7 4 / ’

. I n C o ' J D W ^ Y ^

T ^ E X E M P T I O N OF TERMINAL ARE A OPERATIONS r 

x

GOVERN ME NT----- - - — -

Storage

H E A R I N G

BEFORE A

SUBCOMMITTEE OF THE 

COMMITTEE ON 

INT ERSTA TE AND FOR EIGN COMMERCE

HOUSE OF REPRESENTATIV ES

_ S EIGH TY -SE VE NT H CONGRESS

FIR ST SESSION

ON

H.R. 597 8

A B IL L TO AM EN D SE CT IO N 20 2( C) O F T H E IN TER STA TE 

CO MM ER CE AC T TO PR O V ID E FO R PA R TIA L EXEM PTIO N 

FR OM T H E PROV IS IO NS OF PA RT II O F SU CH AC T O F 

TERM IN A L AR EA MO TO R C A R R IE R O PER ATI ONS P E R ­

FO RM ED BY OR FO R COM MON C A R R IE RS BY W ATE R IN 

IN TER STA TE CO MME RC E SU BJE CT TO T H E SH IP PIN G ACT, 

1916, AN D T H E IN TER COAST AL S H IP P IN G ACT, 1933 

(A ND ID EN TIC A L B IL LS)

JU LY 20, 1961

P ri n te d fo r th e use of th e 

Com mitt ee o n In te rs ta te a nd Fore ig n Co mm erc e

74325

U.S . GO VE RN MEN T PR IN TIN G O FFIC E 

W AS HI NG TO N : 1961
K V* T* f

COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE

ORBN HARRIS , A rk an sa s, C hair m an

JO HN BELL W IL LI AM S, M ississ ip pi

PE T E R F. MA CK, J r., Il lino is

KENNET H A RO BE RT S, A laba m a

MORGA N M. MO UL DE R, Miss ou ri

HA RL EY O. ST AG GE RS , W es t V ir gi nia

WAL TE R RO GE RS , Tex as

SA MU EL N. FR IE D EL, M ar yl an d

JO HN J. FL YNT, J r., Ge orgia

TORB ER T H. MA CDONALD, M ass ac huse tts

GE OR GE M. RH ODE S, Pen ns ylv an ia

JO HN JA RM AN , Oklah om a

LE O W. O'B RIE N, New Yo rk

JO HN E. MO SS, C al if orn ia

JO HN D. DIN GEL L, Michiga n

JO E M. KIL GORE, Tex as

PA UL G. RO GE RS , F lo ri da

RO BE RT W. H E M PH IL L , So ut h Car ol in a

DAN RO ST EN KOW SK I, Il linois

JO H N B. BE NNET T, M ichiga n 

W IL LIA M L. SP RIN GER , Il linois 

PA U L F. SC HE NC K, Oh io 

J. ARTHUR YO UN GE R, C al if orn ia 

HA RO LD R. CO LL IE R, Il linois 

MIL TO N W. GL EN N, New Je rs ey 

SA MUE L L. DE VIN E, Ohio 

AN CH ER NEL SE N, M in ne so ta 

HAST IN GS K EIT H , M ass ac huse tts 

W IL LARD S. CU RT IN , Pen nsy lv ania 

AB NER W. SIBA L, Con ne ct ic ut 

VE RN ON W. TH OM SO N, W is co ns in 

PE T E R H. DO MINICK, Co lorado

JA M ES C. HEA LE Y, New York

W. E. Wil li am so n, C le rk

K en neth J . P ain te r, A s s is ta n t C le rk

P ro fe ssio n a l S ta ff

And rew Ste ve ns on Sam G. Spal

Kurt Bor ch ar dt Mar tin W. Cun ni ng ha m

Subcommittee on Transportation and Aeronautics

JO H N BE LL W IL LI AM S, M ississ ippi, C h a ir m a n

HA RL EY G. ST AG GE RS , W es t V ir gin ia W IL LIA M L. SP RIN GER , Il linoi* 

SA MU EL N. FR IE D E L , M ar yla nd HA RO LD R. CO LL IE R, IU inois

TO RB ER T H. MACDONALD, M ass ac huse tts SA MUE L L. DEVIN E, Ohio 

JO HN JARM AN , Oklah om a

II
Page

Tex t of H .R. 5978_______ 1

Report of—

Bureau of th e Budge t_________________________________________ 2

Commerce De partm ent_______________________________________ 2

Inter sta te Commerce Comm ission______________________________ 4

Statem ent of —

Cohelan, Hon. Jeffery, a Representative in Congress from the State

of California_______________________________________________ 5

Deming, Willis IL, attorn ey, Matson Navigation Co______________ 8

For t, James F., counsel, public affairs, American Trucking Associations, Inc_________________________________________________ 21

Maloney, William M., general solicitor, Association of American

Railroads_________________________________________________ 28

Miller, Hon. George P., a Representative in Congress from the State

of California_______________________________________________ 5

Murphy, Rupert L., Vice Chairman, Interst ate Commerce Commission______________________________________________________ 6

Schwartz, Dan R., Motor Carriers Lawyers Association____________ 16

Scott, Norm an, general traffic manager, Matson Navigatio n Co____ 8

Wheeler, Carl, Sea-Land Co., Newark, N .J ______________________ 19

Additional information sub mitted for the record by—

Alaska Steam ship Co., telegram from Melville Mc Kinstry_________ 31

American Trucking Associations, Inc., letter from James F. Fort,

counsel, public affairs, transm itting explanation of proposed amendment to II.R. 5978_________________________________________ 27

Association of American Railroads, letter from Gregory S. Prince___ 13

Garm atz, lio n. Edward A., s tatement of________________________ 31

Southern Pacific Co., lette r from George L. Buland_______________ 12

Terminal Tra nsp ort Co., Inc., letter from Burton C. Kinney, vice

president, traffic____________________________________________ 31

m

EXEMPTION OF TERMINAL AREA OPERATIONS

THURSDAY, JUD Y 20, 1961

H ouse of R epresenta tives,

Subcomm itt ee on T ranspor tation and A ero nautics, 

of th e Com mittee on I nter state and F oreign Comm erce,

Washington, D.G.

The subcommittee met at 10 a.m., pursuant to call, in room 1334, 

House Office Building, Hon. Samuel N. Friedel presiding.

Mr. F riedel. The committee will come to order.

The Subcommittee on Transportation and Aeronautics of the House 

Committee on Intersta te and Foreign Commerce is meeting this morning to hold hearings on 12 bills to amend section 202(c) of the Inter ­

state Commerce Act to provide for partia l exemption from the provisions of such act of terminal area motor carrie r operations performed 

by or for common carriers by water in interstate commerce subject to 

the Shipping Act, 1916, and the Intercoastal Shipping Act, 1933. 

These bills ar e:

H.R. 5978, by our colleague on this committee, Mr. Jarm an of Oklahoma; II.R. 6062 by Mr. Miller of C alifornia; H.R. 6071 by Mr. Van 

Pelt of Wisconsin; H.R. 6086 by Mr. Ellsworth of Ka nsas; H.R. 6182 

by Mr. Gubser of Califo rnia; H.R. 6194 by Mr. Hosmer of California ; 

H.R. 6246 by Mr. Cohelan of California; H.R. 6270 by Mr. Thompson 

of Louisiana; H.R. 6624 by Mr. Garmatz of M aryland; H.R. 6681 by 

our colleague on this committee, Mr. O’Brien of New York; H.R. 6904 

by Mr. H oran of Washington ; and H.R. 7544 by our colleague on this 

committee, Mr. Curtin of Pennsylvania.

A copy of H.R. 5978 and the reports from executive departments and 

agencies thereon, will be made a par t of the record at this point.

(H.R. 5978 and department reports referred to follow.)

[H.R. 5978, 87 th Cong., 1s t sess.]

A BI LL To am end sec tion 202(c) of the In te rs ta te Commerce Act to provide fo r pa rtia l 

exem pti on fro m the pro vision s of p art II of such Ac t of term inal ar ea moto r ca rrie r 

op erati on s performed by or f or common ca rrie rs by wat er in in te rs ta te commerce subje ct 

to the Shipp ing Act, 1916, an d the In te rc oa st al Sh ipp ing Act, 1933

Be tf ewocted by the Senate and House of Rep resenta tives of the United

Sta tes of America in Congress assembled, Th at section 202(c) of pa rt II of the 

In terstate Commerce Act is hereby amended to rea d as follows:

“ (c) Notwithstanding any provision of this sectio n or of section 203, the provisions of this part, except the provisions of section 204 relative to qualifications 

and maximum hours of service of employees and safety of operation and equipment, sha ll no t apply—

“ (1) to tra nsp ort ation by moto r vehicle by a ca rri er by rai lro ad sub ject 

to pa rt I, or by a wa ter carrie r subject to p ar t II I, or by a fre igh t forwa rder 

subject to pa rt IV, or by a common c arrie r by wa ter in interstate commerce 

subject to the Shipping Act, 1916, and the Int erc oasta l Shipping Act, 1933, 

incidental to tra nsporta tio n or service subject to such pa rts or such Acts, 

in the perform ance within term inal are as of transf er, collection, or deliv ery 

service s; but such transp ort ation sh all be considered to be and sh all be regu-
2 EXEMPTION OF TERMINAL AREA OPERATIONS

la te d a s tr an sp o rt ati o n su bje ct to p a rt I whe n per fo rm ed by su ch ca rr ie r 

by ra il ro ad, as tr ansp ort ati on su bje ct to p a rt III whe n pe rf or m ed by su ch 

w ate r carr ie r, as tr ansp ort ati on or se rv ic e su bje ct to p a rt IV whe n per ­

fo rm ed by su ch fr eig ht fo rw ar der , an d as tr an sp o rt ati o n or se rv ic e su bje ct 

to th e Sh ip pi ng Act, 1916, and th e In te rc o ast al Sh ip pi ng Act, 1933, when 

pe rfor m ed by su ch com mon ca rr ie r by w ate r in in te rs ta te co mm er ce ;

“ (2 ) to tr ansp ort ati on by m ot or ve hicle by an y pe rs on (w heth er as ag en t 

or un d er a co ntr actu al arr angem ent) fo r a comm on c a rr ie r by ra il ro ad 

su bj ec t to pa rt. I, an ex pr es s co mpa ny su bje ct to p a rt I, a m ot or carr ie r 

su bj ec t to th is part , a w ate r c a rr ie r su bje ct to p a rt II I, a fr eig h t fo rw ard er 

su bje ct to p a rt IV, or a comm on c a rr ie r in in te rs ta te co mmerce su bj ec t 

to th e Shi pp in g Act, 1916, an d th e In te rc o ast al Sh ip pi ng Act, 1933, in the 

pe rf or m an ce w ithin te rm in al are as of tr an sf er, colle cti on , or de liv er y 

serv ic e; b u t su ch tr ansp ort ati on sh al l be c on side re d to be p er fo rm ed by su ch 

carr ie r, ex pr es s comp any, or fr eig ht fo rw ard er as p a rt of, and sh al l be 

re gula te d in th e sa m e m an ner as, th e tr ansp ort ati on by ra il ro ad, ex pres s, 

m ot or vehic le, or w at er , or th e fr eig ht fo rw ard er tr an sp o rt ati o n o r serv ice , 

to w hich s uc h se rv ices a re in ci den ta l.”

E xec utive Office of th e P re sid en t,

Bure au of th e B udget, 

W as hi ng to n, D.C., Ju ly 3 ,196 1.

Ho n. Oren H ar ris,

Ch airm an , C om m itte e on In te rs ta te a nd F or ei gn C om me rce ,

Hou se o f R ep re se nt at iv es , W as hi ng to n, D.C.

My Hear Mr. Ch a ir m a n: T his is in re ply to you r le tt er of Apr il 3, 1961, re ­

qu es ting th e vi ew s of th is Office w ith re sp ec t to H.R . 5978, a bil l to am en d 

se ction 20 2( c) of th e In te rs ta te Co mmerce Act to pr ov id e fo r p art ia l ex em pt ion 

fr om th e pr ov is io ns of p a rt II of such act of te rm in al are a m ot or carr ie r 

op er at io ns pe rf or m ed b y or f or comm on c a rr ie rs by w ate r in in te rs ta te c om merc e 

su bj ec t to th e Shi pp in g Act, 1916, an d th e In te rc oast al Sh ippi ng Act, 1933.

The S ecr et ar y of Comm erc e, in hi s re p o rt to yo ur co m m itt ee on th is mea su re , 

is reco m men di ng it s en ac tm en t as a m ea ns of fo st er in g th e ex pa ns io n of conta in er oper at io ns in th e offsho re do mes tic tr ad es . Bo th th e S ecr et ar y of Commerce an d th e C ha irm an of th e In te rs ta te Co mm erc e Co mm iss ion , ho wev er, 

recomme nd th a t th e bil l be am en de d to cle arl y lim it th e scope of th e prop os ed 

te rm in al are a m ot or carr ie r ex em pt ion to le gitim at e te rm in al are a op er at io ns.

Th e B ur ea u of th e Bud ge t ag re es w ith th e view s of th e S ecre ta ry of Commerce an d reco mmen ds tha t, th e pr op os ed legi slat io n be en ac te d, pr ov id ed th a t 

th e ab ov e-men tio ne d am en dm en t is in co rp ora te d in to th e bill.

Si nc er ely yo ur s,

P h il l ip S. H ug hes,

A ss is ta nt Direc to r fo r L eg is la tive R efer en ce .

T he Secretary of Commerce, 

W as hi ng to n, D.C., J u ly 7, 1961.

Ho n. Oren H ar ris,

Ch airm an , C om m itte e on In te rs ta te an d Fo re ign Co mm erc e,

Hou se of Rep re se nt at iv es , W as hi ng to n, D.C.

Hear Mr. C ha ir man : Thi s is in re pl y to yo ur re ques t of Apr il 3, 1961, fo r 

th e vie ws of th is Office in re gar d to H.R. 5978, a bil l to am en d section 20 2( c) 

of th e In te rs ta te Co mm erc e Act to pr ov id e fo r p art ia l ex em pt ion fr om th e pro ­

vision s of su ch act of te rm in al are a m ot or ca rr ie r ope ra tion s per fo rm ed by or 

fo r com mo n carr ie rs by w ate r in in te rs ta te commerce su bje ct to th e Sh ipping 

Act. 1915, an d th e In te rc oast al Sh ip pi ng Act, 1933.

H.R. 5978 tr a n sfe rs re gu la tion of m ot or carr ie rs se rv icing w ate r carr ie rs 

su bj ec t to th e Sh ippi ng Act of 1916 an d th e In te rc oast al Sh ippi ng Act of 1933 

fr om p a rt II of th e In te rs ta te Co mmerce Act to th e Fed era l M ar itim e Boa rd. 

