PASSENGER SERVICE-Continued

Various elements of the examiner's approach have been considered by the Commission on its own motion and otherwise from time to time in the past. For example, in Railroad Passenger Train Deficit, 306 I.C.C. 417, 482–484 (1951), we recommended ameliorative measures to be taken by railroads, and the Federal, state and local governments and exhorted all to support a passenger-train system.

As to the Commission's exercise of jurisdiction over the adequacy of passenger service, that is a hotly contested issue in the pending case, and I am not free to discuss our current deliberations on it. But I can say that the Commission has explored the jurisdictional matter from time to time and has obtained opinions on it from its General Counsel several times over the years, and that the question was before Congress during its deliberations on the Transportaton Act of 1958 which became section 13a and extensive hearings on the same subject were conducted during its session in 1960, but no empowering legislation was enacted.

I would also mention that for several years the Commission has recommended that the Congress make section 13a more workable in relation to the problems of today, and that last year we called the attention of Congress to the serious need for changes in the Federal policy and to the need for a comprehensive study on the need for intercity rail passenger service in the context of government plans and policies as to all modes of travel.

Question 8. You also state that long distance and medium distance intercity rail passenger service will not long survive without a major change in Federal and carrier policies.

Specifically what do you think the ICC ought to do to bring about a change in these policies? As the Federal agency with probably the greatest expertise in this area-why shouldn't the ICC come forth with some bold new proposals?

Answer. The Commission functions within the confines of the law and the congressional policy. We cannot make the kind of policy which is within the prerogative of Congress itself. We can only construe and administer the policies expressed by Congress in its legislation. Here, the only clear expression of congressional intent lies in section 13a, an enactment designed to provide the railroads with relef from unduly burdensome passenger operations.

We do have the duty of making recommendations to Congress, and we have recommended changes in Congressional policies on passenger travel. We have asked authorization for a study to find out how much and what kind of rail passenger service the public would adequately support. There is now pending before Congress bills which embody our legislative recommendations.

Such a project would cut across industry lines as well as other administrative agencies of the government. The I.C.C. is not financially equipped to undertake it, but with appropriate funding by Congress we could do so; and in our recommendation to Congress last year we proposed that such a study be initiated by Congress itself, or in the alternative, by the Department of Transportation with the assistance of this Commission.

Our position is now, as before, that the passenger train problem is an integral part of the entire passenger transportation complex and cannot be adequately resolved in isolation from the Government's plans and policies for nonrail modes. Any "bold new proposal" must begin with an ascertainment of what train service the public actually requires and will support. Without this initial foundation data, it would be futile, in my opinion, to seek the expenditure or commitment of vast capital sums in rail passenger transportation.

Question 9. In the report you indicate that a proposed rule is under study concerning motor bus passenger carriers. I get the distinct feeling that the ICC is primarily concerned with avoiding "destructive competition" rather than with service to the public. Do you believe the public interest has been given adequate consideration? In what way?

Answer. The Commission's main concern is with service to the public. Only to that end are other considerations relevant to our regulatory function. To the extent carrier competition serves to produce improvement in service to the public, it should be nurtured as a beneficial means toward better service. In fact, in the National Transportation Policy set forth as the preamble to the Transportation Act of 1940, seeking the development of a transportation system adequate to the needs of the public, we are specifically admonished to guard against "unfair or destructive competitive practices."

In light of that admonition we must define "destructive competition" as that which would subvert beneficial competition. Not all competition is beneficial

and to the extent it is not, its curtailment would not be considered destructive within the meaning of the NTP.

At any rate, the emphasis in the proposed rule making is not on the avoidance of destructive competition, but rather on enabling the carriers to operate more efficiently while providing improved and more expeditious service to the public. At the same time, as you will note on page 88 of our Report, we contemplate the maintenance of adequate service at points on the existing routes to which the superhighway routes are appurtenant.

The Commission's concern over service to the public is evident in the interim report it has issued in the rule-making proceeding itself, Motor Service on Interstate Highways—Passengers, 107 M.C.C. 95 (1968). For example, at page 119, we pointed out that operations over superhighways would greatly enhance the carriers' ability to provide expedited service to the public and we expressed concern that alternate-route operation over superhighways would not result in a deficiency of service over existing routes. Both these points are discussed at some length in the ensuing pages of the interim report and will be thoroughly considered as the proceeding continues. The Department of Transportation, the National Association of Railroad and Utilities Commissioners and other representatives of the public are actively participating. I can assure you that service to the public is and will be uppermost and that the public interest is being given adequate consideration.

