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ment would call on those funds from time to time to, in fact, remove tracks.

At the present time that fund contains about $174,000. It is estimated that to complete all the track removal over a number of years would cost about $18 million. However, we have not asked either the transit company or the transit commission to incur additional obligations at this particular time.

Senator EAGLETON. I was concerned about past work already done and completed.

Mr. FLETCHER. That is correct, and that has been paid for. In other words, the work which has been done has been paid for.

Senator EAGLETON. Now in your statement you suggested that possibly the District of Columbia could temporarily acquire the transit company and operate it until such time as the compact could be amended to permit WMATA to be the operating agency.

How do you contemplate this acquisition? Would it be by negotiation?

Mr. FLETCHER. Yes, sir.

Senator EAGLETON. And condemnation if negotiation failed?

Mr. FLETCHER. Either way. Of course, we prefer on a negotiated basis. We have prepared a bill of that type. However, it was our decision that, since even in that bill it was indicated that the ultimate operator should be WMATA, we ought to proceed that way because we recognize, of course, that there has to be an amendment by both Maryland, Virginia, and Congress to the compact.

However, usual standard negotiations on any acquisition take a substantial period of time. It makes more sense for us to proceed that way. However, if there is any indication that the amendment of that compact would be hung up, then we think we ought to consider the interim measure of creating our own authority to acquire and operate the system until the contract is straightened out and WMATA could then take it over.

It is simply an interim idea that should be kept in mind by Congress. Senator EAGLETON. Do you take it, in terms of your own reading of the compact and such advice as you have received from your counsel, that WMATA could own the transit company under the existing compact, but it could not necessarily operate it-that is, it could take title and then contract out the operational function?

Mr. FLETCHER. This is my understanding although it is a very fuzzy, cloudy area. There is some legal indication they could acquire it and operate it. It would be a very lucrative position for them to be in. Senator EAGLETON. Where would the city get its financing under its interim proposal?

Mr. FLETCHER. There are a variety of ways that could be available. Under S. 1814, there would be interim financing available. What we would have to do is determine how much it is. One of the possible ways, for example, would be in the acquisition of certain real estate properties that the company now owns.

In our budget, presently being heard by the Appropriations Committee, is the acquisition of one of the car barns for $1.1 million. There are other properties that could be acquired. We may have to consider changes in our revenue package. These are things which would have to

come back to Congress as soon as we determined there was no other way to solve it.

One of the ways, which has great possibility, would be for the District to acquire the buses and lease them back to the company. This would cut down their annual capitalization costs. We could do this quite easily and also be eligible under that plan for direct grants from the Department of Transportation.

The first thing we ought to do is find out how we can keep this company going without having to dip into our regular revenues or increase our revenue sources. Once those areas are exhausted then we would have to come back to find additional revenues to pay that loss.

Senator EAGLETON. On the proposal for the city, to acquire the buses and lease them back to the transit company, does this refer to acquiring the existing rolling stock or is this in the future?

Mr. FLETCHER. Apparently from what Mr. Kneipp said, my understanding had been new, but apparently the lawyers have under consideration the possibility of acquiring the ones they already have.

Senator EAGLETON. With respect to the provision of S. 1814, which gives 3 years for these negotiations to go on, do you have any comment as to whether you think that is too long a period of time?

Mr. FLETCHER. I think it is too long if the present crisis continues. The crisis is immediate. The crisis is today not 3 years from now.

Recognizing the problem of the amendment of the compact, the two States and the District of Columbia and the normal time it takes to negotiate, I think 3 years is a prudent period of time. It would be my expectation, if approved by Congress, this could be done on a much faster time schedule than that.

Senator EAGLETON. Under S. 1814 the Mayor would have the final say on what interim subsidy would be granted but wouldn't the Commission still have an obligation to set the fares at a rate which would cover the cost plus a fair return?

Mr. FLETCHER. Yes, sir; it would. I would like to make this comment at this time, Mr. Chairman.

It is the Mayor's position that any further increases in the fares of D.C. Transit would be tragic in the city. We are opposed to it. We do not want any additional fare increases for the bus system. We feel the fares are high enough now. We feel they are too high. We feel that any additional increases would jeopardize the poor people of the city who would be paying it.

We want to do everything in our power to prevent any further increases in the fare structure.

Senator EAGLETON. Could you elaborate a bit, I am not quite clear on the reference you made, in your prepared statement, to the labor contracts under public ownership?

Mr. FLETCHER. Yes, sir.

Although there is some indication that the very brief reference in the bill might be adequate, however we have been advised that it may be preferable for Congress to consider the recent law passed by Maryland which, I think, would provide additional protection as far as the unions are concerned.

The position of the District of Columbia Government has been from the beginning, and still is, that under any acquisition, as far

as the bus system is concerned, we must protect the existing contracts of the labor unions.

