The public interest would seem to be served by this course because the whole purpose of the certificate provisions is to provide adequate service to the public, and resumption by existing carriers is a surer method of accomplishing that purpose than revocation.

Under the provisions of S. 1143, water carriers would be subject, upon the complaint of any shipper or carrier, or upon the Commission's own motion, to forfeiture of any portion of their authorities which might not currently be in active use-unless they could prove that nonuse was not "willful."

Water carrier certificates on the inland rivers are, typically, described geographically as including all ports and points along named waterways.

In the case of Federal Barge Lines, for example, its authority on the Mississippi runs to "ports and points along the Mississippi River from Minneapolis, Minn., to its mouth."

Many hundreds of communities are included in this 1,819-mile stretch of river. The factors affecting the service provided by Federal Barge Lines at each different port are numerous and variable. Federal's certificate would be in constant jeopardy at any port where, for any reason, it had no traffic for a sustained period of time, regardless of how aggressively it might be serving other ports. The only sure defense against the claim of dormancy is active and continuous solicitation which may not be feasible to so many ports.

In the case of previous sources of traffic diverted from certificated water carriers by selective rail rate cuts, the cases under part II suggest that the inability to compete at profitable rates would be no excuse for the lapse in service.

Great Lakes and coastal carriers in active conduct of water operations between current shipping points would be similarly exosed to impairment of their franchises through partial revocation. Any Great Lakes or coastal port not currently served would be subject to forfeiture.

The shifting patterns of traffic offerings and vagaries of competition could conceivably cause a gradual attrition of a carrier's authority to the point where all that remained was the right to serve. the heavily populated ports which constitute the only continuously reliable sources of traffic.

Most importantly, the carrier that may experience a temporary lapse in service will have no opportunity to reinstate service after a revocation proceeding has begun.

Section 8 of H.R. 5401 is an even more radical departure from prior dormancy provisions than S. 1143. Its overall thrust is not to strengthen but to weaken the certification procedure.

New paragraph (h) proposed as an amendment to section 309 would abandon the certification procedure altogether insofar as concerns every waterway hereafter made navigable.

This is true not only as to service on the newly completed channel, but also as to service between ports on that particular channel and every port on other waterways connecting therewith.

Senator LAUSCHE. Just stop for a moment. You say that new paragraph (h) proposed as an amendment to section 309 would abandon the certification procedure altogether insofar as concerns every waterway hereafter made navigable?

Mr. BELNAP. That is true, sir.

Senator LAUSCHE. Am I correct in my understanding that if paragraph (h) is adopted, the need for certification on waterways hereafter made navigable would be eliminated?

Mr. BELNAP. That is true, sir. It would be eliminated as to service on that waterway and service between ports on that waterway and all other ports, under plain terms

Senator LAUSCHE. What is the rule now with respect to the requirement for certification?

Mr. BELNAP. The carrier almost automatically obtains a certificate if the carrier has served to the existing head of navigation, in connection with a project which had just been completed, that carrier institutes service within a reasonable time, applies to the Commission for a modification in the certificate to include the new waterways and is given that authority.

Senator LAUSCHE. But he must apply?

Mr. BELNAP. He must apply. He can't let it sit there forever. He has to do it quickly, too, within a reasonable time.

Senator LAUSCHE. Proceed.

Mr. BELNAP. Now there is another situation that confronts the industry under this paragraph (h) as proposed in H.R. 5401 and that is this: particular ports on existing navigable waterways would also be on an open-entry basis "over any route or between any ports” where no "certificate is then in effect," just as soon as certificates to such particular ports were canceled as is proposed by amended paragraph (3) to section 312 (a) contained in section 8(a) of H.R. 5401. Senator LAUSCHE. Are you going to explain that?

Mr. BELNAP. Take a situation that you can have in the coastal area. A carrier, for reasons of lack of traffic, rate cuts so they can't profitably attract traffic on its rates, for a period of time, does not serve Baltimore, let us say.

