tion policy are having counterproductive effects on the U.S. transportation system. At the same time, the nation's transportation problems are becoming increasingly complex and interdependent. Issues such as transportation's impact on energy conservation, environmental protection, and regional economic growth cut across the traditional boundaries of transportation modes and Federal agency jurisdiction. To deal with these interdependent problems the Federal Government needs consistent transportation goals and a coordinated organizational structure-and lacks both.

We believe that changes are needed in the organization of Federal transportation programs and in the way in which national transportation policy is established, if the Federal Government is to effectively address the Nation's transportation regulatory problems. Changes are needed to reduce the fragmentation of Federal transportation responsibilities, and to encourage the development and implementation of a modern, unified, logically consistent and equitable national transportation policy. In our view, the national transportation policy should establish-and the Federal agency structure should be reorganized in support of the following basic goals:

(1) Comprehensive planning and coordination of Federal transportation programs and regulatory activities on a national, systemwide basis.

(2) Systematic consideration of the relationship among various modes of transportation and the impact on transportation of crosscutting issues such as the need to conserve energy and to create a healthier environment.

(3) Equitable and efficient balancing of competing national needs in the allocation of limited national resources among Federal transportation programs.

(4) Planning for long-range national needs which will anticipate future problems before they become present crises.

One objective of this chapter is to examine the wide range of transportation problems which the Federal government is charged with solving. Our study shows that these problems are becoming increasingly complex and interdependent, cutting across the traditional boundaries of transportation modes and Federal agency jurisdictions. In the second part of this chapter, we discuss the fragmented structure of Federal agency involvement in transportation. This section demonstrates a serious mismatch between the Nation's increasingly complex and interdependent transportation problems on the one hand, and the fragmented structure of Federal transportation policies, agency jurisdictions and responsibilities designed to deal with these problems, on the other hand. The traditional organizational structure is being forced to deal with new problems such as cross-modal economic impacts, energy conservation, environmental protection and regional economic growth. Our objective is to evaluate the Federal transportation policy and agency structure's ability to address the Nation's transportation problems, and to identify those policy and organizational changes which would better align structure with our transportation problems.

Our study shows that the Department of Transportation has not yet accomplished its intended mission-the coordinated, effective administration of Federal transportation programs. Our analysis indi

cates that the Secretary of Transportation needs greater administrative authority and increased budgetary contol over Federal transportation programs (except for the transportation regulatory agencies which should remain independent). In particular, we recommend that the inland waterway and maritime subsidy programs should be transferred to the Department of Transportation. We also find that the Secretary of Transportation should have authority to initiate proceedings before the regulatory agencies when national transportation goals or foreign policy considerations are at issue.

We have considered and rejected the possibility of consolidating the three independent regulatory agencies (ICC, CAB and FMC) into a single superagency at this time. We conclude that there is little overlap and duplication among regulatory agency jurisdictions, and consolidation would serve little purpose.

The final part of this chapter focuses on past efforts to reorganize the Federal Government's transportation policies and agencies, and on the stumbling blocks which have hindered previous attempts at reorganization. Our objective is to understand the policy implications of previous reorganization efforts, and to explore in more detail the various options and alternatives for policy and organizational reform. In our recommendations, we focus on what we believe is the key transportation issue-the need for a unified national transportation policy. Our objective is to examine the essential characteristics and goals of a unified policy, and to identify legislative and procedural reforms which would effectively further those goals. Our study indicates that comprehensive national transportation policy legislation is needed to establish (1) overall national transportation policy goals and objectives, (2) planning, coordination, budgeting and impact assessment procedures for implementing national policy goals and objectives, and (3) organizational changes to expand the authority of the Secretary of Transportation and to consolidate transportation promotional functions in the Department of Transportation.