The bil l wou ld ad d to section 20 2( c) an ex em pt ion from p a rt II fo r mot or 

tr an sp o rt ati o n w ithin te rm in al are as in th e per fo rm an ce of tr an sf er, collection , 

or de live ry se rv ic es if pe rfor m ed by or fo r a com mo n carr ie r by w ate r in in te rsta te co mmerce su bje ct to th e Shipp in g Act, 1916, an d th e In te rc o ast al Sh ipping 

Ac t, 1933.
EX EM PT IO N OF TE RM INAL AREA OPERATION S 3

Se cti on 20 2( c) w as ad de d to th e In te rs ta te Co mm erc e Ac t by th e T ra n sp o rt ation Ac t of 1940 (54 Sta t. 898, a t 92 0). T his ac tion ex em pt s from ce rtific at io n 

and ra te re gu la tion under p a rt II of th a t act m ot or tr an sp o rt ati o n w ithin te rm in al are as in th e per fo rm an ce of tr an sf er, co lle cti on , or de live ry se rv ices , if 

pe rf or m ed b y or fo r ra il ro a d s su bje ct to p a rt I, w ate r carr ie rs s ubje ct to p a rt II I, 

of fr eig h t fo rw ard ers su bje ct to p a rt IV. Su ch te rm in al are a m ot or tr an sp o rta ti on which is ex em pt ed from p a rt II is re gula te d as p a rt of th e p art ic u la r 

line -h au l tr an sp o rt ati o n to w hi ch it is in ci de nt al .

As th e law pr es en tly st ands, section 20 2( c) do es no t ex em pt from p a rt II 

te rm in al are a m ot or tr an sp o rt ati o n in ci den ta l to w ate r tr an sp o rt ati o n be tw ee n 

th e m ai nla nd an d A la sk a, H aw ai i, P uert o Rico, or Gu am . Alth ou gh A lask a 

and H aw ai i are no w S ta te s of th e U ni ted S ta te s, se ct ion 18(a ) of th e H aw aii an 

State ho od Ac t (73 Sta t. 4), an d se ction 27(b ) of th e A lask an Sta te ho od Ac t 

(72 Sta t. 33 9) , bo th pr ov id e th a t th e F edera l M ar itim e B oar d re ta in it s ju ris ­

di ct io n ov er w ate r tr an sp o rt ati o n be tw ee n th os e S ta te s an d th e m ai nl an d.

The Co mmiss ion has hel d th a t mot or ca rr ie rs pe rf orm in g se rv ice in th e port 

of S eatt le in co nn ec tio n w ith tr an sp o rt ati o n by w ate r to A la sk a w er e no t entitled 

to th e ex em pt ion be ca us e th e lin e- ha ul c a rr ie r w as not su bj ec t to th e ac t (Cwiso lida tc d F re ig htw ays , Inc., E xt en si on, Sea tt le , W ash .; 74 M.C.C. 593, 1958). 

In it s de cis ion th e Co mmiss ion st ate d th a t Co ng ress had pr ob ab ly in te nde d to 

ex em pt from econ om ic re gula tion “a ll ” pu re ly loca l op er at io ns, but st ate d th a t 

th e rem ed y appears to lie in addit io nal le gi sl at io n ra th e r th an a fo rc ed const ru cti on of th e pre se nt law. The prop os ed bi ll is de sign ed to pr ov id e such 

le gi sl at io n which wou ld ap ply th e e xem pt on unif orm ly to all mo des of tr ansp ort .

The pr op os ed am en dm en t to section 20 2( c) wou ld ex te nd th is pr ov isio n to 

comm on ca rr ie rs by w ate r in in te rs ta te co mmerce wh o are su bje ct to th e Sh ippi ng Ac t of 1916 an d th e In te rc oast al Shipp in g Ac t of 1933. The se st ea m sh ip 

line s oper at in g be tw ee n th e 48 m ai nla nd S ta te s an d A lask a, H aw ai i, Puer to 

Rico, an d Gua m wou ld be plac ed in a po si tion to per fo rm th eir ow n pick up 

an d de live ry se rv ices w ithin th e port are as th a t th ey ser ve. Thu s, an en ti re 

ra te , in cl ud in g th e pi ck up an d de live ry se rv ice, wou ld be re gula te d by th e 

F edera l M ar itim e B oa rd . T his is a lo gi ca l sequ en ce in th e de ve lopm en t of 

conta in er tr an sp o rt ati o n of w ate r c arr ie rs in th e offsho re do mestic tr ade. P assa ge o f H.R . 5978 wou ld cl ea rly perm it th ro ugh ra te s f ro m po in t of or ig in w ithin 

a port are a to poin t of ult im ate dest in at io n w ithin a po rt are a se rv ed by th e 

w ate r carr ie r, and sh ou ld fa cil it ate th e ex pa ns io n of th es e conta in er oper at io ns 

in th e offsh ore do mes tic tra des.

As th e bi ll pre se ntly re ad s, th ere is no pr ov isio n as to which ag en cy sh al l 

de te rm in e th e lim its of th e te rm in al are a to whi ch th e ex em pt ion in se ction 

20 2( c) will be ap plicab le. In ord er to av oid m is under st an din gs and co nf us io n, 

th e D epar tm en t of Co mmerce su gg es ts th e follo wing am en dm en t of H.R . 5978:

“T he Co mm iss ion sh al l ha ve ex clus iv e ju ri sd ic ti on to de te rm in e and pre sc ribe 

th e l im its of t erm in al a re a s of th e v ar io us ca rr ie rs fo r th e pu rp os e of th is section 

2 02(c ). ”

As we in te rp re t th e bill, th e ex em pt ion of “t ra n sp o rt ati o n by m oto r ve hicle 

* * * by a comm on c a rr ie r by w ate r in in te rs ta te co mm erc e su bje ct to th e 

Sh ip pi ng Act, 1916, an d th e In te rc oast al Shipp in g Act, 1933,” su bje ct to th e 

fu rt h e r re st ri cti ons of th e bill, in cl ud es su ch tr an sp o rt ati o n by comm on c arri ers by w ate r who oper at e be tw ee n a S ta te of th e United Sta te s, and a po sse ss io n of th e U ni te d Sta te s, be ca us e of th e de fin iti on of “com mo n c a rr ie r by 

w ate r in in te rs ta te co mmerce ” in th e Shi pp in g Act, 1916, in clud es su ch carr ie rs , 

and tr an sp o rt ati o n be tw ee n a S ta te and po ssession re m ai n su bje ct to th a t ac t 

and th e In te rc o ast al Shi pp in g Act, 1933. The m att er, ho wev er, m ay not be 

en ti re ly fr ee fr om do ub t, be ca us e th e bi ll wou ld am en d p a rt II of th e In te rst ate Co mm erc e Act, and th e In te rs ta te Co mm erc e Act co nta in s a de fini tio n 

of “i n te rs ta te co mm erce ” whi ch con fin es th a t te rm to comm erc e be tw ee n S ta te s 

or be tw ee n tw o plac es in th e sa m e S ta te th ro ug h anoth er Sta te . To cla ri fy 

th e bi ll in th is re sp ec t, th e D epar tm en t reco m men ds th a t th e bill be am en de d 

as follo ws :

(1 ) By in se rt in g a ft e r th e word “c om merce ” on lin e 7, pa ge 2, th e wor ds 

“a s defin ed in t he Shi pp in g A ct, 1916, a n d ” ;

(2 ) By in se rt in g after- th e w or d “c a rrie r” on line 2, pa ge 3, th e w ord s “by 

w a te r” ;

(3 ) By in se rt in g a fte r th e w or d “c om merce ” on line 2, pa ge 3, th e w or ds 

“a s defin ed in the Shi pp in g Act, 1916, an d ”.

W ith th e re vi sion s as su gg es ted above, th e D epart m ent do es no t op po se th e 

en ac tm en t of th is b ill.
4 EXEMPTION OF TERM INAL AREA OPERATIONS

The Burea u of the Budget advises the re is no objection to the submission 

of this re port from the standpo int of the adm inistration’s program.

Sincerely yours,

Edward Gudeman,

Acting Secr etary of Commerce.

Interstate Commerce Commission,

'Washington, D.C., Jun e 14,1961. Hon. Oren Harris,

Chairman, Comm ittee on Inters tate and Foreign Commerce,

House of Representatives, Washington, D.C.

Dear Chairman Harris : Your lette r of April 3, 19G1, address ed to the 

Chairman of the Commission and requ esting a report and comments on a 

bill, H.R. 5978, introduced by Congressman Jarman, to amend section 202(c) 

of the Interstate Commerce Act to provide for pa rti al exemption from the 

provisions of pa rt II of such act of terminal are a motor ca rrier operation s 

performed by or for common car riers by wa ter in int ers tat e commerce subject 

to the Shipping Act, 1916, and the Interc oastal Shipping Act, 1933, has been 

considered by the Commission and I am authorized to subm it the following 

com men ts:

Section 202(c) of the Interstate Commerce Act, which H.R. 5978 would 

amend, now provides a pa rti al exemption from the provisions of pa rt II of 

the act of terminal area motor carri er operations performed by or for car riers 

subject to pa rts I, II, III, and IV thereof. H.R. 5978 would extend this pa rtial 

exemption to such motor carri er operations performed by or for common 

car riers by wa ter in int ersta te commerce subject to the Shipping Act, 1916, 

and the Inte rco ast al Shipping Act, 1933.

While we have no objection to the proposed extension of the exemption as 

such, the bill, if enacted in i ts present form , would give rise to a serious problem. 

Under existin g law the Commission ha s the power to determin e the limits of 

term inal area s of car riers subject to pa rts I, II. Il l, and IV of the Inter sta te 

Commerce Act. See, for example, Central Truck Lines, Inc., et al. v. Pan-Atla ntic Steamship Corporation (82 M.C.C. 395) in which the pa rti al exemption was 

discussed ins ofa r as it related to a wa ter carri er subject to the Commission’s 

jurisdiction and, in effect, fixed the terminal are as of the defend ant carrier at 

Tampa, Jacksonville, and Miami, Fla. If H.R. 5978 should be enacted without a 

clar ifying provision, there may be some question as to whether the Commission 

would have jurisdicti on to determine the term inal are as of wa ter carriers subjec t to the Shipping Act and the Interc oastal Shipping Act, with the result that 

wa ter carri ers subject to those act s could fix extensive terminal area s of ports 

within which they could provide motor carri er service which would not be 

subject to economic regulation. This would place oth er carriers at a distinc t 

competitive disadvan tage. This situation is illust rated in a proceeding now 

pending before the Commission in docket No. MC-C-3000, Wester n Motor Tariff Bureau, Inc. v. Matson Navigation Company.

The situation api>ears to be furth er complicated by a recent holding of the 

Federal Maritim e Board in docket No. 815, Common Carriers by Water— Sta tus

of Express Companies, Truck Lines and Other Non-Vessel Carriers. In th at proceeding the Board found th at “any person or business association may be 

classified as a common carrie r by w ate r who holds himself out by the establish ­

ment and maintenance of tariffs, by advertisem ent and solicitation, and otherwise, to provide tra nsp ort ation for hire by wa ter in interstate or foreign commerce as defined in the Shipping Act, 1916; assumes responsibility or has 

liab ility imposed by law for the safe transp ortation of the shipments; and ar ­

ranges in his own name with und erlying water carri ers for the performance 

of such transp ortation, whether or not owning or controlling the means by 

which such tra nsporta tio n is effected, is a common carri er by wa ter as defined 

in the Shipping Act, 1916.”

In order to make cer tain the Commission’s author ity to determine, for the 

purpose of the amendments proposed in H.R. 5978, the term inal area limits of 

common c arrie rs by wa ter subject to the shipping acts, we recommend th at the 

bill be amended by making provision therein for the add ition of the following 

new parag rap h (3) to section 202(c) :
EXEMPTION OF TERMINAL AREA OPERATIONS 5

“ (3) Tlie Commission shall have exclusive jurisdiction to determine and prescribe the limits of terminal areas of the various carriers for the purposes of subsection (c) of this section.”

Such a provision would place water common carriers subject to the jurisdiction 

of th e Federal Maritime Board and water common carriers subject to the Commission’s jurisdiction on an equal basis insofar as the terminal area exemption 

in section 202(c) is concerned.

If amended as suggested above, we would have no objection to the enactment of 

H.R. 5978.

Respectfully submitted.

E ve rett H u t c h in s o n , C h a ir m a n .

Mr. F riedel. The first witness is our colleague from. California, 

Hon. George P. Miller, who is the sponsor of H.R. 6062. Mr. Miller, 

we will be glad to hear you at this time.

STATEMENT OF HON. GEORGE P. MILLER, A REPRES ENT ATIVE IN 

CONGRESS FROM THE STATE OF CALIFORNIA

Mr. Miller. Mr. Chairman, I appreciate the opportunity of appearing before the Subcommittee on Tran sportation and Aeronautics 

of the Committee on In terstate and Foreign Commerce, relative to my 

bill, II.R. 6062.

In introducing this legislation, I am joining many other cosponsors 

in proposing this amendment to section 202(c) of the In ters tate Commerce Act, which is greatly needed at the present time.

In the course of this hearing, I am certain tha t a detailed legal 

analysis will be presented on behalf of the need. However, the important thin g we should remember is this. New technical advances 

in this modern day and age have brought water transportation into 

an area where innovations such as tr ailer containers now travel both 

by land and sea. With such development it is imperative tha t the 

confusion and inconsistency with respect to the regulatory status o f 

terminal area operations by motor vehicles when conducted by our 

four water carriers, be eliminated. It is simply a question of treatin g 

this new form of transportation the same as other terminal area operations which have long been subject to section 202(c) of th e Inters tate 

Commerce Act.

Mr. Chairman, I want to go on record as enthusiastically subscribing to the provisions of H.R. 6062 and companion legislation and 

want to urge favorable action by this committee.

Mr. Friedel. Are there any questions? If not, we appreciate your 

appearance, Mr. Miller.

Mr. Miller. Thank you, Mr. Chairman.

Mr. Friedel. The next witness is another colleague from California, 

Hon. Jeffery Cohelan, who introduced H.R. 6246. Mr. Cohelan, we 

will be glad to have your testimony at this time.

STATEMENT OF HON. JEFFER Y COHELAN, A REPRESENTATIVE IN 

CONGRESS FROM THE STATE OF CALIFORNIA

Mr. Cohelan. Mr. Chairman, I appreciate this opportunity to 

express my support of H.R. 5978 and mv own companion bill, H.R. 

6246, which would amend the Interstate Commerce Act to expand the 

partial exemption now applicable to carriers subject to th at act. 

74 325—61— 2
6 EXEMPTION OF TERMINAL AREA OPERATIONS

One of the many indications of the need for this legislation is the 

wide support which it en joys. Among its backers are the Comptroller 

General, the Bureau of the Budget, and the Federal Maritime Board, 

along with the Interstate Commerce Commission, the Department of 

Justice, and the Secretary of Commerce, who are not opposed to 

such legislation.

The reason for this wide approval is the connnonsense of this legislation, which would promote uniformity in the treatm ent of interstate common carriers; a uniform ity which should take the place of 

the inequities which exist at the present time.

This legislation is also necessary to bring the act up to date, for 

it would include the two new State s of Alaska and Hawaii in the 

exemption in section 202(c), which at present includes only the 48 

contiguous States. Such a provision is only logical in view of the 

intent of the Interstate Commerce Act to regulate the commerce among 

all the States of our Nation. There is no logical reason why these 

States should lie excluded from this legislation.

In general, it may truly be said th at this legislation is in the public 

interest by virtue of the fact that it provides for uniform regulation 

of interstate carriers. In conclusion, I urge this committee to carefully consider the legislation before them and to report it favorably.

Mr. Friedel. Are there any questions? We appreciate your appearance and testimony, Mr. Cohelan.

Mr. Cohelan. Thank you, Mr. Chairman.

Mr. Friedel. The next witness will be Rupert L. Murphy, a Commissioner of the Interstate Commerce Commission.

