THE PORT OF NEW YORK AUTHORITY

The Port of New York Authority is a corporate governmental agency of the States of New York and New Jersey, created in 1921 by a compact between the two States, with the consent of Congress (Public Res. 17, 67th Cong., approved August 23, 1921), to deal with the planning and development of transportation facilities and to facilitate the commerce of the port of New York district.

This district embraces a metropolitan and industrial area of approximately 1,500 square miles, including the five boroughs of New York City, portions of Westchster and Rockland Counties in New York, and such municipalities in New Jersey as Jersey City, Hoboken, Newark, Paterson, Hackensack, Elizabeth, Perth Amboy, and New Brunswick and the intervening territory. The population of this district is approximately 11,000,000.

It

The port authority is an incorporation of 12 commissioners, 6 appointed by the Governor of New York and 6 by the Governor of New Jersey. These commissioners are public officers, and while the port authority has legal title to its moneys and properties, the beneficial interest is in the people of the two States. It has wide powers to finance, construct, and operate terminal and transportation facilities within the port of New York district and to date has financed public works of this character to the extent of $240,000,000. As agent and trustee for the two States, it operates 6 interstate vehicular crossings, including the George Washington Bridge, the Holland tunnel, and Lincoln tunnel. operates the Port Authority Commerce Building in Manhattan, which houses an off-track union terminal freight station in its basement and ground floor, and it operates the port authority grain terminal at Gowanus Bay, Brooklyn. It is proceeding actively with the establishment of two union motortruck terminals, one in Manhattan and one in Newark. Its functions are not confined to its own projects. It has a general duty to promote the commercial development of the port district, and it is authorized to intervene in proceedings affecting the commerce of the port district and to make recommendations to the legislatures of the two States and to the Congress of the United States.

Approximately 1,170 persons are employed in the port authority service. With the exception of a few temporary employees, all are members of the New York State retirement system which is an outstanding example of a modern public retirement system. It is operated on a sound actuarial basis. The contributions payable by the port authority and its employees to the State retirement fund are substantially less than the taxes which will ultimately be payable under the Railroad Retirement Acts if Senate 293 is adopted. Nevertheless the benefits to port authority employees under the State system compare extremely favorably with the benefits to railroad employees under the railroad retirement system. Annexed hereto is a summary of costs and benefits.

The rights of our employees under the State retirement system are substantial and are highly valued by them. Among other things they can transfer to and from other State departments and agencies without affecting their retirement rights.

Notwithstanding, however, their membership in the State retirement system, Senate 293 would bring some of these public employees within the Federal retirement system.

For example, the basement and ground floor of the Port Authority Commerce Building, 111 Eighth Avenue, Borough of Manhattan, New York City, are occupied by an off-track railroad station for less-than-carload-lot freight. This railroad station is operated by the rail carriers themselves. However, elevators run from the freight platforms to the upper floors of the building which are leased for commercial purposes. Port authority employees receive freight on the freight platforms on behalf of tenants, transport it to the upper floors, and deliver it to the tenants. Although they take no part in the rail transportation, nevertheless, it would seem that port authority building employees who engage partly in these activities would come within the purview of Senate 293.

Again, the port authority operates a grain elevator at Gowanus Bay, Brooklyn. This was originally built and operated by the State of New York as part of the barge canal system, but was transferred to the port authority for operation as a public facility by chapter 410 of the Laws of New York of 1944. American and Canadian wheat comes to this elevator for storage pending export. It comes by rail as well as by the State Barge Canal. At the present time the Commodity Credit Corporation is shipping approximately 1,200,000 bushels from Buffalo to the port authority grain terminal. Of this, approximately 210,000 bushels is 75978-459

coming by the State Barge Canal and the balance is coming by rail. This grain terminal is not on any rail line, and grain coming by rail is lightered from the railhead to the elevator, the responsibility of the rail carrier ending with delivery to the elevator. Nevertheless, port authority employees working at the grain terminal apparently come within the purview of Senate 293.

