An Act to grant a franchise to D. C. Transit System, Inc., and for other purposes
PL 84-757 (S.3073), enacted 07/24/1956

598 
PUBLIC LAW 757-JULY 24, 1956 
[70 STAT. 
Public Law 757 
CHAPTER 669 
July 24, 1956 
AN ACT 
To grant a franchise to D. 0. Transit System, Inc., and for other purposes. 
[S. 3073] 
49 u s e 27 and 
note. 
Be it enacted hy the Senate and House of Representatives 
of the 
sy^temi faJ.*"*^* United States of America in Congress 
assembled, 
Franchlse. 
TITLE I 
PART 1.—FRANCHISE PROVISIONS 
SECTION 1. (a) There is hereby granted to D. C. Transit System, 
Inc., a corporation of the District of Columbia (referred to in this 
part as the "Corporation") a franchise to operate a mass transportation 
system of passengers for hire within the District of Columbia and 
between the District of Columbia and points within the area (referred 
to in this part as the "Washington Metropolitan Area") comprising 
all of the District of Columbia, the cities of Alexandria and Falls 
Church, and the counties of Arlington and Fairfax in the Common-
wealth of Virginia and the counties of Montgomery and Prince Georges 
in the State of Maryland, subject, however, to the rights to render 
service within the Washington Metropolitan Area possessed, at the 
time this section takes effect, by other common carriers of passengers: 
Provided, That nothing in this section shall be construed to exempt the 
Corporation from any law or ordinance of the Commonwealth of 
Virginia or the State of Maryland or any political subdivision of such 
Commonwealth or State, or of any rule, regulation, or order issued 
under the authority of any such law or ordinance, or from applicable 
provisions of the Interstate Commerce Act and rules and regulations 
prescribed thereunder. 
DeflniUons. 
^^j Wherever reference is made in this part to "D. C. Transit 
System, Inc." or to the "Corporation", such reference shall include 
the successors and assigns of D. C. Transit System, Inc. 
(c) As used in this part the term "franchise" means all the pro-
visions of this part 1. 
"^•^^ 
SEC. 2. (a) This franchise is granted for a term of twenty years: 
Provided, 
however, That Congress reserves the right to repeal this 
franchise at any time for its non-nse. 
(b) In the event of cancellation of this franchise by Congress after 
seven years from the date this franchise takes effect for any reason 
other than non-use, the Corporation waives its claim for any damages 
for loss of franchise. 
fofc<Mnp*e'mw*e 
^^^- ^- ^^ Competitive street railway or bus line, that is, bus or 
line. 
railway line for the transportation of passengers of the character 
which runs over a given route on a fixed schedule, shall be established 
to operate in the District of Columbia without the prior issuance 
of a certificate by the Public Utilities Commission of the District of 
Columbia (referred to in this part as the "Commission") to the effect 
that the competitive line is necessary for the convenience of the 
public, 
oiil 8
^ * "^ * *
^ ^ * 
SEC. 4. It is hereby declared as a matter of legislative policy that in 
order to assure the Washin^on Metropolitan Area of an adequate 
transportation system operatmg as a private enterprise, the Corpora-
tion, in accordance with standards and rules prescribed by the Com-
mission, should be afforded the opj)ortunity of earning such return as 
to make the Corporation an attractive investment to private investors. 
As an incident thereto the Congress finds that the opportunity to earn 
a return of at least 6^/^ per centum net after all taxes properly charge-
able to transportation operations, including but not limited to income 
70 S T A T . ] 
PUBLIC LAW 757-JULY 24, 1956 
599 
taxes, on either the system rate base or on gross operating revenues 
would not be unreasonable, and that the Commission should encourage 
and facilitate the shifting to such gross operating revenue base as 
promptly as possible and as conditions warrant; and if conditions war-
rant not later than August 15,1958. It is further declared as a matter 
of legislative policy that if the Corporation does provide the Wash-
ington Metropolitan Area with a good public transportation system, 
with reasonable rates, the Congress will maintain a continuing interest 
in the welfare of the Corporation and its investors. 
