Commission. Retention by the Commission of its present authority to prescribe and regulate the form of tariff publication is, in our view, essential to protect the interests of the tariff users. Finally, there are pending proposals in H.R. 5385 relating to the establishment of compensatory rates, adequate rate levels and interim rate adjustments which have not yet been heard. The Department of Transportation is expected to submit recommendations in this area in the near future. As already noted, the Commission has approved the institution of a rulemaking proceeding looking to the possibility of allowing carriers to increase their rates, up to a possible maximum of 2.5 percent, in any given calendar year where they can show and certify on the record, subject to verification by the Commission, that labor costs have increased five percent or more during the same period. Perhaps, then, the bill is premature in that it could preempt consideration of these proposals to the extent that they would involve increased costs stemming from retirement benefits, labor costs and other comparable costs for non-contract employees. In summary, we object to enactment of section 201 because it is ambiguous as to the procedures to be followed in determining the increases and the standards to be applied; because it would preclude consideration of issues which are most relevant to proper determination of rate increases; and because it fails in several respects to protect the interests of the users of transportation services. Moreover, increased cooperation by the carriers in conjunction with new procedures being developed by the Commission can, in our view, better achieve the desired result than would establishing a two-track general increase system—one to provide for labor costs and another for recovering other expenses. Should it appear necessary that the railroads be allowed to recover, on an expedited basis, the costs of the increased railroad retirement tax contemplated by Title I of the bill, we urge the Congress to limit the scope of Title II so that it deals only with that specific situation, and that it not be extended to cover the costs of all future negotiated wage increases unrelated to the retirement tax changes. The draft bill in section 201 makes a provision for refunds in certain situations but does not indicate whether interest on the refunds would be applicable. This should be clarified. Section 202 of the bill would add a new section 13 (5) and oblige the Commission, whenever it permits or authorizes an increase in the general level of rates under section 15a (4), to require the carriers also to make the increase concurrently applicable to intrastate movements. The intrastate increases would also be subject to refunds. We believe that amendment of section 13 is unnecessary. That section, as amended in 1958, is, in our view, adequate to meet the railroads' need for assuring that intrastate rates do not constitute an undue burden. Section 13 (4) now requires us "forthwith" to institute an investigation into intrastate rates upon the filing of a petition by a carrier, whether or not the carrier has made a similar request to the appropriate State agency, and notwithstanding the pendency of any State agency proceeding. Nevertheless, our experience indicates that the carriers are often lax in taking action, either before the Commission or at the State level. In a case recently decided by Division 2 of the Commission (Kansas Intrastate Rates and Charges, 343 ICC 400), it developed that the railroads had waited until five separate general increases in interstate rates had become effective before seeking relief under section 13 to raise intrastate rates to the interstate level. What is needed, we think, is not an automatic statutory mechanism for bypassing State regulatory jurisdiction, but a greater display of initiative on the part of the carriers to make use of the statutory remedies already available to them. The Commission is authorized by various provisions of the Interstate Commerce Act, including section 13(3), to cooperate with State bodies in matters affecting common interests, including general increases in rates. To this end the Commission, at times, has held joint hearings or oral argument with representatives of State bodies. In other respects, the Commission has entered into cooperative agreements regarding enforcement of economic regulations. Consequently, in this period of greater Federal-State relations, the proposed amendment possibly could interfere with the amicable relations existing between the Commission and the State bodies. For this reason, in addition to our conviction that further amendment of section 13 is unnecessary, the Commission recommends that section 202 of the bill not be enacted. Should the Congress decide that section 202 should be enacted, the proviso of that section dealing with refunds is subject to the same objection which we raised earlier concerning the refund provisions of section 201. It should be revised to make it clear that the Commission may order the carrier charging an interim rate keep an accounting of the amounts received under that rate and, upon the establishment of a permanent lower rate, it make refunds, with interest, to those paying the higher rate. Sincerely yours, GEORGE M. STAFFORD, Chairman. APPENDIX A AGREEMENT BETWEEN RAILWAY LABOR AND MARCH 7, 1973. To members of the union negotiating