TO REDISTRIBUTE THE FUNCTIONS OF THE INTERSTATE

COMMERCE COMMISSION

TUESDAY, JANUARY 24, 1939

HOUSE OF REPRESENTATIVES,

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C.

The committee met at 10 a. m., in the hearing room, New House Office Building, Hon. Clarence F. Lea (chairman) presiding.

The CHAIRMAN. The committee will please come to order. The committee has met this morning to begin hearings on H. R. 2531 dealing with the transportation problems of the country. (The bill referred to is as follows:)

[H. R. 2531, 76th Cong., 1st sess.]

A BILL To redistribute the functions of the Interstate Commerce Commission with a view to more efficient exercise of rate making authority; to extend the jurisdiction of the Commission in relation to the fixing of minimum rates, and rates for inland water transportation; to create a Railroad Reorganization Court; and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "Transportation Act of 1939."

TITLE I-AMENDMENTS TO INTERSTATE COMMERCE ACT PART I-INCREASE IN MEMBERSHIP OF INTERSTATE COMMERCE COMMISSIONCREATION OF RATE, FINANCE, AND APPEAL DIVISIONS

SEC. 1. Section 24 of the Interstate Commerce Act, as amended (U. S. C., 1934 ed., title 49, sec. 11; Supp. III, title 49, sec. 11), is amended to read as follows: "SEC. 24. The Commission is hereby enlarged so as to consist of nineteen members, with terms of seven years, and each shall receive $12,000 compensation annually. The qualifications of the members and the manner of payment of their salaries shall be as already provided by law. Such enlargement of the Commission shall be accomplished through appointment by the President, by and with the advice and consent of the Senate, of eight additional Interstate Commerce Commissioners, for terms expiring as follows: Two on December 31, 1940; two on December 31, 1941; one on December 31, 1942; one on December 31, 1943; one on December 31, 1944; one on December 31, 1945. The terms of the present Commissioners, or of any successor appointed to fill a vacancy caused by the death or resignation of any of the present Commissioners, shall expire as heretofore provided by law. Their successors and the successor of the additional Commissioner herein provided for shall be appointed for the full term of seven years, except that any person appointed to fill a vacancy shall be appointed only for the unexpired term of the Commissioner whom he shall succeed. Not more than ten Commissioners shall be appointed from the same political party. Upon the expiration of his term of office a Commissioner shall continue to serve until his successor is appointed and shall have qualified. Hereafter the salary of the secretary of the Commission shall be $10,000 a year."

SEC. 2. Paragraph (1) of section 17 of the Interstate Commerce Act, as amended, is amended by inserting after “(1)” the letter "(a)” and by inserting after such paragraph the following new subparagraph:

"(b) The Commission shall be divided into three divisions, to be designated, respectively, the Appeal Division, the Rate Division, and the Finance Division, and shall consist, respectively, of five, nine, and five members to be designated from the Commissioners by the President. The President shall designate annually one of the members of the Appeal Division as chairman of that division, and the member so designated shall be the chairman of the entire Commission. Each of the other divisions shall select its own chairman. Each such division, respectively, shall have jurisdiction over the matters specified in subparagraphs (c), (d), and (e) and shall power and authority over such matters and shall perform the work or functions of the Commission in respect thereof arising under this Act or under any Act amendatory thereof, or supplemental thereto, or under any amendment which may be made to any of said Acts, or under any other Act or joint resolution which has been or may hereafter be enacted, or in respect of any matter which has been or may be referred to the Commission by Congress or by either branch thereof. Each such division shall have power and authority by a majority thereof to hear and determine, order, certify, report, or otherwise act as to any of said work or functions and shall have all the jurisdiction and powers now or then conferred by law upon the Commission. Any order, decision, or report made or other action taken by either such division in respect of any matters over which it has jurisdiction shall have the same force and effect, and may be made, evidenced, and enforced in the same manner as if made or taken by the entire Commission, and the entire Commission shall have no jurisdiction to take any further action in such matter. The secretary and seal of the Commission shall be the secretary and seal of each such division.

"(c) The Appeal Division shall have jurisdiction to hear and determine applications for reconsideration, reargument, or rehearing from any decision, order, or requirement made or issued by the Rate Division (or any division thereof). If in the judgment of the Appeal Division the application should be granted, in whole or in part, it shall enter an order accordingly and proceed to a final determination of the matter on the merits, upon the record made in the proceeding, either with or without a further hearing as it may decide, otherwise it shall enter an order denying the application.