SEC. 5. The initial schedule of rates which shall be effective within 
the District of Columbia upon commencement of operations by the 
Corporation shall be the same as that effective for service by Capital 
Transit Company approved by the Commissioners of the District of 
Columbia pursuant to the Act of August 14,1955 (Public Law No. 389, 
84th Congress; 69 Stat. 724), in effect on the date of the enactment of 
this Act, and shall continue in effect until August 15, 1957, and there-
after until superseded by a schedule of rates which becomes effective 
under this section. 
Whenever on or after August 15, 1957, the Cor-
poration files with the Commission a new schedule of rates, such new 
schedule shall become effective on the tenth day after the date of such 
filing, unless the Commission prescribes a lesser time within which such 
new schedule shall go into effect, or unless prior to such tenth day the 
Commission suspends the operation of such new schedule. 
Such sus-
pension shall be for a period of not to exceed one hundred twenty 
days from the date such new schedule is filed. If the Commission sus-
pends such new schedule it shall immediately give notice of a hearing 
upon the matter and, after such hearing and within such suspension 
period, shall determine and by order fix the schedule of rates to be 
charged by the Corporation. If the Commission does not enter an 
order, to take effect at or prior to the end of the period of suspension, 
fixing the schedule of rates to be charged by the Corporation, the sus-
pended schedule filed by the Corporation may be put into effect by the 
end of such period, and shall remain in effect until the Commission has 
issued an appropriate order based on such proceeding. 
SEC. 6. The Corporation is hereby authorized and empowered to 
engage in special charter or sightseeing services subject to compliance ic" 
with applicable laws, rules and regulations of the District of Columbia 
and of the municipalities or political subdivisions of the States in 
which such service is to be performed, and with applicable provisions 
of the Interstate Commerce Act and rules and regulations prescribed 
thereunder. 
SEC. 7. The Corporation shall be obligated to initiate and carry out 
a plan of gradual conversion of its street railway operations to bus 
operations within seven years from the date of the enactment of this 
Act upon terms and conditions prescribed by the Commission, with 
such regard as is reasonably possible when appropriate to the highway 
development plans of the District of Columbia and the economies 
implicit in coordinating the Corporation's track removal program with 
such plans: except that upon good and sufficient cause shown the 
Commission may in its discretion extend beyond seven years, the period 
for carrying out such conversion. All of the provisions of the full 
paragraph of the District of Columbia Appropriation Act, 1942 (55 
Stat. 499, 533), under the title "HIGHWAY FUND, GASOLINE TAX AND 
MOTOR VEHICLE FEES", subtitle "STREET IMPROVEMENTS", relating to the 
removal of abandoned tracks, regrat ing of track areas, and paving 
abandoned track areas, shall be applicable to the Corporation. 
SEC. 8. (a) As of August 15,1956, paragraph numbered 5 of section 
6 of the Act entitled "An Act making appropriations to provide for the 
expenses of the Government of the District of Columbia for the fiscal 
Rates. 
C h a r t e r and 
si^tseeing serv-
Conv ersion to 
bus operation. 
Track removal« 
Taxes. 
600 
PUBLIC LAW 757-JULY 24, 1956 
[70 ST A T . 
68 Stat. l i s . 
61 Stat. 328. 
D. C. C o d e 47-
ch. 15. 
D. C. C o d e 47-
1207. 
Exemptions. 
63 Stat. 112. 
D. C. C o d e 47-
2601 to 47-2629. 
63 Stat. 124. 
D. C. C o d e 47-
2701 to 47-2714. 
63 Stat. 128. 
47 Stat. 55S; 68 
Stat. 119. 
Hotov V o h i c 1 a 
fuel tax. 
43 Stat. 106. 
D. C. C o d e 47-
1901 to 47- 1919. 
Definitions. 
Determination of 
t a x by operating 
ratio. 
year ending June thirtieth, nineteen hundred and three, and for other 
purposes", approved July 1, 1902, as amended (D. C. Code, sec. 
47-1701), is amended by striking out the third and fourth sentences 
and inserting in lieu thereof the following: "Each gas, electric-lighting, 
and telephone company shall pay, in addition to the taxes herein men-
tioned, the franchise tax imposed by the District of Columbia Income 
and Franchise Tax Act of 1947, and the tax imposed upon stock in 
trade of dealers in general merchandise under paragraph numbered 
• 2 of section 6 of said Act approved July 1, 1902, as amended." 
