commodities. It makes significant progress on the problem of inequity in regulation. Third, it provides for a fairer climate for competition and for more intensive competition, and lastly, it provides for assembly of information on what is going on in the exempt sector of transportation. This information will be an invaluable tool in formulating future policy decisions. And it is not now available. The lack of it has been a major stumbling block to policymaking for many years.

Öne brief comment on Mr. Nelsen's statement. I would like to remind you that his own committee failed to endorse his views by three to one.

We have previously supported in the House a change in the bill to exempt deep draft self-propelled coastwise operators. We now would like to withdraw our support for that exemption at this time. The chief problem here is that no one knows how much tonnage would be involved or how many ships.

Despite efforts in the House committee staff to obtain this information or from those favoring the change, it has not been available.

In concluding, I would like to make the suggestion that your committee might ask each and every one of the witnesses who appear here in opposition to the publication of rates the question: "Why do you insist on secret rates?"

That concludes my testimony, Mr. Chairman.

Senator HOLLINGS. Well, now, that would be a good idea if we considered them secret.

What's the price of an automobile? I go down and buy a car that may be advertised. The price is right there, and you may be haggling for a price to buy the car. Is it alleged the prices of the entire automobile industry are secret?

Let me get to it. Congressman Nelsen said the original thrust was to solve the mixing problem. It appears from your testimony that the principal and original thrust, as you see it, is to regulate nonregulated carriers. Am I right in that?

Mr. HERSHEY. No, that is not correct. I did not dwell on the advantages of mixing because I believe that the committee is fully aware of that. We support it. It is our first aim. As far as we know there is no one in opposition to it.

I only dwelt on that portion of the bill which is controversial.

Senator HOLLINGS. Well, the nonregulated or exempt carriers are not able to carry regulated commodities at the present time so the "no mixing rule" doesn't apply to them. They can't carry regulated commodities anyway. Isn't that right?

Mr. HERSHEY. That is correct, sir.

Senator HOLLINGS. Well, then, why is it necessary to require these nonregulated carriers to file rates?

Mr. HERSHEY. It's not necessary. The committee

Senator HOLLINGS. Then, if it is not necessary, we can go and delete all this rate argument between regulated and nonregulated and go right to the original thrust-namely, the mixing problem-and see if we could solve that in the closing days of Congress? Would you agree to that?

Mr. HERSHEY. This would certainly solve our number one aim.

You will recall that in previous bills this is all we asked for. Early in the game the unregulated carriers as represented by AWO, Amer

ican Waterway Operators, Inc., appeared in opposition to it. Likewise the railroads.

Now, fortunately, the opposition to that part of the bill, which is the principal part of the bill, no longer exists.

Senator HOLLINGS. Now, Mr. Hershey, you said there were how many regulated carriers? I get the percentages-the 8 and the 68 percent. How many regulated carriers? I'm not as familiar as I should be with this problem. How many regulated carriers generally?

Mr. HERSHEY. The regulated carriers are distinctly in the minority. They move about 35 percent of the traffic. They are generally somewhat larger companies than the average.

I would say we represent in our association approximately 18 regulated carriers.

Senator HOLLINGS. Eighteen regulated carriers in your association? And how many regulated carriers overall?

Mr. HERSHEY. I really can't tell you. I think I could provide the committee with that information.

Senator HOLLINGS. Would it be nearer 50 or 100?

Mr. HERSHEY. I would think it would be nearer 50 than 100. Senator HOLLINGS. All right. Approximately 50. And what are you really talking about when you outline in your prepared statement on page 9 all the exemptions? You see, you mentioned that fine thing of secrecy. We'll apply that to every one of your exemptions. Then the question is, why let the private carriers be secret? Why let the liquid carriers be secret? Why let the hundreds of small harbor carriers be secret? Why let the intrastate carriers be secret? Why let the Great Lakes carriers be secret?

We go right down your suggested list and apply it to each one of the exemptions.

You are only trying on behalf of 50 to grab 100? Is that what you're talking about? Is it 100 of the nonregulated that you are really after? Mr. HERSHEY. We're not after

Senator HOLLINGS. You say probably less than 100.

Mr. HERSHEY. We're not after anybody. We just want to be able to continue to mix commodities. And we think this is a good bill.

Generally speaking, the vast majority of interstate traffic that moves by all modes moves under published rates. The big exemption in this picture is, of course, the dry-bulk exemption on the river.

Senator HOLLINGS. Well, that's the information I should have. Eight percent carry how much? And the 68 percent nonregulated carriers carry how much of the freight to be hauled?

Mr. HERSHEY. You recognize I am sure that information on this is not really available because there is no reporting. The only thing that you can do is to take the relatively rough figures of the U.S. Engineers, which are based primarily on transit through locks, and try to relate that to the type of carrier which made the transit.

On that basis we estimate that approximately 35 percent of the traffic on the inland waterways system exclusive of the Great Lakeswe don't have any figures on that-is moved by regulated carriers and the balance is moved by unregulated. And the unregulated includes many private carriers as well as unregulated for-hire carriers. Senator HOLLINGS. Thank you very much.

