CONTENTS Bartlett, Hon. E. L., U.S. Senator from Alaska, Senate Office Build- Gruening, Hon. Ernest, U.S. Senator from Alaska, Senate Office Maguire, Thomas H., Chairman and Counsel of Executive Com- mittee, Western Traffic Association, Union Station, Chicago 6, Ill; also representing the American Railroads Association.... Miller, Malcolm D., Deputy Commissioner, Transportation and Com- munications Service, General Services Administration, Washington, Murphy, Hon. Rupert L., Chairman, Interstate Commerce Commis- Reports from Government agencies: Agriculture Department, dated March 30, 1962- Commerce Department, dated May 28, 1962... Comptroller General of the United States, dated May 19, 1961. 4 11 III RAILROAD RATES ON ALASKA BOUND FREIGHT TUESDAY, APRIL 17, 1962 U.S. SENATE, COMMITTEE ON COMMERCE, SUBCOMMITTEE ON SURFACE TRANSPORTATION, Washington, D.C. The subcommittee was called to order, pursuant to notice, at 2:25 p.m., in room 5110, New Senate Office Building, Hon. Ralph Yarborough presiding. Senator YARBOROUGH. The Commerce Committee, Subcommittee on Surface Transportation, will come to order. In our hearing this afternoon we will receive testimony on S. 1723, which would amend the Interstate Commerce Act to express that, as a matter of congressional policy, the rates and charges for commodities to and from Alaska shall be no greater than the rates and charges applicable to export or import traffic moving to or from any area adjacent to or in the Pacific Ocean. At the present time railroad freight rates in the continental United States on commodities—both agricultural and manufactured-moving to or from Alaska are higher than those rates on items bound for or received from foreign countries. In the judgment of the sponsors of this measure, railroad rates on like commodities which depend on water carriage for completion of the movement should, at a minimum, be equal rather than extend lower freight rates to citizens of a foreign country than are available to the citizens of Alaska. With this view the Department of Agriculture and the General Services Administration have concurred and each has recommended adoption by the Congress on S. 1723. Alaska has long experienced problems with ever-mounting transportation costs. These costs have prevented the Alaskan economy from developing and have caused the citizens to pay extreme imposts even for the bare essentials. It is with this background in mind that we hear the testimony today. (S. 1723 follows:) [S. 1723, 87th Cong., 1st sess.] A BILL To establish equitable railroad freight rates Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That section 3 of the Interstate Commerce Act is amended by the insertion of the following subsection after section 3(1a): "SEC. 3. (1b) It is declared to be the policy of Congress that commodities shipped to and from the State of Alaska shall pay no greater rates and charges Staff counsel assigned to this hearing: Gerald B. Grinstein. 1 for transportation services subject to the Interstate Commerce Act than are applicable to similar commodities, or services rendered on export or import traffic moving to or from any area adjacent to or in the Pacific Ocean. Any greater charges for such services are hereby declared to be undue and unreasonable prejudice and disadvantage to the State of Alaska." Senator YARBOROUGH. Our first witness is the Senator from Alaska and a member of this committee, Senator Bartlett. STATEMENT OF HON. E. L. BARTLETT, A U.S. SENATOR FROM THE STATE OF ALASKA Senator BARTLETT. Thank you, Mr. Chairman. I shall make every reasonable effort to be brief. I do not see why there ought to be any objection on the part of anyone to enactment of this bill. After all, it merely declares a congressional policy. Now, the effort to secure for Alaska the benefit of these rates, exportimport rates, commenced a good many years ago. It commenced, in fact, as I recall, when by colleague, the junior Senator from_the sovereign State of Alaska, was the Governor of Alaska, in the days of territorialism. And at that time, through the agency of the Alaska Planning Council, efforts were made to persuade the railroads to apply voluntarily to Alaska the export-import rates which were in effect to other sections, other countries of the Pacific Ocean. Those efforts failed. Subsequently, and in 1955, the Federal Government, through the General Services Administration, filed a complaint stating that the Great Northeastern Railway Co. and others had violated the Interstate Commerce Act by discriminating against Alaska in this connection. And the GSA cited the fact that these lower rail export rates