"(d) The Rate Division shall have the jurisdiction vested in the entire Commission by this Act, and Acts amendatory thereof, or supplemental thereto, in respect of carriers subject to such Acts, in the following matters: (1) Classifications, practices, rates, fares, and charges for services, including publication thereof and the divisions of rates, fares, and charges; (2) the establishment of through routes and joint rates, fares, and charges; (3) the providing and rendering of service except where investments for new facilities are involved; (4) accounts, records, and reports; and (5) valuation of properties.

"(e) The Finance Division shall have the jurisdiction now vested in the Commission by this Act, and Acts amendatory thereof or supplemental thereto, in respect of carriers subject to such Acts, in so far as such jurisdiction is not vested in the Rate Division or in the entire Commission as provided in subparagraph (f) hereof.

"(f) The entire Commission shall have jurisdiction in respect of the Commission's employees, offices, expenses, and annual or other reports, to Congress. "(g) An application for rehearing or reconsideration of a decision, order, or requirement made or issued by the Rate Division or any division thereof shall be made direct to the Appeal Division.

"(h) The rights, duties, powers, privileges, or immunities imposed upon or granted to the Commission shall be considered to have been imposed upon or granted to the Appeal Divisiont, he Rate Division, or the Finance Division, as the case may be, for purposes of the exercise of the jurisdiction granted to such division under this section."

PART II-AMENDMENTS TO SECTION 5

SEC. 11. Section 5 of the Interstate Commerce Act, as amended, is hereby further amended by changing paragraph (1) to read as follows:

"(1) That, except upon specific approval by order of the Commission as in this section provided, and except as provided in paragraph (16) of section 1 of this part, it shall be unlawful for any common carrier subject to this part to enter into any contract, agreement, or combination with any other common carrier or carriers for the pooling or division of traffic of different and competing carriers subject to this part, or to divide between them the aggregate or net proceeds of the earnings of such carriers, or any portion thereof; and in any case of an agreement for the pooling or division of traffic or the division of earnings as aforesaid

each day of its continuance shall be a separate offense: Provided, That whenever the Commission is of opinion, after hearing upon application of any carrier or carriers engaged in the transportation of passengers or property subject to this part, or upon its own initiative, that the pooling or division of their traffic or earnings, to the extent indicated by the Commission, will be in the interest of better service to the public, or economy in operation, the Commission shall have authority by order to approve and authorize, or require, such pooling or division of traffic or earnings, under such rules and regulations, and for such consideration as between such carriers and upon such terms and conditions, as shall be found by the Commission to be just and reasonable in the premises.'

SEC. 12. Such section 5 is further amended by striking out paragraphs (2) and 3, by renumbering the remainding paragraphs accordingly, and by changing the renumbered paragraph (2) (b) after the first sentence to read as follows: "If after such hearing the Commission finds that, subject to such terms and conditions and such modifications as it shall find to be just and reasonable, the proposed consolidation, merger, purchase, lease, operating contract, or acquisition of control will promote the public interest, it may enter an order approving and authorizing such consolidation, merger, purchase, lease, operating contract, or acquisition of control, upon the terms and conditions and with the modifications so found to be just and reasonable. In determining the public interest, the Commission shall give due consideration to the promotion of the efficiency and economy of the carriers' service, the affording of better and cheaper service to the public, the securing of a simplified and more effective regulation of the carriers, the ultimate establishment of a number of strong and efficient systems, the due protection of the interests of the stockholders and creditors, the maintenance of such completion among the carriers as is necessary and reasonable in the protection of the public interest; and to all other relevant matters."

PART III.-REGULATION OF RATES AND OTHER MATTERS IN RELATION TO CERTAIN WATER CARRIERS

SEC. 21. Section 1 (1) (a) of the Interstate Commerce Act, as amended, is amended to read as follows:

"SEC. 1. (1) That the provisions of this part shall apply to common carriers engaged in

"(a) The transportation of passengers or property wholly by railroad, or partly by railroad and party by water when both are used under a common control, management, or arrangement for a continuous carriage or shipment, but these limitations conditioned upon control, management, or arrangement shall not apply when the carrier by water is a carrier made subject to this part by paragraph (1) (c) of this section; or”.

