(b) Responsibility, from executive point of view, for policy formation, policy review, and surveillance of administration of certain other transportation functions presently performed by other executive agencies but the administration of which for various reasons need not, or should not, be transferred to the Department of Transportation. Examples are traffic management functions of GSA, DOD, and Post Office, which identify government as a major user of transportation; planning and administration of rivers and harbors work of Corps of Engineers; TVA functions relating to navigation; and other programs in aid of transportation, such as mapping and weather reporting.

(c) Transfer to it of certain executive type functions currently being performed by ICC, CAB, or FMB, such as enforcement of safety, enforcement of areas of economic regulation which require on-the-spot inspections; administration of airmail subsidy program, FMB functions relating to merchant-marine subsidies, and guaranteed loan programs.

(d) Establishment of executive leadership in new areas of transport relationship and reorientation and redirection of existing functions; including leadership in promoting technological advances in all modes, strengthening Federal-State relationships in promotion and regulation; leadership in formation of broad transport policy supported by research; orientation of transport statistical programs of all agencies to common needs; leadership in providing needed transportation services during national or regional emergencies which affect the ability of any regulated carrier to continue service.

At Assistant Secretary level, the Department should be organized along functional lines rather than by clientele or mode of transport. CHAPTER 5. ORGANIZATION FOR JUDICIAL ENFORCEMENT AND REVIEW

No change is recommended in jurisdiction of courts or court procedures relating to judicial enforcements. Statutory inconsistencies exist in providing for judicial review of agency decisions. These should be eliminated through creation of a transportation circuit court of appeals having authority to review decisions on transportation matters. Initial appointees would be assigned from other circuit Also, the Federal Transportation Commission should be named titular defendant, or have the right to intervene, in proceedings involving judicial review of its decisions.

PART IV-ORGANIZATION OF TRANSPORTATION LAW

CHAPTER 1. GOVERNING CONCEPTS

A considerable amount of the criticism which has been directed at the transportation regulatory process has been centered around charges of inequality, inconsistency, and delay. Usually, the regulatory agency is the target of these charges. There is ample evidence, however, to support the conclusion that inconsistencies and ambiguities in the law itself, coupled with obsolete provisions carried over from an earlier and different era are, in large part, the real basis for complaint.

This part summarizes our concepts of the law, then discusses some of its more important inconsistencies and suggests a pattern of reconstruction that could avoid, at least in large measure, such complaint in the future.

The format of the law should be designed to help attain our objectives. Among these objectives are equality and consistency of treatment and clarity in expressing the congressional intent. In areas where Congress intends a specific result the law must be specific, where limited flexibility is desired and greater administrative discretion is allowed specific limits should be stated, where full exercise of discretion is to be lodged in the regulatory agency, the law should state the objective and direct the administrators to attain it by such means as they deem best. When terms requiring exercise of judgment are used in administrative law much uncertainty and confusion resulting in excessive litigation could be avoided if lawmakers expressed their intent and understanding of the terms. Such phrases as "undue preference," "compensatory," "destructive competition," etc., lack precision in a modern world of rapid development.

Finally, we must identify the objective—just what do we want from transportation. Are we to consider the national interest predominant or are individual interests in conflict therewith to be favored?

CHAPTER 2. INCONSISTENCIES

A. INCONSISTENCIES IN THE NATIONAL TRANSPORTATION POLICY

Inconsistencies in law, promotional activities and regulatory decisions impede the development of transportation to its fullest potential to furnish economical service to the Nation. In this chapter, we highlight certain of these inconsistencies as examples of the need for greater coordination in formulating and administering transportation policy. Our national transportation policy is analyzed and inconsistencies and ambiguities therein are discussed.

B. INCONSISTENCIES IN THE EXECUTION OF THE LAW

Here attention is focused upon the "no-man's" land of uncoordinated overall policy which exists outside the realm of any particular Government agency. One Government agency may well decide a case or implement a congressional policy in such a way as to vitally affect the work of another Government agency or to thwart the congressional intent without anyone except Congress (which is often too busy to detect these inconsistencies or to enact remedial legislation to eliminate them) being in a position to do anything about it. Some of the criticisms by Mr. Louis J. Hector, former member of the Civil Aeronautics Board, are reviewed at this point.

C. INCONSISTENCIES IN THE SUBSTANTIVE LAW OF TRANSPORTATION

In most basic respects, when competition exists between modes, all modes of transportation should be responsive to the same tests of public interest. Why then should there exist so many differences in law or regulation between them? Exemptions from regulation, regulation of interagency ownership and control, a prohibition against

the transportation of railroad-owned commodities by a railroad, reparations and penalties, the long- and short-haul clause, through routes and rates applicable thereto, reduced rates for the Government of the United States and sundry other differences in the law applicable unequally to the various modes or types of transportation are discussed at length.

CHAPTER 3. RECONSTRUCTION OF TRANSPORTATION LAW

Since a number of the inconsistencies previously discussed have material effect upon intermodal competition, it is obvious that extensive revision of our transportation laws is not only justified but necessary. We recommend the consolidation of all transportation laws into one Federal Transportation Act of 1961 and an outline of the format of such a consolidation is given.