Mr. Murphy.

STATEM ENT OF RU PE RT L. MU RPHY, VIC E CHAIRMAN, 

INTE RS TA TE COMMERCE COMMISSION

Mr. Murphy. Mr. Chairman, may I report that I have with me 

today Commissioner Tuggle and Commissioner Goff and Mr. Stillwell, 

the Director of our Bureau of Operating Rights.

Mr. Friedel. We are very pleased to have them.

Mr. Murphy. Mr. Chairman and members of the subcommittee, 

my name is Rupert L. Murphy. I am the present Vice Chairman of 

the Interstate Commerce Commission and have served in th at capacity 

since March 7 of this year. I am appearing today to testify on the 

Commission’s behalf with respect to IT.R. 5978, which would amend 

section 202(c) of the Interstate Commerce Act.

Section 202(c) of the Interstate Commerce Act now provides a 

partial exemption of terminal area motor carrier operations performed 

by or for carriers subject to parts I, II , II I, and IV of the act. 

Idle effect of H.R. 5978 would be to extend this partial exemption 

to such motor carrier operations performed by or for common carriers 

by water in interstate commerce subject to the Shipping Act of 1916, 

and the Intercoastal Shipping Act of 1933.

The Commission has no objection to the proposed extension of the 

exemption as such. However, a serious problem will arise if the bill 

is enacted in its present form.

As the law now reads the Commission has the power to determine 

the lim its of terminal areas of carriers subject to parts I , II , II I, and
EX EM PT IO N OF TERM INAL AREA OPERATION S 7

IV of the Interstate Commerce Act. Fo r example, see Central Truck

Lines, Inc., et al. v. Pan-Atlantic Steam ship Corp., 82 M.C.C. 395, 

decided March 21, 1960, in which the partial exemption was discussed 

insofar as it related to a water carrier subject to I nterstate Commerce 

Commission jurisdiction and, in effect, fixed the terminal areas of the 

defendant ca rrier at Tampa, Jacksonville, and Miami, Fla.

Accordingly, if H.R. 5978 were to be enacted without a c larifying 

provision, some doubt may arise as to whether the Commission would 

have jurisdiction to define the terminal areas of water carriers subject to the shipping acts.

In such circumstances, water carriers subject to those acts could 

fix extensive terminal areas of ports within which they could provide 

motor carrier service that would not be subject to economic regulation. Other carriers would thus find themselves at a distinct competitive disadvantage. In fact, there is now pending before the Commission a proceeding, docket No. MC-C-3000, Western Motor Tariff

Bureau, Inc., v. Matson Navigation Co., in which this very situation 

is illustrated.

Recently, the Federal Maritime Board, in docket No. 815, Common

Carriers by Water—Status of Express C ompanies, Truck Lines and

Other Nonvessel Carriers, made a finding tha t appears to further 

complicate this situation. The Board, in tha t proceeding, found 

th at:

An y pe rson or bu si nes s as so ci at io n may be classif ied as a com mo n carr ie r 

by w ate r wh o bo ld s hi m se lf out by th e es ta blish m en t an d m ai nte nan ce of ta riffs, by ad vert is em ent and so lici ta tion , an d ot he rw ise, to pr ov id e tr ansp ort ati on 

fo r h ir e by w ate r in in te rs ta te or fo re ig n co mmerce as defin ed in th e Sh ipping 

Act, 191 6; as su m es re sp on si bi lity or has liabil it y im po sed by law fo r th e sa fe 

tr an sp o rt ati o n of th e sh ip m ents ; an d arr anges in hi s own na m e w ith un de rlyi ng 

w ate r carr ie rs fo r th e perf orm an ce of such tr ansp ort ati on, w het her or not ow nin g or co nt ro llin g th e m ea ns by which su ch tr an sp o rt ati o n is eff ected , is a com ­

mon carr ie r by w ate r as de fin ed in th e Shi pp in g Act, 1916.

Ill order to make certain the Commission’s authority to determine, 

for the purpose of the amendments proposed in H.R. 5978, the terminal area limits of common carriers by water subject to the shipping 

acts which I have mentioned, the Commission recommends tha t the 

bill be amended by making provision for adding a new paragraph 

(3) to section 202(c) to read as follows:

(3) Th e Co mm iss ion sh al l hav e ex clus iv e ju ri sd ic ti on to det er m in e and pre ­

sc ribe th e lim it s of te rm in al are as of th e var io us carr ie rs foi* th e pu rp os e of 

su bs ec tio n (c ) of th is s ec tio n.

Subject, to the amendment I have just suggested, the Commission 

would have no objection to the enactment of IT.R. 5978.

I might mention, Mr. Chairman, that the Senate Committee on 

Commerce has in the last few clays ordered out the recommendation 

of approving a bill which carries the identical suggestion which we 

make here.

Mr. Chairman and members of the subcommittee, the Commission 

appreciates this opportunity to state its position with respect to this 

bill. If there are any questions at this time, I will do my best to 

answer them.

Mr. Friedel. Thank you very much, Mr. Murphy. It is a very 

clear and precise statement.

Mr. Staggers, do you have any questions?
8 EXEMPTION OF TERMINAL AREA OPERATIONS

Mr. Staggers. No questions.

Mr. F riedel. Mr. Devine ?

Mr. Devine. I have no questions.

Mr. F riedel. Mr. Jarman.

Mr. J arman. Mr. Chairman, I think Mr. Murphy’s statement is 

fair and to the point. I will add tha t as the author of H.R. 5978, 

the identical bill to the bill in the Senate committee, the suggested 

amendment is certainly acceptable to me.

Mr. Murphy. Thank you.

Mr. Friedel. Thank you very much, Mr. Murphy.

Mr. Murphy. Thank you.

Mr. Friedel. Our next witness will be Mr. Norman Scott, general 

traffic manager, Matson Navigation Co.

STATEMENT OF NORM AN SCOTT, GEN ERA L TR AF FIC MANAGER,

MATSON NAVIGA TIO N CO.; ACCOMPANIED BY W IL LI S R. DEMING,

ATTORNEY FOR MATSON

Mr. S cott. Mr. Chairman and members of the subcommittee, I am 

Norman Scott, general traffic manager of Matson Navigation Co. 

My company appreciates this oppo rtunity of appearing before your 

subcommittee in support of H.R. 5978. I am accompanied ~this 

morning by Mr. Willis R. Deming, attorney for Matson Navigation 

Co.

My company supports H.R. 5978 to obtain clarification of the juris ­

diction over certain terminal area drayage functions which are incidental to water transportation in domestic offshore trades. To explain 

the operational considerations and economic benefits to users 

of our service, which we believe make the clarification not only desirable, but necessary as well. I would like to describe briefly the 

present procedures for handling cargo in conventional break-bulk 

form.

In general terms, cargo which is offered for ocean transportation 

is delivered to the dock by rail, truck, both common carrier and contract carrier, and also by proprieta ry truckers, moving generally in 

small lots of individual packages which require marking each individual parcel or unit with the name of the consignee, the individual 

pieces requiring multiple handling not only during the course of the 

operations of loading to and from the ship, but prio r to and afte r 

the goods have been in the custody of the ocean carrier.

Inheren t in this conventional break-bulk system, is a high labor 

content of cost, damage, pilferage, delays, and the cost necessary to 

properly package and mark the cargoes. We have recently embarked 

in my company, and there are other operators in the steamship industry as well, who have done the same, on a program to develop and 

implement containerization of cargo. In containerization we attempt 

to handle large units of a standardized size which contain the small 

individual packages, having been loaded at off-dock locations.

Ideally, under these types of container operations, the contents of 

a container are placed into it at the point of origin of the shipment 

and the contents are not removed from the containers until the unit 

has arrived at its ultimate destination.
EXEMPTION OF TERMINAL AREA OPERATIONS 9

Fo r purposes of illustration, I hope you will bear with me if I confine my remarks describing the operation to a description of Matson’s 

container service.

Mr. Chairman, I have taken the liberty to ask the clerk to distribute 

this at this time in order to call your attention to appendix A of this 

rather voluminous report. Appendix A contains some photographs 

of key units in the Matson container system which, I think, would be 

helpful in following my remarks concerning the description of the 

equipment and the service.

The company has a total of nine ships which are equipped to carry 

containers. Of these vessels 1 carries containers exclusively; 2 others 

are very large container carriers which also serve a dual purpose of 

carry ing bulk cargoes; and the remaining 6 of the 9 carry a total of 

75 containers each on deck.

The container equipment which we operate includes both units for 

carrying conventional dry cargo and also refrigerated cargo. Necessary for the support of the system are shoreside cranes which have 

been constructed specially for this system, marshaling areas adjacent 

to the ship berths where containers are accumulated either prio r to or 

subsequent to vessel loading, or discharging operations, and what we 

call container freight stations which are off-dock freig ht platforms 

where container contents can be handled to or from the containers 

themselves.

At the present time my company’s container service has sufficient 

capacity to handle approximately 85 percent of the commercial cargo 

between the ports of San Francisco and Los Angeles and Honolulu. 

We have employed in our system a total of appro xim ately $18 million. 

Container cargo is tendered to our company by having the merchandise 

delivered to the freight station which I referred to, or by having containers loaded at shippers’ places of business. The units themselves, 

which are the cargo-carrying capability of the ship, are transported 

over the road on specially designed skeletal chassis from which the 

containers may be readily demounted.

The containers, when loaded, or after being discharged from a ship 

pending delivery to customers? are assembled a t dockside marshaling 

areas. The loading, as I mentioned earlier, is performed by the large 

shoreside cranes which have been purchased and erected for this 

purpose.

The principal benefits which derive to the users of this service are 

lower costs, reduced damage and pilferage, faster tran sit times, and 

improved vessel turnarounds. From the customers’ standpoint, a 

single phone call, the quotation of a single rate, and a single payment 

for a shipment, which includes insurance and wharfage, is the result 

of our container service in the port areas where it is provided.

To achieve the maximum efficiency of this system, we believe it is 

necessary to operate the incidental drayage functions in the terminal 

areas as a tigh tly integrated part of the overall operation geared to 

vessel and shipside container handling functions. The reasons for 

this are that it permits materially improved equipment utilization and 

operational flexibility, the virtual elimination of deadhead hauling 

of empty equipment.

It permits coordination of vessel stability requirements, that is, 

putting the heavy containers in the bottom of the ship. It also permits maximizing the use of space within the containers.
10 EXEMPTION OF TERM INAL AREA OPERATIONS

Fo r the reasons just enumerated, the savings in transportation 

costs, which Matson has achieved cannot be maintained for the benefit 

of customers unless the company’s rig ht to continue the use of single 

drayage agents in the terminal areas is made clear by the proposed 

amendment to section 202(c).

It is our belief tha t if section 202(c) is not amended, shippers, consignees, and consumers will lose a large part, if not all, of the savings 

in transportation costs which have already been passed on to them 

under single factor rates covering Ixith port-to-port transporta tion 

and incidental terminal area services.

Many years ago, before the regulated motor and water carriers, 

the Interstate Commerce Commission recognized the rig ht of linehaul rail carriers to perform pickup and delivery service within appropriate terminal areas. Subsequently, afte r assuming jurisdiction 

over motor carriers and water carriers, subject to the Interstate Commerce Act, the right of these types of carriers as well as freight forwarders to perform incidental terminal area motor vehicle transfer, 

collection, and delivery services as part of their line-haul operation 

was recognized by further amendment to section 202(c).

The Federal Maritime Board has accepted tariffs naming single 

factor rates in the domestic trade between the mainland and Alaska, 

Hawaii, and Puerto Rico, covering both water transportation and 

incidental pickup and delivery services within terminal areas.

The Board has regulated such rates under the Shipping Act of 1916 

and the Intercoastal Shipping Act of 1933. Some doubt was cast on 

this procedure when the Interstate Commerce Commission indicated 

in Consolidated Freightways, Inc., extension-Seattle, reported at 34 

M.C.C. 593, th at the provisions of 202(c) of the act do not apply to 

pickup and delivery services performed by motor vehicle solely within 

the Seattle, Wash., commercial zone, incidental to continuous through 

movement by water between Seattle and Alaska regulated by the 

Federal Maritim e Board, because such water transportation is not 

subject to the Interstate Commerce Act.

The terminal area pickup and delivery services in the Alaska trade 

were considered to be subject to regulation by the Interstate Commerce Commission under part II of the act. The Commission recognized that its decision was highly technical and probably undesirable from a regulatory standpoint. It commented that the remedy 

appeared to lie in additional legislation.

When the previous amendments to section 202(c) were effected to 

ocean transportation of freight to and from Alaska, Hawaii, Puerto 

Rico, and Guam was generally limited to dock-to-dock sendee. The 

development of integrated container services represents a major 

technological advance in transportation for these offshore areas which 

demands off-dock receipts and delivery of freight to achieve its maximum efficiencies.

We believe that to attain these efficiencies fo r container services of 

the offshore domestic water carriers the proposed amendment is of 

grea ter urgency for such carriers than for those who presently enjoy 

the exemption under the act as it stands.

The proposed amendment to section 202(c) will eliminate uncertain ty as to what agency shall regulate terminal area services of motor 

vehicle operations incidental to water transportation in the domestic
EXEMPTION OF TERMINAL AREA OPERATIONS 11

offshore trade. The Inte rsta te Commerce Commission has suggested 

tha t the bill include a clarifying provision tha t the Commission has 

exclusive jurisdiction to prescribe the limits of the water carriers terminal limits. App ropriate provision is contained in other bills introduced in the House to amend section 202(c), such as H.R. 7544, 

and we support the addition suggested by the Interstate Commerce 

Commission. The Secretary of Commerce has suggested certain clarifying additions so that H.R. 5978, if enacted, would apply uniformly to all water 

carriers in domestic trades regulated by the Federal Maritime Board. 

We also support these amendments to H.R. 5978. We believe that 

the amendments are in the public interest. Included in the back of the volume which was distributed earlierare statements from 108 persons who use Matson’s container service 

urging that it be continued in its present form. We understand tha t the Federal Maritime Board, acting through 

the Department of Commerce, does not object to the enactment of 

this bill. We also understand tha t the Bureau of the Budget agrees with the views of the Secretary of Commerce that section 202(c) be 

amended as a means of fostering the expansion of container operations in the offshore domestic trades. On July 18, 1961, the Senate Committee on Commerce acted favo r­ ably on S. 1978, a companion bill to H.R. 5978, containing the provision suggested by the Interstate Commerce Commission. With your permission, I am submitting fo r the record the detailed 

memorandum and a statement in support of the proposed amendments to section 202(c). These materials contain a more detailed 

description.

Mr. Friedel. How large would that memorandum be ?

Mr. Scott. You have it, Mr. Chairman.

Mr. F riedel. This one here?

Mr. S corr. Yes, sir.

Mr. F riedel. That will not be in the record. It will be in our tiles.

Mr. Scott. I will be happy, Mr. Chairman, to answer any questions 

vou mav have about our service and the need for amending section 

202(c).

Mr. Friedel. Mr. Jarman.

Mr. J arman. Mr. Chairman, I would like to call attention to the 

information set out in appendix B of the material submitted by Mr. 

