Senator BARTLETT. Yes; completely.

Mr. CHAPADOS. Of course, in support of the need for regulation of carriers, and for the creating of a situation where land carriers as well as water carriers can file joint rates between the United States and Alaska, there is no question. We recognize that this is a very important and desirable thing here in the State of Alaska.

Senator BARTLETT. What is important?

Mr. CHAPADOS. That by the creation of a bill like S. 1839 it would then permit Alaskans to be in a position to transmit their goods between the United States and Alaska on a through bill of lading which, as I understand it now, is not possible-is not legally possible anyway. Senator BARTLETT. Mr. Chapados, would you agree with the testimony that has been presented to this committee, on occasion after occasion, if this could be accomplished, and if the savings were passed on to the consumers, it is they, the consumers, who would benefit chiefly from this arrangement? This would make it possible to bring down the cost of living to a certain extent, would it not?

Mr. CHAPADOS. I certainly believe that it would. It is just commonsense that if you eliminate the need for separate billings and separate rating agencies and that sort of thing and can handle it under one agency, on one through bill, you are going to reduce your costs. I think that certainly this would be then passed on to the public and would be desirable, here in Alaska especially.

Senator BARTLETT. In the early days of consideration of legislation of this kind we were told that the freight saving might be on the order of 10 percent. Personally, I think that it wouldn't be that much. No one knows. But in any case, the submissions made to the committee tend to demonstrate that they would be quite substantial.

Mr. CHAPADOS. They certainly would bring about a saving without a doubt, and certainly would improve, I think, perhaps the distribution of goods from all points of the United States into Alaska by the fact that there would be an easier and a better known method of shipping to the State. At the present time it is most difficult for any shipper to determine how to move goods from one point to another because he has to go to the various carriers and ask for rates, and then in turn the carrier must review all the tariffs they have on file and try to figure out the best combination of things. Certainly with a situation where through rates could be devised and could be published and could be worked on as time goes on in such a way as to eliminate the wrinkles, I think you are going to reduce costs that way and you are going to improve the manner of distribution and the acquisition of supplies here in Alaska by having a joint board, an opportunity to file joint rates, and to have through bills of lading between the continental United States and Alaska.

Senator BARTLETT. Can we go back for a minute to your recommendation that there be a mandatory requirement for arrangements between carriers. You referred to the necessity for certain standards. What kinds of standards did you have in mind?

Mr. CHAPADOS. Certainly all carriers that will receive their certificates under the Interstate Commerce Commission will have to meet certain standards. On the other hand, there may be carriers that serve only a limited area. Actually, I have not given too much thought to what these standards might be.

Senator BARTLETT. You mean standards of service?

Mr. CHAPADOS. Standards of service and equipment. Service would include many things. That would result in good equipment and everything else and the area that they might cover from the point of accepting the freight and making distribution throughout Alaska.

I don't feel that the carriers association has a right to insist on water carriers being placed in a position where they have to, by the mandatory requirements of the law, enter into joint tariffs with just any carrier that comes along and says, "I am qualified to operate."

They should be in a position to judge whether it will be a good or bad situation. They should have the right to appeal, but on the other hand I think there should be equity between carriers and between water carriers, and that everybody should have a fair chance, providing they can perform service.

SENATOR BARTLETT. There is one thing which occurs to me in this connection. You put in the word "mandatory," and then you add a proviso or two or three or more. Don't you then in effect have what amounts to a permissive arrangement? I recall that when this joint board bill, which seems to have been before us forever, was being considered by the committee, a very strong argument was made by practically every witness against any mandatory provision. One of the bases for this argument was that if the word "permissive" is used, it is sure as shooting that two carriers are going to get together and inaugurate a joint rate, and that once this has occurred, all the others are obliged, in effect, to fall into line.

Would you have any comment on that?

Mr. CHAPADOS. No, sir.

In fact, I know that I have testified before your Committee on Interstate Commerce in favor of the permissive type of a joint board bill. We are not, of course, talking about a joint board bill now. At least I am recommending that we have the type where the Interstate Commerce would be the only regulatory board.

Senator BARTLETT. Different legislation requires a different approach.

