Amtrak's operations. It argues that, accordingly, pursuant to section 402(a) of the Act, they need not be paid for by Amtrak. However, Amtrak recognizes the difficulty of determining which joint costs are nonavoidable and it offers to pay a "fairly measured" portion of common costs incurred in connection with facilities and services which it uses on the condition that an effective system of quality of service incentives be adopted.

Amtrak alleges that WTC has systematically collapsed accounts to decrease cost traceability and to increase the share borne by Amtrak and that a new cost accounting system must be implemented. The new system would charge direct costs to the user thereby benefited wherever possible and would allocate other costs to terminal users based on car and passenger counts, square footage occupied, and switching moves, as determined by using five separate zones for the terminal, with such subzones as would be necessary. Under the Amtrak plan, "direct costs" would include locomotive repairs, car cleaning supplies, fuel, steam, and all costs of exclusively used facilities. Overhead in connection with directly charged services and facilities would be accumulated by zone and subzone and would be allocated proportionately to direct charges. Where it would be impracticable to charge costs directly, such common costs would be accumulated in the following zones and subzones:

(1) Station Building zone, with
(A) Main Station subzone
(B) Concourse subzone, and
(C) Parking Area subzone;

(2) Virginia Avenue Connection zone;

(3) Station Tracks & Approaches zone, with

(A) Elevated Tracks subzone

(B) Depressed Tracks subzone,

(C) All Other Tracks subzone,

(D) Inspection subzone,

(E) Baggage Handling subzone, and (F) Company Cars subzone;

(4) Coach Yard zone, with

(A) Storage subzone,

(B) Cleaning subzone, and

(C) Minor Mechanical subzone; and (5) Ivy City Yard zone, with

(A) Servicing subzone
(B) Enginehouse subzone,
(C) Car Shop subzone, and
(D) Car Wash subzone.

Common costs (net of any revenues from any station privileges or other sources) would be allocated among the users on the basis of a measure of use Amtrak argues would be appropriate for each zone or subzone.'

'Passenger counts would be applied with respect to subzones (B) and (C) of zone No. 1 and with respect to common areas of subzone (A) of zone No. 1; car counts (including locomotives counted (footnote continued on next page)

Amtrak states that it is willing to accept the risk that its costs accounting system might increase its share of the costs in order (1) to establish control of expenses incurred and activities performed, (2) to ensure that accurate data is available for evaluating on a cost basis the use of terminal facilities and services, and (3) to serve as cost guides for the negotiation of quality of service incentives.

Amtrak asks that the Commission adopt quality of service standards in determining compensation for services payable to WTC by Amtrak, with premiums for superior service and penalties for the inferior." It states that section 402(a) provides for payments in excess of incremental costs for services and access to facilities to be based on the quality of what is provided and argues that there is nothing in the 1973 amendment to section 402(a) which forbids the Commission from approving penalty-type incentives to be used with premium-type incentives in a single compensation system. Amtrak urges that such a system be implemented by January 1, 1976 at the latest. Amtrak requests that in the interim its present pass-through payments to WTC be continued except (a) Amtrak would not pay for unused facilities, (b) the pre-1971 Amendments three-zone car counts would be used to allocate Amtrak's costs, (c) locomotives would be counted on a unit rather than crew basis, and (d) business and other nonrevenue cars would be included in the car counts. Amtrak asks that the interim payment formula be applied retroactively to adjust all payments for terminal services it has made since July 1, 1973.

Finally, Amtrak requests the Commission to direct Amtrak and WTC to negotiate a fixed price contract for terminal cost allocation purposes. Such a contract would be based on Amtrak's anticipated

(footnote 7 continued)

on a diesel unit basis and business cars) would be applied with respect to zone No. 2, subzone (D) of zone No. 3, subzone (A) of zone No. 4, subzone (D) of zone No. 5, and maintenance expenses in subzones (A), (B), and (C) of zone No. 3; direct costs would be applied with respect to subzone (F) of zone No. 3, subzones (B) and (C) of zone No. 4, and subzones (A) and (B) and (C) of subzone No. 5, square feet of space utilized would be applied with respect to subzone (A) of zone No. 1; switching moves, based upon periodic transportation engineering studies, would be applied with respect to transportation expense in subzones (A), (B), and (C) of zone No. 3; and number of pieces of baggage handled would be applied with respect to subzone (E) and zone No. 3. 'Performance would be measured against a standard including (a) schedule adherence, (b) cleanliness of passenger cars, (c) equipment operability, (d) equipment availability, and (e) passenger amenities. Details of the plan would be based upon a special transportation engineering study (conducted- at WTC's and Amtrak's joint expense) that would determine (i) standards of performance which are acceptable from the point of view of Amtrak's operations and reasonably capable of satisfaction by WTC and (11) the amounts of the penalties and premiums which would encourage a high quality of service with due regard to reasonable priorities among the various services to be performed.

use of the terminal. Amtrak suggests that the contract be renegotiated annually, with dispute arbitration by the National Arbitration Panel.

INTERVENORS' POSITIONS

WTC, B&O, C&O, Penn Central, and PB&W jointly contend that Amtrak's access to the terminal must be on an equal footing with that of the other users. They state that no attempt has been made to obstruct Amtrak's access and that the only fundamental problem is Amtrak's refusal to pay its fair share of the operating costs, including a return on the owners' investment. They state that Amtrak refuses to become a direct party to the 1907 Agreement but instead chooses to ride its "piggy-back" access indefinitely to its own unfair advantage, and that only a court order brings Amtrak before the Commission in the instant proceeding. WTC suggests that Amtrak at least implicitly accepted the 1907 Agreement from the beginning of its operations at the terminal on May 1, 1971, until July 1, 1973, and it urges that Amtrak be joined to the Agreement in order to fairly resolve the issues.

