AD RETIREMENT TEMPORARY BENEFIT INCREASE EXTEN- JUNE 14, 1973.-Ordered to be printed Mr. MAGNUSON, from the Committee on Commerce, submitted the following REPORT [To accompany H.R. 7200] Committee on Commerce, to which was referred the bill (H.R. o amend the Railroad Retirement Act of 1937 and the Railroad ent Tax Act to revise certain eligibility conditions for annuichange the railroad retirement tax rates; and to amend the ate Commerce Act in order to improve the procedures perto certain rate adjustments for carriers subject to part I of the d for other purposes, as jointly amended by the Committee on and Public Welfare and the Committee on Finance, having red the same, reports favorably thereon with an amendment, ommends that the bill as amended do pass. PURPOSE AND BRIEF DESCRIPTION I of H.R. 7200 would increase the tax which railroads are ed to pay under the Railroad Retirement Tax Act and, thereould increase the railroads' expense of doing business. (For a te explanation of Title I of H.R. 7200, as reported by the Comon Labor and Public Welfare and the Committee on Finance, ate Report No. 93-202). Railroads presently have the authorpetition the Interstate Commerce Commission for rate increases et expense increases, but there is no requirement that the Comact upon those petitions within any specified period of time. I of H.R. 7200 as reported by this Committee would require minission to act within sixty days on a petition for interstate creases based upon higher expenses resulting from the railroad ent tax increases provided for in Title I. Petitions for intraate increases occasioned by such tax increases would also have H and any requested review of such action by the Commission would have to be completed in thirty days. Any rate increases granted could not exceed reasonable levels on particular traffic, commodities, or commodity groups and would have to maintain the existing relationships within and between major districts. BACKGROUND On March 7, 1973, represenatives of railroad labor and management, complying with the Congressional directive expressed in section 6 of Public Law 92-460, entered into an agreement to support legislation that would provide, among other things, for certain temporary railroad retirement increases. To pay for such increases, railway labor and management agreed to support legislation which would either (1) "provide a tax on transportation charges effective October 1, 1973, to finance railroad retirement taxes in excess of social security taxes, as provided under existing law amended as proposed or (2) "modify Interstate Commerce Commission procedures so as to permit prompt freight rate increases to cover increases in cost." By the terms of the agreement, the determination as to which "type of legislation" would be jointly supported was left to the discretion of the carriers. (See Appendix A.) When the legislation was formulated, the carriers decided to support legislation that would "permit prompt freight rate increases to cover increases in cost." While on the face of the agreement "cost" referred to only those amounts necessary "to finance railroad retirement taxes in excess of social security taxes, as provided under existing law amended as proposed * the requested legislation provided for expedited procedures to consider rate increases for costs not only associated with railroad retirement increases, but also for costs resulting from any negotiated wage increases. The legislation provided that any requests for rate increases would be approved by the Commission within thirty days if the amount requested approximated "that needed to offset increases in expenses theretofore experienced or demonstrably certain to occur ***." Following such an increase, the Commission would commence hearings for the purpose of making the final rate determination and order refunds if interim rate increases exceeded those which were finally approved. This railroad management and labor request legislation was introduced by House Interstate and Foreign Commerce Committee Chairman Harley O. Staggers as H.R. 7200. The House Interstate and Foreign Commerce Committee favorably reported, and the House passed, this bill after amending certain of its provisions. For example, Title II of the bill was amended to limit the thirty day rate increase procedure to petitions for rate increases based upon increases in taxes under the railroad retirement act, as amended, occuring before January 1, 1975, or as a result of the enactment of the Railroad Retirement Amendments of 1973. In other words, the House did not provide expedited procedures for "pass through" of negotiated wage increases; instead, the House limited such "pass throughs" to increases in expenses occasioned by increases in railroad retirement taxes occurring under the 1973 amendments or any other amendments occurring before July 1, 1975. - Senate, the railway labor and management legislation was ed by Senator Ribicoff (S. 1805). Senator Hathaway introbill (S. 1867) which revised both Title I and Title II of the on proposed by railway labor and management. Three Comcook jurisdiction over the legislation: Labor and Public Wel1 Finance (Titles I and III) and Commerce (Titles II and June 11, 1973, the Labor and Public Welfare Committee and ance Committee jointly reported H.R. 7200. H.R. 7200 as I was then referred to the Senate Commerce Committee. This ow being reported with an additional amendment. NEED II of H.R. 7200 is needed for several reasons. In the first place, ssociation of American Railroads established in testimony beCommittee, petitions for rate increases are not always treated ely fashion by the Interstate Commerce Commission. As a rerailroads contend that as much as 1.164 billion dollars may en lost during the period 1967 through 1972. There is a need, e, to eliminate this regulatory lag at least as to petitions for reases based upon legislatively mandated cost increases so as ize these losses. dly, there is a need to facilitate implementation of the agreeween railway labor and management in order to avoid disrupneeded transportation services or last minute action by Conavert such disruption. This is not to say that Congress should ts legislative responsibilities and "rubber stamp" legislation greed to in the collective bargaining process. But, where there onstrated need, Congress should stand ready to assist the colDargaining process by enacting facilitating legislation. veloped in testimony on H.R. 7200 and related bills (S. 1867 1805), there is a need to carefully consider requests for rate s based upon increases in railroad expenses occasioned by railroad retirement taxes. While the present financial condisome carriers may justify "pass through" of