Railway Administration Act (1918) 2

An Act To provide for the operation of transportation systems while under Federal control, for the just compensation of their owners, and for other purposes.

That any railway operating income accruing during the period of Federal control in excess of such just compensation shall remain the Rents ihcluded as in- property of the United States. In the computation of such income, debits and credits arising from the accounts called in the monthly reports to the Interstate Commerce Commission equipment rents and Street electric rail- joint facility rents shall be included, but debits and credits arising ways excluded. etc., since July 1, 1914.

From the operation of such street electric passenger railways, including railways commonly called interurbans, as are at the time of the agreement not under Federal control, shall be excluded. If any lines were come of lines acquired, acquired by, leased to, or consolidated with such railroad or s tem q y~ between July first, nineteen hundred and fourteen, and December thirty-first, nineteen hundred and seventeen, both inclusive, and separate operating returns to the Interstate Commerce Commission were not made for such lines after such acquisition, lease, or consolidation, there shall (before the average is computed) be added to the total railway operating income of such railroad or system for the three years ended June thirtieth, nineteen hundred and seventeen, the total railway operating income of the lines so acquired, leased, or consolidated, for the period beginning July first, nineteen hundred and fourteen, and ending on the date of such acquisition, lease, or averagemcome. consolidation, or on December thirty-first, nineteen hundred and certificate of annual seventeen, whichever is the earlier.

The average annual railwa operating income shall be ascertained by the Interstate Commerce Commission and certified by it to the President. Its certificate shall, Payment of war taxes. p. 300. Post, p. 1076. Other taxes, for the purpose of such agreement, be taken as conclusive of the amount of such average annual railway operating income.

Every such agreement shall provide that any Federal taxes under the Act of October third, nineteen hundred and seventeen, or Acts in addition thereto or in amendment thereof, commonly called war taxes, assessed for the period of Federal control beginning Janu first, nineteen hundred and eighteen, or any part of such period, sh be paid by the carrier out of its own funds, or shall be charged against or deducted from the just compensation; that. other taxes assessed under Federal or any other governmental authority for the period of Federal control or any part thereof, either on the property used under such Federal control or on the right to operate as a carrier, or on the revenues or any part thereof derived from operation (not including, however, assessments for public improvements or taxes assessed on property under construction, and chargeable under the classification of the Interstate Commerce Commission to investment in road and equipment), shall be paid out of revenues derived Assessments prior to from railway operations while under Federal control- that all taxes January 1,1918. Provisions for maintena,,ce, repairs, etc. assessed under Federal or any other governments' authority for the period prior to January first, nineteen hundred and eighteen, whenever levied or payable, shall be paid by the carrier out of its own funds, or shall be charged against or deducted from the just compensation.

Every such agreement shall also contain adequate and appropriate provisions for the maintenance, repair, renewals, and depreciation of the property, for the creation of any reserves or reserve funds found necessary in connection therewit, and for such accounting and ad* ustments of charges and payments, both during and at the end of Federal control as may be requisite in order that the property of each carrier may be returned to it in substantially as good repair and in substantially as complete equipment as it was in at the beginning of Federal control, and also that the United States may, by additional deductions from the 'just compensations or by other proper means and charges, be reimbursed for the cost of any additions, repairs, for renewals, and betterments to such property not justly chargeable to the United States; in making such accounting and adjustments, due Basis of accounting. consideration shall be given to the amounts expended or reserved by each carrier for maintenance, repairs, renewals, and depreciation during the three years ended June thirtieth, nineteen hundred and seventeen, to the condition of the property at the beginning and at the end of Federal control and to any other pertinent facts and circumstances.

The President is further authorized in such agreement to make all the g enfetef other reasonable provisions, not inconsistent with the provisions of bemade. ,P.64s. this Act or of the Act entitled "An Act making appropriations for the support of the Army for the fiscal year ending June thirtieth, nineteen hundred and seventeen, and for other Purposes," a pproved August twenty-ninth, nineteen hundred and sixteen, that he may deem necessary or proper for such Federal control or for the determination of the mutual rights and obligations of the parties to the agreement arising from or out of such Federal control.

