CONCLUSIONS

Technology, uncoordinated and expanding public aid, shipper bias in favor of maximizing competition and certain regulatory policies have together brought about an excessive number of carriers and overexpansion of transportation plant. They have set up trends which if continued unabated to 1975, will see private carriage rather than common carriage the base of the Nation's transportation system. The projections to 1975 of the recent trend in public expenditures for all nonrail transport facilities and equipment if carried out will serve to accelerate the trends toward overexpansison of transport capacity, lower utilization of equipment and excessive social investment. This in turn will tend to increase inefficiency and waste and perhaps prevent adequate transport capability between major industrial centers in time of national emergency. The railroads, unable to adjust expenses to declining volume of business, may become Governmentowned. This Nation will not permit, and properly so, the railroads to go by the board" Common carriers as we have known them are disappearing in water transportation and the highway common carriers are losing relative position and facing a prospect of higher operating ratios. The social investment per ton-mile and passenger-mile in transportation service will increase with the continued decline of common carriers. It is doubtful if the growing mass transportation requirements between major centers of the Nation can be adequately served at any cost by private and contract carrier operations. The great capacity per vehicle and way area required and the inherent economy of its higher utilization may well require an expansion of common carrier facilities long before the end of the century. The components of the long-range transportation problem are:

1. What adjustments in the total social investment in transportation facilities will adequately serve but not burden or hinder a growing national economy, competing as it is to hold and improve its position in the world market.

2. What adjustments in regulatory policy will insure an equitable basis of competition and provide a balanced system which reflects economic fitness and adequacy for the public as a whole.

3. Preservation of the common carrier as the base of the transport system requires that policies of aid, control and government-industry cooperation be directed more effectively to this end.

4. The position of the largest common carrier industry, the railroads, is especially precarious because it must supply its own capital needs for way and structures as well as equipment and because its traffic, unlike that of pipelines, is subject to erosion through intensive and extensive competition. Because of the railroads importance as the pervasive bulk carrier in our transportation complex the position of the railroads and their future is of national public interest. If this position is deteriorating under policies formulated when the railroads were dominant and monopolistic and alternative modes were comparatively undeveloped then basic revision of national policy is indicated.

PART III

ORGANIZATION OF GOVERNMENT FOR

TRANSPORTATION

CHAPTER 1. INTRODUCTION

There is nothing sacred about any organizational structure despite the length of time it has been in effect or the inertial resistance usually evoked when change is suggested. Organization is merely an essential tool by which men work together to achieve a common objective. It should be adaptable to changing situations and should facilitate performance of the various functions for which it is designed. Since coordination of diverse activities is one of its functions, and since coordination is the most difficult of all management functions, organization should be deliberately planned to facilitate this function. Just as we should never advocate change for its own sake we should not maintain the status quo because we are too indolent or because we quail before the complexity of the task. We must remember that although the perfect organization cannot, of itself, insure coordination, a faulty organization can virtually assure failure to coordinate. In this introductory chapter we review the present situation of transportation as related to governmental organization and conclude with a statement of the objectives of Federal organization in regard thereto. The four succeeding chapters suggest an approach to organization to achieve these objectives. We recognize that there are a number of possible solutions to the problem and that no structure which may be adopted will be either perfect or immune to change as future developments may indicate. Although it is not essential that our proposal be selected, it is vital that the many varied interests of Government as policymaker, as promoter and as regulator of transportation be brought into accord. In transportation at no less degree than in other areas, the Federal Government must be suitably organized to harmonize its efforts, as well as the efforts of States, their political subdivisions, and of private industry, toward serving the best interests of the Nation as a whole.

It is, perhaps, unfortunate that the word coordination is used loosely to refer to physical coordination between carriers of the same and different modes on the one hand and, on the other, to coordination between the many varied governmental activities in the transportation field. Important as the former may be, this part of our report deals with coordination in Government and the lack thereof.