were made on shipments to and from the Far East, including Japan, but were denied to Alaska. And the Federal Government, of course, had a very measurable stake in all of this because it was the largest shipper of goods to Alaska and had the lower rates been placed in effect, the Federal Government would have effected a very considerable saving. At any rate, eventually the ICC ruled that there was no violation of the Interstate Commerce Act and the contention of the railroads supported by the ICC was that the lowered rates in effect were instituted because of competition with shipping from the Atlantic coast and the Gulf coast for goods ultimately destined to Pacific areas other than Alaska. Three members of the Commission dissented from the conclusion of the Interstate Commerce Commission. Commissioner Walrath wrote the only dissent in which he stated that the majority was permitting managerial discretion to establish rates on export traffic beyond any principle previously sanctioned by permitting export rates to include only those pinpointed ports where there is through water movement. And Commissioner Walrath also went on to state that Alaska traffic is basically similar to the traffic destined elsewhere in the Pacific and that it was unreasonable to permit export rates to Hawaii and Alaska. Now, Mr. Chairman, it would be my hope that this bill would be promptly reported by the subcommittee, approved by the full committee and passed by the Senate and then by the House of Representatives and signed into law. It would be of great importance in the development of Alaska's resources, the development of which now is handicapped in so many ways by reason of distance from markets and on account of other factors. I should say in conclusion that whether or not action is taken on this bill, the U.S. railroads would be serving their own best purposes if they would institute, and very promptly, export-import rates for Alaska, because now they confront the probability of very strong competition from Canadian carriers. The Canadian National Railroad has announced an intention to inaugurate sea-train service from Prince Rupert, British Columbia to Whittier, Alaska, and if this Senator YARBOROUGH. Pardon a question there. Is Whittier the terminus of the Fairbanks Railroad? Senator BARTLETT. Whittier is one terminus, Seward and Anchorage being the others. Whittier is the port that was established by the Army during World War II. Docks and buildings were built there. The Army put a good many millions of dollars into that facility, and they had to do it all over again because there was a disastrous fire there. So the establishment was rebuilt, and a year or two ago it was abandoned and is not being used now for shipping. Senator YARBOROUGH. If the Canadian railroads established this service in boxcars loading in the United States, it could be taken all the way to Fairbanks and unloaded there, is that correct? Senator BARTLETT. All the way to Fairbanks and all rail points to the south of Fairbanks, including at Anchorage, Alaska's biggest city. Of course, the rail rate is identical to Prince Rupert with that prevailing to Seattle, and since Prince Rupert is 600 miles closer to Alaska, the Canadians will have a great advantage. One way and a very important way in which that could be overcome would be for the U.S. railroads to inaugurate promptly, right now, in my opinion, this export-import rate. That would make them and American steamship lines serving Alaska from Seattle much more competitive than otherwise will be the case. It is still my hope, Mr. Chairman, that this will be done on a voluntary basis by the U.S. railroads. If they do not choose to do so, I think it would be well to have a declaration of congressional policy as set forth in S. 1723. Thank you. Senator YARBOROUGH. Thank you, Senator Bartlett, for this statement. With the list of very busy witnesses that we have here, I want to state my regret that the hearing was opened 20 minutes late. Shortly before 2 o'clock, it was the information of the staff of the committee that another Senator would hold the hearings, but he was called off to something else, and I was notified about 2:17 and I came back to hold the hearings. Senator BARTLETT. We appreciate very much, Senator Yarborough, your having done so, because we know this is a very busy afternoon for you. Senator YARBOROUGH. I think this is an important matter. It was my pleasure to support the admission of Alaska as a State. It had far more population than my home State of Texas had at the time it established its independence and far more population than Texas had |