Various proposals for changes in the provisions of section 22 of the Interstate Commerce Act have been presented to the Congress in recent years. Objections heretofore expressed in our reports and testimony on such proposals are applicable in connection with the amendment to section 22 proposed in the current bill, S. 939. We are still of the opinion that the changes now proposed would be detrimental to the carriers and to the United States. The procedures otherwise available under the provisions of the Interstate Commerce Act do not seem to be effectively designed to facilitate the establishment of appropriate rates and charges on a considerable segment of the traffic generated by the United States. Even in normal times, the patterns of Government traffic, the location of governmental installations for the assembly, storage, and consumption of goods and supplies, and the exigencies of the various Government agencies, especially those related to the defense of the United States, appear to concern needs so different from the needs of ordinary users of carrier services as to justify different treatment in the establishment of adequate and proper rate schedules. Section 22 has been a part of the Interstate Commerce Act since its enactment in 1887, and, as now constituted, it affords a time-honored, efficient, and economical means for the establishment of rates and charges for the services performed by the carriers in the transportation of Government personnel and property. When consideration is given to the need for an expedient means of establishing rates for the tremendous volume of Government traffic which moves in time of war or national emergency, we cannot avoid the conclusion that the amendments proposed in S. 939 would be contrary to the public interest. We have consistently objected to provisions similar to those contained in the proposed paragraph (b) of section 22, specifying that the rates, fares, and charges, and rules, regulations, and practices established pursuant to section 22 "shall be conclusively presumed to be just, reasonable, and otherwise lawful, and shall not be subject to attack or reparation after the date of such acceptance or agreement upon any grounds whatsoever except for actual fraud or deceit, or elerical mistake." While we have in the past maintained that we are not unqualifiedly opposed to the imposition of a reasonable condition of finality on section 22 quotations or contracts, our position has been that the creation of a conclusive presumption upon acceptance of, or agreement to, such quotation or contract is too drastic, since it places the Government at a disadvantage as compared with commercial shippers who may attack the lawfulness of rates and charges paid by them, in appropriate proceedings before the Interstate Commerce Commission, generally within 2 years after the date of delivery or tender of delivery of a shipment at destination. If it is intended, in some degree, to equalize the opportunities of Government and commercial shippers in this respect, we believe that legislative proposals such as the present one should be so framed as to postpone the attaching of a conclusive presumption for at least 3 years after the date of delivery of a shipment in war or emergency times. It has also been our position that elimination of the proposal for authorizing cancelation or termination, "upon not less than 90 days' written notice," of rates, fares, etc., stipulated in quotations or contracts, as set forth in the proposed section 22 (b), would contribute toward maintaining a desirable equality between Government and commercial shippers in their relations with the carriers. Common carriers subject to the Interstate Commerce Act are required to establish rates, fares, and charges, etc., that are just and reasonable and that otherwise conform to all of the requirements of the act. All such rates, fares, and charges applicable on traffic generally, must be published in tariffs and filed with the Interstate Commerce Commission, and no carrier may charge or demand or collect or receive any greater, less, or different compensation than that provided in its published and filed tariff. Shippers or users of the carrier services subject to such provisions, however, have the right to apply to the Interstate Commerce Commission to determine whether the tariff charges are just and reasonable and otherwise lawful, and the Commission, if it finds that the charges paid are excessive, may determine the lawful charges for the services in question, and may award reparation for services performed by carriers subject to parts I and III of the act. The courts have ruled that the Interstate Commerce Commission has exclusive jurisdiction to determine the lawfulness of an applicable tariff rate, and over the years the Commission has formulated a body of principles observed in the disposition of cases involving the lawfulness of rates fares, and charges, etc. Omestion arises, due to the finality sought to be accorded section 22 arrange ments, whether the power of making determinations as to the lawfulness of 91714-57-2 rates and charges would be improperly transferred to, or exercised by, the carriers and the identified administrative officials, whose actions relative to the negotiated rates would not be subject to the inquisitorial powers of the Interstate Commerce Commission. Without recourse to the Interstate