CRITICISMS OF PRESENT ORGANIZATION

The various source data we have reviewed are replete with indications of a general dissatisfaction with the present-day organization for promotion and regulation of transportation directed principally

to lack of coordination, delay, inconsistency and failure to adjust to changing conditions.

We can fairly attribute failure to keep up with the times to the lack of an agency specifically charged with continuing research and review of transportation trends as they affect present and future policies. Our practice has been to await the buildup of sufficient pressure to generate alleged corrective action which is then taken with little regard for its overall effect. One objective of organization should be to provide such a research and review facility.

Inconsistency is partly a result of obsolescent policy, partly a result of procedures which have grown up within the regulatory agencies and partly rapid turnover of officials dealing with problems on a case-by-case basis. Organization should seek to stabilize personnel and to produce a broad policy framework known to all concerned and within which individual problems would be considered.

Delay can be charged to staffing unrelated to workload, to policies inviting conflict and to legalistic procedures applied to administrative type problems. All of these are susceptible of correction under a proper organizational structure.

Lack of coordination in the Federal Government in regard to policy, promotional and regulatory actions affecting transportation is unquestionably the most serious criticism directed toward our present system. Special emphasis may be placed upon:

(a) The three independent agencies for economic regulation of transportation. Each has a limited area of jurisdiction. Jurisdiction of the Civil Aeronautics Board is limited to air transportation. The Federal Maritime Board oversees the merchant marine. The Interstate Commerce Commission has responsibility over rail, oil pipeline, highway and domestic waterway. Although the distribution of regulatory responsibility among different agencies, standing alone, is not necessarily an adequate basis for complaint, in actual practice the existence of separate agencies has led to jurisdictional disputes; to interagency disagreements in specific areas of transportation policy; and to actions by one regulatory agency without regard to the effect on modes of transport subject to regulation by another agency.

(b) The joint boards which may be created by CAB and the ICC, while attempting to narrow the organizational gap in economic regulation of transportation, tend to stress the basic weakness of the present day organization rather than to solve major intermodal problems. Jurisdiction of such boards is expressly limited by statute to through service and joint rates, fares and charges between air carriers under CAB regulation and other common carriers under ICC regulation. The recent proposals for a joint board between the CAB, FMB and ICC to consider through routes and joint rates for carriers serving Alaska, Hawaii, and other States (S. 2451 and S. 2452, 86th Cong.), also would have endowed such board with limited jurisdiction. Even with the existence of the various joint boards there would still be no organizational device to coordinate, for example, CAB actions which on initial analysis involve only air carriers with ICC actions which also on initial analysis involve only domestic surface carriers under its jurisdiction, but which upon close examination, when considered in relation to each other, are concerned with overall national transportation policy.

(c) Two of the agencies created for economic regulation (the CAB and the FMB) also have promotional responsibilities. The third (the ICC) is responsible for administering a guaranteed loan program for railroads. Such activities are normally regarded as executive functions.

(d) In the enforcement of economic regulation, both the CAB and the ICC serve as rulemaker, investigator, prosecutor, judge and jury. The same type of problem applies in a somewhat different degree to transport safety. Although the jurisdiction of CAB in safety affairs is generally limited to accident investigations with the Federal Aviation Agency primarily responsible for safety in aviation, the jurisdicton of the ICC embraces all aspects of rail and highway safety. Furthermore in the field of safety, ICC jurisdiction includes private and exempt highway carriers, not subject to ICC's economic regulation. This comingling of legislative, executive, and judicial functions—in an independent agency responsible for economic regulation—does not lead to effective Government.