Senator Baker.

51-425-70- -3

Senator BAKER. Mr. Chairman, thank you very much. I have only one question I would ask the witness at this point.

May I say that he may sense that I am trying to expedite this so that I can move on to the floor at 10 o'clock. There are other questions that occur to me and that we may have a chance to get into with other witnesses.

But specifically, in view of the importance of the contention that all carriers should be treated equally for rate-filing purposes, could you tell us what problems if any you foresee in leaving rather broad discretion to the Interstate Commerce Commission by requiring filing under section 306 and H. R. 8298?

Mr. HERSHEY. The section that you said was 306?

Senator BAKER. 306.

Mr. HERSHEY. Are you referring to the discretion that they would have in determining that rates would have to be either minimum rates or actual rates?

Senator BAKER. Yes.

Mr. HERSHEY. I don't see any particular problem. I think they have a job to do, just as they did in the early days of the trucking industry in determining whether a theretofore unregulated trucker was in fact a contract carrier or a common carrier.

I think it is a determination that would have to be made on the basis of how many customers have they served and how diverse has been their operating territory and how diverse has been the cargo which they carry.

Senator BAKER. What is the Interstate Commerce Commission's experience with their efforts in this respect with the truckers?

Mr. HERSHEY. I'm not too well qualified to talk about that because I wasn't in the trucking business at that time.

But I understand that many of the truckers wanted to file as contract carriers, and in some instances the Commission determined that they were in fact a common carrier.

Senator BAKER. It was a rather difficult proceeding, wasn't it, taken as a whole?

Mr. HERSHEY. From what I have heard about it, I think it was, yes, sir.

Senator BAKER. Thank you.

Mr. HERSHEY. Of course, there were many, many more truckers than there are actual interstate carriers of commodities.

Senator HOLLINGS. Thank you, Mr. Hershey.

Do you wish to add anything else?

Mr. HERSHEY. No. I have concluded.

Senator HOLLINGS. We appreciate very much your appearance here this morning.

Mr. HERSHEY, I appreciate the opportunity, sir.

Senator HOLLINGS. Thank you, sir.

(The statement follows:)

STATEMENT OF J. W. HERSHEY, CHAIRMAN, AMERICAN COMMERCIAL LINES, FOR

WATER TRANSPORT ASSOCIATION

My name is J. W. Hershey, Chairman of American Commercial Lines of Houston, Texas and Jeffersonville, Indiana. I appear here today as Chairman of the legislative committee of the Water Transport Association, a non-profit trade group headquartered in New York. I am here to represent the leading ICC certificated common carrier barge lines operating on the Mississippi Ohio River

System and the Gulf Intracoastal canal as well as more than a dozen of the unregulated barge lines affiliated with the common carriers. Water Transport Association also has among its members leading barge lines on the Columbia River on the Atlantic Intracoastal waterway steamship lines on the Great Lakes, coastwise and intercoastal operators which I also represent.

The heart of this legislation is the modernization of the so-called dry-bulk exemption, Sections 303(b), to permit the mixing of regulated and unregulated barges in a single tow. And I am glad to say everybody believes this to be in the public interest. The bill also provides for the publication of rates on dry-bulk commodities, for a report by the I.C.C. on the impact of the bill and, finally an expiration date of two years from enactment so that the Congress can take another look at the problem and determine what the permanent policy should be for the long term.

By far the most pressing problem faced by the barge industry and the consumers served by the barge industry is the fact that on September 28, 1970next week-the current suspension by the I.C.C. of its order, which would have the effect of forcing us to operate regulated and unregulated commodities in separate tows, expires. Both the House Interstate and Foreign Commerce Committee and the Senate Committee on Commerce have, since 1967, requested the I.C.C. to stay the application of its order enforcing the so-called "no mixing rule" so that this legislation modernizing the statute may be acted on by the Congress. The industry is very much under the gun with this problem and we appreciate the prompt action of this committee in holding early hearings on the legislation following passage of the measure by the House.

As you are well aware, curing the problems of the no mixing rule, which is the subject of HR 8298, has been before the Congress, the I.C.C. and the courts for well over a decade.

The case for modernization has been fully made. Senator Warren G. Magnuson, appearing as a witness before this very subcommittee on June 28, 1967, said: "There should be no dispute at these hearings about the fact that the archaic and complicated mixing rule exemption in the 26-year old Transportation Act of 1940 stands as a bar to the realization of greater efficiency in inland waterway transportation."

Problem was also succinctly stated in the Report adpoted unanimously by the Senate Committee on Commerce on September 29, 1967:

"Technological innovation in the last 20 years has produced more powerful towboats on our Nation's inland waterways permitting the accummulation of large economical tow loads of 40 or more barges.

"This technological progress would be brought to a standstill under obsolete and restrictive wording in section 303 (b) of the Interstate Commerce Act. S. 1314 proposes to modernize this law to avoid artificial increases in transportation costs to shippers and consumers."