(b) Notwithstanding subsection (a) of this section, the Corporation 
shall be exempt from the following taxes: 
(1) The gross sales tax levied under the District of Columbia Sales 
Tax Act; 
(2) The compensating use tax levied under the District of Columbia 
Use Tax Act; 
(3) The excise tax upon the issuance of titles to motor vehicles and 
trailers levied under subsection (j) of section 6 of the District of 
Columbia Traffic Act of 1925, as amended (D. C. Code, sec. 40-603 (j) 
(4)); 
(4) The taxes imposed on tangible personal property, to the same 
extent that the Capital Transit Company was exempt from such taxes 
immediately prior to the effective date of this section under the pro-
visions of the Act of July 1, 1902, as amended; and 
(5) The mileage tax imposed by subparagraph (b) of paragraph 
31 of section 7 of the Act approved July 1, 1902, as amended (D. C. 
Code, sec. 47-2331 (b)). 
SEC. 9. (a) Except as hereinafter provided, the Corporation shall 
not, with respect to motor fuel purchased on or after September 1, 
1956, pay any part of the motor vehicle fuel tax levied under the Act 
entitled "An Act to provide for a tax on motor vehicle fuels sold 
within the District of Columbia, and for other purposes", approved 
April 23,1924, as amended (D. C, Code, title 47, chapter 19). 
(b) For the purposes of this section— 
(1) the term "a 6i/^ per centum rate of return" means a 6i/^ 
per centum rate of return net after all taxes properly chargeable 
to transportation operations, including but not limited to income 
taxes, on the system rate base of the Corporation, except that with 
respect to any period for which the Commission utilizes the oper-
ating ratio method to fix the rates of the Corporation, such term 
shall mean a return of 6i/^ per centum net after all taxes properly 
chargeable to transportation operations, including but not limited 
to income taxes, based on gross operating revenues; and 
(2) the term "full amount of the Federal income taxes and the 
District of Columbia franchise tax levied upon corporate income" 
means the amount which would have been payable in the absence 
of write-offs in connection with the retirement of street railway 
property as contemplated by section 7 of this part, but only to 
the extent that such write-offs are not included as an operating 
expense in determining net earnings for rate-making purposes. 
(c) As soon as practicable after the twelve-month period ending on 
August 31,1957, and as soon as practicable after the end of each sub-
sequent twelve-month period ending on August 31, the Commission 
shall determine the Corporation's net operating income for such 
twelve-month period and the amount in dollars by which it exceeds or 
is less than a 6i/^ per centum rate of return for such twelve-month 
period. 
In such determination the Commission shall include as an 
operating expense the full amount of the motor vehicle fuel tax which 
would be due but for the provisions of this section on the motor fuel 
purchased by the Corporation during the twelve-month period, and 
70 S T A T . ] 
PUBLIC LAW 767-JXJLY 24, 1966 
601 
the full amount of the Federal income taxes and the District of 
Columbia franchise tax levied upon corporate income. The Commis-
sion shall certify its determination to the Commissioners of the Dis-
trict of Columbia or their designated agent. 
If the net operating 
income so certified by the Commission equals or is more than a 6i^ per 
centum rate of return, the Corporation shall be required to pay to 
such Commissioners, or their designated agent, the full amount of the 
motor vehicle fuel taxes due on the purchases of motor fuel made by 
the Corporation during such twelve-month period. If the net operat-
ing income so certified is less than a 6i/^ per centum rate of return, 
the Corporation shall pay to such Commissioners, or their designated 
agent, in full satisfaction of the motor vehicle fuel tax for such period 
an amount, if any, equal to the full amount of said motor vehicle fuel 
tax reduced by the amount necessary to raise the Corporation's rate 
of return to 614 per centum for such period, after taking into account 
the effect of such reduction on the amount of the Federal income taxes 
and the District of Columbia franchise tax levied upon corporate in-
come payable by the Corporation for such period. 
Within thirty 
days after being notified by the said Commissioners or their desig-
nated agent of the amount of the motor vehicle fuel tax due under 
this section, the Corporation shall pay such amount to the said Com-
missioners or their designated agent. 