Where an employee is working full time upon activities within the purview of S. 293, it will be obviously impracticable to have him under both the railroad retirement system and the State retirement system. To do so would require double payments both by him and by the port authority. Presumably the employee would not care to make double payments. Certainly the port authority would not. Under such circumstances the net result would be that the man will be deprived of his rights under the State retirement system.

THE PROPOSED EXCLUSION OF STATE AND MUNICIPAL EMPLOYEES FROM T/E RETIREMENT SYSTEM

The Port of New York Authority is not the only State or local government body affected by S. 293 in its present form. While we have not attempted to make any survey of the noncarrier activities of the States and municipalities which will come wtihin the purview of S. 293 in its present form, we do know that many State and municipal agencies operate piers and wharves and in connection therewith engage in the handling of freight which has been or may be transported by rail.

In these instances at least S. 293 in its present form will put the Federal Government in the position of injecting itself into the relationships between the State and local governments and their employees, and of dictating to the States and municipalities certain of the terms and conditions with respect to the employment of their citizens in the State or municipal service. This is a thing which we submit that the Federal Government should never do-least of all when the practical effect will be to oust State and municipal employees from their membership in sound and established State or municipal retirement systems.

It was a thing against which Congress was very careful to guard when it established the social-security system. By section 1426 (b) (7) of title 26, Internal Revenue Code of the United States Code, the following are exempt from employment taxes upon others than carriers: “a State, or any political subdivision thereof, or any instrumentality of any one or more of the foregoing which is wholly owned by one or more States or political subdivisions."

We make no comment on the situation where a State or State agency is engaged in actual carrier operations by rail as in the case of the California Belt Line Railroad (State v. Anglem, 129 Fed. (2d) 455; cert. denied, 317 U. S. 669). If, however, the railroad-retirement system is to be extended to cover noncarrier operations, then the considerations which led to excluding the States and their agencies from the social-security system would seem to apply. There would seem to be no good reason why the Federal Government should interfere with the relationship between the State and its employees-particularly where the result will be to cause the employees to sacrifice their rights under a sound and liberal retirement system operated by the State itself.

Accordingly we urge that S. 293 be amended by adding the following to the definition of the word "employer":

"(12) The term 'employer' shall not include any State or any political subdivision of a State or any corporate municipal instrumentality of one or more States or of one or more political subdivisions of States, except that if a State or a political subdivision thereof or a corporate municipal instrumentality of one or more States or political subdivisions thereof shall engage in operations as a common carrier by railroad, subject to part I of the Interstate Commerce Act, such State, political subdivision, or corporate instrumentality shall be deemed to be an employer but only with respect to individuals whose principal work forms part of such carrier operations."

THE NECESSITY FOR CLARIFYING SUBDIVISION (2) OF THE DEFINITION OF THE TERM "EMPLOYER"

S. 293 would amend the definition of the term "employer" to include the following:

"Any person, other than a carrier regulated under part I of the Interstate Commerce Act, which, pursuant to arrangements with a carrier or otherwise, performs, for hire, with respect to passengers or property transported, being

transported, or to be transported by a carrier, any service included within the term 'transportation' as defined in section 1 (3) of the Interstate Commerce Act, whether or not such service is offered under railroad tariffs."

The services included within the term "transportation" as defined in the Interstate Commerce Act are "all services in connection with the receipt, delivery, elevation, and transfer in transit, ventilation, refrigeration or icing, storage, and handling of property transported."

The exact intent and meaning of the foregoing provision is uncertain and it seems probable that unless it is clarified it will only lead to uncertainty and protracted litigation. Looking only at the Interstate Commerce Act, it seems elementary that the definition of "transportation" contained in section 1 (3) intends only services performed by or on behalf of a rail carrier during the act of transportation. The purpose of the definition obviously is to prevent a rail carrier from asserting that icing, for example, is not strictly a transportation service and therefore is not subject to the provisions of the Interstate Commerce Act when performed by a carrier in the course of transportation.

