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was that they would protest rates which the best information available showed were in violation of the Interstate Commerce Act.

I trust that the foregoing explanation will prove helpful.
Yours truly,

HOWARD FREAS,

Acting Chairman.

Senator HARTKE. A carrier files a rate increase. The ICC then decides whether it will investigate that filing. Then if it decides it will investigate, whether it will suspend the rate increase during the period of investigation.

What are the standards in determining whether suspension will be allowed?

Commissioner WALRATH. In the first instance, when it is before the Board of Suspension, the burden of showing probable unlawfulness, either that it is noncompensatory or destructively competitive or unduly preferential or prejudicial, any one of those factors or combination can be made the basis of a protest.

The burden of showing that initially is on the protestant. That is at the initial stage.

The Board of Suspension in turn has access to our cost analysis section and if costs are at issue they verify the costs at that level.

In most recent cases, in cases of reductions, the real issue has been the charge of noncompensativeness. In some instances destructive competition. That is, too low, and therefore depriving another carrier of the right to share in this.

Now, the Suspension Board acts more or less as a grand jury might. It is not an indictment if they investigate but not suspend; it is in the sense an indictment if they suspend. They find that it is probably unlawful.

If the justification that the carriers put in is confirmed by our cost section as being accurate, that is considered and comparison of this with other rates, for example, moving the same type of traffic either by a different mode or by the same mode, that is also a consideration. If it is going rate and they are simply trying to meet it that is quite an argument in its favor.

Most of our cases currently are reductions which would be of benefit to shippers and consumers.

Now, whatever the Board does is subject to appeal to Division 2 and in the normal run of the cases Division 2 acts in an appellate capacity either to suspend where the Board didn't or to not suspend-to vacate the suspension if the Board had suspended. We have the same criteria at that point.

Now, if we (or the Board) suspend or investigate prior to the effective date of the tariff, then the burden of proving the validity of those rates against these attacks is upon the respondent or the proponent and that, of course, is when we make a formal record either by modified procedure or a combination of that

Senator HARTKE. Suppose a carrier files and a suspension is not required by ICC, so during the period of investigation the increased rate is in effect. Suppose also the shipper who is protesting the rate prevails. ICC determines the rate filed was unlawful.

Now, suppose this investigation took say several months or years to complete. After ICC found the rate unlawful the carrier files a new

rate which includes the one found to be unlawful plus a higher one. Can you tell me how the shipper won such a case?

Commissioner WALRATH. Well, it could happen.

Senator HARTKE. How is the consumer protected in such a case? Commissioner WALRATH. He again has the same right of protest and he could include the very factors that you have included in your question.

I say it not only could happen, it might even be justified. On the other hand it might be completely unjustified. It would have to be based on the facts of any given case.

We haven't included the element of what happened to his net revenues and his expenses in the period intervening not in question. The shipper could be protected by protesting. It would again have to be published on the statutory notice.

Senator HARTKE. If you order a refund

Commissioner WALRATH. We have no power to in motor carrier cases in part 2. In part 1, with rail rates, we do have the legal provision-I don't recall the section but it is very clear-that we can require in rail cases that they refund to the extent that we don't ultimately approve their proposal, even if we let it go in effect, or if it runs beyond the suspension period. The shipper is protected throughout if we impose that condition. But in the motor carrier field we don't have that legal power. It is not part of part 2.

Senator HARTKE. During the suspension period, though, the rates are still charged, are they not?

Commissioner WALRATH. During the suspension period the rates that were in effect before the increases were proposed are the only rates that are lawful.

I hope I made clear that if the proposed increase is suspended then the rates in effect before the suspension continue.

HEARING EXAMINERS

Senator HARTKE. On hearing examiners, do you ever have any complaints about any of them not conducting themselves properly? Commissioner WALRATH. We have had very rarely, considering we have more than a hundred in the field.

Senator HARTKE. Do you rotate them?

