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Commission concerning essential national defense and security traffic and the Commission shall afford preference or priority to such move

ments.

Section 1(16) empowers the Commission in the emergency situations set forth in section 1 (15) to route traffic and to fix terms of compensation when the carriers disagree.

Section 1(17) (a) permits the Commission to designate agents to carry out its car service orders, requires compliance by the carriers, and states penalties for failure to comply. Section 1(17) (b) provides penalties for bribes to influence car distribution.

Section 6(8) states that preference and expedition be given to military traffic during war upon determination of the President and that in time of peace no embargo shall be declared as to shipments for the United States.

The final sentence of section 15 (4) permits the Commission to establish temporary through routes in times of emergency. Section 15 (10) permits the Commission, when the public interest and a fair distribution of the traffic require, to direct routing of traffic not routed by the shipper.

Section 420 makes applicable the provisions of section 1(15), 1(16), and 1(17), with respect to freight forwarders.

That part of section 1 (14) (a) which contemplates the determination of the compensation to be paid for the use of locomotives, cars, or other vehicles not owned by the carrier using it is not to be transferred in the proposed bill, nor is section 1 (14) (b) pertaining to protective service contract approvals. The Commission has indicated that these are essentially matters of economic regulation which it desires to retain. Section 1(14) (b) determinations are presently made by the Commission's Rate Division which is Division 2 composed of three Commissioners. All other car service matters are determined by the Finance, Safety, and Service Division, which is Division 3, or by a Commission employee board to which the Commission has delegated authority.

Compensation determinations under section 1(14) (a) relate to formal proceedings. However, much of the car service work is carried out by ICC personnel in the field. Field staff members regularly examine care supply requirements and the carriers' utilization of equipment. They determine the adequacy of car supply; the expedition of movement, interchange, and return of cars; and whether car distribution is made equitably among all shippers. In periods of high demand and short supply of a particular type or types of equipment or where congestions occur, service orders are issued to alleviate existing conditions. Many of the servic orders are further implemented by the Commission's agent, who is the Director of its Bureau of Railroad Safety and Service. Pursuant to the service orders, he may place embargoes, reroute traffic, issue car distribution directions, or take other actions assigned to him by such orders. Service orders and actions taken by the Commission's agent are policed by the Commission's field staff to assure compliance.

The rail carriers have made the AAR Car Service Division their agency for car service matters. The carriers follow the service rules of the AAR Car Service Division. ICC service orders and other car service directives issued pursuant to them are served on the AAR Car Serv

ice Division as agent for the rail carriers. The AAR disseminates the orders and directives to their membership and conducts liaison between the carriers and ICC on questions pertaining to car service. The AAR does not enforce the Commission's actions. The AAR has extensive reporting requirements for the use of its Car Service Division. The data collected by the AAR is furnished to the Commission in the form of statistical summaries for its own car service data requirements. While it is recognized that this prevents duplicate reporting, the adequacy of such data should be subject to continuing evaluation.

ISSUES

The matters transferred are essentially those of an executive nature: that is, they involve the determination (during emergencies for the most part) of where cars are and how best they can be moved to meet emergency needs. Appropriate enforcement powers are available to see that these duties are carried out. Only section 1(12) goes beyond emergency situations. Under that provision coal car distribution may be undertaken in any situation. Among the issues to be raised, therefore, is whether a transfer of these executive-type functions is a meaningful action. Stated somewhat differently: Can the perennial and serious car service problem and the resulting disputes between the more affluent western railroads and the car-short eastern roads be dealt with if all of the personnel involved are transferred to an executive department while the economic regulatory powers are retained in the Commission? It may be argued that the Commission will have no ready source of information as to the true situation which obtains. It may therefore be contended that the car service problem is serious enough without complicating it further by a removal of informed personnel. However, with transfer, the day-to-day car service knowledge and information contemplated under the powers to be transferred will no longer be required by the Commission. In carrying out its economic regulation responsibilities under the powers remaining, the Commission must make its findings on the basis of a formal record. Where car service matters are directly at issue or car supply or utilitzation would be affected, DOT could be an interested party. With greater resources, DOT participation could aid in the development of a better record. Woth DOT intervention, therefore, the Commission would probably be better informed in its consideration of any particular case.

Two other issues may arise. Section 1(13) now permits the Commission, in its discretion, to direct that appropriate car service rules and regulations shall be incorporated in carrier schedules showing rate fares and charges. The present bill presumably contemplates that the Secretary of Transportation shall direct that such filings be made. Theoreticaly, at least, the Commission would be giving up control over one aspect of matter which would go into tariffs still filed with it. This is essentially a minor point, however.

Section 216(b) of the act now makes it the duty of motor common carriers to provide, among other matters, adequate equipment. The draft bill does not contemplate any transfer of powers of the Commission with regard to the adequacy of motor carrier equipThis disparity, however, does not appear to be a matter of great consequence since few, if any, problems arise in this regard.

ment.

CONCLUSIONS

Without a transfer of economic regulatory powers, the transfer of the other ICC car service functions is not a matter to be taken lightly. Car service is essentially a thankless task under present law and the Department of Transportation can fully expect to be subject to numerous requests from shippers and political quarters to reroute equipment to meet emergency situations. However, with the transfer of the executive functions the executive arm of the Government will at least be in a position to inform itself as to the true facts concerning the car shortage. A Department of Transportation could then devote (1) a reasonable study and analysis to the problem in an effort to come up with sound answers, and (2) expanded budgetary efforts to insure adequate field staffing.