Mr. CHAPADOS. I think that probably would be one of the considerations. My feeling in using the word "mandatory" is that there be equity and that people who can qualify should be given an opportunity to enter into joint rates with water carriers, and that water carriers should not in any way be in a position to refuse to at least deal with them, and that in the event that the carrier could meet the qualifications, that they be required then to enter into agreement as with any other carrier that they desire to enter into agreements with.

I think we will find in Alaska that eventually we are going to have large companies and we are going to have small companies. I think that in Alaska all companies should be given a fair and equitable opportunity to deal in this particular traffic.

Mr. GRINSTEIN. Is it your opinion that the carriers in Alaska are anxious to enter into joint rates and through route agreements and provide ultimately single factor billing?

Mr. CHAPADOSs. I think so, because at the present time we are not permitted to do so. Of course, this gets us into a situation where we would start talking about other bills being the economic regulation of the Alaska Railroad. As a carrier regulated by Interstate Commerce

we are not permitted to enter into joint tariffs with unregulated carriers. On the other hand, we have the situation in the State where actually many carriers are regulated under the Interstate Commerce and the Alaska Railroad, as an example, and have filed joint tariffs with the Federal Maritime Board. I may be wrong, but I don't think this actually is legal. But they do exist. These carriers that do not enter into these joint tariffs and file them are at a distinct disadvantage because they cannot quote through rates.

As an example, we operate between Valdez and Fairbanks. If I were asked to quote a rate on a particular item, from the continental United States to Alaska, I have to refer then to the proportional tariff of the Alaska Steamship Co. as an example, figure out their water rates, figure out wharfage charge in Seattle, wharfage charge in Valdez, add the interstate commerce rate which we have filed with the ICC, and come up with a total which then is compared with the through rates of other carriers who apparently can join together and for various considerations, volume and many other things, could very well work out a much more equitable rate.

The carrier that is not in a position to do that just cannot quote rates that are competitive. That, I think, would be very desirable for all carriers in Alaska who desire and are eligible to compete in interstate commerce between the continental States and Alaska to be in a position to file joint tariffs. For other reasons the joint tariffs which would provide the through bill of lading and that sort of thing would be quite an improvement, I think, in the present situation.

Mr. GRINSTEIN. The reason I ask the question, railroads subject to part I of the act and water carriers subject to part III of the act presently have a compulsory joint rate and through-route provision. The results have been less than remarkable in three standout cases. It has taken 14 years, 10 years, and 8 years to get the ICC to enforce them. In each case, by the time the ICC had acted, the traffic had gone, the shipper had gone, and the carrier was not in good health.

What troubles me is whether the situation in Alaska would be different; whether the carriers are so anxious to enter into such agreements here that you wouldn't run into the legal snarl that you frequently run into over the division of rates, which is really the heart of the problem.

It would be your judgment that the carriers here would be more anxious, rail, water and highway, to enter into these agreements and probably have less of a problem over the division of rates?

Mr. CHAPADOS. I am not sure that I can speak for the railroad. As a motor freight carrier it certainly would be desirable as long as we are going to file with the Interstate Commerce, and if the situation develops that a regulation is by the Interstate Commerce, that is, of the water carriers also, that the division of the rates on a through tariff would be a matter that certainly should be solved without too much difficulty since you file with both agencies and it is just a matter of totaling up the filings of the water carrier and the land carrier to produce the through rate.

If there is going to be a dispute between the carriers as to what division one or the other should have, I would think that would be their own problem and that they would certainly have to work out

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something, especially if they are forced to comply with the requirements of the joint tariff.

Mr. GRINSTEIN. In a situation where you just add the two or three local rates, as the case may be, together, there is no problem in the division of rates. But if the saving that Senator Bartlett was talking about is to be effective, your joint rate would be lower than the sum of the local rates. That is where they get into the difficult problem of the division of rates, what each carrier is going to get. This is what has stymied the ICC, and in fact, cut the heart out of the present mandatory provisions for joint rates and through rates between rail and motor carriers.

Mr. CHAPADOS. I am not here to try and insist on a certain approach to be taken, because I am not an expert in this field, and I certainly do not have the benefit of the experience that you refer to. I think that these points should be raised and if they are good ones they should be considered on their merits.

