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RULE OF RATE MAKING Sec. 15a. (1) When used in this section the term "ratos” means rates, fares, and charges, and all classifications, regulations, and practices relating thereto.

(2) In the exercise of its power to prescribe just and reasonable rates the Commission shall give due consideration, among other factors, to the effect of rates on the movement of traffic by the carrier or carriers for which the rates are prescribed; to the need, in the public interest, of adequate and efficient railway transportation service at the lowest cost consistent with the furnishing of such service; and to the need of revenues sufficient to enable the carriers, under honest, economical, and efficient management to provide such service.

(3) In a proceeding involving competition between carriers of different modes of transportation subject to this Act, the Commission, in determining whether a rate is lower than a reasonable minimum rate, shall consider the facts and circumstances attending the movement of the traffic by the carrier or carriers to which the rate is applicable. Rates of a carrier shall not be held up to a particular level to protect the traffic of any other mode of transportation, giving due consideration to the objectives of the national transportation policy declared in this Act.

(4) (a) The Commission shall by rule establish on or before Au gust 1, 1973 requirements for petitions for adjustment of interstate rates of common carrier subject to this part based upon increases in expenses of such carriers pursuant to section 102 of the Railroad Retirement Amendments of 1973. Such requirements, established pursuant to section 553 of title 5 of the United States Code (with time for comment limited so as to meet the required date for establishment), shall be designed to facilitate fair and expeditious action on any such petition as required in paragraph (6) of this subsection 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.

(6)(1) The Commission shall, within sixty days of the filing of a verified petition by any carrier or group of carriers relating to interstate rates in accordance with rules promulgated under paragraph (a) of this subsection, act upon said petition or said petition shall be deemed approved.

(2) The Commission shall, within thirty days of the filing of a verified petition by any carrier or group of carriers relating to intrastate rates in substantial accord with rules promulgated under paragraph (a) of this subsection, act upon such petition when the Commission finds that the State authority having jurisdiction thereof shall have denied, in whole or in part, a petition filed with it by such carrier or group of carriers seeking relief regarding such intrastate rates or shall not have acted finally on such petition within sixty days from the presentation thereof.

(3) Any increased freight rates authorized shall not exceed a reasonable level by types of traffic, commodities, or commodity groups and shall preserve existing market patterns and relationships and present port relationships by uniform maximum increase limitations within and between the major districts.

AGENCY COMMENTS The committee has received no agency comments as of the date of filing of the report.


MARCH 7, 1973. To members of the union negotiating Committee on Railroad Retire

ment and Wages : GENTLEMEN: This will confirm our understanding that the railway labor unions will join with the carriers in supporting legislation which will either

(a) 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 in paragraph (c) of Part A of the Memorandum of Understanding of March 7, 1973, including the Supplemental Annuities excise tax, or

(6) modify Interstate Commerce Commission procedures so as to permit prompt freight rate increases to cover increases in

costs. Determination of which type of legislation to be jointly supported to be at the discretion of the carriers.

This is also to confirm our understanding that, if the temporary benefit increases referred to in Paragraph A(a) of our Memorandum of Understanding of --- -------, are extended through December 31, 1974, the carriers will not oppose making those increases permanent at that time. Yours very truly,

WILLIAM H. DEMPSEY. Initialed subject to necessary acceptance and ratification.

MEMORANDUM OF UNDERSTANDING A. Railroad Retirement Legislation

The carriers and the railway labor unir.. will jointly support legislation which will accomplish the following:

(a) The temporary benefit increases of 1970, 1971 and 1972 (P.L. 91–377, P.L. 92-46, and P.L. 92–460, respectively) scheduled to expire June 30, 1973, will be extended through December 31, 1974.

(6) A Joint Standing Committee consisting of members representing the railway labor unions and the carriers will be established to consider all of the matters relating to restructuring the Railroad Retirement System, including but not limited to such matters as financing the deficiencies, dual Railroad Retirement and Social Security benefits, adoption of a two tier system (i.e., a Social Security tier and a supplementary Railroad Retirement tier), restructuring of the benefit formulas, consideration of any matters considered by the Commission on Railroad Retirement, and any other subjects which the parties may propose. The joint Standing Committee will report to the Congress

3. A separate agreement involving the parties to the Agreement of February 24, 1972 will provide for an extension in the term of the National Hospital, Medical, Surgical and Group Insurance Agreement from its current expiration date of February 28, 1974 to December 31, 1974 and will establish a maximum lifetime major medical benefit of $250,000 effective July 1, 1973. No other benefit changes will be made prior to January 1, 1974the carriers to pick up any necessary increase in premium cost of existing benefits during the ten months' extension.

4. The carriers and the operating organizations to work out a provision to be included in their agreements providing for an extension of the Standing Committee procedures. Such provision will permit the carriers and each union to serve national (but not local) Section 6 notices on the matters now before the respective Standing Committees if either party decides that the Standing Committee procedure should no longer be continued.

5. The provisions of this Part B are contingent upon the enactment of legislation accomplishing the purposes specified in Part A hereof.

Note. Further consideration to be given to Steel Roads and situations where a wage moratorium extends beyond June 30, 1973.

Initialed subject to necessary acceptance and ratification.

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