Commerce Commission to determine the lawfulness of charges paid under rates negotiated and established pursuant to the proposed amendments to section 22, the United States would be irrevocably bound to pay the charges, even though ordinary shippers would be entitled to seek recovery of amounts exceeding the lawful charges collected by carriers pursuant to tariff rates. Under the circumstances, we are of the view that the enactment of this proposal would not be in the public interest, and we recommend that the bill not be favorably considered by your committee. Sincerely yours, JOSEPH CAMPBELL, Comptroller General of the United States. MARCH 8, 1957. Hon. WARREN G. MAGNUSON, Chairman, Committee on Interstate and Foreign Commerce, United States Senate, Washington 25, D. C. DEAR CHAIRMAN MAGNUSON: Your letter of January 14, 1957, requesting comments on a bill, S. 377, introduced by Senator Bricker, to establish the finality of contracts between the Government and common carriers of passengers and freight subject to the Interstate Commerce Act, has been referred to our Committee on Legislation. After consideration by that Committee, I am authorized to submit the following comments: S. 377 relates to the same subject matter as part (b) of Legislative Recommendation No. 3 appearing in the Commission's 70th Annual Report to Congress. Recommendation No. 3 reads as follows: "(a) We recommend that section 22 be amended so as to make the provisions thereof permitting the performance of transportation services for Federal, State, and municipal governments free or at reduced rates applicable only during the time of war or national emergency. "(b) In any event we recommend that section 22 be amended to enable the appropriate agencies of governments and the carriers to negotiate rates on a firm and unassailable basis." A draft bill to give effect to this recommendation, together with a statement of justification therefor, was submitted to you for your consideration and introduction on January 15, 1957, and was introduced by you as S. 939. Section 22 of the act, which S. 377 and the Commission's draft bill (S. 939) would amend, now permits, among other things, "the carriage, storage, or handling of property free or at reduced rates for the United States, State, or municipal governments" and "the transportation of persons for the United States Government free or at reduced rates." These provisions are made applicable to common carriers by motor vehicle by section 217 (b), to common carriers by water by section 306 (c), and to freight forwarders, in the case of transportation of property, by section 405 (c) of the act. Insofar as it applies to Government traffic, section 22 has been in the act substantially as it now stands since the enactment of the original act to regulate commerce in 1887. At that time the Government was a comparatively small shipper and small user of passenger facilities, whereas today it is the largest single purchaser of transportation services, and its traffic moves largely at reduced rates under section 22. At one time section 22 rates or arrangements were regarded as binding on both the carriers and the Government, but in recent years the Government in the so-called Government reparation cases took the position that its utilization of charges so established was not a bar to its later undertaking to obtain still lower charges as a result of orders of the Commission entered after the filing of complaints by the Government. In S. 377 it is proposed that after a section 22 quotation or contract has been accepted or agreed to by the Secretary of Defense, the Secretary of Agriculture, the Administrator of the General Services Administration, or by any official or employee of the United States to whom they may delegate such authority, the rate so established shall 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 whatsoever except for actual fraud, deceit, or clerical mistake," such rates, fares, charges, etc., to be subject to cancellation or termination upon not less than 90 days' written notice by any of the parties. S. 377 would also prevent consideration of the reduced rates as evidence of unreasonableness of other rates, and provides that its enactment shall have no effect on transactions other than those carried out under its provisions. Under the provisions of section 16 (3) of part I and section 308 (f) of part III of the act, the filing of complaints attacking the reasonableness of rates and seeking reparation is already subject to a 2-year period of limitation. However, there are no comparable provisions of this nature in parts II and IV, which are applicable to motor carriers and freight forwarders, respectively, nor does the Commission have authority to make awards of reparation against carriers subject thereto. In this connection, the Commission has consistently taken the position that the Government is subject to the same 2-year period of limitation prescribed in section 16 (3) as any other shipper United States v. Director General, 80 I. C. C. 143 (1923); United States v. Southern Ry. Co,. 