(d) If not paid within the period specified in subsection (c), the 
motor vehicle fuel tax payable under this section and the penalties 
thereon may be collected by the Commissioners of the District of 
Columbia or their designated agent in the manner provided by law 
for the collection of taxes due the District of Columbia on personal 
property in force at the time of such collection; and liens for the 
motor vehicle fuel tax payable under subsection (c) and penalties 
thereon may be acquired in the same manner that liens for personal 
property taxes are acquired. 
(e) Where the amount of the motor vehicle fuel tax payable under 
subsection (c), or any part of such amount, is not paid on or before 
the time specified therein for such payment, there shall be collected, 
as part of the tax, interest upon such unpaid amount at the rate of 
one-half of 1 per centum per month or portion of a month. 
(f) The Commissioners of the District of Columbia or their desig-
nated agent are hereby authorized and directed to issue to the Corpora-
tion such certificates as may be necessary to exempt it from paying any 
importer the motor vehicle fuel tax imposed by such Act of April 23, 
1924, as amended, or as hereafter amended. 
(g) (1) From and after the time fixed in paragraph (2) of this sub-
section the Corporation shall not be required to pay real estate taxes 
upon any real estate owned by it in the District of Columbia and used 
and useful for the conduct of its public transportation operations to 
the extent that the Commission has determined under such rules and 
regulations as it may issue that the Corporation's net operating income 
in the previous year was insufficient, after giving effect to the tax relief 
provided in the preceding subsections, to afford it a 6^/^ per centum rate 
of return. 
(2) This subsection shall take effect upon the completion of the pro-
gram contemplated in section 7 of this part, as certified by the Com-
mission to the Commissioners of the District of Columbia, or at such 
earlier time as the Commission may find that the said program has 
been so substantially completed that the taking effect of this subsec-
tion would be appropriate in the public interest and shall so certify 
to the Commissioners of the District of Columbia. 
SEC. 10. (a) The Corporation shall not be charged any part of the 
expense of removing, sanding, salting, treating, or handling snow on 
Collection. 
Penalties. 
Interest. 
Exemption c e r -
tificates. 
43 Stat. 106. 
D. C. C o d e 47-
1901 to 47-1919. 
R e a l 
e s t a t e 
taxes. 
Effective date. 
Snow r e m o v a l , 
etc. 
602 
PUBLIC LAW 757-JULY 24, 1956 
[70 ST A T . 
37 Stat. 152. 
M e r g e r or con-
solidation. 
Fu t u r e transfer 
to another agency. 
Securities. 
Interest rate. 
54 Stat. 905. 
49 use 5. 
41 Stat. 494. 
49 u s e 20a. 
48 Stat. 74. 
IS u s e 77a. 
52 Stat. 1002. 
49 u s e 489. 
Officers and di-
rectors. 
the streets of the District of Columbia, except that the Corporation 
shall sweep snow from the streetcar tracks at its own expense so long 
as such tracks are in use by the Corporation. 
(b) The paragraph which begins "Hereafter every street railway 
company" which appears under the heading "STREETS" in the Act 
entitled "An Act making appropriations to provide for the expenses 
of the government of the District of Columbia for the fiscal year 
ending June thirtieth, nineteen hundred and thirteen, and for other 
purposes", approved June 26,1912 (D. C. Code, sec. 7-614), is hereby 
repealed. 
SEC. 11. The provisions of law set forth in Title 43, sections 501 
through 503 of the District of Columbia code shall not be deemed to 
restrict any merger or consolidation of the Corporation with any other 
company or companies engaged in mass transportation in the District 
of Columbia or the Washington Metropolitan Area: Provided^ how-
ever^ That any such merger or consolidation shall be subject to the 
approval of the Commission. 
SEC. 12. Nothing in this part shall prevent the transfer, by or under 
the authority of any other Act of Congress, to any other agency of 
any of the functions which are by this part granted to or imposed 
upon the Commission. 
SEC. 13. (a) The Corporation is hereby authorized to issue or create 
loans, mortgages, deeds of trust, notes or other securities to any bank-
ing or other institution or institutions and to Capital Transit Com-
pany, with respect to the acquisition of assets of Capital Transit 
Company (including any corporation controlled by Capital Transit 
Company), provided that the interest rate thereon shall not exceed 5 
per centum per annum, but the aggregate principal shall not exceed 
the cost of acquiring the assets of Capital Transit Company. 
