service, the carrier's financial position, and the availability of alternative forms of transportation, prompt discontinuance should be permitted. Thus, while the Department has posed no strong objections, and poses none now, to the various technical changes to section 13a set forth in S. 1175 (Committee Print No. 1), we would oppose the imposition of any explicit or implicit moratorium on the further discontinuance of existing services. Therefore, we must oppose that section of the ICC's proposal which would require the continuance of any "last remaining passenger train *** between a point in one State and to a point in another State *** for one year from the date of its order," which requirement would be in force throughout a period of 2 years following the enactment of the legislation. In our judgment, this proviso could constitute an implicit moratorium on the discontinuance of something in excess of 40 percent of the presently remaining intercity railroad passenger service. Since alternative forms of transportation are in virtually every case available to the would-be traveler between any and all points in this country, we can find no logic in the suggestions that the last unpatronized railroad passenger train between two points should be subjected to any different tests of public necessity than the first such unpatronized train. This committee is already aware that the financial condition of our privately owned railroads is a cause for increasing concern. When the Congress enacted section 13a of the Interstate Commerce Act in 1958, the railroads were suffering from depressed earnings, a deteriorating financial condition, and a shrinking market. The situation today, if anything, is less comforting than it was in 1958. In 1958 the class I railroads had net income of $602 million, down from a previous 5-year average of $825 million. In 1967 their net income was $555 million, down from a previous 5-year average of $728 million. It is also important to note that the industry's share of the intercity freight market has declined steadily throughout this period. In 1958 the railroad's share of the U.S. intercity freight bill was approximately 32 percent; by last year this figure had dropped to 24 percent, and it is still going down. Despite some modest increase in revenue ton-miles and the benefit of two recent freight-rate increases, moreover, net income for 1968 will still remain close to that of 1967. In view of our Department's responsibility for the development of an efficient and economically viable transportation system, we can only be concerned about this situation. In fact, we cannot escape the conviction that, if the railroads are to continue doing their job for the public, they must begin to attack some of their own problems with a new sense of purpose and we in Government must take their circumstances and their problems seriously. It should be noted that virtually all the railroads in the Western World run a fiscal deficit on their passenger operations. This passenger deficit has in all cases been an important contributing factor in the deepening, overall financial problems of railroads everywhere. In fact, since the Dutch and Swiss national railways first went into the red in 1966, the only major railroads in the Western World which do not now run an overall fiscal deficit are the privately owned, taxpaying railroads of the United States and Canada. In summary, the Department poses no strong objections to the technical amendments to section 13a embodied by S. 1175 (Committee Print No. 1) and recommended by the Interstate Commerce Commission. The Department does not favor that proviso in the Commission's presently proposed bill which would subject "last trains" to special criteria in a discontinuance proceeding. The Department would accept responsibility for a study of the type proposed by the Commission, but urges additional funding for the study, as well as extension of the time period to 2 years and the right to subpena witnesses and records. That concludes my statement, Mr. Chairman. I would be glad to answer any questions which the committee may have. (The appendix to the prepared statement follows:) APPENDIX Section 2. The Secretary of Transportation, acting in cooperation with the Interstate Commerce Commission and other interested Federal agencies and departments, is authorized and directed to undertake and submit, within two years after the date of enactment of this Act, a study of the existing and future potential for intercity railroad passenger service in the United States to the Committee on Commerce of the Senate and the Committee on Interstate and Foreign Commerce of the House of Representatives. In making this study, the Secretary shall consider, among other things: (1) Existing resources of all types for meeting the Nation's present passenger transportation needs. (2) Anticipated expansion of those resources by 1975 on the basis of current governmental or private activities (such as the interstate highway program, by Government, and auto production increased, by industry.) (3) The Nation's expected passenger transportation needs, including business, private, and defense movements, in the years 1975 and 1985. (4) The ability of the existing resources, or resources as expanded by current governmental or private programs, to meet these anticipated needs adequately, efficiently, economically, expeditiously, safely and comfortably, at least as far ahead as 1975. (5) The ability of improved railroad passenger service to meet these anticipated needs. (6) The proper role of the carriers and governmental bodies in develop. ing the required quality and quantity of service, including methods of financing operations which are necessary but not economically