We feel that if there is any question about it that this bill does not provide that complete protection to the labor union, that we might consider the addition of this particular language in Maryland law. Mr. Kneipp has a copy of that provision and would be glad to furnish it to the committee if you would like to see it.

Senator EAGLETON. Do you have a copy of the Maryland law?
Mr. FLETCHER. Yes, we do.

Senator EAGLETON. Could you supply us with one?

Mr. FLETCHER. Yes, sir.

(The document follows:)

MARYLAND LAW AS MODIFIED TO MEET DISTRICT OF COLUMBIA SITUATION

SEC. (a) The rights, benefits, and other employee protective conditions and remedies of section 13 (c) of the Urban Mass Transportation Act of 1964, as amended (49 U.S.C. 1609 (c)), as determined by the Secretary of Labor, shall apply to the operation by the Washington Metropolitan Area Transit Authority of any mass transit bus system owned or controlled by it and to any contract or other arrangement for the operation of such transit facilities. Whenever the Authority shall operate any transit facility or enter into any contractual or other arrangements for the operation of such transit facility, the Authority shall extend to employees of affected mass transportation systems transfer and appointment as employees of the Authority in accordance with seniority, in any available non-supervisory job in respect to such operations for which they can qualify after a reasonable training period. Such employment shall not result in any worsening of the employee's position in his former employment nor any loss of wages, hours, working conditions, seniority, fringe benefits and rights and privileges pertaining thereto.

(b) (1) The Authority may deal with and enter into written contracts with employees of the Authority who may form part of any operating company which the Authority may acquire, through accredited representatives of such employees or representatives of any labor organization authorized to act for such employees concerning wages, salaries, hours, working conditions, and pension or retirement provisions.

(2) In case of any labor dispute involving the Authority and such employees where collective bargaining does not result in agreement, the Authority shall submit such dispute to arbitration by a board composed of three persons, one appointed by the Authority, one appointed by the labor organization representing the employees, and a third member to be agreed upon by the labor organization and the Authority. The member agreed upon by the labor organization and the Authority shall act as chairman of the board. The determination of the majority of the board of arbitration, thus established shall be final and binding on all matters in dispute. If after a period of ten days from the date of the appointment of the two arbitrators representing the Authority and the labor organization, the third arbitrator has not been selected, then either arbitrator may request the Federal Mediation and Conciliation Service to furnish a list of five persons from which the third arbitrator shall be selected. The arbitrators appointed by the Authority and the labor organization, promptly after the receipt of such list, shall determine by lot the order of elimination, and thereafter each shall in that order alternately eliminate one name until only one name remains. The remaining person on the list shall be the third arbitrator. The term “labor dispute” shall be broadly construed and shall include any controversy concerning wages, salaries, hours, working conditions, or benefits including health and welfare, sick leave, insurance or pension or retirement provisions but not limited thereto, and including any controversy concerning any differences or questions that may arise between the parties including but not limited to the making or maintaining of collective bargaining agreements, the term to be included in such agreements, and the interpretation or application of such collective bargaining agreements and any grievance that may arise. Each party shall pay one-half of the expenses of such arbitration.

(c) The Authority is hereby authorized and empowered to establish and maintain a system of pensions and retirement benefits for such officers and employees 29-234 0-69

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of the Authority as may be designated or described by resolution of the Authority; to fix the terms of and restrictions on admission to such system and the classifications therein; to provide that persons eligible for admission in such pension system shall not be eligible for admission to, or receive any benefits from, any other pension system (except social security benefits), which is financed or funded, in whole or in part, directly or indirectly by funds paid or appropriated by the Authority to such other pension system; and to provide in connection with such pension system, a system of benefits payable to the beneficiaries and depend ents of any participant in such pension system after the death of such participant (whether accidental or otherwise, whether occurring in the actual performance of duty or otherwise, or both) subject to such exceptions, conditions, restrictions and classifications as may be provided by resolution of the Authority. Such pension system shall be financed or funded by such means and in such manner as may be determined by the Authority to be economically feasible. Unless the Authority shall otherwise determine, no officer or employee of the Authority and no beneficiary or dependent of any such officer or employee shall be eligible to receive any pension or retirement or other benefits both from or under any such pension system and from or under any pension or retirement system established by an acquired transportation system or established or provided for by or under the provisions of any collective bargaining agreement between the Authority and the representatives of its employees.

