Now, the court in the Palmer case and some of the folks who find it in their selfish interest to say, "Oh, hold these charges down to a minimum level," have said that in the Palmer case, the court said the Commission couldn't do that. I don't believe it, but there is a strong element that says that it did say that, and I say, now, you, the Congress, who are interested in and have the responsibility along with the rest of us for an adequate car supply, you tell the Commission, "Well, when we gave you this power, we meant that you should prescribe these charges on a basis that would get and maintain an adequate car supply, and don't you worry about what that court said in the Palmer case. We don't know what they meant, either, but we are letting you know that we didn't intend and we don't intend that you should prescribe these charges on a basis that doesn't provide some profit, and provide some incentive." Mr. YOUNGER. Thank you. The CHAIRMAN. Mr. Rogers. Mr. ROGERS of Texas. I don't want to trigger a long discussion here, but I take it from your voice inflection about the Senate amendment that you don't think it perhaps should be in the bill? Mr. MARTIN. I think it stinks, and I will tell you why. Mr. ROGERS of Texas. You have answered my question. Mr. MARTIN. Do you want me to tell you now or tomorrow? Mr. MARTIN. Well, I will just tell part of why, now. The CHAIRMAN. If you get it in the record now, you won't have to repeat it tomorrow. Mr. MARTIN. The basic reason why that amendment is bad, and why it would defeat the stated purpose of the bill is this-and there is one clause in the amendment that is particularly vicious The CHAIRMAN. What is the amendment? Let's get it in the record so that anyone who reads this, and I am sure they will, has it. Let's get the amendment. I think it probably starts at line 12, page 12, doesn't it? Mr. MARTIN. I don't have it in front of me. I don't have anything. The CHAIRMAN. We have got all kinds of bills here. Mr. ROGERS of Texas. Starts with "in the consideration of any element." Mr. MARTIN. That's it. The CHAIRMAN (reading): In the consideration of any element included in determinations pursuant to this paragraph as an incentive to car acquisition and maintenance the Commission is empowered to make such element, or any part thereof, inapplicable: 1. To carriers determined by the Commission as owning an adequate number of freight cars to meet their responsibilities to the needs of commerce and the national defense; 2. To carriers which terminate a substantially higher percentage of interline traffic than they originate; 3. To types of freight cars the supply of which the Commission finds to be adequate; and 4. To such other cases or circumstances as the Commission finds to be in the public interest. That one's a wide one. Mr. MARTIN. Well The CHAIRMAN. What does all that mean? Mr. MARTIN. The most important thing that it means, as I see it, and the most important reason why it is vicious and self-defeating is that clause 2, which says that after you have put some profit in car ownership and established a charge that provides incentive for the investment, then the Commission can say: "Oh, no; that doesn't apply to somebody that terminates more traffic than he originates." Well, those roads which terminate more traffic than they originate are the fundamental cause of this recurrent car shortage. They are the gentlemen who get these cars from other roads that are owned by other roads and who keep them and use them and do business on the other man's investment, who have exerted this constant downward pressure on the level of the car rental, who will fight any efforts to increase it or even any effort to give the Commission any power to increase it, and on top of that, the other vice of that clause is this: It purports to say that, after the Commission after a hearing has decided that $6.56, if you please, should be the charge for a $10,000 car, that then it may follow that and say, "Well, that's what the car is worth. That's what ought to be paid in rental, to make the car owner whole, and to provide some incentive for investment, but you, Mr. Road A, don't have to pay that. We will let you pay $4.40." Well, now, how silly can you get? If you have a charge that is fixed after hearing as the proper, valid compensation for the use of a car, then everybody that uses it ought to and must pay it. How can you say that a car whose value is $6.56 per day shall be rented to Mr. A for $4 and to Mr. B for $4.15, and to Mr. C for $3.25, and have 15 or 20 different rent charges, depending not on what the car is worth, not on what the Commission has said is a proper charge, but rather upon the financial, geographical, or other condition of a dozen different users? Mr. ROGERS of Texas. Do you know where this language came from? Mr. MARTIN. I think so. Mr. ROGERS of Texas. Now, Senator Magnuson blamed it on the ICC and, as I understand Chairman Webb, he refused parenthood, but agreed that they did assist in the birth, I believe. Mr. MARTIN. Well, let's be entirely candid about this. I think it comes from Senators Pastore and Cotton, who represent New England, and ably do so, and the New England roads don't like to pay high rent any more than any other tenant or user likes to pay high rent. Mr. ROGERS of Texas. Now, this language