Page images

(The following letters were received for the record :)


U.S. Senator, State of Alaska,
Senate Office Building, Washington, D.C.

NOVEMBER 8, 1961.

DEAR SENATOR BARTLETT: I have just learned that you held hearings in Anchorage and Fairbanks on various transportation matters and I am very sorry that I did not learn of these in time to attend for no doubt these hearings were in regard to your bill S. 2413 which you introduced this year in regard to the Alaska Railroad's being placed under ICC regulations. I also have an excerpt from the Congressional Record containing a statement which you made when this bill was introduced and I might add that it was an excellent review and analysis of the situation.

At this time I would like to add something to this which I feel will be of material help to you in this matter:

In the present Alaska Railroad Division sheet 1-E, item No. 80-C of this sheet, copy of which we are enclosnig, provides for freight charges to be assessed on containerized freight going from Seward to Anchorage or Fairbanks and from Anchorage to Fairbanks. These rates are applicable to ourselves, Weaver

Bros., Garrison Fast Freight, and Puget Sound-Alaska Van Lines.

You will note on the various maximum weights between Seward and Anchorage and Seward to Fairbanks as against the Anchorage to Fairbanks maximums, how the Seward gateway rates are most preferential to Anchorage gateway rates. On freight loaded in excess of 40,000 pounds, the rate from Seward to Anchorage is 43 cents per hundredweight, Seward to Fairbanks $1.03 per hundredweight, and the rate from Anchorage to Fairbanks is 84 cents per hundredweight. As the above rates indicate, the Alaska Railroad rates are inconsistent as to the Anchorage to Fairbanks rate structure in that the railroad is charg ing but 4 cents per hundredweight more for hauling all the way from Seward to Fairbanks over the charge of 99 cents per hundredweight from Anchorage to Fairbanks. For purpose of comparison, the mileage from Seward to Anchorage is 114 miles, Anchorage to Fairbanks 356 miles, the total Seward to Fairbanks mileage is 470 miles. If the Alaska Railroad were to abide by ICC regulations, the Anchorage to Fairbanks rate structure would be in violation of section 3 of part 1 of the act in that Seward gateway rates are preferential to Anchorage gateway rates.

We have for some time been endeavoring to have the Alaska Railroad review this Anchorage gateway rate but have been unsuccessful, in fact they have informed us that they were contemplating raising the Anchorage to Fairbanks rate.

With the Alaska Railroad operating as an unregulated carrier and the Alaska Freight Lines, Inc. and others subject to stringent regulations, not only by the I.C.C., but the Federal Maritime Commission, as you can see places this company in a very unfair competitive position in view of this rate disparity of charges between Seward and Fairbanks as compared with Anchorage and Fairbanks. Although it is true that distance is not the sole factor upon which rates are predicated to entitle it to substantial consideration, in light of the great disparity in distances here involved the burden is shifted upon the carrier to set forth the reason which justifies the disparate rate treatment. In all my correspondence with the Alaska Railroad they have never given me any factors which were considered by them in coming up with the charges set forth in this substituted service schedule. In this case it is very difficult for me to see how the railroad can talk of substituted service since that can only occur when both parties subject to regulations concur in a direct tariff and then have a separate division sheet between them. In this case the Alaska Railroad is not subject

to the I.C.C. and whether or not they call it a substituted service it is really a proportional rate from Seward to Anchorage or Fairbanks.

Under these circumstances the Alaska Railroad should not be allowed to hide behind the guise of a rate division but should be required to justify the establishment of the rate from Anchorage to Fairbanks as a proportional rate in comparison with the rate which they charge from Seward to Fairbanks.

Further, in the case of Puget Sound-Alaska Van Lines using the Alaska Railroad as the connecting carrier, under these circumstances the railroad will make deliveries for Puget Sound-Alaska Van Lines at no additional cost. Under this same rate structure Alaska Freight Lines, Inc., must deliver its own freight, which as you can see makes the disparity substantially greater.

As you know, the Alaska Railroad is at this time operating what I would call "line haul movements with a truck fleet." I would like to point out to you that under the Alaska Railroad Act there is no authority for the Alaska Railroad to operate trucks. They have stated that their truck operation is merely a substituted service. However, I would further like to point out that every railroad in the United States which uses trucks in substituted services is required to obtain a Certificate of Public Convenience and Necessity from the I.C.C. Why should it be any different for the Alaska Railroad? Furthermore, there are points served by the Alaska Railroad which are a substantial distance from the railhead and the operation by trucks cannot be considered substituted service since it is beyond the point served by the railroad.