(d) Whenever the Authority acquires existing transit facilities from a public or privately owned utility either in proceeding by eminent domain or otherwise, the Authority shall assume and observe all existing labor contracts and pension obligations. When the Authority acquires an existing transportation system, all employees (except executive and administrative officers) who are necessary for the operation thereof by the Authority shall be transferred to and appointed as employees of the Authority, subject to all the rights and benefits of this section. These employees shall be given seniority credit and sick leave, vacation, insurance and pension credits in accordance with the records or labor agreements from the acquired transportation system. Members and beneficiaries of any pension or retirement system or other benefits established by the acquired transportation system shall continue to have rights, privileges, benefits, obligations and status with respect to such established system. The Authority shall assume the obligations of any transportation system acquired by it with regard to wages, salaries, hours, working conditions, sick leave, health and welfare and pension or retirement provisions for employees. It shall assume the provisions of any collective bargaining agreement between such acquired transportation system and the representatives of its employees. The Authority and the employees, through their representatives for collectivebargaining purposes, shall take whatever action may be necessary to have pension trust funds presently under the joint control of the acquired transportation system and the participating employees through their representatives transferred to the trust fund to be established, maintained and administered jointly by the Authority and the participating employees through their representatives. No employee of any acquired transportation system who is transferred to a position with the Authority shall by reason of such transfer be placed in any worse position with respect to workmen's compensation, pension, seniority, wages, sick leave, vacation, health and welfare insurance or any other benefits than he enjoyed as an employee of such acquired transportation system. Mr. FLETCHER. Also, we indicated five amendments. We would also like to submit language to you specifically on each of those five amend

ments.

Senator EAGLETON. Fine.

(The documents referred to appear in the appendix.)

Senator EAGLETON. If the city withheld the subsidy, or did not give the company what it would make under the authorized fare, would not the company simply start charging the higher authorized rate? Mr. FLETCHER. Yes; of course.

In other words, if we were not able to solve the financial problem of the District under this bill, the only alternative to it, if it is not yet in public ownership, would be for WMATC to provide the fare increase. They are required to do this by the law.

Senator EAGLETON. Thank you, Mr. Fletcher. We appreciate your being with us.

Mr. FLETCHER. Thank you, Mr. Chairman.

Senator EAGLETON. Mr. George Avery, chairman of the Washington Metropolitan Area Transit Commission.

STATEMENT OF GEORGE AVERY, CHAIRMAN, WASHINGTON METROPOLITAN AREA TRANSIT COMMISSION; ACCOMPANIED BY DOUGLAS N. SCHNEIDER, JR., GENERAL COUNSEL; MELVIN LEWIS, EXECUTIVE DIRECTOR, TRANSIT COMMISSION

Senator EAGLETON. Do you want to identify your associates? Mr. AVERY. On my right is Melvin Lewis, executive director of the transit commission. On my left is Mr. Douglas Schneider, our General Counsel.

Senator EAGLETON. You are an attorney, aren't you?

Mr. AVERY. Yes; I am, Mr. Chairman.

Senator EAGLETON. We have Mr. Avery as our next witness and we will include at this time the entire prepared statement, as submitted, as part of the record. Mr. Avery, will you just summarize same for us? (The document follows:)

PREPARED STATEMENT OF GEORGE A. AVERY, CHAIRMAN, WASHINGTON METROPOLITAN AREA TRANSIT COMMISSION

Mr. Chairman and Members of the Committee, I am George A. Avery, Chairman of the Washington Metropolitan Area Transit Commission, Appearing with me today is Douglas N. Schneider, Jr., the Commission's General Counsel.

I appreciate your invitation to appear today to discuss a basic problem of the mass transit system in Washington.

You have before you two bills, one of which calls for public ownership of the bus system and one of which contemplates continued private ownership. The latter bill was prepared by the Transit Commission and much of my discussion will be directed toward its provisions. However, I should like to make it clear at the outset that my emphasis on this approach is in no way intended to imply direct opposition to the public ownership approach. I am firmly convinced that a serious economic problem exists in the provision of transit service in Washington-a problem which requires attention and action by the Congress. Since I serve as chairman of the agency responsible for regulation of the area's privately owned mass transit facilities, I felt it incumbent upon me to submit a proposal for dealing with this economic problem in the context of a privately-owned system. In my view, the question of whether it is better to take a public ownership approach or to deal with the problem while continuing the system in private hands is a political matter which does not lie within our official province to resolve and I am not, either explicity or by implication, making a recommendation on that political question.

It is my view, however, that if the fare is to be maintained at a given level, a proposition which I emphatically endorse, a subsidy will be required whether or not the system is operated as a private enterprise or is owned by the government.

Against that background, I should like to define the basic problem before us as I see it, and then discuss how the solution that I have suggested would operate.

The problem is one not unfamiliar to all of us. The cost of operating the transit system in this city as in every other major city in this country has been escalating substantially each year for the past several years. Naturally, revenues must be forthcoming to meet these additional costs. For this reason, the transit company has filed a number of rate cases with the Commission in recent years which led to a series of rate increases.

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