286 I. C. C. 203 (1952). In recommending that section 22 be amended so as to enable the appropriate agencies of governments and the carriers to negotiate rates on a firm and unassailible basis, the Commission intended that rates established pursuant thereto should be made binding as of the date of acceptance or agreement, except for fraud or clear error, and section (b) of the Commission's draft bill (S. 939) so provides. The Commission is of the view that the carriers should not be subjected to a period of uncertainty as to their liability under section 22 arrangements for reduced rates on Government traffic. Our draft bill (S. 939) also differs from S. 377 in that it would apply to State and municipal governments as well as to the Federal Government, and would include specifically the storage or handling of property as well as the carriage thereof. The provisions of section 22 are permissive, not mandatory, and section 22 rates are always lower than the existing published tariff rates available to the general public. The carriers are not, therefore, compelled to offer reduced rates to governments, and the governments, if they so choose, may elect to use the carriers' published tariff rates. Should the Federal Government, or any State or municipal government, be dissatisfied with the published tariff rates, they may seek a determination by the Commission as to the reasonableness thereof, the same as any other shipper. By having such a choice, the various governments are, from the outset, in a better position than the commercial shipper to whom section 22 does not apply. If they elect to contract for reduced rates under section 22 they should be bound by them. Superfically, it might appear that any inability on the part of the governments to seek a review of section 22 rates would deprive them of a right enjoyed by shippers generally, and that they would thereby be placed in a position inferior to that of other shippers. However, this would not be the case since, in addition to having the benefit of reduced rates under section 22 which are not available to the general public, they would still have the same right as any other shipper to complain to the Commission of the unreasonableness of a published tariff rate. It does not appear inequitable, therefore, when the Federal Government, or a State or municipal government, accepts a section 22 rate lower than the published tariff rate applicable to other shippers, that it be precluded from seeking review of such rate by the Commission. While we are in accord with the general purposes of S. 377, we believe, for the reasons hereinabove stated, that enactment of part (b) of S. 939 would be more desirable. We also urge enactment of section (a) of S. 939 which would give effect to part (a) of the Commission's legislative recommendation No. 3, to limit the application of section 22 with respect to reduced rates on Government traffic to time of war or national emergency. The movement of the large amount of Government traffic at reduced rates under section 22 has a strong tendency to increase the cost of regulated transportation services to commercial users, who, when their rates become too high, resort to private carriage, all to the detriment of the common carriers upon which the average and small shippers depend for transportation services. Respectfully submitted, OWEN CLARKE, Chairman, OWEN CLARKE, ROBERT W. MINOR, Committee on Legislation. Hon. WARREN G. MAGNUSON, INTERSTATE COMMERCE COMMISSION, February 6, 1957. Chairman, Committee on Interstate and Foreign Commerce, DEAR CHAIRMAN MAGNUSON: Your letter of January 14, 1957, addressed to the Chairman of the Commission and requesting comments on a bill, S. 378, introduced by Senator Bricker, to amend the Interstate Commerce Act in order to provide civil liability for violations of such act by common carriers by motor vehicle and freight forwarders, has been given consideration by the Commission, and I am authorized to submit the following comments: S. 378 would amend sections 204a and 406a of the Interstate Commerce Act, which relate to actions at law for the recovery of charges by or against common carriers by motor vehicle and freight forwarders, so as to make such carriers liable for the payment of damages to persons injured by them as a result of any violation of parts II and IV of the act, respectively, together with a reasonable attorney's fee, to be fixed by the court, in every case of recovery. The bill would also give such injured parties the choice of pursuing their remedy either before the Commission or in any district court of the United States of competent jurisdiction. At present this liability exists, and such remedy is provided, only in respect of violations by carriers subject to parts I and III of the act. Persons injured by carriers subject to, and in violation of, parts II and IV must seek redress through the courts, and where shippers seek reparation awards based on the unreasonableness of established rates, they must first, or at some time during the court proceeding, seek a determination by the Commission on the question of the reasonableness thereof, since, under the act, only the Commission has the power to make such determination. S. 378 would, by authorizing the Commission to make reparation awards in such cases, provide shippers with the same relatively simple and less costly remedy now available to them under sections 8, 9, and 16 of the part I and section 308 of part III of the act. When part II was enacted as the "Motor Carrier Act, 1935," it was believed that conditions in motor transportation were not stabilized and that the subjection of motor carriers to liability for damages should be deferred until the difficult