There is another analogy which is applicable. When Congress passed the grandfather statute granting grandfather authority to Alaska motor and freight carriers, an application for authority was filed with the Commission on behalf of Yutana Barge Lines and the Alaska Railroad filed a similar temporary authority. The Commission saw fit to grant the temporary authority to Yutana Barge Lines and denied the temporary authority to the Alaska Railroad. In this the Alaska Railroad stood up on its hind legs and said, "We are the Alaska Railroad and we are not subject to your jurisdiction." The Commission's Director of the Bureau of Water Carriers informed the Alaska Railroad that it was subject to their jurisdiction. In the same way it is perfectly clear that the motor carrier operations of the Alaska Railroad are also subject to the I.C.C. jurisdiction and they are now operating in violation of the law. Nowhere in the Alaska grandfather bill is a specific exemption for a motor carrier operation performed in Alaska as a part of a movement in interstate commerce by the Alaska Railroad. In absence of this exemption, the Railroad should not be permitted to continue its motor carrier operation, even if somebody should dream up some authority in the basic Alaska Railraod Statute to authorize the operation of a fleet of trucks.

Further, as you know, the Alaska Railroad can file rate increases or reductions on a moment's notice. Carriers such as ourselves must file and it requires 30 days from the Commission for approval or disapproval. This in itself places this company in a very unfair competitive position.

Now, Senator, this brief outline I have given you at this time is only part of the conditions that now exist, but I felt that this part of it should be made known to you at this time. It would be my hope that before any complete hearings would be held on the present transportation matters to Alaska with the new five-man commission that will soon be in operation, that we might have the opportunity of talking to you pertaining to other aspects of the matter as we are certainly looking forward to talking with you at your earliest convenience.

Respecfully yours,


General Manager.



Issued June 30, 1961; Effective July 10, 1961

Issued by E. J. Kunz, General Traffic Manager, Anchorage, Alaska, and F. W. Hoefler, Traffic Manager (Rates and Tariffs) Anchorage, Alaska

(38 Stat. 305; 48 U.S.C. 301-308; Executive Order 3861; June 8, 1923)

[blocks in formation]

1 Exclusive of the tare weight of the trailer, dunnage, racks or cribbing, except that the combined gross weight of trailers when more than 1 trailer is loaded on 1 car, may not exceed 100,000 pounds.

2 (a) Lift vans 24 feet in length may be shipped in multiple units of 2 such vans per car on a single bill of lading, or, in lieu of second 24-foot van, 2 12-foot vans may be substituted. Charges will be based on maximum weight of contents of each van on 1 bill of lading as if shipment had been loaded in a single van. (b) Shipping platforms 24 feet in length may be shipped in multiple units of 2 such platforms per car on a single bill of lading. Charges will be based on maximum weight of contents of each platform on 1 bill of lading as if shipment had been loaded on a single platform. 3 Reduction.



PUBLIC SERVICE COMMISSION, Anchorage, Alaska, November 3, 1961.

U.S. Senate Building, Washington, D.C.

DEAR SENATOR BARTLETT: During your recent hearings concerning various legislation dealing with transportation, you requested an expression from the State of Alaska as to a transportation policy which Alaska would deem most beneficial to the new State and its people.

As a general expression of the State legislature's evaluation of transportation regulation, we would call to your attention the Alaska House Joint Memorial No. 13, passed by the house March 6, 1959, and the senate, March 10, 1959. The memorial stated in part: "Whereas in the newly created State of Alaska, the future development of the State will depend upon the orderly development of transportation facilities to, from and within the State of Alasaka. ***" The

memorial goes on to respectfully request consideration of uniform regulation of all modes of surface transportation including the Alaska Railroad, a Federal agency. The State legislature recognized the existence of situations that could result in inequities between regulated and unregulated carriers serving Alaska. We do not now suggest that the Alaska Railroad can be subjected to full regulation of private industry because of certain complications relating to accounting requirements, rate of return on investment and its very important and sometimes costly program of construction and service, primarily brought about by military requirements and national defense. The Railroad defends its position by generally stating they operate in compliance with the Interstate Commerce Commission rules and regulations as relates to rate changes, etc. We do not argue this statement. Irrespective of the Railroad's policy, the public and competing carriers still must deal with the agency itself or seek authority to take court action against the Federal Government. If there were no other result from regulation of the Railroad but to afford interested parties the benefit of a quasi-judicial regulatory agency to whom they could turn for a determination, the whole effort would be worthwhile. The Railroad is an essential part of the Alaska transportation complex as well as it is essential to national defense. But private industry, too, has an equally important role and must not be impaired nor destroyed by Federal competition which has in past years occurred and which can certainly reoccur without regulation. Statistics prepared by the Automobile Manufactures' Association, "Motor Truck Facts," 1961 edition, indicate that in excess of 10,000 employees in Alaska are trucking employees, directly effected by the health or illness of the motor industry. An industry which for the most part uses year-round employees in an area plagued by seasonal peaks and valleys of employment must be given some consideration.

A second very important aspect of the regulation of the Railroad is the matter of single factor through rates which would and could be participated in by the various modes of surface transportation companies. The joint board bill would have created a lawful status for such an arrangement but the Railroad is still not covered in a manner to permit any of the agencies to exercise any regulatory control over the Railroad. If the ICC were given regulatory control of the Railroad coupled with regulation of the vessel carriers operating between ports on the west coast and ports of Alaska, the legal framework would be established without the creation of another function or composite board.