PART V-SPECIFIED ITEMS OF SENATE

RESOLUTION 244

CHAPTER 1. REGULATION OF TRANSPORTATION

This chapter extends the usual reasons for regulation, that is, protection of the user from the carriers and protection of the carriers from each other into the more fundamental reasons of why normal competition is inadequate to police the transportation industry. After concluding that the requirements of the average user will not be satisfied by a combination of private and unregulated for-hire carriage and that the power aspect of transportation can operate to the detriment of the public interest in the absence of regulation, we conclude that regulation of transportation is essential for the foreseeable future in the public interest,

The chapter then discusses the "type and character" of regulation. It concludes that it is not a question of "too much or too little" but rather one of orientation. There has been inadequate regulation due to exemption and to ineffective minimum rate control. There has been excessive regulation in the fragmentation of motor carrier certificates and elsewhere. The basic fault is identified as fixed, nonprogressive regulation due to lack of adequate information and research to identify the public interest and promptly orient regulation to it in view of the changing times.

CHAPTER 2. GOVERNMENT ASSISTANCE AND USER CHARGES

Following a complete review of the history and magnitude of Government assistance to transportation which demonstrates that the overall program between 1917 and 1960 has amounted to $3312 billion and is projected to cost another $74 billion in the period 1960-75, the report stresses the need for coordination of Government spending of this magnitude to insure that the country gets what it wants at the lowest possible social cost and concludes that expenditures of this size warrant careful consideration of a system of user charges.

The report then proceeds to analyze the various types and levels of user charges, including past proposals; discusses the trust-fund concept as demonstrated in the highway program and considers the share

the general fund should bear of various programs as a result of Government use of facilities.

It concludes that the concept of user charges should be accepted now for gradual application to air and waterway transportation over a period of years. The system should be designed ultimately to recover operating and maintenance costs plus improvements of federally aided transportation facilities. An approach to formulas to accomplish this is indicated.

CHAPTER 3. OWNERSHIP OF ONE MODE OF TRANSPORTATION

BY ANOTHER

Following an examination of the background of this question, chapter 3 discusses an idealistic concept of a transportation company offering service by several modes, either singly or in combination, best suited to the service/cost needs of the shipper. The conclusion is drawn that, regardless of the national benefits to be derived from such operation, it is not realistic to expect such companies to be formed in the present industrial climate of our country.

Recommendation is made that ownership of one mode by another be permitted all modes equally when clearly determined in each case to be in the public interest. It is suggested that such ownership be under a renewable license and evidence that the common ownership is, in fact, operated in the public interest be required as a condition of renewal. It is also recommended that the powers of the regulatory agency in regard to through routes and rates be strengthened and that users be permitted to initiate applications for combination service.

CHAPTER 4. CONSOLIDATIONS AND MERGERS

General consolidation of railroads in the near future is presented as the most important measure to restore the railroad industry to the health and vigorous status of over 30 years ago and as a necessary basis for a coordinated transportation system for the Nation. The analysis is confined to railroad consolidation because of the relative ease of adjusting the organizational structure of other modes.

The history of the national consolidation policy and plans proposed are reviewed. This history reveals that the interest in general consolidations since 1920 has shifted in emphasis from advantages in regulation to advantages in expenses and, lately, advantages in service performance and resulting net revenue potential and credit standing. The advantages and the obstacles and objectives are analyzed. However, the conclusion is reached that the lack of interest of railroad management has been the principal reason for the 40 years of meager progress. There is, therefore, a lack of adequate incentive and the solution of the problem accordingly is in providing adequate incentive. The public interest in maintaining privately owned railroads as a basic element of an efficient transportation system and one that will provide for economic growth and national defense requires early action.

The guiding principles for a consolidation policy are presented. Emphasis is given to the desirability of industry initiative with Government cooperation and aid. The public interest requires a regional

or national approach beginning with the northeast area where conditions of the industry are acute.

The proposed legislation should assign the task of developing detailed consolidation policy to the Department of Transportation if established promptly, otherwise to a special agency created for the purpose. Action should seek to insure industry collaboration through a special task force and time limits should be set for positive action.

CHAPTER 5. INTERCITY RAIL PASSENGER SERVICE

This chapter examines at length the declining trends of rail passenger service since the 1920's and attempts to differentiate between the need of this service and the desire therefor. It also differentiates between intercity and commuter rail service which are distinct problems. It concludes that there is but little real need in most of the United States but that there is indication of desire sufficient to justify investigation in depth to determine those city pairs that probably could support rail passenger service provided that service was redesigned to meet today's conditions. It is further concluded that the rail passenger business is still big business today and too much of an asset to discard lightly, the gross annual revenues still amounting to over $1 billion annually.

An extensive cross section of national opinion regarding rail passenger service is quoted and a possible approach to a successful rail passenger service is suggested along the line of a single rail passenger corporation operating on existing facilities over routes chosen by competent market survey.

CHAPTER 6. THE LONG AND SHORT HAUL PROVISION (SEC. 4) OF THE INTERSTATE COMMERCE ACT

This chapter was written as a separate document because of the specific requirements of Senate Resolution 244. The subject is properly a part of overall pricing policy and is treated as such in part VI of this report.

The conclusions reached elsewhere regarding cost related pricing, when implemented, will in time render the fourth section controversy moot. These conclusions do not admit of departures from sound economic pricing merely to meet competition.

In the interim it is recommended that the fourth section be reinstated as written prior to 1957 and that exception thereto be restricted to those cases in which it is clearly established that relief will result in a national benefit or that it is justified because of cost considerations.

CHAPTER 7. ADEQUATE TRANSPORTATION SERVICE IN RURAL AREAS

The amount and adequacy of public carrier transportation service is declining in many rural areas. These services operate between points in rural areas and between these areas and major cities. Railroad passenger and freight services on branchlines have been reduced in all parts of the Nation and it is clear that this trend will continue as the railroads concentrate on their proper economic role as large-scale transporters. In New England and the Middle West, public bus and