Commissioner Paul J. Tierney

1. The Commission's report on its investigation of the costs of intercity rail passenger service will be transmitted to the Congress within the next week. The investigation was not designed to produce specific results or a formula for individual trains. It considered the costs of the total intercity passenger systems of eight carriers-which produced about 40 percent of such service in 1968. The methodology used in the study, as well as the factual results, should have general application to section 13a cases. In view of the immediate release of the study, I will not dwell on the differences and similarities between the basic approaches used in the study and in individual train discontinuance cases.

The investigation was restricted to only certain areas of the rail passenger problem. As a limited study conducted in eight months with no additional funding, it could not comprehend all of the various cost problems associated with rail passenger service. For over a decade, the Commission and others have proposed various major changes in federal policies relating to this problem. Each time, the question of how much the railroads were losing has been reopened and the ensuing debate has surely helped to block enactment of necessary changes. The purpose of this study was to provide Congress with more accurate information on the dimensions of these losses so that future policy changes could be then considered with a reasonable understanding of the present financial posture of rail passenger service.

In addition to the question of costs, other factors must be evaluated in section 13a cases; namely, present and future public need for rail service, alternative methods of moving people, effects of rail passenger operations on communities and the possibility of governmental assistance to the carriers. These same factors must be evaluated on a nationwide basis to have a national basis on long-range policies. Essentially, this action is what we requested from Congress last year. 2. A major limitation facing opponents to a train discontinuance proposal is time. Between the time when evidence is introduced at hearings and when those hearings are completed, three weeks may transpire. A similar period may be allowed for filing briefs. We have asked that the total decisional time be extended to seven months from the present four-month limit.

I believe public and private organizations have an easier time opposing repeated discontinuance efforts since the issues have been distilled in a prior case. They are more familiar with the train's operation and the carrier's claims. Efforts can then be concentrated on those issues which were initially controlling. Projections of patronage and expenses can be tested. Prior pledges of state and local assistance have had a chance to be fulfilled.

The railroads' opponents may have difficulty examining cost questions, although some state agencies and labor representatives have been successful in their presentations. The Commission also analyzes these cost questions. For other factors, such as public need or local assistance, the opposing presentations do not have this same difficulty of analyzing technical evidence and presenting expert witnesses.

PASSENGER SERVICE Continued

Hearing examiners are responsible for the development of an adequate record. They can and do require more evidence where they feel it is necessary. Specific areas that the carrier must cover in presenting its cases are initially outlined by the Commission...

3. Where several carriers operate a through train and seek discontinuance of parts of that train operated by more than one carrier, the cases are consolidated for hearing, if possible. Notices that are made either simultaneously or within a short peroid of time, which involve different trains in the same general area, have been considered by the Commission on the basis of a consolidated record or decided at the same time. However, if one notice preceded another by a substantial period (four-six weeks), it is extremely difficult to conduct joint hearings or joint decisions because the first case must be decided within 12 to 14 weeks after the second is filed, pursuant to the four-month limitation.

4. The Commission has refused to permit a number of train discontinuances on the basis that the carrier has purposefully downgraded the service without regard to public need or in an attempt to discourage patronage. However, most of these cases have occurred in the past three years. With one exception, the trains were not again considered by the Commission in a second discontinuance proceeding. Having failed to win Commission approval the first time, one carrier sought and then obtained state permission while another was later discontinued when a financially weak connecting carrier was permitted to discontinue its portion of the train. Some of the trains recently involved in this type of case are still subject to the Commission's one year continuance order.

Depending on the necessity for technical analysis of downgrading practices, it may be desirable for the Commission to perform such an investigatory function in future cases should a train be presented again for discontinuance. The case you cite was not an instance where the Commission's Bureau of Enforcement conducted an investigation of whether the subject trains were being operated according to criteria of a previous case involving those trains; it was the first hearing on those trains.