We would now offer comments on the bill that would turn the regulatory functions of the FMB over to the ICC as respects coastwise operations between the other States and Alaska. The maritime regulation does not provide for the regulation of tramp or contract carriers. This permits and encourages destructive competition for the common carriers operating between these ports. The unregulated water carrier skims the cream from the substantial volume traffic that would permit the common carrier to operate with some greater efficiency as to capabilities and service. Common carriers by water who serve Alaska are placed in a very precarious position by such unregulated competition. Uniformity of regulation is again imperative if the transportation system for Alaska is to achieve a sound and efficient operating basis. Short-term benefits of slightly cheaper rates offered by the unscrupulous competitor is enjoyed only by a few individuals to the detriment of the general public. As an example, a pair of articles on a stone shelf does not reflect any different price to the consumer because of transportation rates variation that exist between the several carriers involved. The only benefit that can be gained for the public ratewise is to create an atmosphere which will bring about a stabilized, equally regulated, efficient, and capable transportation complex. Such an atmosphere will never be brought about when unregulated carriers can operate in the midst of the regulated carriers.

During the hearings in Fairbanks, Alaska, some testimony was presented relating to section 22 rates offered on Government traffic. In the contiguous 48 States the volume of military traffic percentagewise does not have the impact of military traffic to, from, and in Alaska. The Legislature of Alaska during the 1960 session passed the Alaska Motor Freight Carrier Act (ch. 166, SLA 1960) and, in their wisdom, did not provide any section comparable to section 22 for the U.S. Government, State, or city as relates to intrastate commerce. We have been unable to do anything with this situation as relates to Federal agencies or the military because of the Federal supremacy policies relating to rates and charges. Now we find ourselves in a situation where we prescribe rates (maixmum, minimum, or maximum and minimum) for the

intrastate common carriers and require they adhere to such rates. These rate levels are to reflect just and reasonable rates. We then find the carriers, by demand of the various Federal agencies and the military, transport shipments of a similar if not identical volume and nature at a rate less then those charged to a commercial account. Now to view this situation from a practical standpoint, shippers and consignees involved in this situation must by payment of these higher rates subsidize the Federal Government shipping agencies and military traffic. For example, a distributor selling locally in Alaska is not competitive with a shipper in Seattle on shipping differentials alone. If the Federal Government takes possession in Seattle it moves its goods to Alaska on a section 22 rate, lower than that available to the Alaskan, who must ship on commercial rates. This most surely retains a captive trade for others than those in our new State. We need commerce of a commercial nature in Alaska but cannot compete with, again, unregulated competition by the Federal Government using section 22 type rate tenders.

By action respecting the House Joint Memorial No. 13 and the passage of an intrastate regulatory act which now applies to the extent permitted under Fed<eral law, the Alaska Legislature has clearly taken the position that such uniform regulation is a necessity to stable transportation industry. They have indicated section 22 type rates are not desirable since they did not provide for this type relief in the State regulatory act.

If the U.S. Congress fails to act on legislation that will offer the several modes of surface transport a lawful place in the Alaska trade, it would appear then to encourage a completely illegal and unlawful situation which now exists. We feel to force a State into the position that it must rely on transportation facilities that do and will continue to operate in a state of chaos created by lack of provisions under which they may lawfully operate constitutes a serious dereliction of duty on the part of all involved, including the U.S. Congress. While exact figures are not available at this time, a reasonable estimate would be that in excess of 50 percent of the total volume of traffic handled by section 15 non-vessel-operating water carriers who also conduct motor operations in interstate commerce within Alaska operate on tariffs filed with the Federal Maritime Board or Commission which include motor service beyond the ports of Alaska and are completely and unquestionably beyond that Board's jurisdiction. These tariffs should have been rejected on January 3, 1959, at the time of Alaska statehood, but dereliction of duty and procrastination has allowed this situation to continue and even flourish in hopes something would happen to legalize the arrangements. We do not suggest that the purpose behind the filing of these unlawful tariffs was not a good purpose, we even say they were a benefit in savings in transport costs, but we do not agree that it should or could be permitted under law that now exists.

Summarizing, we support the passage of an act to place the Alaska Railroad under regulation of the Interstate Commerce Commission; we support passage of an act to place the water carriers operating between the ports of Alaska and the ports of the other contiguous States under Interstate Commerce Commission regulation; and, we support the repeal of the provisions of section 22 of the Interstate Commerce Act except to the extent it would apply on shipments of the military when national defense or other emergency conditions exist that warrant such applications.

These recommendations are based on the sole and distinct purpose of providing the general public and Alaska with a stabilized sound, healthy, and economic transportation system so that the great potentials of this new State may be more quickly developed and brought into their proper perspective.



Director, Division of Motor Transportation.

« PreviousContinue »