initial problems encountered in the early stages of motor-carrier regulation were more nearly resolved. Over 20 years have elapsed since the enactment of part II, however, and it now seems appropriate that such liability should be imposed in view of the tremendous growth of the motor carrier industry and the substantial amount of the Nation's traffic now moved by such carriers. The provisions of the bill are substantially the same as the provisions of parts I and III of the act imposing such liability on carriers respectively subject to those parts. While experience under part IV has not shown an important need for a provision authorizing awards of reparation by the Commission against freight forwarders, it seems desirable and logical to have all four parts of the act uniform in this respect, and the amendment to part IV proposed by the bill therefore seems opportune. Although we have no way of determining with any degree of accuracy the extent to which the Commission's workload would be increased by reason of the proposed provisions, any substantial increase therein, particularly in the number of contested reparation proceedings, would require additions to our staff of examiners. We recommend enactment of the amendments proposed in S. 378. OWEN CLARKE, Chairman. 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 31, 1957, requested a report from General Services Administration concerning S. 939, a bill to amend section 22 of the Interstate Commerce Act, as amended. The bill was proposed by the Interstate Commerce Commission as its legislative recommendation No. 3 (70th annual report, p. 160). The bill is identical with H. R. 3233, now pending before the House. Section 22 of the Interstate Commerce Act permits common carriers subject to that act to transport property and passengers for the United States, State, or municipal governments, "free or at reduced rates." S. 939 would limit the provision so that it would apply only "during time of war or national emergency as declared by Congress or the President." Further, the bill would impose so-called finality provisions to such section 22 rates when employed during such national emergencies. The finality provision would preclude review of such rates, except for fraud or deceit, when they have been accepted by designated Government representatives, including the Administrator of General Service. GSA's interest in this legislation stems from its statutory duties with respect to transportation and traffic management services performed for civilian executive agencies under section 231 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. At the present time, considerable Government traffic moves on so-called section 22 rates and substantial savings or reduced transportation costs have resulted to the Government due to the fact that the higher published rates did not apply. During fiscal year 1956, GSA's savings in transportation costs exceeded $9 million and a large portion of this resulted from reduced rates under section 22 of the act. If the use of section 22 as a means of rate adjustment is withdrawn and the published tariff rates become applicable, these reductions in transportation costs could not be realized. It is true, of course, that in some instances carriers may publish reductions in rates in the tariffs or GSA may be able to obtain reductions through prolonged litigation before the Interstate Commerce Commission, but it is anticipated that only a small portion of the savings realized in the past could be accomplished. Further, such reductions might be only in the form of an award of damages by the Interstate Commerce Commission long after the expenditure of appropriated funds at the higher rates. Accordingly, pursuant to section 11 of the Civil Service Act, as amended (70 Stat. 652), it is respectfully submitted that this bill involves estimated annual expenditures of appropriated funds in excess of $1 million. In addition, a substantial increase in personnel would be required to handle the litigation before the Interstate Commerce Commission which would be an inevitable consequence. It is not possible, however, to supply estimates as to man-years of employment or other details of expenditures as called for by that act. This is due to the fact that the present system has been in effect since 1887 and only through extensive physical or record review surveys could reasonable estimates be made. With respect to the finality provisions contained in S. 939, they are substantially identical with those contained in S. 906, 83d Congress, which was disapproved by the President September 2, 1954, following its enactment. In connection with S. 543 of the 84th Congress, which was identical with S. 906 of the 83d Congress, GSA transmitted the draft of a bill which would give effect to a proposal to amend section 16 (3) of the Interstate Commerce Aet which provides for periods of limitation on the review of rates. A copy of that draft is attached hereto as appendix 1. There is also attached hereto as appendix 2 a statement giving GSA's views, as a shipper, on the reasons advanced by the Interstate Commerce Commission in recommending this legislation. For the foregoing reasons, primarily for the reasons stated in the President's memorandum of disapproval of September 2, 1954, GSA recommends against the enactment of S. 939. 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." |