Senator BARTLETT. Is there any further testimony on this bill? Apparently not. The committee will stand in recess.

(Recess.)

Senator BARTLETT. The committee will be in order.

We will now go to the transportation hearing in order to accommodate the General Manager of the Alaska Railroad who must testify today and who must testify at the earliest possible moment on account of other earlier engagements. I will ask Mr. John Smith, General Manager of the Alaska Railroad, to come to the stand.

Mr. Smith, we feel especially honored that you are testifying before us today. We will be very glad to hear your statement.

STATEMENT OF D. J. SMITH, GENERAL MANAGER, THE ALASKA RAILROAD

Mr. SMITH. Thank you, Senator.

I have a written statement, and if possible I would like to have it entered into the record as representing my own views.

Senator BARTLETT. Your own views?

Mr. SMITH. My own views.

Senator BARTLETT. Not necessarily the views of the Department of the Interior?

Mr. SMITH. That is right. There was not sufficient time to get clearance from the Department on all these different items.

Senator BARTLETT. Is it your desire to read the statement in full? Mr. SMITH. I would like to read most of it. There are three or four pages we can skip.

Senator BARTLETT. My only thought in that connection is that there are many interested people in the room who may not have access to the prepared statement. If your lungs and voice would hold out, perhaps it would be just as well to read it right through.

Mr. SMITH. All right.

With regard to S. 1725 and S. 1839, and House bill 7297, I believe it would be appropriate if others, more directly affected by the bills in question, presented the detailed testimony. I would, however, like to suggest the following amendments to the proposed bills: In S. 1725, after the words "or the Intercoastal Shipping Act, 1933, as amended," found on page 2, line 11, insert the following so that the remainder of section 1 will read:

Provided, however, That this shall not be interpreted to permit the Joint Board established by section 6 of the Act, or any other regulatory agency to prevent any carrier which has entered into or wishes to enter a joint agreement or concurrence with the Alaska Railroad under the Act of March 12, 1914, 38 Stat. 305, or any such carriers or connecting carriers, from publishing joint rates and through routes which include those rates and routes of the Alaska Railroad under said Act of March 12, 1914: Provided further, however, That the authority to establish through service and joint rates should not be applicable to interstate operations within the State of Hawaii by motor common carriers or propproperty.

In S. 1839 and H.R. 7297, after the words "be subject to the provisions of this part," found on page 2, line 23, insert the following so that the remainder of section 2 will read:

and this Act shall be interpreted to permit any carrier which has entered into or wishes to enter into a joint agreement or concurrence with the Alaska Railroad under the Act of March 12, 1914, 38 Stat. 305, or any such carriers or con

necting carriers to publish joint rates and through routes, which include those rates and routes of the Alaska Railroad under said Act of March 12, 1914, in accord with the existing authority under said Alaska Railroad Act.

By virtue of the act of March 12, 1914 (38 Stat. 305; 48 U.S.C. 301), authority is given to the Alaska Railroad and to connecting carriers who wish to make agreements with the Alaska Railroad for joint transportation of passengers or property of the Alaska Railroad, and in addition, the Alaska Railroad and its connecting carriers are authorized to make such other contracts as may be necessary to carry out the purposes of said act, which purposes, among other things, are the joint transportation of persons and property via the Alaska Railroad and its connecting carriers.

Title 48, United States Code, section 307, authorizes "all necessary Acts and things in addition to those specifically authorized" in the act of March 12, 1914, to enable the accomplishment of the purposes and objectives of said act. Therefore, it is our view that Congress has given authority for the Alaska Railroad to enter into joint agreements or concurrences and to publish joint rates and through routes with any carrier presently under any of the Federal regulatory agencies. Consequently, we feel that our proposed amendment would make the regulatory bodies more aware of the authority which already exists. With regard to S. 2413, a bill to provide for the economic regulation of the Alaska Railroad under the Interstate Commerce Act and for other purposes, it is my belief that the end goal sought by yourself, Mr. Senator, as author of the bill, and the aims of the Alaska Railroad have much in common. It is only with regard to the means utilized to achieve the end result that we are at variance. We are not against economic regulation, provided the instrument of such regulation does not create a conflict with the requirements of other Federal agencies. The Secretary of the Interior has established a policy upholding the purposes of the act creating the Alaska Railroad and we do not believe it to be fitting and proper for the Interstate Commerce Commission to imply that the Secretary of the Interior has violated the very law he is bound to execute.

In its letter to Senator Magnuson on September 25, 1961, the ICC refers to a "competitive struggle" between the Alaska Railroad and the motor carriers, and states:

the Commission is firmly of the view that there can be no effective, equitable regulation of surface transportation in interstate commerce within that State [Alaska] as long as one of the major competitive modes is subject to a full measure of regulation while its chief competitor remains completely free from regulatory control.

It is a well-known fact that the Alaska Railroad has been the most effective stabilizing influence in Alaska in keeping rates down within reach of the citizens of Alaska. Since we believe the objective of S. 2413 is to protect the shippers, passengers, and consignees in Alaska, we believe that a different and better approach than S. 2413 should be taken.

