The subcommittee met, pursuant to notice, at 10 a.m., in room 5110, New Senate Office Building, the Honorable Vance Hartke, presiding. Senator HARTKE. The meeting will come to order. This hearing today will be on S. 1031, which would repeal the Inland Waterways Corporation Act. (The bill follows:) [S. 1031, 88th Cong., 1st sess.] A BILL To repeal the Inland Waterways Corporation Act Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the Inland Waterways Corporation Act (49 U.S.C. 151-157) is hereby repealed. SEC. 2. (a) For liquidation of the affairs of the Inland Waterways Corporation, and for this purpose only, notwithstanding any other provisions of law, there are transferred to the Secretary of Commerce all functions, powers, duties, authority, rights, and immunities vested in, or available or applicable to the Corporation on the day before the date of the enactment of this Act which shall be performed, exercised, and administered by the Secretary of Commerce in the same manner and to the same extent as if the same were performed, exercised, and administered by the Corporation. The Secretary of Commerce shall assume and be subject in his official capacity to all rights and benefits, all liabilities and commitments, whether arising out of contract or otherwise, of the Corporation, but he shall pay into the Treasury, as miscellaneous receipts, all future receipts and all remaining funds of the Corporation transferred to, or received by, him. To assist in his liquidation of the Corporation, the books of account, records, documents, assets, and liabilities of every kind and nature, including but not limited to, all funds, notes (and accrued interest thereon), mortgages, deeds of trust, contracts, commitments, claims, and causes of action of Inland Waterways Corporation are transferred to the Secretary of Commerce for liquidation or assignment. (b) No suit, action, or other proceeding lawfully commenced by or against Inland Waterways Corporation before the date of enactment of this Act shall abate by reason of this Act; but the court may, on motion or supplemental petition filed at any time within twelve months after such dissolution and showing a necessity for the survival of such suit, action, or other proceeding to obtain a settlement of the questions involved, allow the same to be maintained by or against the United States in such court. After the date of enactment of this Act, any suit, action, or other proceeding which, but for this Act, would be commenced by or against the Corporation, shall be commenced by or against the United States in a Federal court of competent jurisdiction. Staff counsel assigned to this hearing: Morris J. Levin. 1 Senator HARTKE. This measure was heard and passed by the House last year, but too late in the session for final action to be taken by the Senate. The Federal Barge Line, which is the only carrier subject to this act, contends that failure to enact this measure would interfere with the carrier's ability to meet obligations to the Government and to shippers. The Interstate Commerce Commission has endorsed this measure and without objection its letter will be included in the record. (The letter follows:) Hon. WARREN G. MAGNUSON, INTERSTATE COMMERCE COMMISSION, Chairman, Committee on Commerce, U.S. Senate, Washington, D.C. DEAR CHAIRMAN MAGNUSON: Your letter of March 8, 1963, addressed to the Chairman of the Commission and requesting comments on a bill, S. 1031, introduced by you (by request), to repeal the Inland Waterways Corporation Act, has been referred to our Committee on Legislation. After consideration by that Committee, I am authorized to submit the following comments in its behalf: S. 1031 would repeal the act of June 3, 1924, (49 U.S.C. 151-157), under which the Inland Waterways Corporation was created to foster the development and use of domestic waterways through Government operation of transportation facilities thereon, and would charge the Secretary of Commerce with the orderly liquidation of the affairs of the Corporation. In that act, the Congress provided, among other things, for the continued functioning of the Corporation until specified facilities and services were completed and made available to the public, and private persons engaged, or were ready and willing to engage, in common carrier service in the areas which it served. In addition, the Congress laid down certain conditions respecting the eventual sale of the Corporation's facilities, one of which required the vendee to provide "common-carrier service in a manner substantially similar to the service rendered by the corporation Accordingly, when the Government withdrew from the barge business in 1953, the contract of sale required the purchaser, Federal Barge Lines, Inc., to continue to provide certain services. Included among these were the transportation of a specified minimum quantity of less-than-bargeload and less-than-carload shipments per year and the making annually, of a specified minimum number of trips between certain named points. The contract provided that the purchaser could modify these requirements after June 1, 1973, with the consent of the Secretary of Commerce who, under the statute, was authorized to govern and direct the Corporation in the exercise of its functions. Finally, it was further provided in the contract that: "Should Congress through legislation grant relief with respect to the present requirement of said law that the purchaser continue its common carrier service in a manner substantially similar to the service rendered by the Corporation, the contract shall be deemed as modified to reflect such change." The terms and conditions of the contract were approved by the Commission, as required by section 5(2) of the Interstate Commerce Act, in Federal Barge Lines, Inc. Purchase, Etc., 285 I.C.C. 439 (Dec. 3, 1953). It is our understanding that the purpose of the proposed repeal is to relieve the Federal Barge Lines from the service requirements of the contract of sale, which are considered by that carrier to be obsolete and burdensome and which action, it believes, will place it in the same position as to service requirements as other competing barge lines. In our opinion the repeal of the Inland Waterways Corporation Act would be in the public interest. At present, the Commission has no authority to permit