During the course of your hearings you may get suggestions here in Alaska that will be much better than perhaps the one involving the mandatory approach.

Once again I would like to say that I am thinking more, when I think of the mandatory approach, in terms of establishing equity among the carriers so that everyone has a fair chance to do business and is not excluded because of a right to, without any qualification not enter into an agreement.

But as far as the suggestion that I have made here, or the recommendations, you may find that they are not the best; I am giving you the best of my knowledge on the subject.

Mr. GRINSTEIN. I was just inquiring because if the forms of transportation are in a cooperative mood, then it could work out. It hasn't worked well in the south 48 States.

Mr. CHAPADOS. I think you may know, or maybe you don't know, in Alaska the Alaska Carriers Association is composed of 175 members. The major portion of the members, of course, are active members. We have associate members also. I am sure that they are in agreement on the necessity for some plan of regulation that will at least let us know where we stand.

At the present time, nobody knows where they stand. We have a situation that is far more harmful, I believe, than one that might result from a dispute between carriers as to the division of the rates on the joint tariff. I think that is a minor problem as compared to the one that we presently have, and it would be an improvement. Certainly, as time goes on perhaps the joint tariff could be improved, too, and take care of the particular problems that are developed here.

Mr. GRINSTEIN. In other words, you think for the convenience of the shipping and consuming public that it would be better just to allow them to add up the totals of the local rates so that you can get single-factor billing, and reduce the problems of liability for damage from the shipper's point of view, and later consider how you can possibly achieve certain reductions in proportions of those rates?

Mr. CHAPADOS. Yes. But I believe that at the beginning the carriers in Alaska, at least the carriers that I am familiar with, can sit down with water carriers and work out rates that are going to be compensatory but not to the extent of being a burden on the people of Alaska. I know the Alaska Carriers Association recognizes their

responsibility in this field and wants very much to create a situation here that is desirable for the public and also one that will provide the motor freight industry with an opportunity to make a living. That isn't the case now. There is no rhyme or reason to what appears to be going on.

We

Senator Bartlett, in reading a letter here, referred to a policy of transportation for Alaska, and we certainly need one up here. should all think seriously along those lines, and when the policy is established, it should be followed because that is the only way we are going to improve the situation that exists here now.

Senator BARTLETT. Do you have any questions, Mr. McElroy, on those points?

Mr. MCELROY. The only questions on my mind are very likely to be commented upon by other witnesses.

Mr. CHAPADOS. I want to comment briefly on S. 2413; I believe that is the bill

Mr. GRINSTEIN. That provides for economic regulation of the Alaska Railroad.

Mr. CHAPADOS. I received a copy of the report by the Interstate Commerce Commission relative to this bill. I notice in the report that the Interstate Commerce Commission recognizes the need for the regulation of the railroad. Their explanation of the bill, as they see it, it would appear to me that this would be beneficial in many respects to the Alaska Railroad. Certainly, it would be desirable from the standpoint of the overall regulation of the transportation in Alaska. They point out there, very frankly, that until all carriers in the State are regulated by one group or another, or actually under regulation, that certainly no form of regulation by the Interstate Commerce Commission is going to be effective.

I certainly believe that this is true.

The Alaska Carriers Association feels that it is true. The Alaska State Legislature passed a resolution in the 1959 legislature requesting that some action be taken along these lines. And generally speaking, there seems to be every justification for it.

The Carriers Association feel that perhaps the present bill is not quite strong enough due to the fact that it does not require the Alaska Railroad, or at least as I understand the bill, the regulation by the Interstate Commerce Commission would not necessarily be based on the complete picture as required by the motor carriers to be regulated under.

Take into consideration the need for paying taxes and many other expenses that a private carrier must pay. The Alaska Railroad at the present time does not pay taxes in any form that I know of to the State of Alaska. It operates on the Alaska highways without licenses, without paying motor fuel taxes, and all of these things.

No question but that the Alaska Railroad, in my mind, has performed a service to Alaska, and perhaps can continue to do that. But it certainly doesn't appear to be a fair situation where the very Government that we pay taxes to operates a business in competition with its citizens who in turn try to make a living and pay taxes on the earnings of that activity.

I think that the situation should be resolved and that any regulation of the Alaska Railroad should take into consideration these matters.