SEC. 22. Section 1 (1) of such Act, as amended, is amended by inserting after subparagraph (b) a new subparagraph (c), as follows:

"(c) The transportation of passengers or property by water upon the inland, canal, or coastwise waterways of the United States, but shall not include common carriers engaged in the transportation of passengers or property upon the high seas, the Great Lakes, or in intercoastal commerce by way of the Panama Canal;".

SEC. 23. Section 1 (1) of such Act, as amended, is amended by adding at the end thereof a new sentence as follows:

"If the Commission finds, from time to time, after investigation with or without a hearing, that any carrier or class of carriers included in subparagraph (c) is or would be unduly burdened by the enforcement of the requirements of this part, or of any provision of this part, or of any rule, regulation, condition, or limitation prescribed thereunder, by reason of the local nature or limited extent of, or unusual circumstances affecting, the operations of such carrier or class of carriers, and further finds that as to such carrier or class of carriers, the enforcement of such requirements, or such provision, rule, regulation, condition, or limitation, is not required in the public interest, such carrier or class of carriers shall be exempt from such requirements, provision, rule, regulation, condition, or limitation, to the extent designated by the Commission. In exercising its jurisdiction over carriers included by this subparagraph the Commission shall not apply to any carrier owned or controlled by the United States Government any different policy, or rule of rate making, or any different method of determining costs of service, or value of property, than it applies or would apply in the case of carriers not so owned or controlled."

SEC. 24. The fourth sentence of section 1 (3) of such Act, as amended, is amended to read as follows:

"The term 'transportation' as used in this part shall include locomotives, cars, and other vehicles, boats, barges, tugs, and other vessels, and all instrumentalities and facilities of shipment or carriage (including switches, spurs, tracks, float bridges, docks, piers, wharves, warehouses, terminals and terminal facilities of every kind used by or in connection with any common carrier by water) irrespective of ownership or of any contract, express or implied, for the use thereof, and all services in connection with the receipt, delivery, elevation, and transfer in transit, ventilation, refrigeration or icing, storage, and handling of property transported."

SEC. 25. Section 1 (16) of such Act, as mended, is amended by inserting the letter "(a)" after "(16)" and by inserting thereafter a new subpragraph “(b)” reading as follows:

"(b) Whenever the Commission is of opinion that any carrier by water subject to this part is for any reason unable to transport the traffic offered it so as properly to serve the public, it may, upon the same procedure as provided in paragraph (15), make such just and reasonable directions with respect to the handling, routing, and movement of the traffic of such carrier and its distribution over other lines of carriers by water, as in the opinion of the Commission will best promote the service in the interest of the public and the commerce of the people, and upon such terms as between the carriers as they may agree upon, or, in the event of their disagreement, as the Commission may after subsequent hearing find to be just and reasonable."

SEC. 26. Section 1 (17) of such Act, as amended, is amended by adding to the second sentence thereof after the words "by railroad" the words "or by water." SEC. 27. Section 1 of such Act, as amended, is amended by inserting thereafter six new paragraphs numbered (23) to (28), inclusive, reading as follows:

"(23) No common carrier by water made subject to the provisions of this part by paragraph (1) (c) of this section shall engage in any interstate or foreign commerce subject to the provisions of this part unless there is in force with respect to such carrier a certificate of public convenience and necessity issued by the Commission authorizing such carrier to engage in such transportation: Provided, That if any such carrier is engaged in such transportation on the date this paragraph takes effect such carrier may continue so to engage between the same terminal and intermediate points for one hundred and twenty days after said date and thereafter until such time as the Commission shall pass upon an application for a certificate for such transportation if such application is made to the Commission within said one hundred and twenty days.

"(24) Application for a certificate under paragraph (23) shall be made in writing to the Commission and shall be verified, shall be in such form and contain such information, and shall be accompanied by such proof of service upon interested persons, as the Commission shall by regulation require.

"(25) Upon the filing of any such application, the Commission shall give due notice thereof to the public by posting a notice of such application in the office of the secretary of the Commission and to such interested persons as the Commission by regulation determine. Any interested person may file with the Commission a protest to, or a memorandum or brief in opposition to or in support of, the issuance of a certificate. The Commission may hold hearings, if it sees fit, to enable it to determine its decision upon the application and shall dispose of the application as speedily as possible.

"(26) (a) The Commission shall issue a certificate described in paragraph (23) authorizing the whole or any part of the transportation covered by the application, if it finds that the applicant is fit, willing, and able to perform such transportation properly, and to conform to the provisions of this part applicable thereto, and the rules, regulations, and requirements of the Commission thereunder, and that such transportation to the extent to be authorized by the certificate is required by the public convenience and necessity, otherwise such application shall be denied.