Scott this morning. It graphically indicates the savings in transportation costs tha t are being achieved on representative commodities with 

Matson Navigation Co. For example, the exhibits show a saving to the shipper ranging from 

13 percent to 31 percent, through the use of the containerization method as contrasted with the old shipping practices. These savings are 

obtainable because it is possible for this company to give a single factor rate covering port-to-p ort transportation and incidental terminal 

area services. I think that those examples are indicative of the public 

interest involved in the passage of this legislation.

I would like to ask Mr. Scott if there has been any opposition to the 

bill. If so, would you describe the form it has taken and who the 

objectors have been ?
12 EXEMPTION OF TERMINAL AREA OPERATIONS

Mr. Scott. We have had several indications tha t there have been 

at least a small group of members of the trucking industry in southern C alifornia who have indicated that they do not favor this exemption which we seek. I might say in t ha t connection, that in the selection of our drayage agents who are performing the drayage functions 

for us they were chosen by competitive bidding, and included among 

the people who have indicated opposition to this proposed legislation 

are the least two unsuccessful bidders for the work which has since 

been performed by others.

I would also comment, Mr. Chairman, that the company’s present 

operations have been challenged before both the In ters tate Commerce 

Commission and the Federal Maritime Board. Since the rig ht to perform the functions, as we now do, throu gh a drayage agent has been 

questioned, we believe th at the amendment to section 202(c) would 

clarify tha t point and I would like, if you would permit me to do so, 

to ask Mr. Deming to comment on the legal aspects of that question.

Mr. Deming. The legal aspects are covered in the six-page statement which Mr. Scott provided to the committee this morning beginning at page 3, so I will not take the committee’s time to analyze those 

orally.

Mr. Scott. Mr. Chairman, may I offer for the record a letter from 

the Southern Pacific Co. addressed to the Honorable Joh n Bell W illiams, chairman of this subcommittee, in which the Southern Pacific 

Co. supports H.R. 7544, a companion bill before the House of H.R. 

59782.

Mr. Friedel. It will be so included.

(Southern Pacific letter referred to follows:)

Southern P acific Co.,

San Francisco, July 18, 1961. Hon. J ohn Bell W ill iam s,

Chairman, Subcommittee on Transportation and Aeronautics,

House Committee on Interstate and Foreign Commerce,

House Office Building, Washington, D.C.

Dear Sir : I am writ ing in supp ort of H.It. 7544. Th is bill pe rm its a water 

ca rrie r, w ith in term inal area s, to pro vid e or ar ra ng e fo r lan d tran sp or ta tio n 

incid ental to w at er t ra ns po rta tio n. In l iftin g re str ictio ns upon a w at er c arr ie r’s 

ab ility to pro vid e inc ide nta l land tran sp or ta tio n in a lim ited area, th e bill will 

pro mo te a gr ea te r freedo m in tran sp or ta tio n and fu rt her de sir ab le coo rdina tion 

of w ater an d land tran sp or tatio n. Thu s, the bill fu rthe rs the objec tives which 

th is company ha s espo used in reg ard to tran sjiorta tio n. Fu rth ermor e, as a prac ­

tic al m atter, th is bill would fa ci lita te th e pro gra m of co ntaine riz ation which 

ha s been em barked upon by Ma tson N aviga tio n Co. a nd othe r su pp ortin g interests 

an d which we believe will r es ul t i n more efficient tran sp or ta tio n and th e advance ­

men t of th e Am erican merch an t ma rin e.

I un de rstand hearing s on th is bill will be hel d on the 20th in sta n t I ask 

th at , if co ns ist en t with your practice, th is le tter be made a part of the reco rd. 

Very tr ul y yours,

George L. Buland.

Mr. J arman. Mr. Scott referred in his testimony to certain clarifying amendments th at have been suggested by the Department of Commerce. I would like to say for the record, Mr. Chairman, tha t those 

clarifyin g amendments are acceptable to me as author of one of the 

bills.

Mr. Scott, what is being sought in this legislative proposal only 

gives water carriers not subject to part II I of the Interstate Commerce Act the same identical pickup and delivery service exemption
EXEMPTION OF TERM INAL AREA OPERATIONS 13

provisions tha t are afforded part I (rail carriers), pa rt 111 (water 

carriers), and pa rt IV (freight forwarders). It simply makes for 

uniformity in that field of tran sportation; does it not?

Mr. Scott. I believe that is correct,; yes, sir.

Mr. J arman. I think that is all, Mr. Chairman.

Mr. Friedel. I would like to offer for the record now a letter I have 

from the Association of American Railroads, signed by Gregory S. 

Prince, executive vice president and general counsel, indicating tha t 

they would have no objection if we accept the amendments suggested 

by the Commerce Department and the Interstate Commerce Commission. It is addressed to J ohn Bell Williams.

(Association of American Railroads letter follows:

Association of American Railroads,

L aw D epa rtm en t, 

W as hi ng to n, D .C., J u ly 19,1 96 1.

Hon. J ohn Bell Williams,

Chairman, Subcommittee on Transportation and Aeronautics, Committee on Inter state and Foreign Commerce, House of Representatives, Washington,

D.C.

Dear Mr. Williams : We received notice of hearing to be held before your 

committee on Thursday, July 20, 1961, on H.R. 5978, and 11 other similar or identical bills. Each of these bills would amend section 202(c) of the Inte rsta te Commerce Act to provide for partial exemption from the provisions of part II of such act for terminal area motor carrier operations performed by or for common carrier s by water in inters tate commerce subject to the Shipping Act, 1916, and the Interco astal Shipping Act, 1933. It is the purpose of this le tter to state for the record the position of the railroad industry on these bills. Section 202(c) of the Interstate Commerce Act now provides a partial exemp­ tion from the provisions of part II of the act for terminal area motor carrier operations performed by or for carriers subject to parts I, II, III, and IV of the act. H.R. 5978, and the similar bills, would extend this par tial exemption to such terminal area motor carrier operations performed by or for common carriers by water in interstate commerce subject to the Shipping Act, 1916, and 

the Intercoastal Shipping Act, 1933. The Inte rsta te Commerce Commission, under existing law, now has the power to determine and define the limits of terminal areas of c arriers subject to parts I, II, III , and IV of the Interstate Commerce Act. This authority in the Interstate Commerce Commission is vital and essential to the parti al exemp­ tion granted by section 202(c). If this section is to be amended as provided in H.R. 5978, it is necessary tha t the Interstate Commerce Commission be given jurisdiction to determine and define the limits of terminal areas of common carriers by water subject to the Shipping Act, 1916, and the Intercoastal Shipping Act, 1933, within which areas terminal motor carrier operations may be per­ formed under the partial exemption granted. Without such provision water carriers subject to the shipping acts mentioned could, without res traint fix extensive terminal areas of ports within which they could provide motor car­ rier service free from economic regulation. The absence of such restrai nt would place other carriers, including the railroads, at a distinct competitive 

disadvantage. Only one of the bills set for hearing before your committee, namelv H.R. 7544, contains this essential provision vesting such exclusive jurisdiction in the Interstate Commerce Commission. You are doubtless aware of a similar bill, S. 1978, pending in the Senate. This Senate bill likewise contains pro­ vision to determine and prescribe the limits of terminal areas for the purposes tha t the Interstate Commerce Commission shall have exclusive jurisdiction 

of section 202(c). The position of the railroads is that any bill receiving favorable consideration by your committee must, for the protection of other interested carrier s and in the public interest, contain a provision vesting exclusive jurisdictio n in the Inte rsta te Commerce Commission to determine and prescribe the limits of terminal areas of all carriers for the purposes of section 202(c). As I have stated, H.R. 7544 does contain such provision. If such jurisdiction is vested in the Interstate Commerce Commission, as would be done by H.R. 7544, 

7432 5—61------3
14 EXEMPTION OF TERMINAL AREA OPERATIONS

then the railroad industry has no objection to the proposed amendment of section 202(c). In the absence of such provision, the railroad industry is strongly 

opposed to the proposed amendment.

I respectfully request that this letter, stating the position of the railroad 

industry, be made a part of the record of hearing before your committee on 

these bills.

Yours very truly,

Gregory S. Princ e.

Mr. Scott. Mr. Chairman, may 1 inquire as to the inclusion in the 

record of my prepared statement ?

Mr. F riedel. Your prepared statement will be included in the record.

(Mr. Scott's statement referred to follows:)

Sta teme nt oe Norman Scott, Genera l T raffi c Manager of Matson

Navigation Co.

Mr. Chairman and members of the subcommittee, I am Norman Scott, general 

traffic manager of Matson Navigation Co., which provides ocean transportation 

service between Pacific, gulf, and Atlantic coast ports and Hawaii regulated 

by the Federal Maritime Board under the Shipping Act of 1916 and the Intercoastal Shipping Act of 1933. We appreciate this opportunity of appearing 

before your committee in support of H.R. 5978. This bill, with some clarifying 

language suggested by the Department of Commerce, would amend section 202(c) 

of the Interstate Commerce Act so as to make it clear tha t the Federal Maritime Board has exclusive jurisdiction over the economic regulation of terminal 

area transfer, collection, and delivery services performed by motor vehicle by 

or for all water carriers in the domestic noncontiguous trades regulated by the 

Board, if such terminal area services are incidental to the water transportation 

service regulated by the Board and are performed within terminal area limits 

which the Interstate Commerce Commission would have exclusive jurisdiction 

to prescribe. We understand tha t both the Federal Maritime Board, acting 

through the Department of Commerce, and the Interstate Commerce Commission, have advised you they do not object to the enactment of this bill, with some 

clarifying amendments. We also understand the Bureau of the Budget agrees 

with the views of the Secretary of Commerce that section 202(c) be amended 

as a means of fostering the expansion of container operations in the offshore 

domestic trades, and has recommended to your committee that the proposed legislation be enacted, with the clarifying amendments. The Comptroller General 

of the United States advised the Senate Committee on Commerce that the proposed changes to section 202(c) would promote uniformity in the treatment 

of interstate common carriers, and tha t he believed the changes to be in the 

public interest. On July 18, 1961, the Senate Committee on Commerce acted 

favorably on S. 1978, a companion bill to H.R. 5978.

This amendment to section 202(c) of the Inte rsta te Commerce Act is in furtherance of sound congressional policy of long standing tha t Federal statutes 

and regulatory principles must keep pace with important developments in tran sportation services. Many years ago before it regulated motor and wate r carriers, 

the Inte rsta te Commerce Commission recognized the right of line-haul rail carriers to perform pickup and delivery service within appropriate terminal areas. 

After motor carriers became regulated under part II, Congress enacted section 

202(c), giving statutory recognition to the principle that rail and water carriers 

subject to the Interstate Commerce Act could continue to provide terminal area 

service with motor vehicles, subject to economic regulation under part I or 

part II I of the act as a component of their basic rail or water services, ra ther 

than under part II as motor vehicle operation. In 1942 when regulation of 

freight forwarders was added under par t IV of the act, section 202(c) was 

amended so tha t the freight forwarders’ incidental terminal area motor vehicle 

transfer, collection, and delivery services would be subject to economic regulation under par t IV as a component of the freight forwarder service, rather than 

under pa rt II as motor vehicle operation.

When the previous amendments to section 202(c) were effected, ocean tran sportation of freight to and from Alaska, Hawaii, Puerto Rico, and Guam was 

generally limited to a dock-to-dock service. The development of integrated container services represents a major technological advance in transportation for
EXEMPTION OF TERMINAL AREA OPERATIONS 15

these offshore areas which demands off-dock receipt and delivery of fre igh t to 

achieve its maximum efficiencies.

The proposed amendment to section 202(c) elim inates uncer tainty as to what 

agency shall regulate terminal a rea services by motor vehicle incidental to wa ter 

transp ort ation in the domestic offshore trades. Fo r many yea rs the Federal 

Maritime Board has accepted tariffs naming single factor rates in the Alaska, 

Hawaii, and Pue rto Rico trades, covering both wa ter tra nsp ort ation and incidental pickup and deliv ery services within term inal areas. The Board has regulated such rates und er the Shipping Act of 1010 a nd Interc oas tal Shipping Act 

of 1933, applying essentially the same type of regulation as the In terstate Commerce Commission exercises over sim ilar rat es subject to the In terstate Commerce Act.

Some doubt was cast on this procedure in 1958 when the In terstate Commerce 

Commission sta ted in Consolidated Freightways, Inc., Extension—Seattle, reported at 34 M.C.C. 593, th at the provisions of section 202(c) of the act do not 

apply to pickup and deliv ery services performed by m otor vehicle wholly within 

the Seattle, Wash., commercial zone, in cide ntal to contin uous through movement 

by water between Sea ttle and Alaska regulated by the Federal Maritim e Board, 

because such wa ter transporta tio n is not subject to the Interstate Commerce 

Act. While the issue w as not contested there, the term inal are a pickup and delivery services in the Alaskan tra de were considered to be subject to regu lation 

by the Interstate Commerce Commission under pa rt II of the act. The Commission recognized th at its decision was highly technical and probably und esirable from a regulatory standpoint. It commented th at the remedy appeared to 

lie in additio nal legislation. If it is correct, th at decision presents a serious 

operating and regulatory problem for oth er domestic noncontiguous trad es. 

However, if H.R. 5978 is enacted, i t provides the remedy.

Matson Navigation Co.’s cargo con tain er service between California and 

Hawaii, instituted in 1958 and greatly expanded since tha t time to meet shippe rs’ 

demands, includes incidental transf er, collection, and delivery service within its 

term inal areas, und er single factor r ates filed with and regu lated by t he Fede ral 

Maritime Board. Bu t Matson’s rig ht to provide this service under such rates 

has been challenged by certain motor carriers in proceedings which are pending 

before both the Federal Maritim e Boa rd and the In terstate Commerce Commission. They contend th at in the absence of specific provisions in section 202 (c), 

a wa ter ca rrier serving the domestic noncontiguous tra des has no rig ht to provide terminal are a services by motor vehicle operated by it or its age nts under 

single fac tor rates filed with the Fed eral Maritim e Board. If the ir contention 

is sustaine d and section 202(c) is not amended, con tain er service in the domestic 

noncontiguous trades may be reduced to pier-to-pier movement, at much high er 

total tra nsp ort ation cost to shippers, consignees, and consumers.

This amendment to section 202(c) is nece ssary for the following reasons:

1. Cargo contain er service effects im portant reductions in transp ort ation costs 

by elim inating multiple cargo handling, reducing the time require d to load and 

discharge the ship, and minimizing the exposure of the cargo to loss, damage, 

and pilferage.

2. Maximum savings in contain er service tra nsporta tio n costs can be realized 

and passed on to shippers, consignees and consumers only by having term inal 

are a handling of the con tain er traffic conducted by a single agency of the linehaul car rier. The principal reasons why thi s is tru e a re :

(a) Perm its maximum equipment u tiliz ation.

(h) Develops operationa l flexibility.

(c) Minimizes one-way, deadhead hau ls by draymen.

(<Z) Facilitates coordination of vessel sta bility requirements.

(e) Permits optimum stowage of cargo in containers.

(/ ) Pinpoints responsibility for loss or damage to cargo and equipment.

(g) Prov ides readily available tra ine d personnel for commodities which 

require special skills.

(h) Assu res compliance with Coast Guard regulations.