If the President shall find that the condition of any carrier during all or a substantial portion of the period of three years ended than average income. June thirtieth, nineteen hundred and seventeen, because of nonoperation, receivership, or where recent expenditures for additions or improvements or equiprent were not fully reflected in the operating railway income of said three years or a substantial Portion thereof, or because of any undeveloped or abnormal conditions, so exceptional as to make the basis of earnings l ereinabove provided for plainly inequitable as a fair measure of just compensation, then the President may make with the carrier such agreement for such amount as just compensation as under the circumstances of the particular case he shall find just.

That every railroad not owned, controlled, or operated by another toPro sins carrier company, and which has heretofore competed for traffic with with those taken over a railroad or railroads of which the President has taken the possession, by the President. use, and control, or which connects with such railroads and is engaged as a common carrier in general transportation, shall be held red and considered as within "Federal control," as herein defined, and necessary for the prosecution of the war, and shall be entitled to Previso. the benefit of all the provisions of this Act: Provided, however That Street electric railnothing in this paragraph shall be construed as including any street ways not included. or interurban electric railway which has as its principal source of operating revenue urban, suurban, or interurban passenger traffic, or sale of power, heat and light, or both.

The agreement shall also provide that the carrier shall accept all the terms and conditions of this Act and any regulation or order made Vol. 3s, p. M. byorthrough the President under authority of this Act or of that portion of the Act entitled "An Act making appropriations for the support of the Army for the fiscal year ending June thirtieth, nineteen hundred and seventeen, and for other purposes," approved August tweety-ninth, nineteen hundred and sixteen, which authorizes the President in time of war to take possession, assume control, and utilize systems of transportation.

SEC. 2. That if no such agreement is made, or pending the execution agemount payable i of an agreement, the President may nevertheless pay to any carrier etc. while under Federal control an annual amount, payable in reasonable installments, not exceeding ninety per centum of the estimated annual amount of just compensation, remitting such carrier, in case Determination of where no agreement is made, to its legal rights for any balance balancoolaimed.

claimed to the remedies provided in section three hereof. Any amount thereafter found due such carrier above the amount aid Carrier to pay inter- shall bear interest at the rate of six est on overpayments. per centum per annum. The acceptance of any benefits under this section shall constitute an acceptance by the carrier of all the provisions of this Act and shall obligate the carrier to pay to the United States, with interest at the pe Claims for just com rate of six per centum per annum from a date or dates fixed in proceedings under section three, the amount by which the sums received under thus section exceed the sum found due in such proceedings.

SEC. 3. That all claims for just com ensation not adjusted (as boards of referees" tad provided in section one) shall; the ap pplication of the Presidentor of any carrier, be submitted to boards, each consisting of three referees to be appointed by the Interstate Commerce Commission, members of which and the official force thereof being eligible for service on Powers conferred. Assistance of district such boards without additional compensation. Such boards of referees are hereby authorized to summon witnesses, require the production of records, books, correspondence, documents, memoranda and other papers, view properties, administer oaths, and may hold hearings in Washington and elsewhere, as their duties and the concourts to procure test, venience of the parties may require. In case of disobedience to a mony, etc• Hearings. dent ized. subpoena the board may invoke the aid of any district court of the United States in requiring the attendance and testimony of witnesses and the production of documentary evidence, and such court within the jurisdiction of which such inquiry is carried on may, in case of contumacy or refusal to obey a subpoena issued to any person, corporation, partnership, or association, issue an order requiring appearance before the board, or the production of documentary ,evidence if so ordered, or the giving of evidence touching the matter in question; and any failure to obey such order of the court may be punished by such court as a contempt thereof. Such cases may be heard separately or together or by classes, by such boards as the Interstate Commerce Commission in the first instance, or any board of referees to which any such cases shall be referred may determine. to the nest. Said boards shall give full hearings to such carriers and to the United States; shall consider all the facts and circumstances, and shall report as soon as practicable in each case to the President the just compensation; calculated on an annual basis and otherwise in such form as to be convenient and available for the making of such agreement as Agreement author- is authorized in section one. The President is authorized to enter into an agreement with such carrier for just compensation upon a basis not in excess of that reported by s~i ch board, and may inchide Determination by therein provisions similar to those authorized under section one. CourtofCiaimsifagreeoFailing such agreement, either the United States or such carrier may mentfailst Allowance for add,tiers, betterments, esteusions,etc• Dividend restrictions. file a petition in the Court of Claims for the purpose of determining the amount of :such just compensation, and in the proceedings in said court the report of said referees shall be prima facie evidence of the amount of just compensation and of the facts therein stated. Proceedings in the Court of Claims under this section shall be given precedence and expedited in every practicable way.