Under the revocation provision proposed in H.R. 5401, the Commission will be required to cancel out Baltimore as a part of that carrier's certificate.

Once the certificate of that carrier and others is canceled as to Baltimore, then any carrier is entitled, under H.R. 5401, to establish service between Baltimore and all other ports without seeking any certificate whatsoever.

Senator LAUSCHE. I see.

Mr. BELNAP. The point I am making is that the impact of the open-entry provisions of new section 309 (h) must be considered in the light of the revocation provisions of new section 312(a) which would be added under section 8(a) of H.R. 5401.

Revocation of all authority to and from a port on navigable waterways would, under new section 309(h), automatically deregulate (as to certificate controls) all service between such ports and all other ports.

The extent of resulting deregulation may be gaged by considering the workings of proposed section 8. In addition to all the powers conferred by S. 1143, section 8 of H.R. 5401 would:

(1) Provide for mandatory revocation of any part of a certificate not used for 3 years or more, whether willful failure occurred "before or after" the date of enactment.

(2) Remove all certificate control not merely between ports on newly navigable waterways, but more importantly between such ports and every port on every other river or waterway, regardless of the sufficiency of existing service on such other rivers and waterways.

(3) Remove all certificate controls between points on presently navigable waterways where authority has been revoked for nonuse and all other ports on all other waterways.

Finally, I should deal with the speculation with which lawmakers and attorneys are confronted pending dispositive court decisions. While it may not have been the intention of the framers of section 8 of H.R. 5401, the language of the bill can be read as removing all certificate controls between any ports where no single certificate permits one-line service.

New section 309 (h) provides that—

no such certificate shall be issued to perform such transportation over any route or routes or between any ports with respect to which no such certificate is then in effect.

To illustrate my point, a substantial shipper of paper in Tennessee has its plant on the Hiwassee River. That company ships to numercus ports on the inland rivers, many of which are served by carriers which do not serve the Hiwassee.

This traffic is now satisfactorily being handled in joint line service by carriers collectively possessing authority from origin to destination, even though there is no single certificate.

Inasmuch as there is no single certificate now in effect which authorizes a through service from origin to destination, new section 309 (h) might be read as removing all certificate control. This could also be said as to any two points where no single line service is now available.

None of the present provisions in the act have required a ruling from either the Commission or the courts which would seem to settle this point.

While I feel sure that the House committee did not intend such an extensive deregulation with respect to the right of entry, I cannot say that the plain words of H.R. 5401 do not have that effect. Removal of certificate controls, coupled with the absence of suspension power over initial rates could seriously impair the Commission's control over rates.

It is at least conceivable that a carrier whose rates were determined to be unlawful (after an investigation during which they would be in effect), might simply liquidate and establish another corporation whose initial rates would once again qualify as an initial schedule immune from suspension. The process could be repeated indefinitely. Assuming that it were done with ingenuity, I am at a loss as to how it could be stopped.

In contrast to the prohibition against suspending initial schedules provided by new section 309 (h) in H.R. 5401, initial rates applicable to a new service under present laws are merely permitted to be published on 10 instead of 30 days' notice, and the burden of proof rests upon the protestant, not the proponent.

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The mandatory revocation provisions of new section 312(a) (3) in H.R. 5401 apply as above stated where the 3-year period of willful nonuse occurred before or after the passage of the bill.

While I am not a constitutional lawyer, my review of cases suggests a doubt as to the constitutionality under the fifth amendment of retrospective legislation which would deprive a person of a valuable franchise by reason of prior conduct which, under previous standards, could not have caused forfeiture.

Whether or not constitutional, however, it would seem to me that equity demands that any change in the rules affecting valuable property rights be made operative only prospectively.

That completes my statement, Mr. Chairman. I want to thank

you.

Senator LAUSCHE. Mr. Belnap, in compact terms, state affirmatively what you feel should be done in order to serve justly the public, the community, and treat equitably the competing modes of carriers.