3. For the reasons ju st enumerate d, the savings in transp ortation costs which 

Matson has achieved cannot be mainta ined for the benefit of ship pers and consignees unless its rig ht to continue the use of single dray age agents is made 

clear by amendment of section 202(c). The use of a selected drayag e age nt in 

each terminal area is now perm itted under section 202(c) for rail and wa ter 

carriers and freigh t forwa rde rs regulated by the Interstate Commerce Commission. It should not be denied to wa ter carri ers in the domestic noncontiguous
16 EXEMPTION OF TERMINAL AREA OPERATIONS

trades regulated by the Federal Maritime Board. Indeed, we believe the exemption is more urgently needed for such water carrie rs for their offshore domestic 

container services than for those classes of carriers which presently enjoy the 

exemption.

4. If section 202(c) is not amended, shippers, consignees, and consumers will 

lose a large part, if not all, of the 13 to 31 percent savings in transportation 

costs which have already been passed on to them under single factor rates 

covering both port to port transportation and incidental terminal area services 

provided by selected drayman.

With your permission I am submitting for the record a memorandum in support of the amendment to section 202(c) which contains a more detailed description of Matson’s container service and the closely integrated functions of the 

drayage agent in performing terminal area services. Attached to it are photographs of the equipment used in the container service, a compilation of some 

of the transportation cost reductions resulting from the container service originating in terminal areas, and 108 statements of people who want to continue 

using container transportation and the incidental terminal area services. I will 

be happy to answer any questions you may have about our service and the need 

for amending section 202(c).

I respectfully urge tha t the committee approve the proposed amendment to 

section 202(c) of the Interstate Commerce Act.

Mr. F reedel. Ou t next witnes s is Mr. Da n R. Sc hw artz, Mo tor 

Ca rri ers Lawyers Ass ocia tion.

STATEMENT OF DAN R. SCHWARTZ, MOTOR CARR IERS LAWYERS 

ASSOCIATION, DETROIT, MICH.

Mr. Schwartz. Mr. Ch airm an and gen tlem en of th e com mittee, I 

wish to th an k you fo r the op po rtu ni ty of ap pe aring here tod ay to 

express view s on th e legislati on you are considerin g.

Mr. n ame is D an R. Sc hw ar tz ; my office an d mailin g addre ss is 1730 

Ly nch Bu ild ing , Jacksonville 2, Fl a. I hav e practic ed law at Ja ck ­

sonville fo r 30 years continuously ex cept f or a 3 ^ -y ear perio d in 1942- 

45. I have spec ialized in re presen tin g m oto r ca rri ers befo re St ate regulator y bodies since 1934 and be fore the In te rs ta te Comm erce Commission since the pas sage of part I I of the In te rs ta te Com merce Ac t of 

1935. Since 1935, I hav e dev oted vi rtu ally all of my tim e to mo tor 

ca rrie r work.

2. I have been desig nated by th e presiden t of th e Moto r Carrie rs 

Lawy ers Associa tion, he rein refe rred to as the associatio n, as a spe ­

cia lly ap point ed member of t he as soc iati on’s le gis lative co mm ittee a nd 

have been autho riz ed an d directe d by him an d by the chair ma n of 

the leg islative com mittee to ap pe ar an d testify , giving the associatio n’s views on the propose d legisla tio n specified in th e capti on hereof. Th is directive stem s from th e res olu tion ad op ted by the association a t its annual conference in Dall as, Te x., on A pr il 14,1961.

3. Th e Moto r Car rier s La wy ers Associatio n, organiz ed in 1941, 

is composed of about 370 law yers th ro ug ho ut the Un ite d States who, 

as do I, specialize in moto r ca rr ie r representatio n befor e Fe de ral and 

St ate regu latory agencies. Its c ur re nt officers a re : George S. Dixon, 

preside nt, 2150 Gua rd ian Bu ild ing, Detroit 2, Mich.; W en tw orth E. 

Griffin, first vice presiden t, 1012 Ba ltimo re Bu ild ing, Ka nsas City 

Mo.; Howe ll Ellis , second vice presiden t an d chair ma n, leg isla tive 

committee, 1210 Fid el ity Bui ld in g?

 111 Mo num ent Circle, In dian ap olis, In d.; Ed win C. Re mi nger, th ir d vice presiden t, 905 Th e Le ader 

Bu ild ing , Cle veland , Oh io; Ew ell H. Muse, Jr. , fo ur th vice president, 

415 P er ry B roo ks Bu ild ing, A ustin , Te x.; Ph inea s Stevens, tre asurer,
EXE MPTION OF TERMINAL AREA OPERATIONS 17

700 Petroleum Building, Jackson, Miss.; Beverly S. Simms, secretary, 

512 Barr Building, 910 17th Street NW., Washington, D.C.

At this point, if it please the committee, in view of the statement 

by Mr. Jarman with respect to the amendment proposed by Commissioner Murphy, I will depart from my written statement and summarize the position in just a few sentences.

Mr. Friedel. Your complete text will be inserted in the record. 

(Mr. Schwartz’ statement referred to follows:)

4. Th e as so ci at io n re sp ec tfully reco mmen ds th a t th e prop os ed le gis la tion be 

en ac te d pr ov id in g it is m ad e cl ea r th a t th e I n te rs ta te C om me rce Co mmiss ion h as 

th e sa m e po w er an d au th o ri ty to det er m in e an d fix th e lim its of th e te rm in al 

are as of th e comm on ca rr ie rs by w ate r in in te rs ta te co mm erc e su bje ct to th e 

Sh ippi ng Act, 1916, an d th e In te rc oast al Sh ip pi ng Act, 1933, as it pre se ntly has 

w ith re sp ec t to th e carr ie rs re gul at ed by it under th e In te rs ta te Co mm erc e Ac t. 

The r ea so ns f or th is po si tion a re se t fo rt h below.

5. F or br ev ity, I sh al l here in aft er re fe r to th e In te rs ta te Co mmerce Commission as th e Co mm ission , to th e In te rs ta te Co mm erc e Act as th e ac t, to th e 

comm on carr ie rs by w ate r in in te rs ta te co mmerce su bje ct to th e Sh ip pi ng Act, 

1961, and th e In te rc o ast al Sh ippi ng Act, 1933, as th e no n-IC C w ate r carr ie rs , to 

th e carr ie rs re gula te d under th e act as IC C carr ie rs , and to th e F ed era l M ar itim e B oa rd a s th e M ar itim e Boa rd .

6 (a ). The as so ci at io n reco mmen ds en ac tm en t of th e le gi sl at io n be ca us e it 

be lie ve s it on ly pr oper an d fa ir th a t th e m ot or c a rr ie r ope ra tions of, or oper ation s be ing co nd uc ted by oth er s as agen ts or under contr actu al arr angem ents 

w ith , no n-IC C w ate r c a rr ie rs in te rm in al are as sh ou ld be give n ex ac tly th e sa m e 

ex em pt ion fr om econ om ic re gula tion as is pre se ntly give n by se ct io n 20 2( c) to 

th e te rm in al a re a m ot or c a rr ie r oper at io ns of ICC carr ie rs . By econ om ic re gula ti on is m ea nt th e re quir em ents o f th e act re sp ec ting th e lic en sing of oi> erations 

by th e is su an ce of ce rt if ic at es of pu blic co nv en ienc e an d ne ce ss ity or per m its 

an d th e co nt ro llin g of ra te s, fa re s, and ch ar ge s of th e carr ie rs . P re se ntly th e 

te rm in al a re a m ot or c a rr ie r op er at io ns of th e no n-IC C w ate r carr ie rs , or of 

th eir ag en ts or ot he rs ac ti ng under co n tr act or in co nc er t w ith them , a re su bje ct 

to economic re gu la tion by th e C om mi ssion .

(?>) An ex am in at io n of th e pr op os ed le gi sl at io n a t on ce ra is es th e qu es tion 

which ag en cy , if an y, sh all de te rm in e an d fix th e lim it s of te rm in al are as fo r 

th e no n-IC C w ate r carr ie rs ? I t is po ssible th a t th e re su lt o f th e pre se nt pr op os al 

m ay be eit her a ju dis dic ti onal va cu um or, w h at will be al m os t as ba d, a ju ri sd ic ­

ti onal co nflic t be tw ee n th e Co mm iss ion an d th e M ar itim e Boa rd .

(c ) It is pr op os ed to de pr iv e th e Co mmiss ion of th e po w er to re gula te , ex ce pt 

w ith re sp ec t to sa fe ty , th e te rm in al a re a m ot or ca rr ie r ope ra tion s of no n-I CC 

w ate r carr ie rs . The C om mi ssion , of cou rse, has no p ow er t o re gula te th e n on -IC C 

w ate r carr ie rs in an y oth er re sp ec t an d sinc e th ere a ppears to b e no specific men ­

tion of m ot or carr ie r oper at io ns in th e Shi pp in g Ac t, 1916, or th e In te rc o ast al 

Sh ippi ng Act, 1933, th e no n-IC C w ate r ca rr ie rs wou ld be in a pos itio n to clai m 

th a t n eit her th e Co mmiss ion or th e M ar tim e B oa rd ha s au th o ri ty to pre sc ribe 

te rm in al are a li m it s and ea ch such ca rr ie r co uld fix it s own te rm in al a re as a s it 

cho oses. Bas ed up on actu al ex pe rien ce , I fe el th a t th e w ate r c a rr ie rs wou ld 

co nd uc t su b sta n ti al ove r- th e- ro ad m ot or c a rr ie r oper at io ns under th e gu ise of 

te rm in al are a op er at io ns . My ex pe rien ce de rive s fr om th e po sition ta ken by a 

carr ie r th en kn ow n as Pan -A tl anti c Ste am sh ip Co. which , clai m in g th e ri ght to 

fix it s own te rm in al are as in th e S ta te of F lo ri da, co nd uc ted mot or c a rr ie r oper ation s to in la nd po in ts as fa r d is ta n t as 75 m ile s fr om th e port i t se rv ed unti l th e 

Co mm iss ion pr es cr ib ed pro per te rm in al a re a lim it s an d put an en d to it s lo ng ­

dis ta nc e opera ti ons; se e C en tral T ru ck Lin es , In c. v. Pan- Atlantic Ste am sh ip

Corp ., No. MC- C 2163, 82 M.C .C. 395. F ort unate ly , th is c arr ie r was an d is s ubje ct 

to re gu la tion of th e Com miss ion unde r p a rt II I of th e act so th a t th ere was no 

qu es tion of th e Co mmiss ion’s po wer an d au th o ri ty to de te rm in e and pr es cr ib e 

th e te rm in al are a li m it s in which un ce rtific at ed m ot or carr ie r ope ra tions co uld 

be co nd uc ted by P an-A tl anti c Ste am sh ip Co. under section 20 2( c) of th e ac t.

(d ) Assum ing th a t th e M ar itim e B oa rd whi ch do es h av e som e co nt ro l ov er th e 

non-I CC w ate r carr ie rs , ca n find le gis la tive w a rr a n t to det er m in e an d pre sc ribe 

te rm in al are a li m it s fo r su ch carr ie rs , it is not cert ain th a t th e B oar d will us e 

th e same cri te ri a or arr iv e a t th e sa m e re su lt as wou ld th e Co mm iss ion . I t is
18 EX EM PT IO N OF TE RM INAL AREA OPERATION S

no t ex pe ct ed th a t two se para te an d unc oo rd in at ed ag en ci es dea ling w ith th e 

su bj ec t of te rm in al are as ca n ac hi ev e re ad ily, if a t al l, a un ifi ed po lic y of adm in is tr ati on, proc ed ure, an d tr eatm ent. It is ve ry i>ossihle th a t th e M ar iti m e 

B oa rd wou ld fix te rm in al are as co ns id er ab ly in ex ce ss of th os e allo wed by th e 

Co mm ission , so th a t th e no n-IC C w ate r carr ie rs will co nd uc t fo r- hir e m ot or ca rri e r op er at io ns fr ee o f econo mic re gula ti on i n co m pe tition w ith ce rt if ic at ed mot or 

carr ie rs su bje ct to e conom ic re gula tion by th e Co mm ission . T his co mpe tit ion, in 

my op inion, will ha ve an ad ve rs e effect up on th e r eg ula te d m ot or ca rr ie rs an d be 

contr ary to th e nat io nal tr an sp o rt ati o n po lic y (T ra n sp o rt ati o n Act, 194 0; 

pr ea m bl e to th e In te rs ta te C om merc e Act, ti tl e 49 USC A).

7. It is th er ef ore re sp ec tful ly su gg es te d th a t th e prop os ed le gi sl at io n be 

am en de d by ad di ng th er et o a pr ov isio n in su bs ta nc e and te no r, as fo ll o w s:

“T he Co mmiss ion sh al l ha ve ex cl us iv e ju ri sd ic ti on to det er m in e and fix th e 

of te rm in al are as un de r t h is se ct ion. ”

R es pe ct fu lly su bm itt ed .

D an R. Sch w a rtz .

Mr. Schwartz. Yes, sir; I ask th at my statement, however, go into 

tiie record and any questions witli respect to the statement I will answer 

now or later, as the committee may desire.

The position of the Motor Carriers Lawyers Association briefly is 

that stated by Commissioner Murphy as f ar as the Commission is concerned.

I was the attorney for Central Truck Lines and other motor carriers 

in the case of Central Truck Lines v. Pan-Atlantic Steamship Company, which Commissioner Murphy’s statement cites and so does mine, 

and we have had experience with water carriers in the matter of fixing 

terminal areas. We, therefore, recommend to the committee that H.R. 

5978 be passed with the amendment suggested by Commissioner 

Murphy.

I would like to point out to the committee th at all of these bills are 

not quite exactly the same. IT.R. 7544 does contain in a subparagraph 

(3) the statement which is in better wording than tha t suggested by me 

in my statem ent:

(3) T he Co mm iss ion sh al l ha ve ex cl us iv e ju ri sd ic ti on to det er m in e an d pre ­

sc ribe th e l im its of te rm in al are as of th e var io us c arr ie rs fo r th e pu rp os e of th is 

se ction 202 (c ).

Mr. Chairman, that concludes my statement in chief of the hill.

Mr. Friedel. Thank you, Mr. Schwartz.

Mr. Jarma n ?

Mr. J arman. I thank Mr. Schwartz for his support of the bill and 

assure him that the amendment t hat I will offer when the subcommittee goes into executive session will be identical with paragraph (3) 

of H.R. 7544.

Mr. Schwartz. Tha nk you very kindly, sir.

Thank you, Mr. Chairman.

Mr. F riedel. Mr. Devine.

Mr. Devine. No questions.

Mr. Friedel. Mr. Collier.

Mr. Collier. No questions.

Mr. F riedel. Thank you very much.

Mr. Schwartz. Thank you, sir.

Mr. Friedel. Our next witness will be Mr. Carl Wheeler of the 

Sea-Land Co.

Mr. Wheeler, if you do not want to read your prepared statement, 

we will have it inserted in the record and you may highlight it.
EXEMPTION OF TERMINAL AREA OPERATIONS 19

STATEMENT OF CARL WHEELER, SEA-LAND CO., NEWARK, N.X.

Mr. Wheeler. Thank you, Mr. Chairman.

My name is Carl Wheeler, I am special advisor, regulatory affairs, 

for the Puerto Rican division of Sea-Land Service, Inc.

In the interest of conserving the time of this committee, with the 

permission of the chairman, we will not read our prepared statement 

into the record. However, we do request tha t it be made a part of 

the record. We would like, however, to offer two or three comments 

concerning II.R . 5978.

It is our understanding, and Mr. Jarman mentioned it briefly this 

morning, th at the Commerce Department has recommended an amendment which will clarify the definition of interstate commerce in accordance with a definition as appears in section 1 of the Sh ipping Act, 

1916.

