resulting organization to be seriously weakened." The basic problems was and is that: The identities, interests, and most importantly, funding, of each mode were maintained. Certain transportation programs such as Maritime, Inland Waterway construction and initially, Mass Transit were kept out of the Department. The first two as a result of the efforts of Maritime and barge interests. . . Effective control mechanisms, such as the establishment by DOT of investment criteria permitting cross-modal decisionmaking were torpedoed in the legislative process leading to the creation of the Department.43 Unified Transportation Budget One way to achieve control over Federal transportation policy is through reorganization of the fragmented Federal budget process for transportation subsidies, grants and operating programs. These programs have relatively narrow objectives, powerful congressional and industry-union constituencies and limited flexibility for responding to broader transportation needs. One way to achieve coordination. among them is budget control imposed through a unified transportation account in the budget. Under present practice, transportation programs are collected and shown in the budget sent to Congress as part of a "function" which also includes "commerce." However, this presentation is an-after-the fact approach and is not used in reaching decisions for individual agencies or programs. In a report prepared by William T. Coleman, Jr. and John W. Barnum (respectively, former Ford administration Secretary and Deputy Secretary of Transportation) shortly before leaving office. the recommendation is made that financial assistance programs and the operations and capital expenditures of the transportation components of the Federal Government "should be included. for budgetary purposes in a unified transportation account, without regard to source or application of funds." They suggest that authorization and appropriation requests should be made by the appropriate agency (e.g. Corps of Engineers, ICC, DOT) and the funds appropriated to that agency "but only after all such authorization and appropriation requests have been considered in the context of the total transportation function." 45 They add: To implement our recommendation for a unified transportation account. both the executive branch and the Congress should separate the commerce and transportation functions, add to the transportation function some of the activities not now included in that account (e.g., the ports and waterways portion of the Corps of Engineers), and make budgetary decisions with all transportation activities in mind.16 We believe that the unified transportation account can help to achieve an efficient and equitable balancing of spending on competing programs. Basically, a unified or consolidated transportation would Ibid. Coleman Report, p. 19 Ibid. p. 21. give the Secretary of Transportation explicit authority to make budgetary trade-offs among the various Federal transportation activities. As Coleman and Barnum explain, the expenditures in some programs are limited by a matching funds requirement, but where this device for budgetary constraint is not available, demonstrating to the Congress the relative cost of such programs in comparison with other Federal transportation programs is one of the few ways of controlling the level of expenditures. They continue: "Although obviously there can also be trade-offs between the transportation and other accounts, and the amount allocated to any one transportation activity increased or decreased without regard to other subaccounts, in looking first at the total Federal budget and then at the transportation account, the executive branch and the Congress should be in a better position to make intelligent and acceptable-allocations of funds available for transportation." 47 In a recent statement, the present Secretary of Transportation, Brock Adams, appears to embrace this view for the current administration. He terms the present grants structure "outdated and inadequate to meet new, increasingly complex, national priorities which we should be certain are considered in transportation planning." In calling for a "more flexible transportation program," Secretary Adams concludes: I hope that the end result of our efforts will be a combined transportation account to permit the setting of national funding priorities and consolidation of transportation programs... Our priorities are changing, and our policies must change accordingly, if we are to shape our destiny rather than be shaped by it.48 Should independent transportation regulatory agencies be consolidated? As indicated previously, various studies have recommended that the independent transportation regulatory agencies be merged into a single regulatory agency. The basic arguments in favor of such an alternative are enhanced coordination, avoidance of contradictory regulatory policies for the various modes, and improvement in the ability to establish a national transportation policy. Perhaps the best case for consolidation of the major economic and related activities was made by the Doyle Report in 1961. It concluded: The splintering of economic regulation among three independent agencies, coupled with the lack of central direction in promotional programs, has led 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 47 Ibid, p. 21. 48 Statement of Brock Adams, Secretary of Transportation, Before the Subcommittee on Surface Transportation of the House Committee on Public Works and Transportation, Sept. 20, 1977. between the same communities which has been withdrawn with contemporaneous approval of another regulatory agency (the ICC).49 It is further argued that under the single agency concept, it would be possible to deal with "the entire capital structure of the transportation system" and to provide central direction for all transportation research activities.50 Finally, inconsistencies such as the certification of subsidized local air service to smaller cities without regard to motor bus service or railway service would be eliminated, it is contended, if such decisions were in one agency rather than several. Most recently, the House of Representatives' study on "Federal Regulation and Regulatory Reform" noted that the coexistence of the ICC with other transportation agencies such as DOT and the CAB "decidedly complicates the task of forming a coherent, unified approach to the development of a national transportation policy." 