viable. Section 3. (a) For the purpose of carrying out the provisions of Section 2 of this Act the Secretary or on the authorization of the Secretary any officer or employee of the Department of Transportation, may hold such hearings, take such testimony, sit and act at such times and places, administer such oaths, and require, by subpena or otherwise, the attendance and testimony of such witnesses and the production of such books, papers, correspondence, memorandums, contracts, agreements, or other records as the Secretary, or such officer or employee deems advisable. (b) In order to carry out the provisions of Section 2 of this Act, the Secretary or his duly authorized agent shall at all reasonable times have access to, and for the purposes of examination the right to copy, any documentary evidence of any corporation, business firm, institution, or individual, having materials or information relevant to the study authorized by this joint resolution. (c) The Secretary is authorized to require, by general or special orders, any corporation, business firm, or individual or any class of such corporation, firms, or individuals to file, in such form as the Secretary may prescribe, reports or answers in writing to specific questions relating to the study authorized by Section 2 of this Act. Such reports and answers shall be made under oath or otherwise, and shall be filed with the Secretary within such reasonable period as the Secretary may prescribe. (d) Any of the district courts of the United States within the jurisdiction of which an inquiry is carried on may, in case of contumacy or refusal to obey a subpena or order of the Secretary or such officer or employee issued under subsection (a) or subsection (c) of this section, issue an order requiring compliance therewith; and any failure to obey such order of the court may be punished by such court as a contempt thereof. (e) Witnesses summoned pursuant to this section shall be paid the same fees and mileage that are paid witnesses in the courts of the United States. (f) Any information which is reported to or otherwise obtained by the Secretary or such officer or employee under this section and which contains or relates to a trade secret or other matter referred to in section 1905 of title 18 of the United States Code, shall not be disclosed except to other officers or employees of the Federal Government for their use in carrying out Section 2 of this Act. Nothing in the preceding sentence shall authorize the withholding of information by the Secretary (or any officer or employee under his control) from the duly authorized committees of the Congress. Section 4. There are hereby authorized to be appropriated, without fiscal year limitation, such sums, not to exceed $2,000,000, as may be necessary to carry out the provisions of Section 2 of this Act. Senator PEARSON. Mr. Lang, first, I agree with you that if we are going to have this study, as complex as it will be, and do it on a crash basis, even on the basis of 2 years, you are going to have to have the power to make the investigation, which would include all of those powers of subpena and appearance and otherwise, if you are going to get the job done. Is one of the difficulties in such a study that you just can't really relate it only to railroads, that you are going to have to talk about buses and airlines and all other modes of transportation? Mr. LANG. This is the greatest single problem that one faces in trying to address this specific issue. It really makes no sense at all to talk in terms of looking at something which you call a "need" for intercity railroad passenger service without considering at the same time and to the same extent the kind of service alternatives that are available to the traveler and the extent to which they may in fact serve his needs better than something you call an intercity passenger train. I might point out in connection with this problem of subpena power, while we do not expect that it will be necessary, we can foresee difficulties in getting some of the kinds of data from other modes of transportation which we feel are necessary in order to get a sensible overall picture of the requirements for transportation and the extent to which different modes can meet them. We certainly have no expectation that we would get anything other than cooperation out of the railroad industry in such a study, but we could visualize a situation where some of its competitors might prefer not to give us data which we consider important simply because they didn't want to get involved in the act. Senator PEARSON. I think the other great problem is the question of whether or not you are staffed up to do this, even if you had the funds. Have you got the technical expertise available in your Department to undertake a job like this? Mr. LANG. Well, we have a cadre of staff people who are knowledgeable about work of this sort. They are certainly fully occupied on other things. But between those people and some of the contractors that we are using in our other studies-most importantly, the "Northeast Corridor Planning Study"—with whom we have developed a very close work ing relationship-these are private research organizations and universities we feel that we ought to be able to put together the kind of team, the kind of expertise that could do a sensible job on this. But getting organized would certainly take us several months, and a study that lasted for only a year I'm afraid would not produce very much. Senator PEARSON. Do you have any idea as to the amount of additional funds that you think would be necessary? Mr. LANG. Our estimate is that we should have an authorization of $2 million. Whether we would actually have to ask for that much in appropriations would depend