Committee on Railroad Retirement 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 (b) 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 unions 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. (b) 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 by July 1, 1974. If the joint Committee can not agree on a joint report and recommendations, the railway labor unions and the carriers will submit ex parte reports to the Congress by July 1, 1974. (c) The Railroad Retirement Tax Act to be amended to provide that commencing October 1, 1973, the employers will assume, the 4.75% of the employee taxable compensation in excess of the 5.85% employee Social Security tax (a maximum of $42.75 per employee per month in 1973, and a maximum of $47.50 per employee per month in 1974.) (d) The Railroad Retirement Act to be amended to provide that commencing July 1, 1974 employees with 30 years of service and attained age of 60 may retire without actuarial reduction in their annuities. (e) If during the period July 1, 1973 through December 31, 1974 the Social Security Act is amended to provide for increased benefits, the dollar amount of such benefit increases will be "passed through" to the Railroad Retirement benefits structure effective on the same date or dates the Social Security benefits are increased. (f) Except as specifically provided in this Part A, neither the carriers nor the railway labor unions will propose or support legislation seeking changes in benefit levels or new types of benefits to become effective prior to January 1, 1975. B. Collective Bargaining Agreements 1. Separate but substantively uniform national collective bargaining agreements will be entered into on behalf of the carriers represented by the National Carriers' Conference Committee and the following named railway labor unions: 2. All national collective bargaining agreements will dispose of the current national notice and local notices covering the same subject matter, and will: (a) Provide for a general wage increase of 4% effective January 1, 1974. (b) Provide for cost-free dues checkoff provided that checkoff amounts may be changed not more often than every three months, authorizations to be received at least 30 days in advance of first checkoff, parties to make determination as to whether checkoff will be uniformly made on the first or second half payroll. The provision also will include suitable priorities, and a savings clause. (c) Contain a moratorium provision which will permit notices to be served not earlier than July 1, 1974, but not to become effective prior to January 1, 1975. Each of the moratorium provisions will be patterned after the respective moratorium provisions contained in the agreements enumerated in paragraph 1 above. (d) To the extent that either the affected unions or the National Carriers' Conference Committees desire, will provide for Standing Committee type procedures during the eighteen months' term of the moratorium. 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, Surigcal and Group Insurance Agreement from its current expiration date of February 28, 1974 to Deceniber 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, 1975-the carriers to pick up any necessary increase in premium cost for 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 Stading Committee procedures. Such provision will permit the carrers 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. APPENDIX B LETTERS REPORTING ON PROGRESS OF NEGOTIATIONS OF PARTIES WASHINGTON, D.C., To: Hon. Harrison A. Williams, Jr., Chairman, Senate Committee on Hon. Harley O. Staggers, Chairman, House of Representatives, GENTLEMEN: Section 6 of Public Law 92-460, which provided for a 20% temporary increase in annuities for Railroad Retirement beneficiaries, as well as temporarily extending certain previous increases in such annuities, directed representatives of railroad employees and management to submit a report containing their mutual recommendations respecting the problems of the railroad retirement system no later than March 1, 1973 to the Senate Committee on Labor & Public Welfare and the House of Representatives Committee on Interstate and Foreign Commerce. That law also required the parties, to take into account the report and specific recommendations of the Commission on Railroad Retirement. The Commission, established by the Congress by Public Law 91-377, submitted its recommendations to the parties on June 30, 1972. Since that time representatives of labor and management have studied the contents of that report very carefully. As the Commission itself recognized, "the railroad retirement system is one of the most complicated pension plans in the country," and required the Commission to break new ground by building an actuarial model of the system to make projections of the receipts and expenditures of the system and analyze the consequences of prospective changes in railroading and in the economy." Obviously these issues have proven equally complex and difficult for the parties. However, in the series of meetings that have been held between representatives of labor and management, substantial progress has been made in shaping recommendations that both sides can support. Although we are as yet unable to submit the kind of report envisioned by the Congress, we are both hopeful that within the near future we will be able to resolve those matters where differences con |