5. The carrier notices do indicate that the public has a right to protest. Should the Commission decide to postpone the discontinuance and hold hearings (which it generally does) notices of those hearings and of the public's right to appear are also required to be posted. In addition, orders to hold hearings and final decisions to continue the trains are given the widest press coverage of any type of issue before this Commission. I feel the present situation does give some meaningful information to the public, although improvements could be made. Improvements relating to public notification were included in our passenger recommendations last year. (S. 3861)

6. In view of the difficulties involved in processing this case, reasonably precise estimates of a final announcement date are particularly hazardous. I would hope that the decision might be announced before September.

7. Federal jurisdiction over the quality of rail passenger service would materially improve the service to the public in some instances. However, I doubt that such a change would be significant enough to revolutionize that service. The dimensions of the intercity rail passenger problem are far too great to assume that it could be solved so simply. The Commission's report to Congress in June 1968 discussed this matter in detail.

The examiner did include a number of other proposals that require action on the part of Congress, state and local governments, carriers, labor and the public. Many of these suggestions have already been proposed, in whole or in part, by the Commission in the past 10 years. Our suggestions have not been implemented. 8. The question of jurisdiction over the quality of rail passenger service has been considered in several cases, in Congressional hearings, and internally by the Commission for a number of years. In the area of rail passenger service, we have consistently advocated major policy changes during the past decade as a result of studies, investigations and other passenger cases. A nine point comprehensive program was advocated in 1959 (306 I.C.C. 417) after an exhaustive investigation. Governmental assistance, including subsidies, was proposed time and time again in cases and also in our annual reports to Congress. We have sought to have section 13a overhauled for several years. The June 1968 report covered the intercity situation in depth and asked that the future role of railroads in the national transport network be determined and that policies be created to achieve the desired system. In a matter of days, the Commission will once more submit recommendations for Congressional action after a major study.

I am convinced that Congress, itself, must change federal policies or much of the intercity noncorridor service will die. The sharp decline in passenger miles,

32-102-69-18

PASSENGER SERVICE-Continued

trains and revenues over the past 30 months speak for themselves. Carriers, labor and states could help improve the present situation, but more comprehensive action is needed.

9. The term "destructive competition" when employed with respect to motor bus passenger operations relates to interests of both the passengers using such service and the carriers providing the service. Although, the term may be easily misunderstood, it has been employed principally to describe situations where it is necessary to maintain the delicate balance in order to preserve for passengers an efficient and economical transportation system.

The differences between the operations of passenger and freight carriers are material. The loss of a freight carrier's service ordinarily would not have the serious impact on the public that would result from the loss of passenger operations. The reason being that there are usually many property carriers serving a particular area while only one passenger carrier may be serving the same area. A territory will ordinarily support more freight carriers than passenger carriers, and competition is ordinarily more important and more serious between passenger carriers than between freight carriers. As evidence of such competition, it has not been necessary to minutely describe routes of freight carriers as it has been with respect to passenger carriers.

Presently, the Commission has under active consideration proposed regulations which relate to the use of superhighway routes by passenger carriers. In that proceeding, a matter of chief concern to the Commission is that the resulting use of those highways should not change the existing competitive situation so as to lead to a less frequent, economical or complete service to the using public. The use of superhighway routes in intercity traffic will undoubtedly result in substantial time savings which could have the undesirable consequence of change in competitive situations. Any situation which has the effect of creating "destructive competition" and a lessening of service to the public is contrary to the public interest.

The Commission, therefore, attempts to maintain a policy of competitive balance without "destructive competition" in order to keep available to the passenger public a convenient, economical and efficient motor bus service.

Commissioner Willard Deason

1. The study is about complete and will be submitted to Senator Magnuson in the very near future. The study will not develop a new formula which may be applied in future cases, nor do I believe it can or should. Rather, it will supply detailed information on rail passenger costs designed to promote a better understanding of rail passenger service generally.

2. It cannot be ignored that repeated proposals by a railroad to discontinue the same train places a burden on those opposing discontinuance. That burden is magnified by the fact that opponents rarely unite to present an organized case against the railroad.

The Commission's hearing officers now conduct their own questioning in order to develop the record in the public interest. They also have the authority to subpoena the production of relevant evidence.