Al

(e) Transport promotional programs lack central direction. though the Federal-aid highway program, administered by the Bureau of Public Roads, and the merchant marine program, administered by the Maritime Administration, are conducted under policy direction of the Under Secretary of Commerce for Transportation, no central leadership exists in the promotion of other transport programs, or in relating each program with the others. To illustrate, air mail subsidies are administered by the CAB, while the FAA is responsible in other promotional areas for air transportation. The Corps of Engineers, Department of the Army, is responsible generally for rivers and harbors work, while the Coast Guard, Department of the Treasury, is responsible for various aids to navigation. Both the Corps of Engineers and the Coast Guard have responsibility for safety in navigation. The shining example of uncordinated promotion is, of course, the unplanned impact of the Federal-aid highway program on transit and traffic problems of some of our larger metropolitan areas. There is some degree of executive control of program funds through the Bureau of the Budget, but there is no central organization responsible for directing policy planning and coordination of these programs in the public interest.

The navigational portion of the Arkansas River project is an outstanding example of the lack of coordination between promotion of navigation improvements by the Corps of Engineers and local interests and the economic regulation of rail transportation by the ICC. No evidence was found in the documents examined to indicate that the Arkansas basin area has lacked, now lacks, or in the foreseeable future might lack, adequate transportation services in the absence of this navigational improvement. However, local sponsors of the project stated that they were paying freight rates which were, in general, the highest in the national rate structure, and expressed a belief that development of water transportation on the Arkansas River would relieve this condition. This is not an unusual reason for local support of navigation projects. Similar statements with reference to having a waterway improvement bring about a reduction

U.S. Army, Corps of Engineers, "Arkansas River and Tributaries, Arkansas and Oklahoma" (H. Doc. 758, 79th Cong., 2d sess.), pp. 9-10, 43-44.

in freight rates can be found in Corps of Engineers hearings on other navigation improvements.

Inclusion of the navigational features in the Arkansas project will, according to latest estimates, cost the general taxpayers more than $850 million for initial construction, and some $10 million annually for maintenance and operation. One of the principal justifications given the general public for these large expenditures on the single waterway is the possible reduction of certain freight rates. This is indeed an exceedingly costly method of obtaining regional freight rate adjustments in a regulated industry. On this navigation project alone, amortization of the capital investment with interest, coupled with annual charges for maintenance and operation, will be twice as much as the $20 million appropriated to the ICC in 1961 for nationwide regulation of the several forms of transportation under its jurisdiction. It will be more than five times greater than the $7.4 million appropriated to the CAB in the same year for economic regulation of air transportation.

The splintering of economic regulation among three independent agencies, coupled with the lack of central direction in promotional programs, has led to paradoxical decisions in economic regulation, to conflicts between promotional programs, and to an increasingly apparent chasm between promotion and regulation. It is exceedingly difficult to accept as satisfactory or acceptable a national transportation policy under which one regulatory agency (the CAB in this instance) can authorize subsidized short haul common carrier local air passenger service to replace unsubsidized common carrier rail passenger service between the same communities which has been withdrawn with contemporaneous approval of another regulatory agency (the ICC).

It is equally difficult to regard as the only acceptable method for the conduct of public business and organizational arrangement under which an executive agency responsible for administering one transportation program must appear against private interests in adversary proceedings conducted by another executive agency which administers a transportation program of special benefit to those private interests. Yet, this is exactly what the Bureau of Public Roads, Department of Commerce, does when it appears at public hearings conducted by the Corps of Engineers, Department of the Army, to seek such navigational clearances in Federal-aid financed highway bridges as will conserve the public funds involved in bridge construction without unduly affecting waterway transportation. Since the Corps of Engineers is responsible for promotion of waterway transportation, its jurisdiction over bridge clearance decisions places it in the incongruous position of being the defense counsel for waterway transportation, the prosecutor of the highway interest, the jury which evaluates the facts, and the judge who is called upon to make the final objective decision.

The widening chasm between promotion and regulation is further illustrated by another aspect of the relationship of the Federal-aid highway program and economic regulation of railroads. Available evidence indicates, on the one hand, that some 60,000 miles of rail lines are uneconomical and should be abandoned. On the other hand, although precise data are not available, the expanded highway program calls for numerous highway-railroad grade separation struc