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(2) the difference between its test period return, if an income, and its Federal control return, if a smaller income, or

(3) the sum of its Federal control return, if a deficit, plus its test period return, if an income.

The sum of such amounts shall be credited to the carrier.

For every such month the Commission shall ascertain:

(1) the difference between the carrier's Federal control return, if an income, and its test period return, if a smaller income, or

(2) the difference between its test period return, if a deficit, and its Federal control return, if a smaller deficit, or

(3) the sum of its Federal control return, if an income, plus its test period return, if a deficit.

The sum of such amounts shall be credited to the United States.

If the sum of the amounts credited to the carrier exceeds the sum of the amounts credited to the United States, the difference shall be payable to the carrier. In the case of a carrier which operated its system for less than a year during, or for none of, the test period, the above computation shall not be used, but the carrier shall receive its deficit in operating income for that portion (as a whole) of the period of Federal control during which it operated its own system.

Legal Proceedings Arising Out of
Federal Control

Legal proceedings, based on causes arising out of Federal control, which prior to Federal control could have been brought against the carrier, shall be brought against an agent designated by the President. Such

proceedings may be instituted within periods of limitations prescribed by law but not later than two years after the passage of this Act, in any court which but for Federal control would have had jurisdiction of the cause of action had it arisen against the carrier. The procedure to be followed in serving process in connection with such proceedings is outlined in Section 206.

Claims for reparation on account of damage caused by the collection or enforcement by or through the President during the period of Federal control of rates, classifications, regulations or practices (including those applicable to interstate, foreign, or intrastate traffic), which were unjust, unreasonable, unjustly discriminatory or unduly or unreasonably prejudicial, or otherwise in violation of the Interstate Commerce Act, may be filed with the Commission within one year after the termination of Federal control against the agent designated by the President. The Commission is given jurisdiction to hear and decide such complaints, as provided in the Interstate Commerce Act. All such actions and reparation claims pending at the termination of Federal control shall not abate by reason of such termination, but may be prosecuted to final judgment, substituting the agent designated by the President. Final judgments and awards shall be paid out of the revolving fund created by Section 210 (page 57).

The period of Federal control shall not be computed as part of the periods of limitation in actions against carriers or in claims for reparation to the Commission for causes of action arising prior to Federal control. No execution or process other than on a judgment recovered by the United States against a carrier shall be

levied upon the property of any carrier where the cause of action grew out of the possession, use, control or operation of any system of transportation by the President under Federal control.

Refunding of Carriers' Indebtedness
to United States

As soon as practicable after the termination of Federal control the President shall ascertain

(1) the amount of each carrier's indebtedness to the United States at the termination of Federal control incurred for additions and betterments made during Federal control and properly chargeable to capital account, or otherwise incurred;

(2) the amount of indebtedness of the United States to the carrier arising out of Federal control, which amount may be set off against class (1) so far as the President may deem wise; but only to the extent permitted under any contract now or hereafter made between the carrier and the United States in respect to the matters of Federal control; or where no such contract exists, to the extent permitted under paragraph (b) of Section 7 of the standard contract relative to deductions from compensation.

The right of set-off shall not be exercised so as to prevent the carrier from having (1) the sums required for corporate charges and expenses referred to in paragraph (b) of Section 7 of the standard contract, accruing during Federal control, and (2) the sums required for dividends declared and paid during Federal control, including also a sum equal to that proportion of such last dividend which the period between its payment and the termination of Federal control bears to the last regular dividend period. Nor shall such right of set-off be exercised unless there shall have first been paid such additional sums as may be necessary to pro

vide the carrier with working capital in an amount not less than one twenty-fourth of its operating expenses for the calendar year 1919.

At the request of the carrier, any remaining indebtedness to the United States in respect to such additions and betterments shall be funded for a period of ten years from the termination of Federal control or for a shorter period at the option of the carrier, with interest at the rate of six per centum per annum, payable semi-annually, subject to the right of the carrier to pay on any interest-payment day, the whole or any part of such indebtedness. A carrier obtaining the funding of such indebtedness shall give such security as the President may prescribe.

If the President and any of the various carriers shall enter into an agreement for funding through the medium of car trust certificates or otherwise, the indebtedness to the United States incurred for equipment ordered for the benefit of the carrier, such indebtedness so funded shall not be refundable under the above provisions. Any other indebtedness to the United States, which may exist after the settlement of accounts and which is then due, shall be evidenced by notes payable in one year from the termination of Federal control, or a shorter period, at the option of the carrier, with interest at the rate of six per centum per annum, and secured by such collateral security as the President may require.

The President shall have the right to make such arrangements for extension of the time of payment of any bonds, notes or other securities, acquired under the provisions of this Act, (Section 207) or of the Federal Control Act, or of the Act of November 19, 1919, or for their exchange for other securities, or

partly for cash and partly for securities, as may be provided for in any agreement entered into by him or as may in his judgment seem desirable.

By agreement with the President, carriers may issue notes or other evidences of indebtedness secured by equipment trust agreements, for equipment purchased during Federal control by or through the President under Section 6 of the Federal Control Act, and allocated to such carriers respectively. The carrier may issue such evidences of indebtedness pursuant to this section without the authorization or approval of any state or Federal authority, and without compliance with any state or Federal requirement as to notification.

Rates

All rates, and all classifications, regulations and practices, changing, affecting or determining any part of, or the aggregate of, rates, or the value of the service rendered, which on February 29, 1920, are in effect on the lines of carriers subject to the Interstate Commerce Act, shall continue in force until thereafter changed by Federal or state authority, or pursuant to authority of law. Prior to September 1, 1920, no such rate shall be reduced and no such classification, regulation or practice shall be changed so as to reduce any rate unless such reduction or change is approved by the Commission.

All divisions of joint rates in effect on February 29, 1920, between the lines of carriers subject to the Interstate Commerce Act, shall continue in force until thereafter changed by mutual agreement between the interested carriers or by state or Federal authorities.

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