the expense inthis may not be the case with all carriers. Prompt consideration ests for rate increases is needed, but there is no demonstrated at such increases must be automatically granted. With respect state rates, careful consideration can best be assured by perState agencies to receive the views of local shippers when Is petition for increases in intrastate rates. ly, there is a need to preserve a fair rate structure when acting eneral freight rate increases. As the Commission has pointed Ex Parte No. 281. Increased Freight Rates and Charges, 1972, .C. 288, served October 4, 1972, its general freight rate inare permissive in nature. Commission authorizations for rate es "do not require that any respondent increase its rates by any lar amount... nor do they preclude variability of applicaovided increases do not exceed those allowed." The Commisnt on to conclude: "The public interest and the maintenance of al rate structure must prevail over respondents revenue need, r pressing." Thus, in a situation where the expedited proare required, the Commission must carefully examine the way RE ан ES in which any general freight rate increase would be implemented by particular carriers. DESCRIPTION AND ANALYSIS OF COMMITTEE AMENDMENT Section 201 of the proposed bill would amend the Interstate Commerce Act to provide for an expedited procedure for petitions requesting adjustments of interstate rates of common carriers (subject to part I of the Interstate Commerce Act) based upon increases in expenses of such carriers pursuant to section 102 of the bill-i.e. railroad retirement tax increases. On or before August 1, 1973 the Commission is required to establish in an informal rulemaking proceeding requirements for such rate increase petitions which would "facilitate fair and expeditious action on any such petition . . . by disclosing such information as the amount needed in rate increases to offset such increases in expenses and the availability of means other than a rate increase by which the carrier might absorb or offset such increases in expenses." In order to meet the August 1 deadline, the Commission could modify its rulemaking procedures to require comments sooner than 30 days after publication of the proposed requirements. The Commission is required to act upon a petition for an adjustment in interstate rates within sixty days of the receipt of such petition. If the petition has been filed in accordance with the requirements established pursuant to rule as discussed above, the petition shall be deemed approved as filed if the Commission fails to act within the required sixty days. This provision was included to insure timely action by the Commission within the sixty-day period. Increases for intrastate rate adjustments would first be considered by the State authority having jurisdiction over such intrastate rates. The State authority is required to act upon such petition within sixty days of its presentation by the carrier. If the State authority denies in whole or in part a petition or fails to take action, the Commission. upon petition to it by the carrier, is required to act upon such petition within thirty days. The Commission can overrule a denied petition if such denial unduly burdens interstate commerce. The bill specifically requires that any increase freight rates authorized "shall not exceed a reasonable level by types of traffic, commodities, or commodities groups and shall preserve existing market patterns and relationships and present port relationships by uniform maximum increase limitations within and between the major districts." (For text of amendment see changes in existing law section infra.) The bill as reported by the Committee is designed to meet the needs outlined above. By requiring the Commission by August 1 to promulgate rules for requirements of petitions for expedited rate increases and by requiring the Commission to take action on such petitions within sixty days, rate increases which are granted to offset increases in railroad retirement taxes could be available to the carrier no later than October 1st, 1973 when such increases would go into effect. (Intrastate rates could be delayed an additional thirty days if denied by a State authority). This procedure, then, satisfies the agreement between railroad labor and management to support legislation which would Interstate Commerce Commission procedures so as to permit freight rate increases to cover increases in costs." roposed legislation also insures careful scrutiny by the Comor a State authority prior to the approval of rate increases. ould be no automatic "pass through" of expense increases ocby higher railroad retirement taxes. This "pass through" nly be available to the railroads if it is justified. y, any rate increase authorized by the Commission or State y could not exceed a reasonable level by types of traffic, com, or commodity groups. And, such authorized rates would have rve existing market patterns and relationships and present tionships by providing for uniform maximum increase limiwithin and between the major districts. This would assure that olic interest and the maintenance of a lawful rate structure" prevail over revenue needs, however pressing." (See 341 I.C.C. mary, the bill as reported would provide for prompt freight eases to cover increases in expenses occasioned by higher railirement taxes to the extent that such increases are justified. den of justifying such rate increases would be on the petitioner. ippers would be assured an opportunity to participate in dewith respect to intrastate rates because State authorities would such decisions. And, finally, any rate increases granted would be conditioned in such a way as to assure that rates did not easonable levels by types of traffic, commodities, commodity and to guarantee that existing marketing patterns and relas and present port relationships would also be preserved. COST ost increases occasioned by the bill as reported see pages 12 of Senate Report No. 93-202 filed jointly by the Committee r and Public Welfare and the Committee on Finance June 11, he Committee does not anticipate any additional cost to the te Commerce Commission as a result of the revised procedures for in the bill as reported. VOTE IN COMMITTEE ant to section 133 (b) of the Legislative Reorganization Act as amended, the bill was ordered reported by unanimous voice CHANGES IN EXISTING LAW pliance with Subsection (4) of Rule XXIX of the Standing the Senate, changes in existing law made by the bill as rere shown as follows (existing law proposed to be omitted is in black brackets, new matter is printed in italic, existing law no change is proposed is shown in roman): INTERSTATE COMMERCE ACT * RES H |