WASHINGTON METROPOLITAN AREA TRANSIT PROBLEM

THURSDAY, MAY 22, 1952

UNITED STATES SENATE,

COMMITTEE OF INTERSTATE AND FOREIGN COMMERCE,

Washington, D. C.

The committee met, pursuant to recess, at 10 a. m., in room G-16, nited States Capitol Building, Senator Edwin C. Johnson of Coloado (chairman) presiding.

Present: Senator Johnson.

Also present: E. R. Jelsma, professional staff member.

The CHAIRMAN. The hearing will please come to order.

Mr. James H. Flanagan, Chairman of the Public Utilities Comission of the District of Columbia.

Mr. Flanagan, will you come forward, please.

STATEMENT OF JAMES H. FLANAGAN, CHAIRMAN, PUBLIC UTILITIES COMMISSION, DISTRICT OF COLUMBIA

The CHAIRMAN. We are very pleased to have you as a witness, Mr. lanagan, because you have been charged, in rumors at least, with eing the man who has blocked any efforts to work out this problem. So we are glad to have you here to speak for Mr. Flanagan. Mr. FLANAGAN. Thank you for the opportunity.

The CHAIRMAN. I don't know whether we will get you, on the deensive right away, but I am trying to put you on the defensive. Mr. FLANAGAN. That is all right. I have been there for 10 years, enator, and I do not mind being in that position 10 years.

Mr. Chairman, I found out today that a letter, which I understood The District Commissioners had written to you, was not delivered, principally because it had to be approved by the Budget Bureau nd that approval had not been received. In that letter the District Commissioners informed you that a representative from the Public tilities Commission would be present at these hearings.

The CHAIRMAN. I am sorry we did not get the letter and I am sorry hat the Bureau of the Budget did not want the witness to come. Mr. FLANAGAN. It has been approved, I understand, now and all leared, so I thought at first we would attend and listen carefully and f this committee decided to approve either or both of the bills before it ve would, of course, offer to cooperate in every way.

I am not going to try to defend that rumor, Mr. Chairman, because there is absolutely nothing to it. We have done nothing to block his legislation.

The CHAIRMAN. Have you done anything personally to try to work the thing out?

Mr. FLANAGAN. That I want to discuss.

The CHAIRMAN. Fine.

Mr. FLANAGAN. We have discussed this problem many times among ourselves and we recognize that there is a problem. I want to point out, first, that the District Commissioners, or the Public Utilities Commissioners do not have authority to go beyond the bounds of the District of Columbia. We have never attempted to exercise jurisdiction beyond that given to us by the Congress. However, we have never ducked additional responsibilities.

I noticed the chairman's reaction to a suggestion made by Mr. Campbell yesterday and I want to discuss that briefly, if I may. If Congress, in its legislative powers, chooses to give the District of Columbia additional powers we will, as usual, do our best to exercise those powers to the best of our ability. If Congress chooses to appoint a group composed of representatives of the District, of Maryland, and of Virginia and there again we are called up to cooperate, we will do so in every respect within our power.

I am not going to criticize, because I do not have any more construc tive suggestion that has been made, but I would like to make various comments in the hope that our experience will bring something to light or will be helpful to the committee.

The CHAIRMAN. I am glad to have you do that, because it seems to me that that is the most constructive proposal that has been brought forth in this whole controversy. It has this very great attraction, that Congress can do something about this problem and do it now.

To arrange for hearings down at the ICC, to develop facts that we already know exist, leaves me pretty cold. I can't warm up to it. I think this is a time for action, and that proposal does open the

door to action.

The two points that ought to be fully developed are, first, Is it legal? I am not an attorney, but I cannot see but what it would be perfectly legal.

The second point, Is it practical? On that point we have had no testimony yet and I hope you can offer some testimony on the prac ticability of it, and on the legality of it, too, if you are so inclined,

Mr. FLANAGAN. I am a layman, Mr. Chairman. Every now and then I do express opinions that border on the legal, but I do not pretend to be a legislative expert.

