Senator EAGLETON. It is interesting to point out in that contract, as Mr. Babson has testified, Mr. Chalk did not propose to sell the tourist and sightseeing facilities, which today he considers to be part of the package.

So that I can understand better just how this came about, and correct me at any time as I recite it, your staff and you read in the paper in April of early 1967 the possibility that, based on a public statement of Mr. Chalk's, he would like to sell D.C. Transit. You then, or one of your staff men, Mr. Gleason

Mr. BABSON. I believe Mr. Gleason.

Senator EAGLETON (continuing). Contacted Mr. Chalk to see if he was sincere about this and what it was all about.

And there were some meetings back in 1967 between Mr. Chalk and WMATA.

Mr. BABSON. Only one which represented the WMATA board as such. I believe that was General Mathe, myself, Mr. Gleason, and General Graham from WMATA, and Mr. Chalk, April 21, 1967.

Mr. Gleason, we believe, was discussing the matter with Mr. Chalk, just the two of them perhaps, on the phone, and perhaps once in person. And then General Graham and Mr. Gleason had a meeting with Mr. Chalk-that was in 1968. We dropped it in 1967, as I indicated, because the price seemed to be out of line.

We were advised by knowledgeable persons that there were financial problems which did not meet the eye, which have since, I guess, come out. So we really were not too interested. We were too busy trying to plan a regional rapid transit system to get into this.

Senator EAGLETON. It was dropped, then, in 1967, because the price Mr. Chalk suggested was too high. Do you recall what month, roughly? Mr. BABSON. It was July. It was dropped, Mr. Chairman, in July, really, when we did get a letter from Mr. Chalk addressed to Mr. Gleason stating that it was his firm present intention to sell D.C. Transit System.

Senator EAGLETON. May I have a copy of that letter for the record? Mr. BABSON. Yes, sir. I have a letter here to Mr. Chalk from Mr. Gleason, a letter of July 3rd from Mr. Chalk to Mr. Gleason.

Mr. BABSON. After receiving Mr. Chalk's letter in July, we pretty much forgot about it and let it drop.

Senator EAGLETON. It was dropped, then, in July 1967. Who reopened it in 1968?

Mr. BABSON. I am going to ask General Graham to comment on that, if he will, please.

General GRAHAM. So far as I know, Mr. Chairman, we had an invitation from Mr. Chalk to Mr. Gleason to meet with him on the 16th of July 1968. Mr. Gleason asked me to go with him to that meeting. This was the meeting at which Mr. Chalk broached the idea of a contract involving three appraisers.

As a result of that meeting, he said that he would send and he did send two or three weeks later the contract which has been previously referred to.

Senator EAGLETON. So it was Mr. Chalk, then, according to your best recollection, who reopened the matter in July 1968, to sell the company?

Mr. BABSON. That is correct.

Senator EAGLETON. So, in summary, as I view it, Mr. Chalk was interested in selling the company in April 1967. He was interested in selling the company in August of 1968. A week or so ago he was not interested in selling the company for public operation, before the House committee, but today he is interested in selling the company once again.

You don't have to answer.

Mr. BABSON. Thank you, sir.

Senator EAGLETON. I won't ask you, for the record, the appraisal value that was made on your behalf, but I take it that it was substantially lower than the figures that have been talked about here today by Mr. Chalk.

Mr. BABSON. Quite substantially, Mr. Chairman.

Senator EAGLETON. Would you comment on S. 1814 insofar as that 3-year negotiating period is concerned? Does that appear to you to be quite long?

Mr. BABSON. In a sense it does, Mr. Chairman. If you are going to make it 3 years, we could make it the same time we start operations of the Transit System in 1972, if you want to wait that long.

Senator EAGLETON. You would prefer to dovetail the operation of these facilities, the subway and the transit?

Mr. BABSON. If you are going to wait that long, we could just go ahead and dovetail it, but I don't think we would like to wait that long. We think it is too long. If we are going to go this route at all, if Congress wants us to, we should proceed apace.

Mr. KENNEDY. I don't believe there is particular magic in the 3-year figure. It applies, as I recall, in the bill both to the interim subsidy, which would expire at the end of 3 years, and to the time period within which the legislatures of Maryland and Virginia would be permitted to act, but I don't think there is any particular significance to the number.

Senator EAGLETON. It is to tie in with the amendment of compacts in Maryland and Virginia. That was the rationale for the 3-year period. It just seems to me, as one individual, that you make it for such a long period of time during which a subsidy is costing so much that there is no pressure put on the parties to bargain intensively. It is the same thing as cooling-off periods in labor negotiations. If you have a continuum of cooling-off periods, sometimes the parties never get together.

Mr. Lowe. Mr. Chairman, if the legislatures of Maryland and Virginia approve the compact amendments, and both States have sessions next year, we could actually be deep in the middle of negotiations with D.C. Transit for the acquisition of the company just about a year from today.

Mr. BABSON. With the General Assembly meeting in January, with the emergency clause in Virginia at least-I think it is the same in Maryland you could have a bill enacted to become effective, I think, 30 days after it is signed. By early next year we should be able to have the amendments to the compact.