3. Where more than one connecting railroad files for discontinuance of that portion traveling over its tracks, consolidation is desirable. Because of the statutory 4-month time limite imposed by section 13a (1), however, consolidation is not possible unless the applications are filed simultaneously or at about the same time. In the case of the California Zephyr, only one of the connecting lines has filed for discontinuance and that filing was in May. Assuming another of the connecting lines were to file now, the Commission would undoubtedly be unable to consolidate the two and still decide the case first filed within the statutory 4-month period.

4. Ideally, the Commission should conduct an independent investigation to determine whether there has been compliance with an admonishment as to downgrading of service made in an earlier discontinuance decision. However, resources and availability of personnel do not, as a general rule, permit such an investigation.

5. A railroad proposing discontinuance is required to give notice of the proposal to the public. The carrier's notice is examined by this Commission to insure that it conforms to applicable regulations. I am not aware that such notices are sometimes misleading but if they are, I certainly would favor the promulgation of meaningful standards designed to promote clarity.

PASSENGER SERVICE-Continued

6. The Commission has the so-called Adequacies case under active consideration and it is my sincere hope that a decision will be forthcoming in the very near future.

7. Many of the matters raised in Mr. Messer's report have been considered by the Commission in the past. The law, however, has not been construed to go as far as Mr. Messer would suggest. A thorough reexamination of the Commission's prior position is now being made and as I must participate in that proceeding, I believe it would be inappropriate for me to comment further at this time.

8. The Commission has recognized that significant segments of the last remaining long- and medium-distance intercity passenger service will not long survive without a major shift in Federal and carrier policies. In its special report to Congress dated June 25, 1968, the Commission called attention to the urgent need for changes in Federal policy if the decline is to be stopped.

Unfortunately, the Commission is circumscribed by the law and if there are to be bold new proposals, they must come from Congress. The Commission has made a number of specific recommendations in this area.

9. I believe that the public interest will have been accorded adequate consideration when final rules and regulations are adopted in the two proceedingsone dealing with passenger and the other with property carriers embraced in the Commission's interim report in Motor Service on Interstate Highways— Passengers, 107 M.C.C. 95. This is evident, in my opinion, from the interim report itself, particularly that portion thereof captioned Adequate Service commencing on page 123, and I am enclosing a copy of that interim report for your convenience.

Commissioner George M. Stafford

1. The study will be submitted to Senator Magnuson shortly. The study is not intended to develop a formula but rather to supply detailed information on this subject of rail passenger costs. The study was undertaken at the request of Senator Magnuson and it is needed to enable more understanding of the entire question of rail passenger service as we sought in our recommendations to the Congress in 1968; it has no relation to data supplied in individual cases, and I believe it should not.

2. I believe there is a burden placed on localities and individuals who oppose discontinuance of particular trains. However, section 13a was enacted by Congress in 1958 specifically to effectuate the discontinuance of passenger trains that were little used by the public and created financial difficulties for the railroads.

Our hearing examiners have the responsibility to develop the record in the public interest and have the authority to ask questions or subpoena data that may be required.

3. As a matter of course, where different proceedings present questions or issues that are related, consideration is always given to whether they should be consolidated, the respective records incorporated in the other proceedings, or any other steps necessary to insure that the complete picture is before the examiner. In discontinuance matters, there is a practical problem of time during which the investigation can be conducted as we may require continuation of the trains only four months under the statute. Since the carriers can choose when to file for discontinuance, if one carrier filed near the end of the investigation for the connecting line, it would not be feasible to consolidate due to the time factor.

4. I agree that we should make such an investigation and assume we would before acting on a successive application for discontinuance. The charge of downgrading is often raised, but seldom does the record warrant such a conclusion. One of the few is the Southern Pacific case you cite and our Bureau of Enforcement participated, not as a follow-up, but in the actual case where we found downgrading and required continuation of the trains. If the carrier seeks to discontinue again, then is the time the follow-up investigation would be made. 5. The railroad has to state in their notice the facts of the proposed discontinuance, such as trains involved, effective date, etc., and post it along the route so the users have the opportunity to see it. I would favor establishing standards to insure the public will not be misled if such is now the case.

6. I expect that a decision will be reached shortly.

7. I believe the matter has come up previously in cases. Whatever happened in the past, the important point is that the issue is now being considered and, since it is a pending matter on which I must vote, I will not comment further.