upon some further preliminary staffwork on structuring the study. Senator PEARSON. I take it that your position on the moratorium on the last train is simply that in relation to the last train you either can justify a service or you can't justify a service, and you would rest it on that basis. Mr. LANG. Yes, sir. We have given this a great deal of thought and have concluded, on the basis of the way in which the Commission has handled past train discontinuances under the present statute, that there really is no need for any special kind of test for something that you call last train, that the lack of patronage, the steady increase in costs relative to fare levels are things that are no different in connection with the last train than they are with the first one, and we think that the present statute provides adequately for this situation. We are concerned with any kind of move to try to impose, even indirectly, a moratorium on discontinuances, because our study of this matter and again I would refer back particularly to the work that we are doing in our high speed ground transportation demonstrations and in the "Northeast Corridor Planning Study"-indicates to us quite clearly that the present type of long-distance and even intermediate-distance intercity railroad passengers service is simply not competitive and never can be, that it will only be with some new form of service with new technology, new marketing concepts and service concepts that the public is going to get something that they want and what they need. So we are very skeptical about the efficacy of merely preserving any of the present service once the patronage has dropped off to a point that by the tests that are presently applied under section 13a it can no longer justify operation of the train. Senator PEARSON. I'm impressed by the point that you make that merely continuing present service isn't going to prove anything. And yet we are so far away from the new rail transportation systems, high-speed system, and the Northeast corridor, and so forth. There is a great deal of slippage. It is a very complex technical undertaking. In the Armed Services Committee we see these new weapons systems come along. It's the same thing everywhere when we get into something as complex as this. In this statement in relation to the last train, you say, "in our judgment, this proviso could constitute an implicit moratorium on the discontinuance of something in excess of 40 percent You indicate that the "last train" concept if documented would actually affect 40 percent of the passenger trains today? Mr. LANG. Our estimate is that it could, but that would depend upon the sequence in which service was discontinued, as I think Mr. Briggs outlined very well. It might turn out to be considerably less than that, or it could turn out to be somewhat more than that, depending upon how long this kind of statutory provision remained in effect. Senator PEARSON. Go ahead, Mr. Sender. Mr. SENDER. Mr. Lang, the Department of Agriculture, commenting to the committee in support of the high-speed ground transportation bill, said: There is need to facilitate access and provide better commuting systems between town and country, between rural and suburban areas, even between the cities. Improved transportation facilities are needed to stimulate economic development and to make the movement of people and goods easier among towns and small cities. Three out of 10 rural residents cannot now conveniently commute to a city of 25,000 population. Additional public transportation is needed to provide easy access to education, training and jobs. Is this one of the matters that would be considered in the proposed study? Mr. LANG. I think certanly this aspect of the use of existing service would have to be carefully considered, although in our thinking we have increasingly tended to separate the commuter transportation requirements from the intercity transportation requirements. However, I should go on to point out that while this may be a useful concept for purposes of structuring studies and even programs, as a practical matter what constitutes commuter transportation on one hand and intercity transportation on the other hand often fuse into each other in ways that at the present time we don't clearly understand. Such phenomena have clearly begun to develop in this country as intercity transportation has improved in its quality. Here I am thinking of the improvement in highway transportation that has resulted from the construction of the Interstate System and of the improvement in air transportation. As these improvements have taken place, we find an increasing pattern of what is essentially commuter traffic moving between origins and destinations which even a few years ago would be adjudged simply and solely an intercity type of movement. Improved transportation, in fact, widens the commuting range out of the metropolitan area, so that you have a situation today, for instance, where there are many, many, many people who are regular commuters between Washington and New York, Boston and New York, Philadelphia and New York, Hartford and New York, and similar patterns evolving in other major metropolitan areas around the country. So when you look at something that you call intercity transportation, you can't really ignore the fact that this transportation is also being used to an increasing extent by people who are in fact commuting to and from work. Mr. SENDER. Is it a correct summary of your statement, Mr. Lang, that your only opposition to the bill, S. 3861, is as to the "last train" provision, with a modification that the funds and other amendments you suggested be added to the study? Mr. LANG. That's correct. Senator PEARSON. Thank you very much, Mr. Lang. |