Let me tell you how we have operated. We have had a situation here among our three regulatory Commissions of the District of Columbia, Maryland and Virginia, which I think is unique. We have mutual respect for each other; we have enjoyed the utmost confidence in each other, and we get the fullest cooperation from both the Maryland and Virginia Commissions when that cooperation is necessary. To illustrate, we had a very complex and important hearing dealing with rates to be charged by the Potomac Electric Power Co. In the past we had made, for the gas in particular, and for the transit company allocations dealing with the amount of property and revenue and expenses to be allocated between the District of Columbia and the neighboring jurisdictions. When it came to the electric com

at the very best, some of them adjudicated and some of them not so well adjudicated cases, and there are so many assumptions to be made in allocation, particularly dealing with an electric company, that the end result is not one to hang your hat on, if I may use that colloquial expression.

So we went all out in our decision, to make a decision on an area basis. That is, we took into account the revenues, needs and expenses of the electric company in its operations not only in the District of Columbia but in Maryland and Virginia, and we made a determination on a system basis, on the amount of additional revenue the electric company needed.

Mr. Glassman made a slight error in his presentation yesterday. We did not establish rates for Maryland nor for Virginia, because that is not within our power, we established rates only for the District of Columbia.

However, there has been agitation for area regulation, and yet certain citizens object to our making determinations on an area basis, insisting that we must confine our efforts to the District of Columbia. We disregarded those protests at this time and made an area determination that went to court and our decision and opinion has been upheld in its entirety by the lower court. It has not been appealed. Whether it will be appealed I don't know.

Now you may ask if we can do that for the electric company why can't we do it and why don't we do it for the transit company. There again, basically certain representatives of the citizens insist we must make a determination on transit affairs on a District basis, so that we do allocate between the Maryland and District operations of the Capital Transit Co. when we hold their hearings.

The difference, too, is this: An electric company, as you can well visualize, is a very complicated set-up. You can take Western or Eastern Avenues and every lane that crosses those avenues goes from he District into Maryland, and allocation is the most complex

process.

However, with regard to transit operations, bus lines are limited in umber. The man-hours and bus-hours devoted to Maryland operations can be segregated from those which are conducted within the District. Therefore, there is that major difference. In addition to hat, the transit company, according to the records made before the Maryland Commission, have sustained and continued to sustain a loss n their operations. Naturally the District citizens would object to our imposing fares upon them which would absorb the losses susained in Maryland.

Now, to just give you a little background of the problems which we face, when we try to decide to regulate only on the District basis as gainst the area basis-and an area basis of regulation in our opinion the only sound way to conduct our operations because this area is o closely knit-under our laws that is not always necessary, and hat is the point I want to impress upon you, Mr. Chairman. The CHAIRMAN. You say it is not always necessary?

Mr. FLANAGAN. It is not always possible.

The CHAIRMAN. Is that your word, "necessary"?

Mr. FLANAGAN. It is not always possible because of the laws under which we operate.

The CHAIRMAN. That puts a different slant on it. There is a lot of difference between "necessary" and "possible."

Mr. FLANAGAN. If I said "necessary" I did not mean it.

The CHAIRMAN. You said "necessary," and I could not follow you Mr. FLANAGAN. I say it is very advisable, but it is not always possible.

The CHAIRMAN. Fine.

Mr. FLANAGAN. There is one point I would like to make here, too. I think, in looking through to the end results of any legislation, people should not get the idea that the establishment of another regu latory body is going to result in busses or streetcars running in every which direction, nor are fares going to be reduced necessarily as th result of the creation of any new body. We still think the laws wil prevail. We do not think Congress-if you want a legal opinionwe do not think Congress, for instance, has the power to compel a the companies in this area to furnish services throughout the area So many of the companies-and this is what makes the transit situa tion complex-so many of the companies are not incorporated withit the jurisdiction of the District of Columbia, some of them are inco porated in the State of Virginia and some in the State of Maryland and all States, as you know, are jealous of their own prerogatives.