does nothing more than create restrictive clouds that could be employed under rules of statutory construction to defeat some of the purposes of the bill. Mr. MARTIN. You have stated it very well, Mr. Rogers. Mr. MARTIN. It is a bad thing. I think it actually might threaten the constitutionality of the bill, and certainly I say as a lawyer that, if the Commission construed it to give them power to require a lesser payment by some user than the amount which they had themselves fixed as a proper charge for the car, that action could be successfully challenged in the courts. It is ridiculous. Now I have sympathy for some of these roads in the East and the New England roads. I know they have problems. But the way to cure them is not to confiscate the property of the car owner. There are many other ways. The Commission and the courts have said that there are other ways and, in my prepared statement which I will give you tomorrow, I cite a case in the U.S. Supreme Court which says just this. It says you can't solve this poverty problem in the East or in the New England roads by charging them less than a proper car rental charge. If they are in trouble, take care of them some other way. Give them a bigger cut out of the through rate, if you think they deserve it. Fix some kind of a reclaim arrangement; if their amount of per diem which they pay is too much, let them reclaim their connection, or, conceivably, even take off the top of the through charge for the shipment that might move from Los Angeles to Boston; take a little piece of that off the top, and take it off the backs of the terminating line, and before you start cutting up the pie. There are dozens of ways that you can give proper consideration to the financial plight and the geographical location of different railroads, terminating roads, so to speak, but I submit that you can't lawfully and should not in equity undertake to solve their problems by creating a different rental charge other than what the Commission has found is proper, in order to put profit in car ownership and get boxcars. The CHAIRMAN. I assume, with this language, particularly paragraph 2 in it, or item 2, it would mean, should the Commission find a carrier coming within the purview of 2 in the proposed bill, that whatever the Commission decided under the authority of this bill, insofar as that particular carrier is concerned, the existing per diem would prevail. Mr. MARTIN. It could, certainly. I don't know what we would do except go to court. The CHAIRMAN. How could it be changed? Mr. MARTIN. Sir? The CHAIRMAN. How could it be changed? It says this authority here would not be applicable. Mr. MARTIN. If the Commission did that, I would take them into court overnight and beat the hell out of them. They can't do that. We have still got a Constitution, I think, in these United States. The CHAIRMAN. Thank you very much. We will look forward to hearing your formal statement tomorrow morning. Mr. MARTIN. 10:30, right? The CHAIRMAN. 10:30. Mr. MARTIN. Thank you very much. The CHAIRMAN. The committee will adjourn until 10:30 tomorrow. (Whereupon, at 3:50 p.m., the hearing was recessed to reconvene at 10:30 a.m. on Wednesday, October 6, 1965.) NATIONAL FREIGHT CAR SHORTAGE WEDNESDAY, OCTOBER 6, 1965 HOUSE OF REPRESENTATIVES, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D.C. The committee met at 10:30 a.m., pursuant to recess, in room 2123, Rayburn House Office Building, Hon. Oren Harris (chairman) presiding. The CHAIRMAN. The committee will come to order. I notice a couple of our colleagues who perhaps would like to have an opportunity for a few brief comments before we get started with the regular list of witnesses this morning. Is Mr. Foley here? The Honorable Thomas S. Foley, our colleague from Washington. Mr. FOLEY. Thank you, Mr. Chairman. The CHAIRMAN. He has one of the bills, H.R. 9580. We are very glad to welcome our colleague to this hearing and we will be very glad to have your comments. STATEMENT OF HON. THOMAS S. FOLEY, A REPRESENTATIVE IN CONGRESS FROM THE STATE OF WASHINGTON Mr. FOLEY. Thank you very much, Mr. Chairman. I have a brief statement in support of H.R. 9580, which is identical to a bill introduced by you as chairman of the committee, H.R. 7165, and 14 other bills pending before the Committee. This bill, as I said, is one similar, identical actually to 15 other bills, including the principal bill, H.R. 7165. It authorizes the Interstate Commerce Commission to raise rental rates on boxcars and provides more incentives for increased freight car ownership by railroads. I ask consent to submit a statement for the record in order not to delay the committee in its considerations of this legislation. I would like to state very briefly that as a Member from the Fifth Congressional District of Washington, which includes the area of northern and north-central Washington, the problem of freight car shortages has been a plaguing problem for many, many years. We have seen, as each year goes by, increasing shortages of freight cars and increasing, very serious restrictions of transportation available to our agricultural industries, our forest industries and our manufacturing concerns. I would hope that this committee would very seriously consider the legislation pending before it. I think the legislation is moderate. |