(b) (1) Section 5 of the Interstate Commerce Act shall not be 
construed to require the approval or authorization of the Interstate 
Commerce Commission of any transaction within the scope of para-
graph (2) of such section 5 if the only parties to such transaction 
are the Corporation (including any corporation wholly controlled by 
the Corporation) and the Capital Transit Company (including any 
corporation wholly controlled by the Capital Transit Company). The 
issuance or creation of any securities provided for in subsection (a) 
shall not be subject to the provisions of section 20a of the Interstate 
Commerce Act. 
(2) No approval of the acquisition of assets referred to in subsec-
tion (a), or of the issuance or creation of any securities provided for 
in subsection (a) in connection with such acquisition, shall be required 
from any District of Columbia agency or commission. 
(c) This section shall not apply to any issuance of securities con-
stituting a public offering to which the Securities Act of 1933 applies. 
(d) Notwithstanding the provisions of section 409 (a) of the Civil 
Aeronautics Act of 1938— 
(1) no air carrier shall be required (because of the fact that 
a person becomes or remains an officer, director, member or stock-
holder holding a controlling interest of the Corporation, or of any 
common carrier controlled by the Corporation which is engaged 
in mass transportation of passengers for hire in the Washington 
Metropolitan Area, or is elected or reelected as an officer or 
director) to secure the authorization or approval of the Civil 
Aeronautics Board in order to have and retain such person as an 
officer or director, or both, of such air carrier if such person is 
an officer or director of such air carrier at the time this section 
takes effect; and 
70 STAT.] 
PUBLIC LAW 757-JULY 24, 1956 
603 
"Air carrier", 
49 u s e 489. 
4 1 Stat. 496. 
49 u s e 20a. 
(2) no person who, at the time this section takes effect, is an 
officer or director of an air carrier shall be required to secure the 
approval of the Civil Aeronautics Board in order to hold the 
position of officer, director, member or stockholder holding a 
controlling interest of the Corporation or of any common carrier 
controlled by the Corporation which is engaged in mass trans-
portation of passengers for hire in the Washington Metropolitan 
Area. 
As used in this subsection, the term "air carrier" has the same meaning 
as when used in section 409 (a) of the Civil Aeronautics Act of 1938. 
(e) Notwithstanding section 20a (12) of the Interstate Commerce 
Act, authorization or approval of the Interstate Commerce Com-
mission shall not be required in order to permit a person who is an 
officer or director of the Corporation to be also an officer or director, or 
both, of any common carrier controlled by the Corporation which is 
engaged in mass transportation of passengers for hire in the Washing-
ton Metropolitan Area. 
SEC. 14. The Corporation, at the time it acquires the assets of Capital co^i^?, Habln-
Transit Company, shall become subject to, and responsible for, all *!••• 
liabilities of Capital Transit Company of whatever kind or nature, 
known or unknown, in existence at the time of such acquisition, and 
shall submit to suit therefor as though it had been originally liable, 
and the creditors of Capital Transit Company shall have as to the 
Corporation all rights and remedies which they would otherwise have 
had as to Capital Transit Company: Provided^ however, That the 
Corporation shalljiot be liable to any dissenting stockholder of Capital 
Transit Company for the fair value of the stock of any such stock-
holder who shall qualify to be entitled to receive payment of such fair 
value. No action or proceeding in law or in equity, or before any 
Federal or District of Columbia agency or commission, shall abate in 
consequence of the provisions of this section, but such action or pro-
ceeding may be continued in the name of the party by or against which 
it was begun, except that in the discretion of the court, agency, or com-
mission the Corporation may be substituted for the Capital Transit 
Company. In any and all such actions or proceedings, the Corporation 
shall have, and be entitled to assert, any and all defenses of every kind 
and nature which are or would be available to Capital Transit 
Company or which Capital Transit Company would be entitled to 
assert. 
PART 2.—MISCELLANEOUS PROVISIONS 
SEC. 21. (a) Section 14 of the joint resolution entitled "Joint resolu-
tion to authorize the merger of street-railway corporations operating 
in the District of Columbia, and for other purposes", approved Janu-
ary 14, 1933 (47 Stat. 752), as amended (Public Law 389, Eighty-
fourth Congress), is hereby repealed to the extent that such section 
repeals the charter of Capital Transit Company, without thereby 
affecting the termination of its franchise. 