Senator EAGLETON. Do you read your present authority as such that you could acquire the company but could not operate it?

Mr. BABSON. Let me defer that to the General Counsel.

Mr. KENNEDY. The answer to the question is "yes." It is certainly questionable whether or not we would have the power to operate.

Senator EAGLETON. If we could instantaneously change all necessary laws today, would you prefer to acquire and operate, Mr. Babson, or would you prefer to just acquire and contract out the operational aspect?

Mr. BABSON. We really like the provisions in the bill now which give us the alternative to go either way. We have some real doubt now as to whether there is any reason still existing for having to hire a private contractor to run the system. I personally wonder if there is any real incentive there for a private contractor that does not exist for the governmental agency, semi-quasi governmental agency.

We are interested in low fares, too, but we are elected to represent the riders and feel that we have quite an incentive to have an efficient operation.

Senator EAGLETON. Do you foresee any problems, if you were to become the operator of the bus company, in terms of labor negotiations, or matters of that type?

Mr. BABSON. No, sir; we don't.

Senator EAGLETON. Thank you, Mr. Babson. Thank you, gentlemen. We appreciate your being here.

Mr. BABSON. Thank you, sir.

Senator EAGLETON. We will at this time place in the record: a letter of July 3, 1967, from Mr. Chalk to Mr. Gleason, of WMATA, and Mr. Gleason's response to Mr. Chalk dated July 13, 1967.

Mr. JAMES GLEASON,

D.C. TRANSIT SYSTEM, INC.,
Washington, D.C., July 3, 1967.

Vice Chairman, Washington Metropolitan Area Transit Commission,
Washington, D.C.

DEAR MR. GLEASON: This is to confirm the discussions I had with you, Mr. Graham and Mr. Ison yesterday and on prior occasions during the past two months in connection with the D.C. Transit System.

As I advised you, it is my firm, present intention to sell the D.C. Transit System as an operating entity. I stated to you that I think it would be in the best interests of the District of Columbia and the future subway system if the ownership of the surface transit system be merged with the ownership of the subway system. It is obvious that in your planning for the future you would doubtless be in an advantageous position to save possibly hundreds of millions of dollars if you knew and could plan today a complete integration in terms of origin, destination, routings and frequencies. In terms of good business management and prudent planning, it seems to me, viewed objectively, as the obvious thing to do. The opportunity may not be available to you again in the event a deal is not consummated at this time. Alternatives presently existing may foreclose this opportunity.

Should you desire to go forward toward consummation of our discussions, I would suggest a mutual letter of intent setting up a formula to determine a price based upon appraisals made by outside impartial experts with outside limits on the high and low side.

In terms of payment and timing, this would present no problem since we would be flexible to your situation.

I appreciate that your Board has divergent opinions, and I feel it would be unfair to each of us to leave so important a subject in a state of ambiguity. If your intentions are serious as expressed to me by yourself and other members of your Commission, and if these intentions represent the majority opinion, I am prepared to enter into a mutual letter of intent. On the other hand, if your Board cannot make a firm determination of intent to purchase within one week from date hereof, I shall consider the matter closed and not open for further discussions.

Very truly yours,

O. ROY CHALK, President and Chairman of the Board.

WASHINGTON METROPOLITAN AREA TRANSIT AUTHORITY,
Washington, D.C., July 13, 1967.

Mr. O. Roy CHALK,
D.C. Transit System, Inc.,

Washington, D.C.

DEAR MR. CHALK: This is to acknowledge your letter on July 3 in confirmation of the discussions held recently with Mr. Graham and Mr. Ison of the Washington Metropolitan Area Transit Authority.

As I am sure you know, the members of the Washington Metropolitan Area Transit Authority have given careful consideration to your publicly announced intention to dispose of the facilities and franchise of the D.C. Transit system, and the question of the Authority's purchase of your system has been discussed at several of its executive sessions. Although I would not want to presume on what the decision of the Authority members would be in connection with your request for a letter of intent, it appears to me that at the present time the Auhority lacks basic information concerning your system which would be necessary to properly and responsibly evaluate your request. However, despite the foregoing, you are entitled to receive some expression of the Authority's interest. I will attempt to obtain this at the earliest possible date.

Regrettably, the calendar of matters to be considered by the Authority will not permit adequate discussion of this matter prior to its session of July 21. However, on that date I will have this matter placed on the Authority's agenda and will advise you promptly of the Authority's decision.

Sincerely,

JAMES P. GLEASON,
Vice Chairman.

Senator EAGLETON. Now the next witness is Mr. George W. Apperson, president of the National Capital Local Division 689 of the Amalgamated Transit Union.

Mr. Apperson, you have been kind enough to have submitted to us a 22-page prepared statement with several appended exhibits numbering quite a few pages. I will incorporate the same in its entirety in the record at this point.

If you will, try to give us a capsule summary of your prepared statement, plus any comments you wish to make based on such testimony as you have heard here this morning.