WTC argues that the 1907 Agreement establishes a fair and reasonable basis for compensation, with specific, functioning provisions for resolving several issues raised by Amtrak, such as excessing unneeded property. It notes that the 1907 Agreement provides for arbitration if the WTC Board of Managers does not agree to excess and remove from the rental base any property which is objected to by a user as being unneeded.

WTC challenges the accuracy of the calculations of present and prospective utilization of the terminal made by Amtrak's expert witnesses.' As computed by WTC, Amtrak currently uses 5 percent of the station on an exclusive basis and 59 percent in common with others rather than 2 percent and 25 percent, respectively, as stated by Amtrak. In WTC's view, Amtrak's calculations fail to consider many essential support facilities. Another shortcoming WTC raises is Amtrak's alleged failure to make allowance in its computations for the very growth in traffic it itself predicts. WTC also asserts that Amtrak has overstated excess trackage existing at the terminal and that, in any event, most of the land under and surrounding excess

10

'For example, WTC points out conflicting data on the square footage of the station submitted by witnesses Silkey (360, 570) and Curtin (200, 300).

el.e., storage, terminal management's and accounts' offices, relief and claim departments, valet parking, personnel office, utilities, et cetera.

tracks is needed for terminal-related activities. It states that areas of the Ivy City yard claimed to be excess either may not be feasibly disposed of or have already been excessed pursuant to the 1907 Agreement. With regard to Amtrak's claim that it pays for unneeded services, WTC shows that Metroliners make substantial use of switching service-directly refuting an Amtrak assertion to the contrary. Witness Robert L. Hines for WTC states that Amtrak's and Southern's long-distance trains are the only users of the coach yard except for an occasional commuter car and the Penn Central mail train. (He allows that on Thursdays or Fridays cuts of cars are taken from Penn Central's and B&O's commuter trains to the car washing facility adjacent to the Ivy City engine terminal, but states that they do not spend any time in the coach yard.)

WTC denies that its cost accounting is arbitrary or unfair and asserts that costs are identified and charged directly to the responsible party wherever possible. Witness Hines states that approximately 40 percent of all WTC expenses are prorated between users on the basis of counts of cars and engine crews. For the first 7 months in 1974, he states, total common expenses amounted to approximately 39 percent of the total charges for all users and for a similar period in 1973 the corresponding percentage was 42 percent. Hines states that common expenses are comprised of (1) net operating expenses that cannot be directly associated with the individual users and (2) rentals, taxes, and interest. He states that the remaining expenses (approximately 60 percent of the total) are direct charges which can be identified by type of operation and associated with the individual users. Direct charges include labor and material expenses which are immediately indentifiable with the work performed and are primarily associated with the maintenance of equipment accounts, such as car and locomotive repair, car cleaning, and inspection. Labor charges are determined from time tickets prepared by craft employees who itemize their time spent on each project; thus the total labor billed to each user equals the rate of pay of each employee multiplied by the number of hours expended on the user's behalf. Payroll overheads and fringe benefits are added to direct labor charges. (Overheads include vacations, holidays, training, indirect labor, et cetera, while fringe benefits include railroad retirement, unemployment insurance, and health and welfare payments.) Expenses for materials plus overheads are charged directly to the work performed.

WTC argues that the single zone, consolidated car count permits reasonable distribution of costs because most joint terminal

expenses are related to passenger cars or locomotive units handled. WTC's witness Shaw states that the original multiple-zone system (pre-1971 Amendments) prohibited WTC from moving trains and switching cars in the most efficient manner. Under the three-zone system, all trains that entered the terminal also entered the station zone but cars had to go to the coach yard zone only if they needed to be serviced or repaired or were laid over at the terminal and had to be moved out of the station to make room for other trains. As long as terminal expenses were calculated and distributed separately for each zone there was a built-in incentive for each railroad to use only the minimum number of zones necessary. There was a particular incentive to avoid the coach yard zone, and railroads attempted to avoid having their cars moved to the coach yard by deferring service or having it performed elsewhere. As use declined, the cost per car for use of the coach yard increased. The objections raised by the railroads to any avoidable movements of cars to the coach yard tended to prevent WTC from operating the terminal in the most efficient manner. WTC states that the results of the WMATA transaction, with its attendant reduction of station tracks, would mean that even greater inefficiencies in operations would be produced if a return to multiple zones were ordered. In the opinion of witness Shaw, based on his knowledge of the terminal and the transportation services it provides to users, an increase in zones would actually increase Amtrak's costs because its cars predominate among the cars being moved around the terminal. WTC argues that "implementation of a more sophisticated system looking at individual services and facilities would not be justified by the marginal improvement (if any) in identification of costs." It also asserts that the zones proposed by Amtrak would be even more impractical than the pre-1971 zones.

WTC argues that it would be unreasonable to reinstitute constructive car counts for by-passed and short-stopped traffic. Most of such traffic consists of mail trailers on flatcars which cannot pass through the terminal because of inadequate tunnel height clearances. The mail trailers are brought into the Washington area on freight trains, unloaded in Alexandria, and then brought by highway to WTC's mail dock. Since this traffic does not use the terminal, WTC states that it would be unfair to count it as if it did.

WTC denies that the 1971 Agreements were in any way designed to disadvantage Amtrak. Penn Central's witness, Carl Helmetag, Jr., states that the objectives of the revisions were (1) to improve terminal operating efficiency, (2) to reduce excess property, and (3)