With that amendment, Sea-Land endorses the legislation, and we 

urge favorable congressional action.

Mr. Friedel. Does that also include the other amendment recommended by Mr. Murphy ?

Mr. Wheeler. Yes, si r; we do recommend that as well.

Mr. Friedel. Thank you.

Mr. Jarm an ?

Mr. J arman. I thank Mr. Wheeler for his support of the bill. 

Mr. Friedel. Mr. Devine?

Mr. Devine. No questions.

Mr. Friedel. Mr. Collier ?

Mr. Collier. No questions.

Mr. Friedel. Thank you very much.

Mr. Wheeler. Thank you very much.

(Mr. Wheeler’s statement referred to follows:)

Sta tem ent by Car l H. W h eel er, Spec ia l Adv ise r, R eg ul at or y Affa ir s, 

Sea -L an d Ser vi ce, I nc.

W e appre ci at e th e opport unity to appear be fo re th is co m m itte e to day to 

di sc us s II.R . 5978 an d si m il ar hi lls to am en d se ction 20 2( c) of th e In te rs ta te 

Co mmerce Ac t of 1940. I am her e on beh al f of Sea -L an d Se rvice, Inc., P uert o 

R ic an Divisi on . We m ain ta in re gula r biwee kly sa ilin gs fr om P o rt N ew ar k, 

N.J., to th e p rinc ip al por ts i n Puert o Rico.

D ur in g th e la st 5 or 6 years th is co untr y’s m erc hant m ar in e has ac hiev ed 

sign ific an t im pr ov em en ts in th e metho ds of carr yin g ca rg o in oc ea n tr an sp o rta ti on. Pr ob ab ly th e mos t im p o rt an t of th es e re ce nt ch an ge s has be en in th e 

field of co nta in er iz at io n, w hi ch per m its th e m ov em en t of goods in carr ie row ne d co nta in er s th er eb y m in im izin g ca rg o han dl in g co sts , tr an sm it tim e, an d 

cl ai m s fo r los s a n d /o r da m ag e to m er ch an di se .

Se a- Lan d Se rvice, In c., w hi le perh ap s not th e ori gin at or, has pi on ee re d in 

co nt ai ne ri za tion, an d w as th e fi rs t co mpa ny to ut iliz e a st an dar d-s iz e conta in er 

in th e m as s comm on carr ia g e of goods by w at er. Tod ay Se a- Lan d oper at es a 

to ta l of s ix fu ll conta in er sh ip s, of w hich th re e a re em ploy ed in our P uert o Ric an 

se rv ice. The se ve ss els hav e th e ca pac ity to li ft 23.712 co nta in er s an nuall y in 

ea ch dire ctio n. O ur se rv ic e is co nd uc ted p u rs u an t to th e Sh ip pi ng Act, 1916, 

as am en de d, th e In te rc o ast al Shi pp in g Ac t of 1933, as am en de d, an d th os e ot her 

sta tu te s go ve rn in g th e comm on carr ia g e of good s by w ate r in th e offsh ore 

do m es tic n on co nt ig uo us tr ade.

Shi pp er s an d co ns igne es ca n on ly ac hiev e th e m ax im um be ne fit s of conta in er ­

iz at io n whe n conta in er s a re lo ad ed a n d /o r un lo ad ed a t th e actu al ult im ate o rigi n 

an d des tinat io n of th e tra ffi c. W he n th is ca nno t he ac co mplish ed , goods m us t 

no t on ly he m ultih an dle d on th e w ay to sh ip side , but th en ag ai n han dle d an d 

lo ad ed in to conta in er s th er eb y def ea ting m an y of th e a dvanta ges of c onta in er iz atio n. R eh an dl in g of goods in it se lf su bst anti all y in cr ea se s th e po ss ib ility of loss
20 EXEMPTION OF TERMINAL AREA OPERATIONS

or damage, causes delays in transit, not to mention the added handling costs 

which are experienced by the carr ier and must, in turn, be passed on to shippers 

and consignees in the ocean ca rrie r’s freight rate. Therefore, in lieu of shippers 

and consignees deriving the maximum economic and operational advantages from 

containerization, the service becomes nothing more th an a modified conventional 

operation when the traffic must be handled either into or out of containe r 

equipment at carrier’s pier facility.

We have been quite successful during the last few years in reaching the 

actual origin or destination of much of our traffic. This has been accomplished 

by developing interchange arrangements with ICC certificated motor carr iers who 

utilize our container equipment in lieu of their own trailer s.

However, we have been unable to achieve an optimum service from eith er 

the shippers’ or carriers’ standpoin t since there is still a relatively large 

percentage of multihandled cargo moving across our terminal.

You may ask why we have not been successful in r eaching the origin and/or 

destinati on of more of our traffic. The answer to this involves several factors. 

Both the wate r carr ier and motor carrier achieve relatively poor equipment 

utilization under interchange arrangements where the wate r carrier is dealing 

with 30 or 40 different motor carriers. For instance, the water carr ier may 

make container equipment available to two different motor carriers, both of 

which are going to pick up a 20,000-pound shipment from two different shippers 

located only one block apart. In lieu of a single trai ler which has the capacity 

to lift both shipments, two pieces of equipment must be dispatched. The water 

carrier does not achieve optimum loading of his container equipment and the 

motor carrier is faced with the expense of deadheading trac tor equipment to 

pick up our container equipment. Since t he cost of equipment and service are 

factors which are included in the level of rates, it is in the public inter est for 

the water car rier to minimize equipment costs by utilizing a minimum number 

of containers, and the motor car rier must minimize expenses by achieving 

maximum utilization of his tractors and manpower by eliminating deadhead 

trips.

Where container equipment is moved by interchange involving the use of a 

substantial number of motor carriers, none of these carri ers achieve a sufficient 

volume of business in order to effect sufficient economies to produce an adequate 

rato structu re. As a result, many shippers today find it will be no more 

expensive, and in some instances less expensive, to make their own trucking arrangements and to tender their goods to the water carr ier at our pier facility.

Enactment of this proposed amendment of section 20 2(c) of the Interst ate 

Commerce Act will correct some of the aforementioned problems. This proposed legislation will permit a water carrie r, such as Sea-Land who is equipped 

to do so, to perform pickup and/or delivery services within prescribed terminal 

zones, and thereby render a complete trans porta tion service to and from those 

shippers and consignees located in such areas . By performing the pickup a nd/or 

delivery of goods incidental to the line haul ocean transporta tion ourselves, 

we will be able to achieve maximum equipment utilization and the lowest 

possible cost for the performance of these services. Since we will be working 

against a fixed volume of traffic, we will be in a position to maint ain a “pool” 

of container equipment at key locations thereby minimizing deadhead trips to 

obtain empty container equipment. We will be able to coordinate our pickups 

so as to achieve maximum utilization of our tractors and manpower. These 

factors will enable us to perform said terminal services at a substanti ally 

lower cost than would otherwise be possible.

As long as we receive a substantial quan tity of traffic at our terminal, our 

rate s must be predicated upon our cost of receiving, checking and loading this 

freight into our trai ler equipment. With enactment of the proposed amendment to section 20 2( c) , Sea-Land, by offering local pickup and delivery service 

incidental to the line haul ocean transportation, will be able to place these 

same goods into our container equipment at shipper’s premises for tha t sum or 

possibly less than is currently paid by the shipper to merely tran sport his 

goods to our pier. In other words, we should be able to develop a tariff 

structure wherein the cost incidental to the transporta tion of the goods can 

be more accurately related to the services which are performed. Where goods 

jnove under a pickup service thereby eliminating the ocean carriers rehandling, 

a tariff stru cture can be developed wherein terminal costs are deleted from 

the ocean freig ht rate, thereby providing an optimum service at the lowest 

possible cost.
EXEMPTION OF TERM INAL AREA OPERATIONS 21

The advantages which can accrue to shippers and consignees have been 

demonstrated by Matson’s operation under their westbound container freight 

tariff No. 14. The advantages are furthe r demonstrated by our own domestic 

operations which are conducted pursuant to part III of the In ters tate Commerce 

Act, and we offer and we do perform pickup and delivery service incidental 

to our line haul transportatio n under the present exemption in section 202(c).

We urge th at this committee endorse prompt passage of H.R. 5978 and similar 

bills so that the citizens of Puerto Rico, Guam, Hawaii, and Alaska may enjoy 

those benefits which have accrued to shippers and consignees within the continental United States since passage of the Motor Carrier Act which included 

the original section 202(c) exemption in 1935. These bills do nothing more 

than that. Rail and wate r carriers conducting their operations pursuant to 

the Inte rsta te Commerce Act have repeatedly shown the benefits of the present 

section 202(c) exemption, and it is our belief that those citizens of our noncontiguous States and territor ies should not be deprived of these same benefits.

Mr. Friedel. Our next witness will be Mr. James Fort, counsel, 

public affairs, American Trucking Associations.

You may proceed, Mr. Fort.

STATEMENT OF JAM ES F. FORT, COUNSEL, PUBLIC AF FA IRS,

AM ERICA N TRUCKIN G ASSOCIATIONS, INC., WASHINGTON ,

D.C.

Mr. Fort. Mr. Chairman and gentlemen of the subcommittee, may 

1 say, first, tha t I do not have a prepared statement to give to you 

this morning, and I hope you will accept my apologies fo r that.

My name is James F. Fort. I am counsel, public affairs of the 

American Trucking Associations, with offices at 1616 P Street NAY., 

Washington, D.C.

I think that most of the gentlemen of the committee know the 

formation of the American Trucking Associations, but for the record 

it is the national trade association of the trucking industry representing all forms of truck transporta tion, both private and for-hire.

My appearance today is in opposition to H.R. 5978 and the similar 

bills which are before the committee today. From previous testimony today, I am quite sure tha t the gentlemen of the committee 

are familiar with the status of the present exemptions which are 

granted to carriers under section 202(c) of the Interstate Commerce 

Act. There is, however, one aspect of the exemption which is sought 

by the advocates of the legislation which we feel should be emphasized.

Motor carriers, railroads, freigh t forwarders, express companies, all 

of whom presently enjoy the exemption, all of those carriers are subject to regulation by the ICC. We should like to emphasize tha t 

these underlying carriers, be they rail, express, motor, or what have 

you, when they Use the motor carrier exemption granted them in 

202(c) are governed by ICC regulations. Thus, when a railro ad uses 

a motor carrier for pickup and delivery service within a terminal area, 

tha t pickup and delivery service is included in tariffs tha t are filed by 

the railroads with the ICC.

Under the bills t hat are before you today, the water carriers would 

be granted an exemption to use motor carriers, but the tariffs which 

they file to cover their motor carrier service would not be filed with 

the ICC. Instead the Federal Maritime Board would have jurisdiction over those tariffs. That, we feel, is a most important distinction. As the committee well knows, the trucking industry has been 

on record and has appeared before this committee many times in the
22 EXEM PTIO N OF TERM IN AL AR EA OPE RATI ONS

past years to urge the elimination or, at least, the curtailment of various exemptions which presently exist in the Interstate Commerce 

Act.

Now we are faced with a further exemption from regulation. This 

committee, your counterpart in the Senate, the executive branch, and 

many students of transportation have expressed serious concern in 

recent months over the decline of the regulated common carrier industry. This concern has not been limited to any mode of tran spo rtation. The committee knows that many studies have been conducted 

and many solutions have been proposed in the interest of creating a 

stronger common carrier system in the public interest and in the in terest of national defense.

Almost without exception, those studies have urged the curtailment 

of existing exemptions. These exemptions include the agricultural 

exemption, the bulk commodity exemption, the private car exemption, and dozens of others. The intent and purpose of these multiple 

recommendations has been to bring about stability and streng th to 

the common carrier system.

To further amend the act to provide for exemptions at this time 

can only furt her weaken the common carrier system. We see no need 

for this legislation. The water carriers who seek enactment of this 

bill have operated for many years without such an exemption.

As we see it, this bill would allow them to (1) use their own trucks 

in pickup and delivery service, subject, as T said a moment ago, to 

Federal Maritime Board jurisdiction, and (2) it would allow them to 

use noncertifloated motor carriers for their pickup and delivery, again 

subject to only Federal Maritime jurisdiction.

M e see no public need for this exemption and we see a continued 

erosion of existing carrier service should the bill be enacted. An 

important aspect of the concern which has been expressed over the 

decline of common carriage relates to the so-called area operation. 

These are the blatantly illegal or, on the other hand, the quasi-illegal 

or questionable operations of motor vehicles which have caused much 

concern to the ICC and to our industry in the past few years.

Much of the testimony which has been developed before the Senate 

Commerce Committee in recent hearings has laid the blame for these 

illegal operations at the foot of various exemptions which exist from 

the Interstate Commerce Act. today and particularly from part II. 

The extension of this exemption to the water carriers might well bring 

about a further increase in illegal operations.

Mr. Chairman, the trucking industry opposes the enactment of this 

bill. AV e strongly urge that the committee take no action on it during 

this session of Congress. That would complete my statement.

Mr. F riedel. Mr. Fort, am I correct in my interpretation of your 

statement that if this amendment that the Senate adopted is included 

you would be in favor of the bill ?

Mr. F ort. No, sir, we would still oppose the bill. We certainly 

believe tha t the addition of tha t amendment would improve the bill, 

since it would give the ICC rath er than the Federal Maritime Board 

the authority to limit a terminal area, but even with the inclusion of 

that amendment we would still oppose the bill at this time.

Mr. F riedel. Mr. Jarm an, any questions?
EXEMPTION OF TERMINAL AREA OPERATIONS 23

Mr. J arman. Mr. Fort, you referred to the ICC regulation of rates 

at the present time, and then to the change in jurisdiction under this 

bill to the Federal Maritime Board. It is true tha t if this bill becomes law, the Federal Maritime Board would regulate the rates of 

the water carriers operating under this legislation; would it not?

Mr. Fort. Tha t is my understanding, sir.

Mr. J arman. I s there any basis for assuming th at we would not get 

the same kind of fair regulation of rates through the Federal Maritime Board th at we get through the ICC ?

Mr. Fort. I certainly did not mean to infer tha t there would be 

unfair or improper regulation on the part of the Federal Maritime 

Board, but simply to point out to the committee that, as I said, the 

underlying carriers that presently enjoy this exemption, the motor 

carriers, the rail carriers, express, freight forwarders, are presently 

regulated by the ICC, so that when a railroad, for example, operates 

trucks in a terminal area, th at operation is subject to the same jurisdiction, that is, the ICC’s jurisdiction, as the underlying carrier.

If this bill passes, the water carriers who would be brought under 

the exemption would be operating trucks under that same exemption, 

but they would not be subject to ICC regulation.

Mr. J arman. Would you agree that the bill under discussion would 

help achieve more uniformity in transp ortation ?

Mr. F ort. There is no question but what it would achieve statutory 

uniformity and AT A favors uniformity, but we. favor a fair, equitable type of uniformity. We do not believe this bill would give us 

that.

Mr. J arman. However, you would agree that if the bill passes, the 

legislation would give water carriers not subject to pa rt II of the 

Interstate Commerce Act the same identical pickup and delivery 

service exemption provisions that are afforded p art I (rail carriers), 

part I I (water carr iers), and pa rt IV (freight forwarders) ?

Mr. F ort. Yes.