STATEMENT OF GEORGE APPERSON, PRESIDENT, LOCAL DIVISION 689, AMALGAMATED TRANSIT UNION, ACCOMPANIED BY HERMAN STERNSTEIN, COUNSEL FOR THE UNION

Mr. APPERSON. Thank you very much, Senator. (The prepared statement follows:)

PREPARED STATEMENT OF GEORGE APPERSON, PRESIDENT, LOCAL DIVISION 689, ATU My name is George Apperson. I am President and Business Agent of National Capital Division 689, of the Amalgamated Transit Union, AFL-CIO. Division 689 represents for bargaining the over three thousand operating and maintenance employees of D.C. Transit System, Inc. (D.C.) and its subsidiary Virginia Lines, also known as W.V.&M Coach Co., Inc. Our union was chartered in 1916, and has been representing employees in the Washington metropolitan area transit systems since that time.

Perhaps the single most significant factor which triggered the present examination by the Congress into the possibility of supplementing income from fares for the Company, or public ownership and operation, was the determined effort of our Union to compel the Company to pay up the almost $2,000,000 which the Company owes to the D.C. Transit System, Inc. Employees Retirement Trust and to the Transit Employees' Health and Welfare Plan. We are indeed grateful for the interest you have expressed in making these inquiries. I appear

here today, gladly, at the request of the distinguished Senator from Maryland, the Chairman of the Committee on the District of Columbia, and hope to make available to you all of the information we have which will aid you in your consideration of this legislation.

I want, at the outset, to take a moment for a look at the history of local mass transportation. During the 33 years prior to the time, in 1949, that the Wolfson interests took over Capital Transit, Division 689 and Capital Transit and its predecessors maintained a fine collective bargaining relationship. Between 1916, when a brief strike to obtain recognition took place, and 1951, a period of 35 years, only one strike occurred. That took place in 1945, immediately after the war, and it lasted only three days. Our disputes during that period were handled through negotiations or arbitration and the community benefited, as well as the Company and the workers, from this long period of industrial peace.

Our International has been representing transit employees for over 70 years. And during all that time it has always insisted on recognizing that transit is an industry which provides an essential public service; an industry in which strikes are to be avoided if at all possible. For that reason, our International Constitution requires that every Division offer to arbitrate its disputes with employers before it resorts to a strike. Our Local By-Laws are consistent; we do not resort to the strike weapon unless we first offer arbitration and it has been refused. I don't believe there is any other International Union which has such a provision in its Constitution. Employers in this area recognized the values of that arbitration policy. It was an integral part of the sound labor relations here in Washington between 1916 and the advent of Mr. Wolfson.

With the advent of the Wolfson group there was a substantial change. The Company boldly overthrew the long-standing policy of arbitration of unsettled disputes. In 1951 a three-day strike resulted when the Company refused to arbitrate a dispute over contract changes. As you well know, in 1955 the Company's refusal to arbitrate in order to resolve a dispute forced a 52-day strike, and ultimately the Company's franchise was revoked.

With the lessons of that experience fresh in our minds and in the minds of the community, when Mr. Chalk took over the local transit system, our Union insisted upon writing into the contract a clear and all-inclusive requirement of arbitration of any unsettled disputes between the parties. Both Mr. Chalk and the Union have regarded this clause as a guarantee of uninterrupted service to this community. I have appended (marked Exhibit No. 1) to this written statement a photographic copy of the provision of our present bargaining agreement under which all issues in dispute between us are to be submitted to arbitration. There has been no strike here since these clauses were written into our agreements; indeed, until the problem arose of delinquencies in making payments into the pension and health and welfare funds, there were not even any threats to strike.

So much for historical context. I want to turn now to the facts as to the amounts owed, as of right now, to the pension and health and welfare funds. D.C. Transit of D.C. now owes $1,891,229.92 to the two funds. That amount is made up of (1) Employer contributions owed to the pension fund total $1,480,778.92; (2) Employee contributions to the pension fund withheld by the employer from the employees' pay for transmittal, and not transmitted, $74,170.16; and (3) Employer contributions owed to the health and welfare fund, $336,280.84. The amount owed by the employer to the pension fund are amounts due for the months from July, 1968 to March, 1969; employee contributions to the pension fund not transmitted are for March, 1969. Unpaid employer contributions to the health and welfare fund are for the months September, 1968 to January, 1969. A precise statement of the amounts due, by month and by fund, is attached to this statement, marked Exhibit 2.

Both the pension and health and welfare plans are Taft-Hartley type programs with contributions by both the employer and the employee. Employee contributions are made by check-off; that is, deducted from pay. Pension deductions are made each week; they are based on a percentage of the employees' actual pay. Health plan contributions, also deducted from employees' pay, are a specific sum of money per month depending on whether the employee is single or has a family, and are taken out of the employees' pay checks for the third week of each month. Each fund is administered by 6 trustees, three appointed by the Company, and three appointed by the Union. In each case the agreement contains a provision for the appointment of an impartial person to sit with the Trustees to resolve an impasse, should one arise.