"(b) If any applicant who makes application for a certificate within one hundred and twenty days after the date paragraph (23) of this section takes effect shall show that, from January 1, 1939, until the effective date of paragraph (23), it, or its predecessor in interest, as a common carrier by water over the route or routes for which application is made and has so operated since that time, or if engaged in furnishing seasonal service only, was in operation on January 1, 1939, during the season ordinarily covered by its operation, except in either instance as to interruptions of service over which the applicant, or its predecessor in interest, had no control, the Commission, upon proof of such fact only, shall issue a certi

ficate authorizing such applicant to engage in transportation by water subject to the provisions of this part between the terminal and intermediate points between which it, or its predecessor in interest, so operated between January 1, 1939, and the effective date of said paragraph (23).

"(c) No certificate issued to a carrier by water under this part shall confer any proprietary or property rights in the use of the waterways.

"(27) (a) Each certificate issued under paragraph (26) of this section shall specify the route or routes over which, and the terminal points and intermediate points, if any, between which, the carrier by water is authorized to engage in transportation; and there shall be attached to the exercise of the privileges granted by the certificate, or amendment thereto, such reasonable terms, conditions, and limitations as the public convenience and necessity may require from time to time, including terms, conditions, and limitations as to the extension of the route or routes of the carrier, but no terms, conditions, or limitations shall restrict the right of the carrier to add to its equipment and facilities on the line, route, or routes, or between the termini specified in the certificate, as development of the business and the demands of the public may require.

"(b) No carrier by water made subject to the provisions of this part by paragraph 1 (c) of this section shall undertake the extension of its route or routes, or shall acquire or operate any line or route, or extension thereof, or shall engage in transportation under this part over or by means of such additional or extended line, route, or routes unless and until there shall first have been obtained from the Commission a certificate, or a provision in a certificate issued to such carrier, that the public convenience and necessity require or will require the extension, or operation, or extension and operation, of such additional or extended line, route, or routes. Such certificate shall be issued upon the same procedure as provided in paragraphs (24) to (27), both inclusive, of this section.

"(e) A carrier by water made subject to the provisions of this part by paragraph 1 (c) of this section operating under a certificate may occasionally deviate from the route or routes over which it is authorized to operate under the certificate, under such general or special rules and regulations as the Commission may prescribe.

"(28) Certificates of public convenience and necessity issued to common carriers by water under the provisions of this section shall be effective from the date specified therein, and shall remain in effect until suspended or terminated as provided in this section. Any such certificate may, upon application of the holder thereof, in the discretion of the Commission, be amended or revoked, in whole or in part, or may upon complaint, or on the Commission's own initiative, after notice and hearing, be suspended, changed, or revoked, in whole or in part, for willful failure to comply with any provision of this part, or with any lawful order, rule, or regulation of the Commission promulgated thereunder, or with any term, condition, or limitation of such certificate. No such certificate shall be revoked fexcept upon application of the holder) unless the holder thereof willfully fails to comply, within a reasonable time, not less than thirty days, to be fixed by the Commission, with an order of the Commission commanding obedience to the provision of this part, or to the rule or regulation of the Commission thereunder, or to the term, condition, or limitation of such certificate found by the Commission to have been violated by such holder. The right to engage in transportation in interstate or foreign commerce by virtue of any such certificate, or of any application for such certificate filed pursuant to the provisions of this section, may be suspended by the Commission upon reasonable notice of not less than fifteen days to the carrier, but without hearing or other proceeding, for failure to comply, and until compliance, with the provisions of section 6 (1) of this part or with any lawful order, rule, or regulation of the Commission with respect to such provisions."

SEC. 28. The first sentence of section 3 (2) of such Act, as amended, is amended by adding immediately after the words "by railroad" the words "or by water". SEC. 29. Section 4 of such Act, as amended, is amended by inserting thereafter a new paragraph numbered (3), reading as follows:

"(3) Whenever a carrier by water made subject to the provisions of this part by paragraph (1) (c) of this section shall in competition with a railroad route or routes reduce the rates on the carriage of any species of freight to or from competitive points, it shall not be permitted to increase such rates unless after hearing by the Commission it shall be found that such proposed increase rests upon changed conditions other than the elimination of railroad competition."