A. FEDERAL TRANSPORTATION PROGRAMS: STRUCTURE

As the discussion to follow illustrates, the Federal Government is engaged in a large number of activities impacting on transportation. More than 30 separate Federal agencies provide financial and technical aid, develop and operate transportation facilities and support services, administer economic regulations, conduct research and development, and enforce safety regulations. In this section we examine three categories of transportation agencies: (1) independent economic regulatory agencies; (2) major executive agencies with transportation regulatory responsibilities; and (3) other agencies having significant impact on transportation policy. For each group of agencies, we focus on possible policy and organizational changes which would better align the present policy and agency structure with our national transportation problems.

1. INDEPENDENT ECONOMIC REGULATORY AGENCIES

There are three major independent economic regulatory agencies with transportation responsibilities. The Interstate Commerce Com

mission is the oldest regulatory agency, with broad responsibilities for regulation of surface transportation. The Civil Aeronautics Board regulates commercial air transportation, and the Federal Maritime Commission regulates domestic offshore and international ocean transportation. Each agency operates independently of the executive branch, whose primary control lies in the appointment of commission members and the designation of agency chairmen.

Our study found little duplication or overlap in the jurisdictions and responsibilities of the three transportation regulatory agencies, and little evidence that these agencies should be combined in a single transportation regulatory agency. In fact, the major problems of coordination among modes is confined to a single agency-the ICCwhich regulates rail, water and motor transportation. (See pp. 188 to 190 for a more extensive discussion of this issue). However, we found two basic problems with the present policy and agency structure:

(1) There is no unified set of national transportation goals which defines relative priorities in areas where the transportation regulatory agencies interact with the transportation promotional agencies. Instead, each of the regulatory agencies derives its basic goals and objectives from separate policies, which can and do conflict with the fragmented policies that guide the promotional agencies.

(2) Although the Department of Transportation is charged with leading the Federal Government in the development of Ñational transportation policy, there is no direct way for the Department to initiate policy-related proceedings before the regulatory agencies when this is required by national transportation goals or foreign policy considerations. The Department must wait until one of the regulatory agencies has begun proceedings, and then intervene in order to broaden the scope of the proceedings to encompass national transportation policy issues.

The absence of a unified statement of national transportation policy goals and priorities has particularly detrimental effects in areas where the transportation regulatory agencies interact with the transportation promotional agencies. For example, the Interstate Commerce Commission is charged with regulating rail freight transportation. Yet such important activities as the development of the Federal-aid highway system, and the construction of inland navigation facilities are totally out of ICC jurisdiction-even though their potential impacts on the rail freight system are very great. To deal with such cross-modal impacts, a unified set of national goals and priorities would seem to be a fundamental prerequisite for rational decisionmaking by the ICC, Federal Highway Administration and Corps of Engineers. In practice, however, the three agencies must operate independently, basing their decisions on separate (and potentially conflicting) statements of policy goals.

Some rulemaking and rate setting proceedings impact on national transportation issues but are poorly integrated with the planning and policy formulation activities of the executive branch transportation agencies. In practice, the transportation regulatory agencies are frequently reluctant to initiate broad, long-range policy oriented

regulatory proceedings, preferring to conduct narrow inquiries responsive to narrow, short-term concerns. The executive branch agencies, particularly the Department of Transportation, frequently intervene in regulatory proceedings in order to raise issues of broad policy and policy coordination. However, there is a clear need for statutory authority which would give the Secretary of Transportation greater power to initiate policy-oriented rulemaking proceedings before the transportation regulatory agencies, when such intervention is necessary to implement national transportation goals or when foreign policy considerations are involved.

Following is a brief description of the organization and functions of the three independent transportation regulatory agencies: a. Interstate Commerce Commission

The Interstate Commerce Commission (ICC) is an independent regulatory commission with broad responsibilities for the economic regulation of surface transportation. ICC activities directly affect every mode of transportation except air.