In this regard I would like to suggest to the committee that the law proposed by the Alaska Railroad would permit any shipper, person, common carrier, and so forth, to complain to the ICC of any violation of law by the Alaska Railroad, and permit investigation and reparation of the same; permit the ICC to determine and prescribe rates and classifications based upon hearings; permit the Commission to estab

lish through routes, joint classifications, joint rates, fares, or charges and the division thereof and determine the lawfulness of new rates, suspensions thereof, and require refunds.

Our major objection to S. 2413 is that it creates conflicts with regulations of other Federal agencies. Further, it raises some basic constitutional issues. The Alaska Railroad, being in the executive department, a bureau of the Department of the Interior, must follow rules, regulations, laws, and precedents designed to control the functions of the executive department. The Interstate Commerce Act, a law designed to exercise Government controls over private enterprise, when modified to control a Government agency, must preclude an independent commission from encroaching upon the constitutional powers of the executive department. S. 2413 would allow such encroachment. For example, S. 2413 would make the Alaska Railroad subject to 49 U.S.C. 12(1) which authorizes the Commission to bring action in court against the Secretary of the Interior and the Alaska Railroad through the U.S. Attorney General and the U.S. district attorneys to enforce what the Commission considers to be the law under chapter I. There is a similar provision in chapter II (49 U.S.C. 43).

On the other hand, the Attorney General and the U.S. district attorneys are required by law (28 U.S.C. 507), to defend the Secretary of the Interior and the Alaska Railroad. Hence, the conflict created by S. 2413 would cause the Attorney General to be both the prosecuting and defense attorney at the same time.

A draft bill proposed by the Alaska Railroad, which we would like to enter into the record, you will note, differs from S. 2413 in that the former selects the specific provisions of the Interstate Commerce Act which would apply to the Alaska Railroad, a Government agency, and eliminates those portions of the act designed for private carriers and creates no conflicts with normal Government procedures. The act proposed by the Alaska Railroad is the modification of 48 U.S.C. 301 to read as follows:

A BILL To amend the Act of March 12, 1914, to make the rates of the Alaska Railroad subject to uniform requirements of the Interstate Commerce Act

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That the first paragraph of the first section of the Act entitled "An Act to authorize the President of the United States to locate, construct, and operate railroads in the Territory of Alaska and for other purposes," approved March 12, 1914 (38 Stat. 305), as amended (48 U.S.C. 301), is amended to read as follows:

The President of the United States is empowered, authorized, and directed to adopt and use a name by which designate the railroad or railroads and properties to be located, owned, acquired, or operated under the authority of sections 301, 302, and 303-308 of this title; to employ such officers, agents, or agencies, in his discretion, as may be necessary to enable him to carry out the purposes of said sections; to authorize and require such officers, agents, or agencies to perform any or all of the duties imposed up him by the terms of said sections; to detail and require any officer or officers in the Engineer Corps in the Army or Navy to perform service under said sections; to fix the compensation of all officers, agents, or employees appointed or designated by him; to designate and cause to be located a route or routes for a line or lines of railroad in the State of Alaska not to exceed in the aggregate one thousand miles, to be so located as to connect one or more of the open Pacific Ocean harbors on the southern coast of Alaska with the navigable waters in the interior of Alaska, and with a coal field or fields so as best to aid in the development of the agricultural and mineral or other resources of Alaska, and the settlement of the public lands therein, and so as to provide transportation of coal for the Army and