The conflicting positions and demands of the western railroads and the eastern roads are undoubtedly overstated. Once the true facts are ascertained, the executive branch will then be in a position to come forward with proposals for long-range solutions to the problem; the resolving of such problems is one of the main purposes behind the creation of a Department.

Many proposals could then be considered. Among them might be support for off-peak rate proposals or for other forms of pricing services and movement of commodities which could lessen the critical need for equipment during or at particular periods. The Department would be able to consider whether tax incentives on general boxcar or hopper equipment, or on improved classification yard facilities might be provided. A Department would be in the position to consider whether more enforcement should be undertaken or whether, as an alternative, faster and earlier implementation of car service orders could be effected. A careful evaluation could be undertaken as to the continued coordinated use of safety and car service personnel to determine whether the economies effected will continue without sacrificing safety to any degree. Transfer of these executive powers would permit the Commission to devote itself to matters of pressing economic concern. At the same time, the Department, through the use of its greater research resources, could afford careful analysis, aid, and full cooperation with the Commission in resolving the car shortage problem pursuant to the powers it retains. With the growing and expanding economy of the Nation, the adequacy of railroad equipment is a matter of pressing national concern. The transfers contemplated under this bill are wholly necessary and meaningful.

16. INVESTMENT STANDARDS AND CRITERIA

Nearly all Federal investments in transportation facilities have promotional effects, even when fully recouped through user charges on the direct beneficiaries. Like all other Federal expenditures, such investments must be evaluated to insure overall benefits at least equaling the costs of the project.

Throughout our history, public investment in transportation facilities has been common and often on a massive scale.

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Inconsistencies

in Federal policies governing public investment decisions have been cited repeatedly. The underlying cause of these inconsistencies appears to be a lack of clear standards for preparation and evaluation of investment proposals.

The Secretary of Transportation would be required under the proposed legislation to develop standards and criteria, subject to Presidential approval, to be used in the formulation and economic evaluation of all proposals for the investment of Federal funds in transportation facilities or equipment by Federal agencies both in and outside of the Department. Certain exceptions are enumerated in the proposed legislation. The standards and criteria for economic evaluation of the transportation features of multipurpose water resource projects would be developed by the Secretary after consultation with the Water Resources Council, and would be compatible with the standards and criteria for economic evaluation applicable to nontransportation features of such projects.

A beginning can thus be made on the comparative evaluation of transportation projects (the same objective as that of the new programing-planning-budgeting system for allocation of all Federal resources) with a view to identifying those warranting support and establishing priorities for approval programs in the order of their overall merit.

The importance of this program will grow as both private industry and Government increase investments in transportation facilities. Full care must be taken to be sure that these investments of Federal funds are made with appropriate consideration of the needs of the public, users, carriers, industry, labor, and the national defense.

17. RELATIONSHIP OF THE MASS TRANSPORTATION PROGRAM TO THE DEPARTMENT OF TRANSPORTATION

The draft bill for a Department of Transportation does not provide for the inclusion in the new Department of the mass transportation program authorized by the Urban Mass Transportation Act of 1964, now located in the Department of Housing and Urban Development. Mass transportation is a very new Federal interest. Program decisions have impacts on interstate transportation and on national transportation policy as well as on general urban planning and development. Some of these effects are only beginning to emerge. The Federal mass transit assistance program consists of a complex of interrelated functions which should be identified and analyzed before decisions are made on their final assignment, whether individually or as an entity, to the Department of Housing and Urban Development or to the Department of Transportation. At the President's direction the Secretaries of the Department of Transportation and the Department of Housing and Urban Development will undertake a 1-year study which will be the basis for these decisions.

Among the subjects which this study by the two departments will consider are:

1. The role of the Department of Transportation in

(a) Determining overall technical criteria for Govermnent investments in urban transportation facilities.

(b) Research and development on urban transportation facilities and equipment.

(c) Detailed planning and engineering of specific systems. (d) Urban transportation demonstration activities.

(e) Financing the development or improvement of urban transportation systems.

2. The role of the Department of Housing and Urban Development in—

(a) Overall general planning criteria relating to transportation investment in urban areas, including mass transit and highways.

(b) Interrelationships of transportation and patterns of urban development.

(c) Criteria and certification of general urban development plans and role of transportation plans in the general urban pic

ture.

(d) Demonstrations involving general urban development patterns and planning involving transportation as an integral part. Both functions are highly interrelated. Moreover both are expanding and will continue to do so. The present program concepts and practices may not necessarily be governing for a more comprehensive Federal effort in both fields.

SCOPE OF PRESENT MASS TRANSPORTATION PROGRAM

The Urban Mass Transportation Act of 1964 provides an authorization of $375 million for grants in aid and demonstration projects in mass transportation. Grants must be made to public bodies and are limited to two-thirds of the capital costs of a project which cannot be funded from fare-box revenues. The authorizations cover the period through the fiscal year 1967 although appropriations may be made from this authorization for other fiscal years. Some $55 million is still unappropriated and the administration has requested an additional authorization of $95 million.

Up to $30 million may be used for research and development and demonstration projects. The administration has recommended that this amount be increased to $40 million through the fiscal year 1968.

RELATIONSHIPS WITH HIGHWAYS AND PLANNING

Mass transportation projects must be developed in accordance with comprehensive transportation plans for the metropolitan area involved, which in turn must be consistent with overall urban development plans. A less rigorous requirement of the Federal-Aid Highway Act of 1962 provides that urban highway projects can be approved only if the Secretary of Commerce finds that they are consistent with a continuous comprehensive transportation planning process carried on cooperatively by the States and communities concerned. Highway planning may need to be tied more closely to the overall

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