Commissioner WALRATH. They are rotated-in fact, we are functionally complete now. They are all in the Bureau of Proceedings, and they are rotated to the extent that they have capability in an area. The theory is to rotate them and broaden their experience. That is why they were put together in that group.

Senator HARTKE. Here is another area in which I would hope-I don't speak specifically here of the ICC but generally speaking I would hope the Commission would keep themselves in a position of watching this situation because a hearing examiner can be really fair and yet be oppressive.

Commissioner WALRATH. That is true. We have retained specialization only to this extent: That we have a chief hearing examiner in the Bureau of Proceedings who supervises the whole pool of examiners.

Then we have associate chief hearing examiners who are specialists in rates and practices, in finance and operating rights.

It is their responsibility to see that those that are hearing their particular cases have the capability in the rotation system of hearing the various types of cases.

Senator HARTKE. I would hope the Commission would keep its own prerogative quite free so they could take a look. There is always this tendency and possibility that certain people become teachers pets inside the operation and

Commissioner WALRATH. I agree with you in principle. I think we have been very fortunate in that not happening at ICC-perhaps because we have such a large number of them and so many cases to be heard.

HOUSEHOLD GOODS

Senator HARTKE. All right. Section on household goods movers. Have the household goods carriers been complying with the existing regulations, in your opinion, generally speaking?

Commissioner WALRATH. Senator, I believe that perhaps the chairman of Division 1 might better answer. Are you talking about rates— if so, I will answer?

Senator HARTKE. Household goods movers. Generally, whether notifications and complaints have been handled properly. We have received some complaints here in the committee.

Commissioner WALRATH. I think perhaps the chairman or othersSenator HARTKE. I am just addressing this to the Commission.

Mrs. BROWN. Mr. Chairman, in this field the rules and regulations have been in effect since January 1, 1967, and those were new, all of them, as a result of a rulemaking proceeding.

The Commission, after 1 year, actually sent, not investigators, but we sent checks into our field operation to be concerned with whether or not the implementation of these rules was being carried out. In other words, the first year give them an opportunity to get underway. We carried on a series of those and we found some violations. And we have worked on violations in regard to it. Also during this 2-year period we have undertaken to, shall we say, tighten up the rules and regulations or to make them more workable in areas where we thought they turned out to be weak.

And just very recently we have instituted two rulemaking proceedings in the area. But we have kept close track on it.

Senator HARTKE. I think in view of the fact that we have discussed this rulemaking procedure in connection with the discussion on consumers that we will move on.

CARRIER CONSOLIDATIONS

Section on carrier consolidations. Who do I talk to?
Commissioner WALRATH. Commissioner Tuggle.

Senator HARTKE. In what field are your major merger undertakings occurring at the present time?

Commissioner TUGGLE, The largest cases, of course, are in the railroad industry, but the most cases are in the motor carrier field. Senator HARTKE. The committee is receiving a lot of complaints, and I am too, and I would imagine you are not being spared.

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These complaints allege that the carrier mergers of late result in poorer service, especially to the small shippers and to those who are off the main route points, shippers contend carriers are trying to discourage them to the extent that there would be no service at all. Has ICC looked into this matter?

Commissioner TUGGLE. Are you speaking primarily of motor or rail? Senator HARTKE. Both.

Commissioner TUGGLE. They are supposed to render better service, and one of the main reasons for permitting these consolidations is to improve the service. By and large, I am quite sure that takes place. There are many complaints filed about service every year regardless of mergers which we investigate and try to rectify.

Senator HARTKE. In the Doyle report, certain recommendations on the mergers were made. These are contained, if you want to look at it, at pages 268 through 272. This report in 1961 recommended that general consolidation of railroads must be approached on a regional or national basis. It predicted that if the piecemeal approach is used by ICC that the results would be much of what has happened today. Why did you not follow the recommendations of the Doyle report? Commissioner TUGGLE. Well, the Doyle report is not the law of the Congress.