the Federal Barge Lines to make any changes in its services which would be contrary to the requirements of that act even though such changes may be desirable and otherwise lawful under the applicable provisions of part III of the Interstate Commerce Act. It should be pointed out in this connection, however, that since repeal of the Waterways Corporation Act would not change any of the statutes administered by this Commission, it is our view that the Federal Barge Lines would still have to make appropriate changes in its published tariffs before it could discontinue any of the services now required by statute and the contract of sale and as reflected in the tariffs. Such changes would, of course, be subject to protest, suspension, and investigation. Nevertheless, in order to avoid any uncertainty as to the intended effect of the bill, if enacted, it is our further view that it be made clear in the committee's report that such enactment is not intended to affect the authority of this Commission to require Federal Barge Lines to comply with the tariff filing provisions of part III in effectuating changes in service. We favor the enactment of S. 1031. COMMITTEE ON LEGISLATION, Chairman. RUPERT L. MURPHY. Senator HARTKE. Also without objection I will include in the record the comments of the General Accounting Office which makes no recommendation concerning the merits of the proposal. (The comments of GAO follow :) Hon. WARREN G. MAGNUSON, COMPTROLLER GENERAL OF THE UNITED STATES, Washington, April 4, 1963. Chairman, Committee on Commerce, U.S. Senate. DEAR MR. CHAIRMAN: Your letter dated March 8, 1963, requests our comments on S. 1031. The bill would repeal the Inland Waterways Corporation Act (49 U.S.C. 151157). The Corporation was created pursuant to this act in 1924 to continue the operations of the inland waterways transportation and terminal facilities then operated by the U.S. Army on the Mississippi and tributaries, except the Ohio River, and on the Warrior River. This act declared it to be the policy of the Congress to continue the transportation services until such things as (1) navigable channels, (2) terminal facilities, (3) joint rail-water tariffs are provided and (4) private enterprise is engaged or ready to engage in common carrier services on these rivers. Another provision of this law appearing in section 153 (d), title 49, United States Code, permits the sale of the transportation facilities belonging to the Inland Waterways Corporation when the Secretary of Commerce finds that navigable channels and adequate terminals are available and joint tariffs have been published. This subsection further provides that the purchaser shall give satisfactory assurance and agree as part of the consideration of such sale that the facilities so sold will be continued in the common carrier service in a manner substantially similar to the service rendered by the Corporation and give ample security by bond or otherwise to insure the faithful performance of such agreement. Pursuant to this authority the Secretary of Commerce under contract dated July 24, 1953, sold the transportation facilities and operating rights to the Federal Waterways Corporation in the amount of $9 million. The name of the Federal Waterways Corporation was later changed to the Federal Barge Lines, Inc. Under the contract the purchaser was required to pay the $9 million in installments on or before June 30, 1964. This requirement has been modified by a contract amendment to require full payment by June 30, 1969. Protection to the Government is afforded through the execution of mortgages on the physical assets transferred as security for the performance of the contract and by other protective provisions in the contract. In order to implement the provisions in the law, 49 U.S.C. 153(d), requiring the purchaser to continue the common carrier services in a manner substantially similar to that rendered by the Corporation, the contract defines "common carrier service in a manner substantially similar to the service now rendered by the Corporation" as being generally that service furnished by the Corporation and in particular the making of a minimum number of trips per year between the various ports involved and for the transportation annually of certain minimum tonnage of less than barge load cargo. To secure the performance of this transportation service the contract provides, unless excused, certain penalties, denominated as liquidated damages, for each trip short of the minimum stated in the contract which was omitted or for which service was not made available during the year and for the transportation of less than the minimum tonnage of less than barge load cargo. The obligation to render common carrier service substantially similar to that rendered by the Corporation is mandatory until July 1, 1973, after which the consent of the Secretary of Commerce must be obtained before the discontinuance or modification of common carrier service may be effected. Another provision of the contract would automatically modify the terms of the contract in accordance with any change later enacted in the law, 49 U.S.C. 153 (d), with respect to the obligation for the purchaser to continue its common carrier service in a manner substantially similar to the service rendered by the Corporation. We understand that the bill was introduced on behalf of the Federal Barge Lines, Inc., to permit the modification of the contract as to the common carrier service requirements which are reported to be the cause of unprofitable operations by the barge lines company. It is the position of the Department of Commerce that so long as the provisions in title 49, United States Code, section 153 (d), remain in effect modification of the service obligation in the contract is not possible. Whether the relief sought to be obtained by the enactment of the bill, which would repeal the Inland Waterways Corporation Act and thus relieve the present common carrier service requirements under the contract of sale with the Federal Barge Lines, Inc., is desirable constitutes a question of policy for determination by the Congress. Consequently, we make no recommendation concerning the merits of the measure. Sincerely yours, FRANK H. WEITZEL, Assistant Comptroller General of the United States. Senator HARTKE. Our first witness today will be