The above-quoted provision of S. 293 is, however, wholly inconsistent with this interpretation of the Interstate Commerce Act. It does not relate to services performed by a rail carrier because it designates a person "other than a carrier regulated under part I of the Interstate Commerce Act." Nor does it necessarily refer to services performed on behalf of a carrier since it relates to services performed pursuant to arrangements with a carrier "or otherwise." Nor is it confined to services while the property is in the course of transportation, since it refers to property "transported” or “to be transported" as well as property "being transported."

Under these circumstances, it becomes impossible to say with certainty just where the line is to be drawn. It may, for example, be argued that whoever stores any property which was at one stage of its history transported by rail, or which may at some future time be transported by rail, is an employer within the meaning of S. 293. It is difficult to believe that any such extreme interpretation is intended or will be supported by the courts. Nevertheless, it serves to underscore the fact that no clear line is drawn between those who are to be subject to the act and those who are not.

It is almost unnecessary to point out that no good end can be served by a statutory definition which is so vague and uncertain. It can only lead to disputes and litigation, and only after many court decisions will the exact scope of the provision be determined. Meantime, there will be doubts and uncertainties with respect to warehousemen and many other types of organizations in terminal areas such as the Port of New York District. This lack of certainty can only. work to the prejudice of both employers and employees.

Accordingly we urge that the above-quoted provision of S. 293 be modified to indicate in plain and unambiguous language the exact types of organizations intended to be brought within the scope of the Railroad Retirement Act. We do not suggest any substitute language since we do not feel justified in assuming ourselves to draw the line. We do, however, feel that the lines should be plainly drawn so that all concerned, both employers and employees, may know whether or not they come within the terms of the act without resorting to litigation.

CASUAL AND INFREQUENT OPERATION

In the port of New York district railroad freight is tó a considerable degree lightered from the rail head to railroad pier stations or to shipside. These lighterage operations are normally performed by the railroads with their own lighters and tugboats. On occasions, however, it becomes necessary for a railroad to augment its equipment temporarily by hiring tugboats or barges from independent owners.

Needless to say, if these independent operators must pay pay-roll taxes under the railroad retirement system on the basis of these infrequent operations, they will be reluctant to perform such services for the railroads. The net result may well be that many of them will refuse to do any work whatsoever for the railroads.

As presenty drawn, S. 293 provides that the term "employer" shall not include any person "by reason of the performance of any operation which is insubstantial or is so irregular or infrequent as to afford no substantial basis for an inference that such an operation will be repeated.”

The operations of which we are speaking are so casual and infrequent that we cannot imagine that they come within the purview of the bill. On the other hand, it cannot be said that there is "no substantial basis for an inference

that such an operation will be repeated" since it is to be inferred that they will be repeated on rare occasions when the railroad finds it necessary to hire extra equipment.

Accordingly we urge that the above-quoted language from subdivision (1) of the definition of the term "employer" be changed to read "by reason of the performance of any operation which is insubstantial or is casual or infrequent.” Dated: New York, July 23, 1945. Respectfully submitted.

LEANDER I. SHELLEY, General Counsel of the Port of New York Authority.

SUMMARY OF COSTS AND BENEFITS UNDER THE NEW YORK STATE PENSION SYSTEM

Cost to employer, computed on actuarial basis, 42 percent.

Cost to employee, averages slightly less than 5 percent computed on actuarial basis.

Old-age retirement.

Retirement age: 60 years.

BENEFITS

Retirement allowance: One-half pay after 35 years service (proportionately more or less for greater or less service).

Minimum: None.

Maximum: None (members earning more than $240 monthly after 35 years' service get more than $120).

Example: Member earning average $225 monthly, retiring at age 65 after 35 years' service: Employer pays $4,261.50; employee pays $3,873.23; employee gets $116.67 per month.

Retirement because of discharge without fault

(a) After 20 years' service: Retirement allowance based on age, salary, and length of service.