SEC. 4. That the just m ensation that may be determined as hereinbefore provided by agreement or that may be adjudicated by the Court-of Claims, shall be increased by an amount reckoned at a reasonable rate per centum to be fixed by the President upon the cost of any additions and betterments, less retirements, and upon the cost of road extensions to the property of such carrier made by such carrier with the approyal of or b order of the President while SEC. 5. That no carrier while under Federal control shall, without the prior approval of the President, declare or pay any dividend in excess of its regular rate of dividends during the three years endedSIXTY-FIFTH CONGRESS. SEas. II. CH. 25. 1918. . 455 June thirtieth, nineteen hundred, and seventeen: Provided, however, Approval of issues. That such carriers as have paid no regular dividends or no dividends during said period may, with the nor approval of the President., pa dividends at such rate as the resident may determine.

SEC. 6. That the sum of $500,000,000 is hereby appropriated, out e$Aenpro riation for of any moueys in the Tressury not otherwise appropriated, which, together with any funds available from any operating income of sand carriers, may be used by the President as a revolving fund for the purpose of pa g the expenses of the Federal control, and so Terminals, e a r s, far as necessary t e amount of just compensation, and to provide equipment, etc. terminals, motive power, cars, and other necessary equipment, such terminals, motive power, cars, and equipment to be used and accounted for as the President may direct and to be disposed of, as Congress may hereafter by law provide. The President may also make or order any carrier to make any Additions equipment ' terminals additions, betterments, or road extensions, and to provide terminals, teed. ' motive power, cars and other equipment necessary or desirable, for eto., su= war purposes or in the public interest on or in connection with the property of any carrier. He may from said revolving fund advance Advances to carriers to such carrier all or any part of the expense of such additions, bet- for expenses of, ordered. torments, or road extensions, and to provide terminals, motive power, cars, and other necessary equipment so- ordered and constructed by such carrier or by the President, such advances to be charged against such carrier and to bear interest at such rate and be payable on such terms as may be determined by the President, to the end that the United States may be fully reimbursed for any sums so advanced. y Any loss claimed b an carrier b reason of any such additions settlement of losses y y y y betterments, or road extensions so ordered and constructed may be additions, etc. I claimed by carriers by determined by agreement between the President and such carrierfailing such agreement the amount of such loss shall be ascertained gate, p.4-4as provided in section three hereof. From said revolving fund the President may expend such an portationfacilities. amount as he may deem necessary or desirable for the utilization and operation of canals, or for the purchase, construction, or utilization and operation of boats, barges, tugs, and other transportation facilities on the inland, canal and coastwise waterways, and may in Use of water trans. the operation and use of sucl facilities create or employ such agencies and enter into such contracts and agreements as he shall deem Post, p. 1290. in the public interest.

SEC. 7. That for the purpose of providing funds requisite for Lssue atrri Faebal maturing obligations or for other legal and proper expenditures, or control. for reorganizing railroads in receivership, carriers may, during the period of Federal control, issue such bonds, notes, equipment trust certificates, stock, and other forms of securities, secured or i lnsecured by mortgage, as the President may first approve as consistent Furchase sale, etc., with the public interest. The President may, out of the revolving thereof by the Govern. fund created by this Act, purchase for the United States all or any wentpart of such securities at prices not exceeding par, and may sell such securities whenever in his judgment it is desirable at prices not less than the cost thereof. Any securities so purchased shall be held by the Secretary of the Treasury, who shall, under the direction of the President, represent the United States in all matters in connec- Report to congress. tion therewith in the same manner as a private holder thereof. The President shall each year as soon as practicable after January first, cause a detailed report to be submitted to the Congress of all receipts and expenditures made under this section and section six during the preceding calendar year.

SEC. 8. That the President may execute any of the powers herein ti nenci and heretofore granted him with relation to Federal control through iced. powers, ei hosuch agencies- as he may determine, and may fix 'the reasonable compensation for the performance of services in connection thereCoaperation of Gov- with and may avail himself of the advice, assistance, and cooperaernment establishmeats, etc. Control ti ransport on systems purposes, for war and of the members and employees thereof, and may also call upon any department, commission, or board of the Government for such services as he may deem expedient. But no such official or employee of the United States shall receive any additional compensation for such services except as now permitted by law.