Motor carriers

ICC is responsible for the economic regulation of common and contract interstate commercial motor freight carriers-the for-hire interstate trucking industry--and most of the intercity bus industry. Local (noninterstate) trucking, agricultural trucking, and privately operated trucking are excluded from ICC regulation. Consequently, ICC regulations do not apply to 58 percent of intercity motor-freight transportation in terms of ton miles or to two-thirds of all motor freight transportation in terms of dollar expenditures.

Motor carriers subject to ICC jurisdiction are required to comply with detailed regulations that control entry into the interstate bus and trucking industries, the rates charged for service, and company consolidations and mergers.

For example, motor carriers wishing to provide regulated transportation services must obtain the ICC's permission to operate. The applicant must show that the service is required by public convenience and necessity. Willingness to offer service at a lower rate is not admissible as justification. Even existing carriers must obtain permission to expand service. When obtained, operating rights are specified in detail as to the type of service or commodity permitted and the geographic route that must be followed.

Regulated motor carriers must also file tariffs with ICC which set forth just and reasonable passenger and freight rate tariffs. ICC exercises control over minimum rates and regulates competition between motor carriers (and between motor carriers and other transportation modes such as railroads, which are also under ICC jurisdiction). ICC approval must also be obtained for financial reorganization and mergers of motor carriers.

Federal economic regulation of interstate motor carriers began in the mid-1930s with the passage of the Motor Carrier Act of 1935, now part II of the Interstate Commerce Act. This legislation was a congressional response to public concern over undesirable competitive practices between motor carriers and between motor carriers and the railroads.

Railroads

Most U.S. railroad transportation is subject to ICC economic regulation. Railroads must file tariffs with ICC which set forth just and reasonable passenger and freight rate tariffs. ICC exercises control over rates and regulates competition between railroads and between railroads and motor carriers. ICC approval must be obtained for establishing and developing new rail freight or passenger service and for discontinuance or mergers of railroads.

Federal economic regulation of the railroad industry was first authorized by the Interstate Commerce Act of 1887. This act was a response by the Congress to public concern over rate discrimination against shippers and unfair competitive practices against railroads by groups of railroads and shippers operating as economic cartels. The Transportation Act of 1958 extended ICC's authority to discontinue unprofitable rail services and was a response to public concern over the post-World War II economic decline of the railroad industry.

ICC also is assigned, pursuant to the Regional Rail Reorganization Act of 1973, responsibilities for rail services planning for the Midwest and Northeast region.

Petroleum pipelines

ICC's responsibilities formerly included the economic regulation of interstate petroleum pipelines. These functions were transferred to the Department of Energy by the Department of Energy Organization Act (P.L. 95-91).

Water carriers

ICC's responsibilities include the economic regulation of domestic water carriers operating coastwise, intercoastally through the Panama Canal, and on inland waters of the United States. ICC jurisdiction over domestic water carriers is extremely limited and does not include such major categories as private shippers carrying proprietary cargoes, carriage of liquid bulk cargoes, and the bulk carriage of three or less commodities. According to ICC estimates, ICC jurisdiction extended to only 5.6 percent of total domestic water carrier ton miles in 1973.

Federal economic regulation of domestic water carriers began with the Shipping Act of 1916. This act was a response by the Congress to concern over rate discrimination against shippers and unfair competitive practices by conferences of ocean common carriers operating as cartels. Federal involvement in domestic water carrier regulation was extended by the Intercoastal Shipping Act of 1933 and later by the Transportation Act of 1940 which included domestic water carriers under part III of the Interstate Commerce Act.

b. Civil Aeronautics Board

The Civil Aeronautics Board (CAB) is an independent regulatory commission with broad responsibilities for the promotion and economic regulation of the U.S. commercial air transportation industry. The basic structure of CAB's present economic regulatory authority was established by the Civil Aeronautics Act of 1938 and updated by the Federal Aviation Act of 1958. CAB's regulatory authority extends to all types of commercial air transportation except for a few air carriers that provide exclusively intra-State service.