Mr. J arman. Based on your own understanding of the facts involved. will you agree that the exemption tha t is proposed in the bills 

before us will mean lower shipping costs to the shippers?

Mr. F ort. I have no knowledge on which to base an answer to that, 

Mr. Jarman.

Mr. J arman. Have you given any study to the containerization 

program and the manner in which it is being handled ?

Mr. F ort. Yes, the associations have given a great deal of study 

to it.

Mr. J arman. T)o you know, if that is within your own knowledge, 

anything about comparative costs of containerization tran spo rtation with the old system of handling shipments?

Mr. F ort. I am afraid I personally do not, sir. I would only have 

the vaguest of information about tha t personally.

Mr. J arman. I would like to urge that you give consideration to 

tha t because it seems to me that the savings involved by the passage 

of this bill underlies the public interest involved. Comparative costs 

indicate th at savings ranging from 13 percent to 31 percent are being 

achieved and can be achieved under this type of transportation program. I think that is a strong argument tha t this bill definitely is in 

the field of improved transportation facilities and very definitely in 

the public interest.
24 EXEMPTION OF TERMINAL AREA OPERATIONS

Mr. Fort. I would reply to that this way, sir.

The Congress, basically, is going to have to come to grip s one of 

these days, as is the transportation industry, with a question of 

exactly what is the public interest in transportation. The transportation industry as such is not doing too well overall—railroads, air­ lines, motor earners. It makes no difference to whom you may speak.

If the Congress decides that, yes, we really do want and need a 

strong common carrier transportation system, then the Congress is 

also going to have to decide at some point, “We, the Congress, are 

going to have to start protecting them more than we are now protecting them. We are going to have to take back some of the exemptions th at we have already given. We are going to have to give them 

more protections in return for the service which we require of them 

in the public interest.”

Our industry is here to serve the public. If the Congress decides 

tha t we want to give an exemption here, give an exemption there, every 

one of those is taking something away from the common carrier, 

regulated industry.

Now, this may be in th e public interest because, let us say, it will 

result in lower rates. On the other hand, the public interest is very 

strong in the preservation of the common carrier system, as a pa rt of 

the emotional defense effort and as an important segment of the 

economy of this country.

These two things must be balanced by the committee. They must 

be balanced by the transportation industry. I did not mean, Mr. Jarman, to make a speech on this point in reply to your comment.

Mr. J arman. My own reaction is that I think there is a lot of t rut h 

in what you say as to the public interest. However, the decision 

should be tha t if the public interest demands greater financial support of different modes of transporta tion, then tha t support should 

come from the entire country.

I would question the line of reasoning that the public interest would 

justify penalizing a shipper by not providing for him by legislation, 

or regulation, or whatever, the most economical business operation 

possible. If that business operation and the economy of it makes it 

tougher for a particular line of transportation to survive, then I would 

agree tha t the public interest may well dictate tha t the government 

representing all the public, might be justified in allowing a subsidy. 

I certainly do not think tha t such a subsidy should be footed by the 

shipping public.

Mr. F ort. This is a decision which you just must make. If the public interest lies, on the one hand, in giving the shipper the lowest possible transporta tion rate, but at the same time by so doing you are 

weakening your own creature, the regulated transportation industry, 

if this is the decision tha t you gentlemen wish to make, then tha t 

is your decision.

We would obviously hope it would be the other way.

Mr. J arman. Mr. Chairman, the only other comment I would make 

is that, as he has done a number of times in the past before this committee, Mr. For t has made an excellent presentation of his own position on the suggested legislation. I would hope tha t th e amendment 

that the Inte rsta te Commerce Commission shall have exclusive ju risdiction to determine and prescribe the limits of terminal areas of the
EXEMPTION OF TERMINAL AREA OPERATIONS 25

various carriers for the purposes of subsection (c) of this section, 

will be considered by you and your organization as sufficient protection in this overall transportation held. I frankly had hoped that 

tha t would be the line of your testimony this morning.

Mr. F ort. I wish it had been, sir. The industry does feel that the 

addition of t hat amendment would be most helpful and certainly believes that if the committee should decide to act upon the bill i t should 

be included.

Mr. J arman. Thank you.

Mr. F riedel. Mr. Devine?

Mr. Devine. No questions.

Mr. F riedel. Mr. Collier?

Mr. Collier. One question, Mr. Chairman.

I want to study this section of the act a little more closely. At the 

present time, as I understand it, there is no regulation of rates of 

motor carriers under any circumstances by the Maritime B oard; is tha t 

correct ?

Mr. F ort. No, sir; none at all at the present time.

Mr. Collier. This legislation, if it were enacted, would then in sum 

and substance, as I understand it, place the rate on the shipping of 

any commodity, whether it is shipped by water and subsequently the 

completion of the shipment to its destination by a motor carrier or all 

by water, all under the jurisdiction of the Maritime Boa rd; is tha t 

righ t ?

Mr. F ort. That is my understanding, sir. The rates for the water 

carriers which would be filed with the Maritime Board would include 

the charges fo r pickup and delivery service, let us say, and therefore, 

the operation of the trucks and the rates of those trucks would be 

under the tariffs filed with the FMB.

Mr. Collier. There has been repeated reference to terminal areas, 

and I believe I understand what a terminal area is, but ju st how would 

this be defined, in your opinion ? I mean a terminal area would be 

exactly what, as fa r as the legislative definition is concerned ?

Mr. Fort. The ICC has, insofar as motor carriers and as freight 

forwarders are concerned, already defined specifically what is a terminal area under this exemption. They have not so defined a terminal 

area as to water carriers or railroads. A terminal area in practical 

operation is just what it indicates. It may be a city. It may be somewhat larger than a city. It may be a county.

Let us take Arlington County across the river here. If a motor 

carrier or a railroad has a terminal in Arlington County, the terminal 

area might be just the county. It might include a much larger area. 

These are specifics which have been prescribed by the ICC in some 

instances.

Mr. Collier. You mentioned the fact t hat this would probably increase the volume of the so-called gray area operations in the motor 

carrier industry which all of us are concerned with. How, in effect, 

would this increase the operation ? Would this bring into the motor 

carrier industry more of the so-called gray area operators, or would it 

simply increase the volume of those presently operating?

Mr. Fort. I do not mean to indicate, sir, th at the operation of trucks 

under this exemption per se will be gray area operations. Should this 

bill pass the operation of the motor carriers, or water carriers would
26 EXEM PTIO N OF TERM IN A L AR EA OPE RATI ONS

be perfectly legal. What I am saying is th at most of the gray area 

operations with which we are concerned, and with which the ICC, 

and the Senate Commerce Committee, and many others are concerned 

today, arise under the exemptions. The committee is intimately familiar, of course, with the agric ultura l exemption which allows a 

farmer to carry his own goods without regulation or any for-hire carrier to carry agricultural products from A to B without any regulation whatsoever. If this bill were to pass, we would have another 

exemption and every time you get another exemption you have a 

potential for more gray area operations.

There is nothing specific that I could point to and say if this bill 

passes this is going to be an illegal operation, but the potential is there 

and this is the thing which disturbs us.

Mr. Collier. One other question, if I might direct this to my colleague, Mr. Chairman.

Are there any figures available or any projections made that would 

indicate tha t passage of this amendment to section 202 would, in fact, 

reduce the cost to the shipper?

Mr. J arman. I would also like to refer my colleague to appendix 

B of the large exhibit furnished earlier in the hearing. It sets out a 

number of instances of comparative transportation costs on representative commodities. I will not go thro ugh them, but I will refer you to 

the first one which deals with bakery goods. It spells out, first, the 

different charges under the older system of shipping, coming out with 

a total of $939.11. Then you will notice that under tariff No. 14, item 

220, fo r the same shipment, the total cost would be $713.77. The saving to the shipper under the containerization program is $225.34, or 

31.57 percent There are a number of other instances of savings th at 

would be achieved under the kind of transportation system that would 

be legalized by the passage of the bills before us.

Mr. Collier. I apologized for asking that question. I arrived late 

and did not have this document in front of me.

Tha t is all, Mr. Chairman.

Mr. Friedel. I would like to repeat Mr. Murphy's statement in 

pa rt here. lie s ays:

As th e law now re ads th e Co mm iss ion has th e po wer to det er m in e th e lim its 

of te rm in al are as of c arr ie rs su bje ct to p a rt s I. II , III, an d IV of th e In te rs ta te 

Co mm erc e Ac t. For e xa mple, see C en tral Tru ck L in es , In c., et al. v. Pan A tl anti c

Ste am sh ip Co rporation, 82 M.C.C. 395, in which tire p a rt ia l ex em pt io n w as dis ­

cu ss ed in so fa r as it re la te d to a w ate r carr ie r su bje ct to In te rsta te Co mm erc e 

Com miss ion ju ri sd ic tion an d, in effect, fixed th e te rm in al are as of th e def en dan t 

ca rr ie r a t Tam pa . Ja ck so nv ill e, and Miami, Fla . Ac cording ly, if II .It. 5978 w er e 

to be en ac te d w ithout a cla ri fy in g p rovi sion , som e do ubt m ay a ri se as to w het her 

th e Co mmiss ion wou ld ha ve ju ri sd ic ti on to define th e te rm in al are as of w ate r 

c a rr ie rs sub je ct to th e sh ip pi ng ac ts.

They proposed this amendment (3) :

T he Co mmiss ion sh al l ha ve ex clus iv e ju ri sd ic ti on to det er m in e an d pr es cr ibe 

th e li m it s of te rm in al are as of th e var io us carr ie rs fo r th e pu rp os e of sub section (c ) of th is se cti on .

I do not know whether you are familiar with that.

Mr. Fort. Yes, I am familiar with the view of the ICC and with 

the amendment.

Mr. Collier. Thank you very much, Mr. Fort.

Mr. F ort. Thank you.
EX EM PT IO N OF TERM INAL AREA OPERATION S 27

(The following lette r was later received from Mr. F ort :)

A m er ic an T r u c k in g Asso c ia tio n s, I nc.,

Washington, D.C., July 2$, 1961.

H on. J o h n B ei.i, W il l ia m s,

House of Representatives, Washington, D.C.

Dear Mr. Wil li am s : T his le tt er re la te s to II.R . 5978 and re la te d bills which 

w er e th e sub je ct o f a h eari ng on Ju ly 20, 1961.

Fo llo wing m y ap peara nce b ef or e th e co m m itte e I ex pla in ed th a t th e American 

T ru ck in g Assoc iatio ns , In c., w as att em pti ng to wor k ou t an am en dm en t to th e 

su bje ct bill w hi ch wou ld ov erco me our ob jections . Su ch an am en dm en t ha s 

be en d ra ft ed and su bm itte d to th e pr opo nen ts of th e bill. As of th is tim e we 

ha ve not h ear d th eir f inal re ac ti on to th is la ng ua ge .

Our am en dm en t wou ld add a pr ov iso a t th e en d of th e am en dm en t (a gr ee d 

to by all ) gi vi ng th e In te rs ta te Co mm erc e Co mmiss ion ju ri sd ic ti on to de te rm in e 

th e scope of ex em pt te rm in al ar ea s. The la ngu ag e su gg es ted is as fo ll ow s:

“Prov ided , ho wev er , T h a t an y su ch te rm in al are a of an y comm on ca rr ie r by 

w ate r in in te rs ta te co mmerce su bje ct to th e Shipp in g Act. 1916, an d th e In te rco ast al Sh ip pi ng Act, 1933, sh al l he no g re ate r th an th e ex em pt co mmercial 

zo ne de te rm in ed and pre sc ribed unde r se ct ion 2 0 3 (b )( 8 ) fo r m ot or carr ie rs 

su bje ct to th is p a rt em br ac in g th e w ate r te rm in us of a ny su ch com mo n ca rr ie r by 

w ate r. ”

Thi s am en dm en t wou ld m ak e th e ex em pt io n fo r m oto r carr ie rs and th e w ate r 

c a rr ie r pr op on en ts o f th is l eg isla tion i de nt ical .

W ith th e in cl us io n of th e prop os ed am en dm en t, th e American T ru ck in g Asso ci atio ns , Inc., wou ld ha ve no ob jection to th e bill. W ithout th e am en dm en t, 

ho wev er, we h av e no ch oice b ut to v igor ou sly opi>ose th e bill.

A fu rth e r ex pl an ation, to get her w ith ba ck gr ou nd in fo rm at io n, is se t fo rt h in 

th e att ached pa pe r.

It is re sp ec tfully re qu es te d th a t th is le tt er and th e attachm ent be m ad e a p a rt 

of th e reco rd .

Sin cer ely ,

J a m es F . F ort, Co unsel, P ub lic Affair s.

E xpl anati on of P roposed A m en dm en t to H .R . 5978

As th e co m m itt ee kn ow s, al l fo rm s of su rf ace tr an sp o rt ati o n ex ce pt th e de ep ­

w ate r carr ie r pr op on en ts of th is bill ha ve a te rm in al are a ex em pt ion fo r th e 

op er at io n of tr uc ks . T he ex em ption is gra nte d to th e tr uck in g in dust ry an d, in 

effect, g ra n ts to us th e ri ght to us e no nc er tifica te d loc al m ot or c arr ie rs to per fo rm 

pi ck up a nd de live ry s er vi ce f or ou r ac co un t in te rm in al ar ea s.

F or mot or comm on ca rr ie rs th is te rm in al are a has bee n spec ifica lly se t fo rt h 

by th e In te rs ta te Co mmerce Co mmiss ion on a se t ge og ra ph ic ba sis. In ot her 

words , we may o nly oper at e tr ucks w ithin a ca re fu ll y defin ed lim it. The se lim its 

ar e, ge ne ra lly sp ea ki ng , th e sa m e as th e co mm er cial zone fo r m oto r carr ie rs 

which is de sc ribe d in se ct ion 20 3( b) (8 ) of th e act.

In th e in sta n t si tu ati on we are co nf ro nt ed w ith a pec ul ia r si tu at io n. The ci ty 

of Lo s Ang ele s has tw o ex em pt co mm ercial zones specifically pr es cr ib ed fo r th e 

mot or ca rr ie r in dust ry . On e en co mpa sses th e h arb or are a an d th e oth er , th e c ity 

are a. Thu s a mot or comm on carr ie r hav in g auth ori ty from th e IC C to op er at e 

to Los An geles has n o au th o ri ty to se rv e th e h arb o r are a ou tsid e th e cit y li m its as 

th is is no t w ithin th e Los An geles co mm ercial zone an d th us not w ithi n th e 

te rm in al are a fo r a mot or carr ie r. If su ch a ca rr ie r has fr eig ht des tined fo r th e 

harb or zone he m ust mak e arr angem ents w ith anoth er ce rtific at ed carr ie r to 

carr y th e fr eig ht. T his is a st an d ard arr angem ent ex ac tly lik e th e in te rc han ge 

o f ra il fre ig ht .

Sh ou ld th is hypot het ic al m ot or c a rr ie r m ak e su ch an arr an gem en t, th en he 

wo uld file ta ri ff s co ve rin g th is pr oc ed ur e w ith th e ICC an d they wou ld be su bje ct 

to re gula tion b y th a t ag en cy .

