement setting forth the necessity therefor. Rates, fares, charges, rules and regulations authorized by this subsection or subsection (c) of this section shall not be subject to suspension nor to the provisions of section 4, but shall be subject to all other applicable provisions of the act: Provided, however, That the provisions of the act with respect to filing, publication, and posting of tariff schedules and contracts will be waived where the security of the United States so requires upon the filing of an appropriate statement with the Commission by the Government agency concerned. "(c) Nothing in this section shall be construed to affect the validity of any free or reduced rates, fares, or charges for transportation service rendered prior to the effective date hereof, and such rates, fares, or charges may be continued effective for future application if filed and published as provided in subsection (b) of this section within 180 days after the effective date of this amendment, and shall be subject to all other applicable provisions of such subsection." 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 transportation of persons or property for 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. as amended, is hereby amended as follows: (1) By adding at the end of section 16 (3) (c), the following new sentence: "With respect to shipments of property or passengers or both 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." (2) By adding the following new subparagraph to section 16 (3) as subparagraph "(i)": "(i) The provisions of section 16 (3) shall extend to and include all shipments of property or passengers or both for or on behalf of the United States." (3) By adding the following new sentence at the end of section 204a (4) : "With respect to shipments of property or passengers or both 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." (4) By adding the following new paragraph (7) to section 204a: "(7) The provisions of this section shall extend to and include all shipments of property or passengers or both for or on behalf of the United States." (5) By adding the following new sentence at the end of section 308 (f) (2): "With respect to shipments of property or passengers or both 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." (6) By adding the following new subparagraph (5) to section 308 (f) : (5) The provisions of this paragraph (f) shall extend to and include all shipments of property or passengers or both for or on behalf of the United States." (7) By adding the following new sentence at the end of section 406a (4): "With respect to shipments of property or passengers or both 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." (8) By adding the following new paragraph (7) to section 406a : "(7) The provisions of this section shall extend to and include all shipments of property or passengers or both for or on behalf of the United States." SEC. 2. The amendments made by the first section of this act shall apply only to causes of action which accrue on or after the date of enactment of this Act. Hon. WARREN G. MAGNUSON, DEPARTMENT OF THE ARMY, Washington, D. C., April 11, 1957. Chairman, Committee on Interstate and Foreign Commerce, United States Senate. DEAR MR. CHAIRMAN: Reference is made to your request to the Secretary of Defense for the views of the Department of Defense with respect to 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. The Secretary of Defense has delegated to the Department of the Army the responsibility for expressing the views of the Department of Defense thereon. S. 377 would amend section 22 of the Interstate Commerce Act (49 U. S. C. 22) by adding two new subsections thereto. The new subsections would, in brief, provide that reduced rates offered, negotiated, or established under the provisions of section 22 when accepted or agreed to by the Secretary of Defense, Secretary of Agriculture or the Administrator of the General Services Administration would be conclusively presumed to be just, reasonable, and otherwise lawful, and not subject to attack, or reparation, 2 years after the date of such acceptance or agreement upon any grounds other than actual fraud or deceit, or clerical error. In addition, it provides that the provisions of the bill shall not be construed as any indication that similar rates, or fares, charges, rules, regulations, or practices theretofore effective were or were not binding upon or enforcible against the United States. S. 377 is identical with S. 543, 84th Congress, and similar to S. 906, 83d Congress except that S. 906 would have made such agreements under section 22 final and conclusive 180 days after their acceptance unless there existed an emergency declared by the Congress, in which event, such agreements would have become final 2 years after their acceptance. The Department of Defense opposed enactment of S. 906, 83d Congress, and S. 543, 84th Congress, and is opposed to the enactment of S. 377 for substantiaily the same reasons. The Department is of the opinion that the provisions of S. 377 would place the Government in a position inferior to that now enjoyed by commercial shippers Under the provisions of the Interstate Commerce Act, commercial shipnents are transported under tariff rates filed with the Interstate Commerce Commission. It is extremely important to note, however, that the reasonableness of those published rates may be questioned by commercial shippers at any time following the publication of the rates in tariff form. The only limitation upon the appeal by commercial shippers is that recovery is limited to the 2-year period preceding the filing of the action. S. 377, on the other hand, would require the Government to seek recovery for unreasonable rates within 2 years after acceptan otherwise, those rates would become final and binding with no appeal available to the Government. For example, a commercial shipper may transport goods under published tariff rates for an indefinite period before appealing those |