the distinguished former servant of the U.S. Senate, an outstanding public official now with the Commerce Department, Mr. Frank Barton, Deputy Under Secretary of Commerce for Transportation. STATEMENT OF FRANK L. BARTON, DEPUTY UNDER SECRETARY OF COMMERCE FOR TRANSPORTATION, ACCOMPANIED BY KENNETH F. MCCLURE, ASSISTANT GENERAL COUNSEL, DEPARTMENT OF COMMERCE Mr. BARTON. Thank you, Senator. I am accompanied today by my genial and able friend, Mr. Kenneth F. McClure, who is Assistant General Counsel, Department of Commerce. Senator HARTKE. I want you to know you are more than welcome. Mr. BARTON. Thank you, Senator. I am always glad to be here before the committee. We have a statement in the form of a letter and I would like to place that in the record with your permission. Senator HARTKE. Without objection, the letter will be incorporated into the record. (The letter follows:) GENERAL COUNSEL OF THE DEPARTMENT OF COMMERCE, Hon. WARREN G. MAGNUSON, Washington, D.C., April 22, 1963. DEAR MR. CHAIRMAN: This letter is in reply to your request for the views of the Department of Commerce with respect to S. 1031, a bill to repeal the Inland Waterways Corporation Act. The Inland Waterways Corporation, a Federal corporation in the Department of Commerce, pursuant to the statutory language (49 U.S.C. 151-157) which would be repealed by the enactment of S. 1031, operated until 1953 the Federal Barge Lines, a comprehensive barge common carrier service on the Mississippi and Missouri Rivers, around the gulf, and up the Warrior River in Alabama since this responsibility was assigned to the Secretary of Commerce by Reorganization Plan No. II of 1939. This service, in accordance with the direction of the statute, was developmental in nature, and was inaugurated in an unincorporated form by the Department of War during World War I in an effort to augment other transportation facilities of the Nation in the prosecution of the war. Section 151 through 153 of title 49 of the United States Code, with their emphasis on common carrier service and the establishment of terminal facilities, make clear the developmental aspects of this operation. Section 153 authorized the Secretary of Commerce, upon the finding that described stages in the development of river transportation were achieved, to dispose of the facilities by lease or sale to private persons. These conditions having been accomplished, the facilities were sold in accordance with the statute on the 24th day of July 1953. Your attention is invited to the provisions of section 153 (d) containing the specific requirement that the purchaser of the facilities was to give satisfactory assurance and agree, as part of the consideration for such sale or lease, that the facilities so sold or leased would be continued in the common carrier service in a manner substantially similar to the service rendered by the Corporation, together with ample security by bond or otherwise to insure faithful performance of such an agreement. To carry out this provision, the contract of sale provided standards of performance with penalties in the event of nonperformance. These standards were defined in terms of actual operations by the Federal Barge Lines during a representative period preceding the sale in 1953. There was general agreement that providing a bond as an assurance was not feasible because of the unique and unpredictable nature of the undertaking. Penalty provisions amounting in extreme cases to default and return of the facilities were made a part of the contract of sale to assure performance. This technique was deemed acceptable in light of the alternative "by bond or otherwise" provided by the statute. In defining the service standards required by the contract to be performed by the purchaser, minimum numbers of trips to be made within all segments of the area served by the system were specifically detailed. These were: (a) From the port of New Orleans, La., to the port of St. Louis, Mo., and return (designated as the Lower District), 125 trips per annum in each direction. (b) From the port of St. Louis, Mo., to the ports of St. Paul and Minneapolis, Minn., and including Stillwater, Minn., on the St. Croix River and Port Cargill and Black Dog, Minn., on the Minnesota River, and return (designated as the Upper District), 40 trips per annum in each direction. (c) From the port of St. Louis, Mo., to the port of Chicago, Ill., and return (designated as the Illinois District), 75 trips per annum in each direction. (d) From the port of St. Louis, Mo., to the port of Omaha, Nebr., and return (designated as the Missouri District), 16 trips per annum in each direction. (e) From the port of New Orleans, La., to Port Birmingham, Ala., and return (designated as the Warrior River Division), 18 trips per annum in each direction. (f) From Port Birmingham, Ala., to the city of Ensley, Ala., and return (designated as the Railroad Division), such trips as may be necessary to transport cargoes in reasonable quantities delivered at or destined to Port Birmingham, Ala., and such on-line cargo in reasonable quantities as may be offered for transportation. (g) In the event transportation to Sioux City, Iowa, becomes practical and feasible, the purchaser will extend service to this area to provide such services as are justified in the light of demand therefor and cargo available. The definition of service performed prior to the sale by Federal Barge and imposed by the contract on the purchaser also included “adequate provision for the transportation of such less than barge load and less than carload shipments as can reasonably be anticipated and the active solicitation of these shipments." This service was further defined as "14 percent of the total tonnage per annum, or 375,000 tons per annum, whichever is less, shall be less than barge load cargo." In addition, the definition also included as a requirement of the contract, the maintenance of joint tariffs with rail carriers and motor carriers and an alertness to make reasonable arrangements for interline traffic with other barge, rail, and truck lines. Provision is made in the contracts for excuse of the penalty provisions upon a showing by the purchaser, concurred in by the Secretary or his designee, that the penalties should not be enforced because the deficiencies arose from reasons 97790-63- -2 |