Navy, transportation of troops, arms, munitions of war, the mails, and for other governmental and public uses and for the transportation of passengers and property; to construct and build a railroad or railroads along such route or routes as he may so designate and locate, with the necessary branch lines, feeders, sidings, switches, and spurs; to purchase or otherwise acquire all real and personal property necessary to carry out the purposes of said section; to exercise the power of eminent domain in acquiring property for such use which use is declared to be a public use, by condemnation in the courts of Alaska in accordance with the laws now or hereafter in force there; to acquire rights-ofway, terminal grounds, and all other rights; to purchase or otherwise acquire all necessary equipment for the construction, and operation of such railroad or railroads; to build or otherwise acquire docks, wharves, terminal facilities, and all structures needed for the equipment and operation of such railroad or railroads; to fix, change, or modify rates for the transportation of passengers and property, which rates shall be subject to the first paragraph of section 13 of the Act of February 4, 1887 (24 Stat. 383), as amended (49 U.S.C. 13(1)) and section 15 of the Act of February 4, 1887 (24 Stat. 384), as amended (49 U.S.C. 15 (1), (2), (3), (4), (5), (6), (7), (8), (9), (10), (11), (13)), except the seventh and ninth paragraphs of the amendment of section 15 by section 12 of the Act of February 28, 1920 (36 Stat. 551), as amended (49 U.S.C. 15 (12), (14)), and except that so long as such railroad or railroads continue to be both wholly owned and operated by the United States of America or by one of its departments, corporations, or agencies, the Interstate Commerce Commission in determining the lawfulness of rates or charges maintained, or from time to time proposed to be maintained, by such railroad or railroads, shall give due consideration, among other things, to the national public purposes which to a substantial extent prompted the construction, expansion, maintenance, and improvement thereof, with particular reference to the requirements of the national defense, as well as promotion and development of natural resources, and shall to the extent warranted by the facts recognized for valuation and cost finding purposes a segregation of both capital investment and operating expenses which are found to be solely attributable to such national public purposes, distinguishing them from normal railroad common carrier investment and operational expenses; nor shall such rates and charges be deemed to be unlawful solely because they fail to yield sufficient revenues to cover any amounts for taxes not actually required by law to be paid or provide a return on capital investment; but no free transportation or passes shall be permitted except that the provisions of the interstate commerce laws relating to the transportation of employees and their families shall be in force as to the lines constructed under said sections; and except also that the issuance of passes to ministers of religion traveling secretaries of Railroad Young Men's Christian Associations, and persons exclusively engaged in charitable and eleemosynary work when engaged in their work in Alaska; to indigent, destitute, and homeless persons, inmates of hospitals and charitable and eleemosynary institutions, and to such persons when transported by charitable societies or hospitals and the necessary agents employed in such transportation; to newsboys on trains, persons injured in wrecks, and physicians and nurses attending such persons; the interchange of passes for the officers, agents, and employees of common carriers, and their families; and the carrying of passengers free with the object of providing relief in cases of general epidemic, pestilence, or other calamitous visitation is permitted; to receive compensation for the transportation of passengers and property, and to perform generally all the usual duties of a common carrier by railroad; to make and establish rules and regulations for the control and operation of said railroad or railroads; in his discretion, to leave the said railroad or railroads, or any portion thereof, including telegraph and telephone lines, after completion under such terms as he may deem proper, but no lease of such railroad or railroads shall be for a longer period than twenty years and no other lease authorized in sections 301, 302, and 303-308 of this title shall be for a longer period than fifty-five years, or in the event of failure to lease, to operate the same until the further action of Congress. If said railroad or railroads, including telegraph and telephone lines, are leased under the authority given under said sections, then and in that event they shall be operated under the jurisdiction and control of the provisions of the interstate commerce laws; to purchase, condemn, or otherwise acquire upon such terms as he may deem proper, any other line or lines of railroad in Alaska which may be necessary to complete the construction; of the line or lines of railroad designated or located by him. The price to be paid in case of purchase shall in no case exceed the actual physical value of

the railroad; to make contracts or agreements with any railroad or steamship company or vessel owner for joint transportation of passengers or property over the road or roads herein provided for, and such railroad or steamship line or by such vessel, and to make such other contracts as may be necessary to carry out any of the purposes of said sections; to utilize in carrying on the work herein provided for any and all machinery, equipment, instruments, material, and other property of any sort whatsoever, used or acquired in connection with the construction of the Panama Canal, so far and as rapidly as the same is no longer needed at Panama, and the successors to the Isthmian Canal Commission are authorized to deliver said property to such officers or persons as the President may designate, and to take credit therefor at such percentage of its original cost as the President may approve, but this amount shall not be charged against the fund provided for in said sections.

S. 2593 is a bill to improve and encourage collective bargaining between the management of the Alaska Railroad and representatives of its employees, and to permit to the extent practicable the adoption by the Alaska Railroad of the personnel policies and practices of the railroad industry. I might say at this point, Senator Bartlett, that your supporting statement to the Senate which is contained in pages 19345 through 19351 very well covers our position.

For a decade, the Alaska Railroad and its unions have negotiated wage rates on a pattern of Northern Pacific Railway wage rates, by occupation, plus a differential to fairly reflect the higher price level of the rail belt in Alaska. These negotiations not only resulted in the adoption of wage rates and related wage rules, but, in addition, rules based on the practice of the railroad industry, including hires, bidding, bumping, and reassignments. All other related personnel matters have been regulated by the contracts between the Alaska Railroad and union representatives of all employees, as on stateside railroads. These wages, working conditions, grievance procedures, hearings and investigations, and such matters pertaining thereto are all contained in written agreements between the railroad and the eight national labor unions representing employees on the Alaska Railroad. Similar written agreements have been in effect as early as the agreement between the locomotive engineers, conductors, firemen, and brakemen in the Alaska Railroad agreement of April 1, 1920. Civil Service and veterans' preference regulations, if applied to the Alaska Railroad, would be in general conflict with all current union agreements.

The heart of this personnel bill is not exemption from veterans' preference but a provision which grants the employees, including veterans, the right to choose, through negotiation, whether they wish to keep their present seniority system, or whether they wish to abandon it in favor of civil service procedures, many of which are applic

able both to veterans and nonveterans.

Management's position for passage of this proposed bill is based primarily upon continuation of these negotiated union agreements which have been in effect for over 30 years. Failure of this bill will make it mandatory for the railroad to take certain action in order to conform with regulations. Management has already been put on notice by the unions that such actions will be considered a break in faith between the U.S. Department of the Interior and the unions. Management of the Alaska Railroad must, therefore, do all possible to sustain these agreements.