Memorandum of Disapproval of Bill To Establish the Finality of Contracts Between the Government and Common Carriers.

I HAVE WITHHELD my approval of S. 906, "To establish the finality of contracts between the Government and common carriers of passengers and freight subject to the Interstate Commerce Act."

This legislation provides that rates established under the provisions of Section 22 of the Interstate Commerce Act, when accepted or agreed to by the Secretary of Defense, the Secretary of Agriculture, or the Administrator of General Services, or by any official or employee to whom the authority is delegated by them, shall be conclusively presumed to be just, reasonable, and otherwise lawful, and shall not be subject to attack, or reparation, after one hundred and eighty days, or two years in the case of contracts entered into during a national emergency declared by Congress, after the date of acceptance or agreement upon any grounds except actual fraud or deceit, or clerical mistake.

The determination of what is a just, reasonable, or otherwise lawful' rate on interstate shipments is now vested in the Interstate Commerce Commission. All shippers, including the Government, are bound as a matter of contract to pay the agreed rate, whether it be in the form of a tariff rate or a Section 22 Quotation. This contractual obligation is subject, however, to an overriding right of the shipper to appeal to the Interstate Commerce Commission to determine whether the agreed rate is lawful. The statute of imitations for such action in the present law is two years. This Act would require the Government to determine the lawfulness of the rate, with finality, and through agencies other than the Interstate Commerce Commission, within one hundred and eighty days at ordinary times, or within two years during a national emergency declared by Congress. Whereas the commercial shipper could contest the rate while it is in effect, the Government would apparently be required to cancel or refuse the rate and pay higher charges during any test of the lawfulness of the rate.

I am therefore unable to approve this legislation, which relegates the Government in its role as a user of transportation services to a position inferior to that of the general shipping public and restricts its access to the Interstate Commerce Commission, the body of experts authorized by Congress to determine the reasonableness of rates.

I see no reason why the Government should not be subject to the same limitations on retroactive review of its freight charges as the commercial shipper. That result could be accomplished equitably by an amendment to Section 16(3 ) of the Interstate Commerce Act specifying that the Government shall be subject to the two year limitation presently applicable to commercial shippers. The Government would then be on exactly the same basis under that section as all other shippers, and existing inequities in the present rate-making relationships between the Government and the common carriers would be removed. I recommend that such legislation be enacted at the next Session of the Congress.

DWIGHT D. EISENHOWER