Example: Member, age 49, earning $260 monthly, with 21 years continuous service: About $78 monthly, or 30 percent pay.

(b) After less than 20 years' service: Contributions returned with interest but no retirement allowance.

Retirement for disability

(a) Upon disability incurred in line of duty: Retirement allowance of threefourths pay plus annuity bought with own contributions.

(b) Upon ordinary disability, after 15 years' service: Retirement allowance of 90 percent of normal old-age retirement, but not less than 25 percent of average monthly salary.

(c) Upon ordinary disability, prior to 15 years' service: Contributions returned with interest but no retirement allowance.

Death benefits

(a) Upon death in line of duty: Allowance to dependents at one-half pay, together with return of contributions.

(b) Upon death from ordinary cause after 12 months' service: Lump-sum payment of 1 month's salary for each year of service up to 6, together with return of contributions.

Senator JOHNSON of Colorado. Thank you very much.
Now, next is Mr. Devereux.

STATEMENT OF J. H. DEVEREUX, JR., REPRESENTING HAMPTON ROADS MARITIME EXCHANGE, NORFOLK, VA.

Mr. DEVEREUX. My name is J. H. Devereux, Jr. I am representing the Hampton Roads Maritime Exchange as chairman of a special committee appointed to study and to report to the exchange on S. 293.

The exchange is opposed to this bill and their opposition is divided. into two main categories. In the limited time I have, I can only touch

briefly on our objections but, with your permission, Senator, I would like to file a brief which will extend my remarks.

Senator JOHNSON of Colorado. That is perfectly all right, sir.

Mr. DEVEREUX. The Hampton Roads Maritime Exchange embraces in its membership maritime and other interests located in the ports of Newport News, Norfolk, and Portsmouth, Va. It is a community which to a large extent is dependent upon water-borne commerce for its prosperity. Anything which affects water-borne commerce affects the prosperity of that community.

The water-borne commerce can be divided into two groups, coastwise and foreign. Coastwise commerce has suffered due to the war. We are hopeful that the lines will reestablish themselves when the present war is over. However, at the time the war broke out, these lines were operating on a very small margin of profit, and anything which would tend to increase their operating costs might and probably would discourage them in the resumption of the services which we enjoyed prior to the war.

Our foreign commerce is dependent upon the ability of the American manufacturer to sell his goods abroad. With the end of the war foreign markets are going to be highly competitive and any additional cost to the American manufacturer in delivering his goods in these highly competitive markets will work to his detriment. Loss of trade will affect all ports and among those will be the ports of Hampton Roads.

The second part of our opposition is based on the fact that S. 293 directly affects, and we believe adversely, certain groups, namely, contracting stevedores and terminal operators. The nature of the work down there is such that these two groups work part of the time on railroad cars and railroad lighters and railroad car floats, and during that period of time come under the terms of S. 293, come under the Railroad Retirement Act. The rest of the time they are working at regular shipping work or regular warehouse work, and would come under the terms of the Social Security Act.

It would be almost an impossibility to segregate the work, the nature of which is such that the men switch from one form of work to another constantly during one operation. They might be working on railroad cars or lighters for half an hour or so and then go back to a pier operation, then go back to the railroad operation, and so on, during the course of 3 or 4 days, in the loading of a vessel.

Senator JOHNSON of Colorado. Are they covered by railroad retirement provisions under the present existing law?

Mr. DEVEREUX. No, sir. Both groups of men employed by the contractors-the stevedoring contractors and the terminal operators-are paid in accordance with existing union agreements and come under the Social Security Act.

Senator JOHNSON of Colorado. You want to maintain that status quo?

Mr. DEVEREUX. We want to maintain that status quo, and in behalf of the stevedores and terminal operators we ask the committee to not report this bill out, but, if they do, to eliminate certain paragraphs of section 1, namely, (2), (4), (5), and (11), which represent the objectionable coverage paragraphs.