cipal statutes upon which Federal domestic water 
carrier regulatory authority rested at the end of the 
1930s. 
Although Federal authority over domestic water 
carriage had been expanded substantially with enact- 
ment of the 1938 amendment to the Intercoastal 
Shipping Act, inland water carriers remained largely 
beyond Federal regulation. The ICC, of course, did 
exercise some limited jurisdiction over those trans- 
portation services offered jointly by rail and water 
carriers and water carriage provided by railroad sub- 
sidiaries, but this authority was directed primarily 
at controlling the competitive practices of the rail- 
roads and excluded water transportation unaffiliated 
with rail carriage. The ICC role in regulating rail- 
related water carriage also meant that Federal 
authority in this area was divided between two 
agencies. By 1940, pressures emerged for the con- 
solidation of this domestic regulatory authority and 
for the extension of general Federal regulation to 
the inland waterway system. 
In 1940, legislation was passed which accom- 
plished the desired consolidation of regulatory 
authority and extended Federal regulation to the 
inland system. With enactment of the Transportation 
Act of 1940, which added a new Part III to the 
Interstate Commerce Act, the bulk of Federal regu- 
latory authority over domestic water transportation 
(including the inland system) was vested in the 
Interstate Commerce Commission, leaving to the 
U.S. Maritime Commission (and its successors) pri- 
mary responsibility for the regulation of foreign 
trade carriage. The single exception to this foreign/ 
domestic division of responsibility was in the offshore 
domestic trades between the continental United 
States and Hawaii, Alaska, and U:S. territories. In 
these noncontiguous domestic trades, the Maritime 
Commission retained primary responsibility for 
water carrier regulation. All territorial trades were 
exempted from inclusion under ICC authority by 
the 1940 Act itself, and, when Hawaii and Alaska 
became States, the authority of the Maritime Com- 
mission over these trades was preserved by the state- 
hood legislation. Regulation of these noncontiguous 
domestic trades continues to be governed primarily 
by the terms of the Intercoastal Shipping Act of 
1933, as amended, subject to the trade practice pro- 
hibitions of the Shipping Act of 1916. 
In addition to bringing the inland waterway sys- 
tem under Federal regulatory authority, the Trans- 
portation Act of 1940 also extended domestic water 
regulation to certain contract carriers, although regu- 
latory authority in this area has remained limited 
and is primarily designed to protect common carriers 
(of all modes) from unfair competition. Basically, 
regulated contract carriers are required to file with 
the ICC only the lowest rates actually charged for 
their services and are free to charge higher rates as 
they wish. The ICC may raise floor rates found to 
be so unreasonably low as to result in unfair compe- 
tition, but has no power to lower rates. 
Although many of the provisions of the Shipping 
Act and the Intercoastal Shipping Act were repealed 
by the Transportation Act of 1940 with respect to 
the water carriage made subject to ICC jurisdiction, 
similar trade practice prohibitions and standards 
were incorporated in the new legislative authority. 
Tariff filings were required, and rates could be over- 
turned by ICC if found to be unreasonably high or 
unreasonably low. Unjustly discriminatory rates and 
practices were outlawed, and agreements among 
common carriers relating to rates were allowed and 
given antitrust immunity if approved in advance and 
if individual participants retained the right of indi- 
vidual action. Thus, in general, the basic regulatory 
authority previously exercised by the U.S. Maritime 
Commission over part of the domestic water trans- 
portation system was simply transferred to ICC and 
expanded to include the inland waterway system and 
contract carriers. The specific ICC authority over 
domestic water transportation is, however, replete 
with exceptions and exemptions and, as a conse- 
quence, is highly complex. After delineating most of 
the major exceptions and exemptions, one author has 
identified three major elements of the domestic water 
transportation system which remain generally within 
the jurisdiction of ICC: “. . . common carriage of 
nonbulk freight; common carriage of dry bulk cargo 
on the high seas and Great Lakes; and intercoastal 
contract carriage of dry bulk cargo, when substan- 
tially competitive with common carriage (by water, 
rail, or highway ).” *° 
In addition to the domestic carriage line haul 
operations subject to ICC authority, numerous other 
water transportation-related services also fall within 
ICC jurisdiction under various provisions of Part III 
of the Interstate Commerce Act. Authority in this 
area extends to such services as delivery, elevation, 
transfer in transit, refrigeration, storage, and similar 
transportation-related services offered to the public. 
It is also important to note that ICC authority 
under the 1940 Act includes the regulation of the 
domestic portion of foreign trade water transporta- 
tion services before or after trans-shipment in the 
carriage to or from a foreign location. With the 
growth of intermodalism in recent years, and the in- 
creasing use of through transportation rates, juris- 
dictional problems between ICC and FMC have 
become more and more common in this area. Since 
foreign trade-through rates may include in a single 
rate charges for both foreign trade and domestic 
trade services, it is often not clear which authority 
should govern such rates. Hence, while a major 
motivation for enacting the Transportation Act of 
40 William L. Grossman, op. cit. note 29, p. 106. 
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