SEC. 9. That the provisions of the Act entitled "An Act making appropriations for the support of the Army for the fiscal year ending June thirtieth, nineteen hundred and seventeen, and for other purposes," approved August twenty-ninth, nineteen hundred and sixFurther powers con teen, shall remain in force and effect except as expressly modified ferred. carriers subject t° present laws etc., not and restricted by this Act; and the President, in addition to the powers conferred by this Act, shall have and is hereby given such other and further powers necessary or appropriate to give effect to the powers herein and heretofore conferred. The provisions of this Act shall also apply to any carriers to which Federal control may be hereafter extended.

SEC. 10. That carriers while under Federal control shall be subinconsistent herewith. ject to all laws and liabilities as common carriers, whether arising under State or Federal laws or at common law, except in so far as may be inconsistent with the provisions of this Act or any other No defense as applicable to such Federal control or with any order of the ernmental agency. Actions not transferPresident. Actions at law or suits in equity may be brought by and against such carriers and judgments rendered as now provided by law; and in any action at law or suit in equity against the carrier, no defense shall be made thereto upon the ground that the carrier able from State to Fed- is an instrumentality or agency of the Federal Government. Nor eras courts. shall any such carrier be entitld to have transferred to a Federal court any action heretofore or hereafter instituted by or against it, which action was not so transferable prior to the Federal control of such carrier; and any action which has heretofore been so transferred No process against because of such Federal control or of any Act of Congress or official property under Federal order or proclamation relating thereto shall upon motion of either control, initiated rates etee e 1 initiated by the 3-party be retransferred to the court in which it was originally instituted. But no process, mesne or final,. shall be levied against any under prThatyduring g the period ofFederal . Federal control control, whenever in his opinion the public interest requires, the President may initiate rates, fares, charges, classifications, regulations, and Practices by filing the same with the Interstate Commerce Commission, which said rates, fares, charges, classifications, regulations, and radices shall not be susconsideration by In pended by the commission pending finalpdetermination. terstate Commerce c°mmissien °r reasonableness, etc. Said rates, fares, charges, classifications, regulations, and pracj and upon such notice as he map direct, but the Interstate Commerce Commission shall, upon coinplaint, enter upon a hearing concerning the justness and reasonableness of so much of any order of the President as establishes or changes any rate, fare, charge, classification, regulation, or practice of any carrier under Federal control, Noncompetition in and may consider all the facts and circumstances existing at the operation to be consid- time of the making of the same. In determining any question conered. cerning any such rates, fares, charges, classifications, regulations, or practices or changes therein, the Interstate Commerce Commission shall give due consideration to the fact that the transportation systems are being operated under a unified and coordinated national Findings, etc., of control and not in competition. commission After full hearing the commission may make such findings and orders as are authorized by the Act to regulate commerce as amended,and said findings and orders shall be enforced as provided in said Act: Provided, however, That when the President shall find and certify oerotTHoate of rresTto the Interstate Commerce Commission that in order to defray, the dent of expenses of Federal control and operation fairly chargeable to rail- crea way operating expenses, and also to pay railway tax accruals other than war taxes, net rents for joint facilities and equipment, and operating to n. compensation to the carriers, operating as a unit, it is necessary to Consideration by increase the railway operating revenues, the Interstate Commerce commission as to rates, Commission in determining the justness and reasonableness of any etc. rate, fare, charge, classification, regulation, or practice shall take into consideration said finding and certificate by the President, to ether with such recommendations as he may make.

SEC. 11. That every, person or corporation, whether carrier or tat s poent forheo- shipper, or any receiver, trustee, lessee, agent, or person acting of. for or employed by a carrier or shipper, or other person, who shall knowingly violate or fail to observe any of the provisions of this Interfering with use Act, or shall knowingly interfere with or impede the possession, use, of railroad property, operation, or control of any railroad property, railroad, or trans- etc n portation system hitherto or hereafter taken over by the President, or shall knowingly violate any of the provisions of any order or regulation made in pursuance of this Act, shall be guilty of a misdemeanor, and shall, upon conviction, be punished by a fine of not more than $5,000, or, if a person, by imprisonment for not more than two years, or both. Each independent transaction constituting a viola- action, or a failure to observe, any of the provisions of this Act, Tense or any order entered in pursuance hereof, shall constitute a separate offense. For the taking or conversion to his own use or the embezzlement of money or property derived from or used in connection with orState by Federal or State statutes. the possession, use, or operation of said railroads or transportation systems, the criminal statutes of the United States, as well as the criminal statutes of the various States where applicable, shall apply to all officers, agents, and employees engaged in said railroad and transportation service, while the same is under Federal control, to the same extent as to persons employed in the regular service of the United States. Prosecutions for violations of this Act or of tri1,,ecuutions in dis. any order entered hereunder shall be in the district courts of the United States, under the direction of the Attorney General, in accordance with the procedure for the collection and imposing of fines ~.nd penalties now existing in said courts.