Tod ay th e st ea m sh ip line op er at in g in in te rs ta te commerce in to Lo s An geles 

has no ex em pt io n to oper at e tr uck s an yw he re . The M at so n N av ig at io n Co., ho wev er. ha s pu bl ishe d a ta ri ff w hich incl ud es pi ck up an d del iv er y anyw her e in w hat 

th ey d es cr ib e as a “t erm in al are a.” T hi s te rm in al are a in cl ud es b ot h co mmercial 

zones de si gn at ed by th e ICC fo r m oto r carr ie rs . T hus th e st ea m sh ip line is 

seek ing, no t un ifor m ity, but an ex em pt ion g re ate r th an th a t af fo rd ed to mot or 

carr ie rs .
28 EXEMPTION OF TERMINAL AREA OPERATIONS

Not only is Matson seeking a greater exemption but it is also seeking to furnish 

motor carrier service in inter state commerce t hat will be subject to the jurisdiction of the Federal Maritime Board. Enactme nt of II.R. 5978 is simply saying to 

the ICC, “Here is motor carr ier service in inte rsta te commerce, but we don’t 

think this is something that you need to be concerned about so we will give jurisdiction here to the Federal Maritime Board instea d.” While it is not our intention to be critica l of the Federal Maritime Bord, it is our view t ha t tha t agency 

is not properly equipped to regulate motor carrier service. The Federal Maritime 

Board is neithe r familiar with motor car rier rate s nor with the competitive 

situation in the motor common car rier field.

The motor c arrier industry has been concerned alxmt this situation for several 

years and suits are now pending before the ICC and the FMB which challenge 

the present Matson practices in the Los Angeles area. There is precedent for the 

proceedings. In Consolidated Freiffhtways, Inc.-E.vtension-8eattle, 74 M.C.C. 593, 

595, the ICC sa id : “Thus local pickup and delivery service performed for any 

line-haul c arriers subject to the ac t are exempted from regulation, but such services performed for line-haul carriers not subject to the act are still not exempt 

regardless of their limited scope but, rath er, are subject to regulation under 

par t I I.”

It should be obvious from the foregoing th at the Matson Co. is seeking by this 

legislation to legalize a practice which is subject to very considerable question 

at the moment.

If this be the reason, then w hat are the alleged gains which necessitate passage 

of this bill?

Much was said at the hearing about the benefits of the container operation in 

which the steamship companies are engaged. Cheaper rates and better service 

were held out to be the answer.

It is the position of the American Trucking Associations, Inc., tha t Matson 

is seeking by this bill to preserve a monopolistic practice which is not in the 

public interest. It is not unlike the position of the railroads in their fight to 

gain the righ t to control and operate independent trucklines. Their argument 

has historically been t hat removal of present safeguards will mean cheaper and 

bette r transportation. Congress has always wisely reje cted this on the grounds 

tha t the alleged benefits are fa r outweighed by the thr eat of a trans portatio n 

monopoly in ra ilroa d hands.

Our additional amendment, set forth above, has but one goal—to place regulation of motor carria ge for these steamship companies when performed outside of 

commercial zones un der the ICC. We do not say tha t Matson must give up its 

present practices but we do say tha t thei r regulation—insofar as motor carri er 

service between commercial zones is concerned—should be under the ICC.

Our amendment would create complete equality between the motor carri ers 

and the steamship companies. Both would, under our proposal, have exactly the 

same exemption.

The amendment has as its inten t and purpose a directive to the ICC tha t there 

shall be no motor carrier service in inte rsta te commerce between commercial 

zones without ICC control. We would urge tha t you direct the ICC not to 

abandon to the FMB its statu tory function of re gulating for-hire motor carriage 

regardless of for whotn it is performed.

The American Trucking Associations, Inc., still feels tha t there should be no 

fur the r exemptions from the act. We certainly see no need for this amendment 

to apply to operations such as those from Puerto Rico which have been conducted withou t such an exemption for many years. The committee should 

understand tha t the motor common carrier industry stands ready to fulfill its 

common carrie r obligation to carry freigh t for steamship companies or any o ther 

shipper. We see nothing to be gained by this legislation except a furthe r 

deteri oratio n of the motor common carrie r industry.

However, with the amendment proposed, th e bill would not be opposed.

Mr. F riedel. We have one more witness and I understand a brief 

statement. We will call Mr. Maloney, representing the AAR.

STATEMENT OF WILLIA M M. MALONEY, GENERAL SOLICITOR, 

ASSOCIATION OF AMERICAN RAILROADS

Mr. Maloney. Mr. Chairman, my name is William M. Maloney. 

I am general solicitor for the Association of American Railroads.
EXEMPTION OF TERMINAL AREA OPERATIONS 29

You have already mentioned the letter tha t Mr. Gregory S. Prince, 

executive vice president and general counsel of the association, wrote 

to the chairman of the subcommittee.

The position of the railroad industry is stated in tha t letter. I 

have listened very carefully to the testimony of Commissioner Murphy 

for the Inte rstate Commerce Commission and it seems to me th at the 

position set forth in our letter is almost identical with the position 

taken by the Inte rsta te Commerce Commission, that with this amendment giving the Interstate Commerce Commission exclusive jurisdiction to prescribe and define terminal areas, the railroad industry has no 

objection to these bills. I have heard some mention here this morning, 

however, of language proposed by the Department of Commerce.

I wish to make clear tha t our letter does not concern itself in any 

way with tha t proposal by the Department of Commerce because I 

have not seen the proposal. I have no idea really, of what it is or 

what it would do, so I would ask the committee to keep tha t in mind in 

considering the letter.

I am also a little bit perturbed about the implication tha t m ight be 

derived from Mr. Fo rt’s statement that this proposed legislation, 

even if amended as the Inters tate Commerce Commission and the railroads suggest tha t it be amended, would in effect constitute a broadening of exemptions. I am sure tha t this committee is aware of the fact 

that the railroads are very much opposed to the broad exemptions th at 

exist in the act today, and that we have been before the members of 

this committee and the members of the Senate committee in an effort 

to repeal many, if not all, of those exemptions, so I would not have 

any implication arise from our position on this bill th at we are in favor 

of exemptions.

On the contrary, I would like to explain to the committee th at in 

our reasoning in reaching the conclusion that we did as to our position 

on this bill, we do not consider tha t section 202(c) is really an exemption. It is referred to even in testimony here today as a partia l 

exemption. In actuality, what we believe it to be is a question of 

whether you are going to have piecemeal regulation of railroad operations, which include motor carrier operations within terminal areas, 

and regulate one part of it under p art I and one pa rt of it under part 

II of the Interstate Commerce Act, and Congress decided th at they 

would not do that and they would regulate the entire railroad setup, 

the line haul and the terminal ojieration, under part I. We consider 

that our terminal operations under pa rt I do not lie in the field of 

exempt transportation and tha t really what we have here is in substance the same question for the water carrier subject to the Shipping 

Act and that, if we are correct in our interpretation of this bill, their 

terminal operations would be regulated under the Shipping Act.

I believe that is all, Mr. Chairman.

Mr. Friedel. Here is a letter we have from the Secretary of Commerce containing the amendment reported by Air. Murphy:

The Commission shall have exclusive jurisdiction to determine and prescribe 

limits of terminal are as of the various carri ers for the purpose of thi s section 202(c).

It also has three other amendments:

(1) By inserting after the word “commerce” on line 7, page 2, the words “as 

defined in the Shipping Act, 1916.”
30 EX EM PT IO N OF TE RM INAL AREA OPERATION S

They want that included.

(2 ) By in se rt in g aft e r th e wor d “c a rr ie r” on lin e 2, pa ge 3, th e wor ds “by 

w ate r” ;

(3) By in se rtin g aft e r th e wor d “co mmerce ” on line 2, pa ge 3, th e wor ds 

“a s defin ed in th e Sh ipping A ct, 1916, a n d .”

This will be inserted in the record.

(The letter of the Secretary of Commerce was inserted with the 

other reports and appears on p. 2.)

Air. Friedel. Do you understand those amendments ?

Mr. Maloney. Mr. Chairman, I understand the language of the 

amendments. I certainly have not had time to think them through 

and see whether they represent any substantial change from the concept of the original bill.

Mr. Friedel. We will keep the record open for a couple of days 

and if you have any objections, let us know, and if you concur with 

them, let us know.

Is Mr. Fo rt here yet ?

Air. F ort. Yes, sir.

Air. F Riedel. Do you have any proposed amendments ?

Air. Fort. Not at this moment, sir.

Air. F riedel. If you do, the record will be open for a couple of days 

and maybe you can get together and decide something so we all will 

be happy.

Air. F ort. Tha t is possible.

Air. F riedel. Air. Jarman?.

Air. J arman. Our understanding is tha t these amendments that 

we are now discussing are simply clarifying amendments and I believe you will so find them to lie on further study.

Air. Chairman. I think Air. Maloney has made a contribution to 

the record in bringing out the fact that we talk about exemptions, 

we might, give the impression that we mean total exemption from ICC 

jurisdiction and regulation. As you well stated, it simply means exemption from a certain portion of the act. Jurisdiction and regulation is retained under another section of the ICC Act. The jurisdiction and regulation of the water carriers under the proposed legislation would be similarly retained in the Federal Maritime Board. 

There is no real exemption from regulation of any pa rt of the trans­ portation program that we have under discussion.

Mr. Maloney. Air. Jarm an, I had not intended to make an oral 

statement and the only thing tha t caused me really to do this was I 

wanted to make it clear, in the railroads saying tha t we have no objection to this bill, if amended as the ICC proposes, that I did not 

want any implication th at by not objecting to this bill we were by any 

means in favor of exemptions, and it was for th at reason that I made 

the little statement that I did.

Air. J arman. I understand, and as I said, I think your comments 

add to the record. I think they make it abundantly clear that there 

is no real exemption from regulation involved. It is simply an exemption from a particular part of the act, but the coverage is retained 

in other parts of the act.

Air. Maloney. Yes, sir.

Air. J arman. Thank you.
EX EM PT IO N OF TERM INAL AREA OPERATION S 31

Mr. Scott. Mr. Chairman, with your permission, sir, by keeping 

the record open, we will have an opportunity also to comment on any 

subsequent introductions into the record.

Mr. F riedel. Yes, sir.

Our colleague, the Honorable Edward A. Garmatz, of Maryland, 

must attend a meeting of his own committee and is unable to testify 

here. Accordingly, without objection, we will insert his statement at 

this point in the record.

(The statement referred to follows:)

Sta teme nt of H on. E dward R. Garm atz, T hird Dis tr ic t, Marylan d

Mr. C ha irm an and m em be rs of th e co mmitt ee , du e to a m ee tin g of th e Coa st 

G uar d Su bc om m itt ee which co uld not be po stpo ne d and of w hi ch I am ch ai rm an , 

it w ill no t be po ss ible to appear per so na lly to te sti fy in behalf of my bill, H.R. 

6624, to am en d se ction 202 (c ) of th e In te rs ta te Co mm erc e Act.

The F edera l M ar iti m e B oa rd has ac ce pt ed fo r m an y years w ate r c a rr ie r 

ta ri ff s ap pl ic ab le to of fsho re do mes tic tr ad es w hi ch na m e sing le fa cto r ra te s, 

in cl ud in g pi ck up and de live ry se rv ice by m ot or vehic le. The re fo re , it wou ld 

be co ns is te nt w it h th e lo ngst an di ng po licy th a t m oto r ca rr ie r oper at io ns w ithin 

te rm in al are as a re to be re gula te d as p a rt of th e line -h au l carr ia ge to which 

th ey are in ci de nt al , if se ction 20 2( c) of th e In te rs ta te Co mm erc e Act w er e 

am en de d as in H.R . 6624 and oth er bills on th e su bj ec t, which yo u a re consi der in g th is mor ning .

W ith th e ad dit io n of our tw o ne w Sta te s, it seem s logica l th a t th e ex em pt ion 

in se ction 20 2( c) sh ou ld ap pl y to th os e S ta te s als o, as we ll as th e 48 co nt ig uo us 

Sta te s.

The In te rs ta te Co mmerce Co mm iss ion h as re co mmen de d th a t a cla ri fy in g 

para g ra p h b e ad de d, a s fo ll o w s:

“ (3 ) The Co mmiss ion sh all hav e ex clus ive ju ri sd ic ti on to det er m in e an d pre ­

sc ribe th e lim it s of t erm in al are as of th e var io us carr ie rs fo r th e p urp ose s of t h is 

se ction 2 02(c ). ”

T hi s is pe rf ec tly ag re ea ble to me an d I su gg es t th a t th e bi ll be am en de d 

ac co rdingly. I ur ge the a ppro val of t h is le gi slat io n.

(The following material was received for the record:)

Seattle, W a sh., Ju ly 18, 1961.

Ho n. Oren H ar ris,

Ch airm an , C om m itte e on In te rsta te a nd F or eign C om me rce,

H ou se o f R ep re se nta tive s, W as hi ng to n, D.C.:

Ref er en ce t o H ou se b ill 5978 whi ch c om es be fo re Hou se s ub co m mitt ee f o r h earin g on T hu rs da y, Ju ly 20. As a comm on c a rr ie r st ea m sh ip oper at or se rv in g th e 

T err it o ry an d now th e S ta te of A lask a fo r ov er 65 ye ar s, we fee l th e prop osed 

le gi sl at io n is co ns truc tive an d des irab le fr om st andpoin t es ta blish ed com mo n 

c arr ie rs se rv in g th e no nc on tigu ou s are as of A lask a, H aw ai i, an d P uert o Ric o. 

W e re sp ec tful ly ur ge it s fa vora ble co nsi de ra tion by your co mmittee .

Ala sk a Stea m sh ip Co., 

Melv ille McKin st ry.

T er mi na l Transport C o., I nc.,

A tl anta , Ga., A ugust 4, 1961.

lion. Oren H ar ris ,

Cha irm an , C om m itte e on In te rs ta te an d Fo re ign Co mm erc e,

U.S. Hou se o f R ep re se nta tive s, W as hi ng to n, D .C.

My Dear Congressman H arris : By m ea ns of th is le tt er T er m in al T ra n sp o rt 

Co., Inc., de si re s to ex pr es s it s vigo ro us op po sitio n to II .R . 5978 unle ss th e bill 

sh al l be am en de d to pr ovi de th a t an y exe mpt, a re a pre sc ribe d “s hall be no 

g re ate r th an th e ex em pt co mmercial zo ne de te rm in ed and pre sc ribed und er 

se ction 20 3( b) (8 ) fo r m oto r carr ie rs su bje ct to th is p art , em br ac in g th e w ate r 

te rm in us o f a ny suc h comm on c arr ie r by w ate r. ”
32 EXEMPTION OF TERMINAL AREA OPERATIONS

Terminal Tr an sport Co., Inc., is a duly certificated motor common carri er 

operatin g between Chicago, Ill., and Miami, Fla., and serving interme diat e 

points. At the pre sen t time, and for some time past, we hav e worke d in connection with wa ter car rie rs in providing a coordinated water-l and service. 

Passage of H.R. 5978 withou t the above ame ndm ent would enable the wa ter 

ca rri ers to esta blis h extensive term inal area s within which they could provide 

the ir own moto r ca rri er services and thu s elim inat e our partic ipa tio n in the 

traffic movement.

Your efforts to have the bill amende d as set forth above will be gre atly 

appreciated.

Very tru ly yours,

B ur to n C. K in n e y ,

Vice President, Traffic.

Mr. Friedel. If the committee has no further business, the meeting 

is adjourned.

(Whereupon, a t 11:30 a.m., the subcommittee adjourned.)

o