Mr. BELNAP. On the matter of revocation, I believe that the public interest requires revocation either by the Commission or when by the Commission's own act only when a certificate is completely dormant, no service being rendered at all. And that is true to a lot of certificates outstanding under part III.

There is no reason they should be continued. They should be canceled. But they should be canceled because they are completely dormant and have been dormant.

Senator LAUSCHE. Go on.

Mr. BELNAP. The partial revocation does not fit the water carrier business. To pick a part out, Captain Ingersoll is going to address himself to the practical standpoint, I deal with it only from the legal standpoint.

Senator LAUSCHE. The partial revocation, would that be applicable to what you pointed out to be the Baltimore situation?

Mr. BELNAP. Yes; there should not be a partial revocation of any water carrier certificate.

Senator LAUSCHE. Proceed.

Mr. BELNAP. There should be no free right of entry under any circumstances, so you have one class of water carriers which operate free from certificate regulation, able to publish initial rates at their whim without the Commission being able to do anything about it. That is contained in H.R. 5401. It is not contained in the Senate bill 1143.

Senator LAUSCHE. I think you stated that the certificates are now issued giving the authority to serve on all of the ports within the navigable stream on which the

Mr. BELNAP. Points and places is a customary phrase, beginning at Minneapolis on the north and going to the mouth of the passage on the south in the Mississippi River. They don't pick you out a port.

Senator LAUSCHE. But the present certification would not authorize service on newly developed navigable streams.

Mr. BELNAP. No, sir. It does not.

Senator LAUSCUE. Sir, application would have to be made and acted upon favorably for that

Mr. BELNAP. Not before. It is done contemporaneously. The carrier is given a right to extend between a reasonable period and the Commission has held by rule it will be 100 days. The carrier extends its service, publishes its tariff, and makes application for a certificate.

Now, if it acts within a reasonable time, that certificate is granted, provided the carrier previously served

Senator LAUSCHE. Your complaint is that granting the right of entry without certification is in conflict with the general principles that have always been operative in this system of law.

Mr. BELNAP. Completely in conflict, sir.

Senator LAUSCHE. Thanks very much.

Any questions?

(No response.)

Senator LAUSCHE. All right. Thanks very much for your help. Anything further, Mr. Ingersoll?

Mr. INGERSOLL. If I may, Mr. Chairman

Senator LAUSCHE. I am going to read your 24-page paper.

Mr. INGERSOLL. I would like to just skim through this and mention these points of substance that concern the common carriers.

Senator LAUSCHE. We have another five carriers and you will have to skim through it, because I must conclude with these witnesses today. Proceed.

Mr. INGERSOLL. Let me first turn to page 11 of my testimony, in which I recommend on behalf of the common carrier water carriers, language to amend S. 1143, to accomplish the cure of the features of S. 1143 which we think are improper.

One feature is the partial revocation feature, and the other feature is the unavailability of an opportunity to cure.

This proposed language on page 11 would seek to cure those two deficiencies in S. 1143, from our point of view.

Senator LAUSCHE. That is the indented paragraph on page 11?
Mr. INGERSOLL. Yes, sir.

Senator LAUSCHE. You suggest substitute language?

Mr. INGERSOLL. Yes, sir.

Senator LAUSCHE. Proceed.

Mr. INGERSOLL. I think another point I ought to spend a little time on this question of open-entry rate regulation, this idea originated with the common carrier water carriers.

In the 1963 hearings during the debates on the deregulation legislation, we testified as to the choices that were put before the Congress by the President.

There was an inequity between unregulated bulk water transportation and regulated bulk rail transportation and that to even up that inequity, the railroads should be deregulated or, as an alternative, the water carriers could be regulated.

We testified then and we have always maintained a position that the inequities should be cured by regulating the water carriers, that the bulk exemption, wherever there is intermodal competition, should be cured.

There should not be different degrees of regulation as between two modes in competition for the same traffic.