One virtue of this long delay in arriving at a solution for the problem is that a huge record has been developed and a great many facts are clearly beyond dispute.

For example, when, in 1961, these same barge carriers appeared before the Senate Committee on Commerce with the first modest proposal for curing the mixing problem, the barge industry was quite badly split on the question of mixing.

That is no longer so.

The May 2, 1970 Weekly Letter of the American Waterways Operators, Inc., while reiterating opposition to the recording of rates stated:

"AWO supports the provision of the bill which would permit the mixing of regulated commodities and exempt dry-bulk commodities in the same tow or vessel and will seek to have this provision retained by the House."

As the years have gone by, facts and studies have accumulated. The result has been that there is no controversy over the fact that the mixing of barges of regulated and unregulated commodities in a single tow is very much in the public interest. It has led to improving productivity in inland barging, it has brought about larger more economical tows, more powerful towboats and lower unit costs. There has been a decline in the average level of barge rates so that today we can say that the average level of barge rates is below that of 1920. Few other industries can demonstrate that their improved technology has enabled them to contain the rises in costs and the inroads of inflation as effectively as can the inland barge industry.

I should stress one very important fact. The beneficial effects of the improved technology have already been passed along to shippers and consumers in the

form of low freight rates. Failure to cure the "no mixing" problem will mean that something the public now enjoys will be taken away.

The tremendous technological achievement is described in a statement prepared for and made part of the record of the hearings of the Senate Committee on Commerce on S. 1314 on June 28, 1967, by L. P. Struble, Jr., Executives Vice President of the Dravo Corporation, Pittsburgh, Pa. In the interests of time, I have not recalled Mr. Struble, but am attaching his paper "Technological Developments on Inland Waterways" to my testimony. There is nothing controversial about the hard work, ingenuity and willingness to taken financial risks in the interests of greater efficiciency in transportation recounted in this paper. The facts are well established and all credit goes to the inland shipyards for a remarkable contribution to holding down the costs of inland water transportation.

Since we testified before this Committee in 1967 we have obtained the answer to the question: What would happen to barge line costs if the mixing problem is not cured? Dr. Karl Ruppenthal, Director of Transportation Management of Stanford University, made a study of the barge tows actually operated in 1967 to determine the economic impact of applying the "no-mixing rule" to traffic of the major certificated barge lines in that year. With the aid of the Stanford computer, he used two methods to estimate cost effects of unmixing the tows. In one case, total costs per ton mile would have increased by 60 percent. In the other total costs would have increased about 47 percent. Thus the magnitude of cost increases involved is clearly in the neighborhood of 50 percent.

It is obviously difficult to determine with any precision from a 1967 study the impact of such enormous cost increases on rates, but it is evident that rate increases would have to be very substantial if this bill fails.

After over a decade of wrestling with attempts to arrive at an acceptable modernization of Section 3003 (b) so as to permit mixing, we have concluded that any solution must take into account three very stubborn facts.

The first stubborn fact is that a modernization of the Act to permit mixing of regulated and unregulated barges in a single tow and the full utilization of the capacities of the larger towboats is in the public interest.

The second stubborn fact is that, as the Senate Committee on Commerce recognized in its 1967 Report, "competitive equality must be established for all modes of transportation so that rights under law granted to one mode shall also be granted to other modes similarly situated."

The third stubborn fact is that the House Interstate and Foreign Commerce Committee by a three to one bi-partisan vote demanded and the House adopted a measure which connects correcting the no mixing problem with going at least part of the way toward curing inequality in regulation between railroads and water carriers.

We came before the Senate Committee on Commerce in 1967 with a proposed bill which made a very fundamental reform of Section 303 (b). We suggested a cure for mixing, the removal of the three commodity limitation in the section and elimination of the relatively meaningless reference to commodities carried according to the custom of the trade in June, 1939. We believed then and we still believe that this proposal is in the public interest. The Senate Committee on Commerce so found in its unanimous Report.

In studying the matter exhaustively, the House Subcommittee on Transportation and Aeronautics saw an opportunity to take a step in the direction of improving the conditions of competition both within the barge industry and between the barge industry and the railroad industry.

They took the stubborn fact that mixing is in the public interest and the stubborn fact that the public interest requires greater equality of regulation and put the two facts together.

They added to the mixing cure, which is accomplished by language proposed by the I.C.C., a provision for the recording of dry bulk-rates-not regulation of such rates but simply a recording of rates with the I.C.C.

They added as a third provision of the proposal that the I.C.C. will make a study and report back in two years at which time such further action would be taken as may be deemed appropriate.

We have therefore a cure for the no mixing problem, recording of rates on dry-bulk commodities by barge, an expiration date for the legislation and a study to provide guidance for future action.

Now we are frank to say that the water carriers didn't get everything we thought the situation seemed to warrant. On the other hand, the essential requirement that mixing be continued is preserved. The railroads, it is clear from the record, did not get everything they thought the situation seemed to warrant. But they have made progress.