(b) Upon the taking effect of part 1 of this title. Capital Transit 
Company shall not be authorized to engage in business as owner or 
operator of electric railway, passenger motor bus, public transporta-
tion of passengers, or common carrier of passengers within, to, or from, 
the Washington Metropolitan Area. 
(c) Capital Transit Company shall continue to exist as a corporation 
incorporated under the provisions of subchapter 4 of chapter 18 of the 
Act entitled "An Act to establish a code of laws for the District of 
Columbia", approved March 3, 1901, as amended (D. C. Code, title 29, 
ch. 2), under its certificate of incorporation, as amended, and Capital 
Transit Company may amend its charter in any manner provided under 
the laws of the District of Columbia and may avail itself of the provi-
69 Stat. 724. 
3 1 Stat. 1284. 
604 
PUBLIC LAW 757-JLl.Y 24, 1956 
[70 ST A T . 
Effective dates. 
Temporary tran-
sit system. 
sions of the District of Columbia Business Corporations Act in respect 
to a change of its name and may become incorporated or reincorporated 
thereunder in any manner as therein provided. 
Nothing referred to 
in this title, or the sale and vesting of the assets of Capital Transit 
Company, referred to therein, shall cause or require the corporate 
dissolution of Capital Transit Company. 
SEC. 22. Nothing in this title shall be deemed to extend the franchise 
of Capital Transit Company beyond August 14, 1956, or, except as 
otherwise provided in this section, to relieve Capital Transit Company 
of any obligation to remove from the streets and highways at its own 
expense all of its property and facilities and to restore the streets and 
highways in accordance w ith the provisions of the District of Columbia 
Appropriation Act, 1942 (55 Stat. 499, 633) in the event the Corpora-
tion fails to acquire the assets of Capital Transit Company. 
If part 
1 of this title takes effect. Capital Transit Company shall thereupon be 
relieved of all liability to remove from the streets and highways of 
the District of Columbia all of its properties and facilities and to 
restore such streets and highways. 
SEC. 23. The powers and jurisdiction of the Public Utilities Com-
mission of the District of Columbia with respect to C/apital Transit 
Company shall cease and be at an end upon the taking effect of part 1 
of this title. 
TITLE I I 
SEC. 201. (a) Part 1 of title I shall take effect on August 15, 1956, 
but only if prior thereto D. C. Transit System, Inc. (referred to in 
this title as the "Corporation") has acquired the assets of Capital 
Transit Company and has notified the Commissioners of the District 
of Columbia in writing that it will engage in the transportation of 
passengers within the District of Columbia beginning on August 15, 
1956. If the Corporation has not acquired the assets of Capital 
Transit Company prior to August 15,1956, but does thereafter acquire 
such assets, the Corporation shall, on the date of such acquisition, give 
written notice thereof to the Commissioners, and part 1 of title I shall 
take effect upon such date of acquisition. 
(b) Part 2 of title I, and this title, shall take effect upon the date of 
the enactment of this Act. 
SEC. 202. If it is determined by the Commissioners of the District 
of Columbia that, due to any act or omission on the part of the Cor-
poraition, the Corporation has not acquired the assets of Capital 
Transit Company and if such Commissioners approve a valid contract, 
ratified and approved by the required number of stockholders of 
Capital Transit Company, between Capital Transit Company and 
some other corporation providing for the acquisition of such assets 
and if such other corporation is also approved by such Commissioners 
as capable of performing the operation contemplated by the franchise 
provisions of part 1 of title I, then the terms "D. C. Transit System, 
Inc." and "Corporation" as used in this Act shall be deemed to mean 
such other corporation for all purposes of this Act. 
SEC. 203. If part 1 of title I of this Act does not take effect on August 
15,1956, the Commissioners of the District of Columbia may authorize 
(including authorization of such contractual agreements as may be 
necessary) such mass transportation of passengers within the District 
of Columbia, beginning on and after August 15, 1956, and until such 
date as part 1 of title I of this Act takes effect, as may be necessary 
for the convenience of the public. 
Such transportation shall be 
furnished to the public at such rates and under such terms and regu-
lations as may be recommended by the Public Utilities Commission 
and approved by the Commissioners of the District of Columbia. 
Approved July 24, 1956.