SEC. 12. That moneys and other property derived from the operation of the carriers during Federal control are hereby declared to property be the property of the United States. Unless otherwise directed by Faecaion goes before the President, such moneys shall not be covered into the Treasury, but such moneys and property shall remain in the custody of the same officers, and the accounting thereof shall be in the same manner Disbursements there. and form as before Federal control. Disbursements therefrom from witbout specific shall, without further appropriation, be made in the same manner appropriation. as before for such purposes as under the Interstate Commerce Commission classification of accounts in force on December twenty-seventh, nineteen hundred and seventeen, are chargeable;,o operating expenses or to railway tax accruals and for such other purposes in connection with Federal control as the Payment of war President may direct, except that taxes under Titles One and Two taxes 4om Tunas of the Act entitled "An Act to provide revenue to defray war expenses, ri rs Ante. p. 300. and for other purposes," approved October third, nineteen hundred and seventeen, or any Act in addition thereto or in amendment Apportionment of thereof, shall be paid by the carrier out of its own funds. If Federal taxes. control begins or ends during the tax year for which any taxes so chargeable to railway tax accruals are assessed, the taxes for such year shall be apportioned to the date of the beginning or ending.

Meeting of deficits. Pending interstate commerce and antiAt such periods as the President may direct, the books shall be closed and the balance of revenues over disbursements shall be covered into the Treasury of the United States to the credit of the revolving fund created by this Act. If such revenues are insufficient to meet such disbursements, the deficit shall be paid out of such revolving fund in such manner as the President may direct.

SEC. 13. That all pending cases in the courts of the United States trust eases not affected affecting railroads or other transportation systems brought under hereby the Act to regulate commerce, approved February fourth, eighteen hundred and eighty-seven, as amended and supplemented, including the commodities clause, so called, or under the Act to protect trade and commerce against unlawful restraints and monopolies, approved ha y ll second, eighteen hundred and ninety, and amendments hereto, roceed to final determination as soon as may be, as if the stay of execution au Unite States had not assumed control of transportation systems ; thorized. but in any such case the court having jurisdiction mad, upon the application of the United States, stay execution of final judgment or decree until such time as it shall deem proper.

SEC. 14. That the Federal control ofprailroads and transportation systems herein and heretofore provided for shall continue for and during the period of the war and for a reasonable time thereafter, which shall not exceed one year and nine months next following the date of the proclamation by the President of the exchange of ratificaReiinquishment or tions of the treaty of peace : Provided, however, That the President systems not needed. nState timpaired . laws, etc., Exceptions .' Emerecla ycharacter of Act declared. may, prior to July first, nineteen hundred and eighteen, relinquish control cf all or any part of any railroad or system of transportation, further Federal control of which the President shall deem not needful or desirable; and the President may at any time during the period of Federal control agree with the owners thereof to relinquish all or any part of any railroad or system of transportation. The President may relinquish all railroads and systems of transportation under Federal control at any time he shall deem such action needful or desirable. No right to compensation shall accrue to such owners from and after the date of relinquishment for the property so relinquished .

SEC. 15. That nothing in this Act shall be contrued to amend, amend, repeal, impair, or affect the existing laws or powers of the States in relation to taxation or the lawful police regulations of the several States, except wherein such laws, powers, or regulations may affect the transportaton of troops, war materials, Government supplies, or the issue of stocks and bonds . SEC. 16. That this Act is expressly declared to be emergency No future policy to legislation enacted to meet conditions growing out of war ; and nothing herein is to be construed as expressing or prejudicing the future policy of the Federal Government concerning the ownership, control, or regulation of carriers or the method or basis of the capitalization thereof.

Approved, March 21, 1918.