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DEPOSITED BY THE
UNITED STATES OF AMERICA

CONTENTS

Page

Moss, Hon. Frank E., U.S. Senator from the State of Utah, Senate

Office Building, Washington, D.C............-

Ullman, Hon. Al, U.S. Representative from the 2d Congressional
District of Oregon, House Office Building, Washington, D.C....

Letters received for the record-

140

Darrough, Sam A., vice president and general manager, Lincoln Grain,
Inc., 925 Terminal Building, Lincoln, Nebr. --
Pilcher, Crawford L., chairman, Georgia Public Service Commission,
244 Washington StreetS W., Atlanta, Ga..

140

143

Stewart, O. L., executive secretary, Southwest Oregon Shippers' Traf-
fic Association, Inc., 415 Pacific Building, Roseburg, Oreg.
Triggs, Matt, assistant legislative director, American Farm Bureau
Federation, 425 13th Street NW., Washington, D.C...

141

143

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FREIGHT CAR SHORTAGE

MONDAY, JUNE 17, 1963

U.S. SENATE,

COMMITTEE ON COMMERCE,

SUBCOMMITTEE ON FREIGHT CAR SHORTAGE,

Washington, D.C. The subcommittee met pursuant to notice at 2:30 p.m., Hon. Senator Prouty presiding.

Senator PROUTY. The committee will be in order.

The purpose of this hearing is to take testimony on S. 1063 in the light of the recent critical freight car shortage. This bill was introduced by the chairman of the committee for himself and 34 cosponsors after the request of the Interstate Commerce Commission.

It would amend section 1(14) (a) of the Interstate Commerce Act by allowing the Commission, in fixing the compensation to be paid for the use of freight cars, to give consideration to the level of freightcar ownership and to other factors affecting the adequacy of the national car supply. It also would determine on the basis of such consideration whether such compensation should be calculated on the basis of the elements of ownership expense involved in owning and maintaining freight cars, including a fair return on value or whether it should be computed on the basis of elements reflecting the value of use of freight cars, or upon a combination of bases.

In order to accommodate all who wish to testify, an additional hearing on this matter will be held on June 25.

(The bill, S. 1063, and the departmental and agency comments submitted to the committee, follow :)

[S. 1063, 88th Cong., 1st sess.]

A BILL To amend section 1(14) (a) of the Interstate Commerce Act to insure the adequacy of the national railroad freight car supply, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 1(14) (a) of the Interstate Commerce Act is amended by adding at the end thereof a new sentence reading as follows: "In fixing the compensation to be paid for the use of freight cars, the Commission shall give consideration to the level of freight car ownership and to other factors affecting the adequacy of the national freight car supply and shall, on the basis of such consideration, determine whether compensation should be computed on the basis of elements of ownership expense involved in owning and maintaining freight cars, including a fair return on value (which return shall be fixed at such level as in the Commission's judgment will encourage the acquisition and maintenance of an adequate freight car fleet), or should be computed on the basis of elements reflecting the value of use of freight cars, or upon such other basis or combination of bases as in the Commission's judgment will provide just and reasonable compensation to freight car owners, contribute to sound car service practices, and encourage the acquisition and maintenance NOTE.-Professional staff member assigned to these hearings, Gerald B. Grinstein.

of a car supply adequate to meet the needs of commerce and the national defense."

(Departmental and agency comments:)

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Dear Mr. CHAIRMAN: We again refer to your letter of March 15, 1963, in which you asked for our comments on S. 1063.

The purpose of S. 1063 is to amend section 1(14) (a) of the Interstate Commerce Act, 49 U.S.C. 1(14) (a), to give the Interstate Commerce Commission a greater degree of flexibility and a broader basis for determination in fixing rentals to be paid by rail carriers for the use of freight cars. This bill imple ments legislative recommendation No. 2 made by the Interstate Commerce Com mission (76th Annual Report, page 198). The current rental fee, according to the Commission, is so unrealistically low that rail carriers find it economically advantageous not to make replacements and additions to their own supply of cars, but to use available cars of other carriers. Prior versions of this bill have been introduced in former Congresses; hearings were held by your committee in the 86th and 87th Congresses and S. 1789, 86th Congress, 1st session, was reported favorably. Hearings were also held by the House Interstate and Foreign Commerce Committee in the 86th Congress on H.R. 7937 which was reported favorably. Both Congresses, however, failed to act on these bills.

S. 1063, if enacted, would have no direct and immediate effect upon the functions and operations of our Office. The railroad freight car shortage which has continued to increase for some years is, however, a matter of public knowledge and undoubtedly affects the interest of the United States as a user of rail transportation. We think S. 1063 is in the public interest and we recommend that it receive favorable consideration from your committee.

Sincerely yours,

JOSEPH CAMPBELL,

Comptroller General of the United States.

DEPARTMENT OF AGRICULTURE,
Washington, D.C., May 9, 1963.

Hon. WARREN G. MAGNUSON,

Chairman, Committee on Interstate and Foreign Commerce,
U.S. Senate

DEAR SENATOR MAGNUSON: This will reply to your letter of March 15, 1963, inviting comments on S. 1063, a bill to amend section 1(14) (a) of the Interstate Commerce Act to insure the adequacy of the national freight car supply, and for other purposes.

To accomplish its purpose it would require the Interstate Commerce Commission, in fixing a rate of compensation paid by one railroad to another for the use of the latter's freight cars, to consider (1) the elements of expense involved in owning and maintaining freight cars including a fair return on value, or (2) the elements reflecting the value of the use of the freight cars or (3) a combination of the two. More important, it would require the Commission also to consider the level of the national freight car ownership and other factors affecting the adequacy of the freight car supply.

The Department recommends passage of this bill.

The supply of serviceable freight cars is declining by substantial numbers annually. In view of the position taken by most railroads that they do not care to speculate on there being sufficient future traffic to justify expensive purchases of high priced cars, it appears that the introduction by this bill into the car rental situation of some additional elements, including the added advantage of ownership which may be considered, would be desirable in order to provide sufficient incentive for the purchase by the railroads of enough cars to meet the needs of commerce and the national defense and to handle the traffic offered them. The Bureau of the Budget advises that there is no objection to the presentation of this report from the standpoint of the administration's program.

Sincerely yours,

ORVILLE L. FREEMAN, Secretary.

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