So that, to my mind, the best set-up-and one which is not possible of attainment unfortunately at this time-the best set-up would be common ownership. Then you would have a management interested in serving not only a limited area but an extended area.

The CHAIRMAN. Are you talking now about mergers of the transportation companies serving this area?

Mr. FLANAGAN. That, I say, would be the simplest set-up, but I do not see how it can be obtained within a very short time.

The CHAIRMAN. How can it be attained at any time? You can't make private companies merge; can you?

Mr. FLANAGAN. No; but I am pointing out what would make it sim ple. Back in 1933 a merger act was passed by the Congress which did set up-but it was not compulsory, it was desired by the companies at least-which did set up a single transit company to replace two or three other companies which had been in existence prior to that tine. and from that merger emerged the present Capital Transit Co. Thers again I don't think you can get common ownership unless the e nomics are recognized, because you still have operation-for-a-profi motive, which was mentioned yesterday by one of the witnesses.

The CHAIRMAN. Of course if they can operate privately and each one of them is permitted to take its toll, why should they ever merge! Two tolls are better than one toll, and that is what our prese: arrangement provides for.

Mr. FLANAGAN. That is right.

The CHAIRMAN. That is one of the objections.

Mr. FLANAGAN. That is right.

The CHAIRMAN. And not only that, in some instances they do not even make it convenient for people to pay two tolls.

Mr. FLANAGAN. Well, I attended, as did several other members of our Commission, some of the hearings held before the Maryland Cor mission, those held in Silver Spring, for example, and the Commissi

ade, they took the only action necessary, although they do not need y defense in that respect, nor is it my business. But that is why, owever, I do say that it must be recognized that you do not immeately replace all the lines that have been abandoned merely by a ange of the jurisdictional set-up.

I do not know, I am perfectly frank to say, I do not know what is e best solution for the problem. I recognize that a definite problem es exist and I do want to be helpful in its solution.

So I repeat, if Congress, in its legislative powers, decides that the istrict Commission should be given the additional powers necessary, at is all right with me. I would certainly do my best to fulfill ose obligations. If Congress decides that the area regulation, that e representatives of the three jurisdictions compose a new body, that all right with me. That would be along the line of the compact, though I think that under the provisions of the present bill it would ke some years to work out the setting up of such a compact body. I cannot think of anything else. I hope I have given you the history f how we conduct our affairs and to assure you I have not tried to ock this legislation, nor would I do so, and I will cooperate in every ay possible, and that is as far as I can go.

The CHAIRMAN. That is fine, Mr. Flanagan. We are very pleased have your statement.

I want to explore with you for just a minute the most recent proposal s to how it should be set up. The bill that we have, Senate Joint esolution 135, is copied more or less from the New York Port Auhority, which, of course, is dependent upon compacts with the States volved. But here in the District we have a peculiar situation. The Congress has two authorities. The Congress has authority over transortation within the District, and Congress also has the responsibility nd authority over interstate commerce and interstate transportation. o it would appear to me that we do not need a compact in this area. The Congress could enact legislation providing for an area comission and giving that commission authority over the transportation n the District, the intrastate traffic; and it could also give that comission special authority over the interstate traffic from Maryland to he District, from Maryland through the District to Virginia, from Virginia to and from the District, and from Virginia through the District to Maryland.

That is, if this traffic passed through the District this commission ould have authority over it. It would seem to me and I am not n attorney and I haven't had an opportunity to discuss this with atorneys-but it would seem to me that such an arrangement would e well within the powers of the Congress.

Now as to its practicability, I am wondering just how it ought to e set up. Suppose that we should have a commission of three, one Tom Maryland, one from Virginia and one commissioner from the District, these commissioners to be appointed by the President and confirmed by the Senate, and suppose that Congress required that ne commissioner be appointed from Maryland and he should also De a member of the Public Utilities Commission, or whatever they all the commission in Maryland, and the same thing for Virginia and the same thing for the District of Columbia; I wonder how that would work out?