Senator HARTKE. I know that, but it was done under supervision of the Congress. These were recommendations as to how to proceed. Could you not have proceeded that way?

Commissioner TUGGLE. Under the law as it is now written, all mergers are instituted by the parties who desire to merge. We can't start a merger proceeding. We can't cause anybody to do it.

It must move from the parties that are involved. We have no authority to bring in other carriers all over the country that are not interested in it and don't want to become involved in it at all.

Senator HARTKE. But as an opinion, do you think this is a desirable policy to follow?

Commissioner TUGGLE. Well that is a very large question. As a matter of fact, before one of the major railroad consolidations is finally completed, virtually all the railroads in a region or in an area are in it as parties, as their interests might appear.

Senator HARTKE. Well, that doesn't give me the answer to my question. In other words, what I am trying find out is: Do you think the Doyle report made a bad recommendation, or would you recommend that the ICC follow that report? We have another report here, you know, the Department of Transportation. They released a study on western railroad mergers. In that report it was recommended that in the consideration of mergers four issues should be resolved.

First, anticipated cost savings from the merger.

Second, the competitive effects of the merger.

Third, linkages between major partners among the resulting sys

tems.

Fourth, the financial plans of resulting systems and the problems of weak roads.

Is the law such that you could not make consideration of these factors?

Commissioner TUGGLE. We consider those factors and many others.

Senator HARTKE. You do consider them?

Commissioner TUGGLE. Yes, sir. All those factors. Maybe not under the specific name, but they are considered now.

Some of these regional matters being mentioned were tried back in 1920, and they failed. The Congress directed the Commission to make a study of all the railroads of the United States and to set up regional railroad networks or systems. The Commission engaged a most knowledgeable man in that field and they put out a preliminary report. And from that time on the Commission put in a considerable part of its time listening to the complaitns of other carriers, of the shipping public, of labor and of everybody involved. And we recommended that we would be relieved of that responsibility. And after a few years Congress did relieve us of that responsibility. They repealed the law.

Senator HARTKE. Well, do you think they should have?

Commissioner TUGGLE. Yes; I think they should have repealed that. Senator HARTKE. We need a viable transportation system in this United States of America. In spite of the fact that some people may contend that when we created a Department of Transportation we did create a national transportation policy, I am somewhat dismayed by the real lack of any cohesive system. Now, we can say the one we have has worked quite well through the years. I suppose that a good case can be made for that. But I think there is a growing concern on the part of a lot of people that a very broad view of the national economy should be given very careful regard before granting these mergers. Do you view that as your role or do you believe that you are so limited by legislative restrictions that it is not possible for you to give that type of consideration?

Commissioner TUGGLE. We can't give a single case national consideration. As the law is now, a merger proposal has to be started by the carriers. We have no authority to start that. Until something comes before us, there is nothing we can do.

Senator HARTKE. Do you feel the law should be changed?

Commissioner TUGGLE. No, sir. I see no reason to change it. I think it is adequate now. Let me add just this observation: I don't think you can get together any 11 men in the United States who can sit up here in Washington and draw lines on a map and make a viable, practical, efficient, economical national railroad network. It just couldn't be done. There is not that kind of knowledge. These things have to develop out of the needs of the economy and of the commerce of the country. They emerge from the fact that there are certain deficiencies in transportation and they find out or believe-and must substantiate it before their merger can be approved that by some kind of consolidation, transportation efficiency is going to be improved. That is the purpose of it.

Senator HARTKE. I understand the purpose. I just wanted to have the results. Is there any possibility, for example, that there could be reciprocity in the use of tracks as an alternative to railroad mergers? Does the law give you such authority?

Commissioner TUGGLE. Yes, sir. It is possible to obtain trackage rights, but it is exceedingly difficult to get two carriers who are arm's length competitors all the time to allow another railroad, in which they don't share its earnings, to operate over their property.

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