51 It is our view that these problems can be dealt with more directly and expeditiously without the necessity of merging the regulatory agencies. Aside from inconsistencies resulting from the subsidy program of the CAB, it is difficult to find examples of problems stemming solely from the separation of the agencies. Problems of cross-subsidization, for example, where the rates of one mode are held at unnaturally high levels to protect another mode, do not result from a failure of coordination between agencies. The fact is that rail, motor and water rates are set by the same agency-the ICC-not by different agencies with overlapping mandates. The remedy, then, for incongruities and inconsistencies resulting from cross-subsidies and promotional rates is to clarify the mandate of the ICC. Merging the economic transport agencies would not eliminate these issues; it would merely change the situs of the dilemma. Moreover, most current observers agree that there are few issues common to the ICC, CAB and FMC which are not problems of regulatory agencies generally. Problems of delay, self-evaluation, planning, and management are not restricted to the transportation agencies. Other issues, such as inconsistencies resulting from the failure of coordination between promotion and regulation, can be dealt with by transferring the few remaining promotional activities from the regulatory agencies to the Department of Transportation and by rationalizing the mandates of the agencies. It is for this reason that we recommend that the promotional aspects of the ICC's mandate and the CAB's subsidy program for small communities be transferred to DOT. Other problems of coordination referred to above can, in our view, be dealt with by instituting a unified transportation account in the budget, thereby giving the Secretary of Transportation the power to make needed trade-offs between competing modes and the President the power to make tradeoffs between competing national priorities. Giving the Secretary power to deal with all subsidies and all Federal Doyle Report, p. 96. 50 Ibid, p. 100. House Subcommittee on Oversight and Investigations, "Federal Regulation and Regulatory Reform", p. 375. investment in transportation would go far to enable him to eliminate the failures in coordination of one promotional program with another and failures of coordination of one mode of regulation with regulation of other modes. Finally, Congress is currently considering legislation to limit regulation in the airline and motor carrier industries. If such legislation is passed, in whole or in part, the jurisdictions of the transportation regulatory agencies will be affected. It would surely make more sense to consider merger of these agencies at that time, in light of their new jurisdictions, than to recommend merger at this time, with far reaching deregulation proposals pending in the Congress. In fact, it can be argued that to initiate structural reorganization of these agencies now would diminish the prospects of attaining any measure of deregulation. At this time, we do not believe that administrative consolidation of the three independent regulatory agencies offers significant benefits. Our study found little overlap or duplication among the jurisdictions and responsibilities of the three regulatory agencies, which consolidation might remove. In general, we believe that the problems of fragmented goals and fragmented planning can now be more effectively addressed through reforms leading to a unified national transportation policy and a governmentwide transportation planning process. Other organizational changes There are a few other changes, involving transfer to DOT of primarily benefit-granting transportation activities currently carried out in other units, that we believe would improve coordination of transportation policies and programs. We recommend the transfer to DOT of (1) the navigation, planning, investment analysis and construction decision activities of the Civil Works function of the U.S. Corps of Engineers and (2) the subsidy programs for ship construction and operations of the Commerce Department's Maritime Administration. We believe that the transfer of the Maritime Administration (MARAD) and the waterways functions of the Army Corps of Engineers to DOT would allow for integration of the water mode with the national transportation planning and program functions of DOT. These changes would promote better investment decisions, and would permit coordination of all promotional Maritime activities within the same Department. It would also permit necessary trade-offs to be made among transportation modes and would allow for setting of transportation priorities by considering all available options by the same agency. We therefore recommend that MARAD and the civil works functions of the Corps of Engineers be transferred to DOT. We also agree that all international aviation matters (as well as local service subsidies) should be transferred from CAB to DOT. The CAB's role in international aviation matters must necessarily involve it in foreign policy. It also is difficult to avoid conflicts of interest where CAB members participate in negotiating with a foreign country regarding routes and then vote on route and rate applications by foreign and domestic carriers which are covered by the agreements so negotiated. We therefore recommend that the international air carrier activities in the CAB's Bureau of International Affairs be transferred to DOT to the extent that the Secretary be given power to negotiate routes; the CAB, however, should continue to award foreign routes, subject to the President's powers in this area. As Coleman maintains, this would "facilitate coordination of international aviation policies, programs and regulations and . . . promote a stronger U.S. flag carrier system." He adds: ... The activities would be consolidated with the Aviation Policy Office in the Office of the Secretary, which has much the same function in international aviation matters. This would make for a more coordinated and less duplicative approach to bilateral negotiations and other responsibilities DOT shares with the Department of State. The Board's need for staff advice on regulatory matters in the international area can be handled in the same manner as in the domestic A unified national transportation policy We believe that the basic organizational problem in Federal transportation regulation is the absence of a unified national transportation policy. Since the development of nonrail modes of transportation, the Nation has been attempting to accommodate the various modes in the development of a more efficient transportation system. As we have seen, this problem has been complicated in the past few decades by cross-cutting issues of energy conservation, environmental impact, safety, and urban development. Beginning in 1887 and continuing until about 1920, the principal thrust of national transportation policy was the protection of the public from monopolistic practices of the railroad industry. Dating from about the time that motor carriers began to compete with railways, national policy was directed toward providing for stability in the carrier industries and toward regulating competition among the modes. The basic assumptions during this period seemed to be, first, that we needed the several modes in our transportation system because each offers something that no other one does; second, that each mode should be allowed to develop in accord with its potential and, in fact, to receive Government aid in this development; and, third, that if the regulatory policy were roughly equitable in dealing with the regulated carriers of the several modes that private enterprise would in some way give the Nation the full benefits of a balanced national system involving the various modes, although they might be owned and operated separately from each other. As brought out elsewhere in this report, the present program of regulation does not provide complete equity of treatment of the several modes and certainly includes inconsistencies and contradictions. But even if these deficiencies were taken care of, the present policy would be inadequate because of its fragmentation-the failure of regulatory policy to be required to take a comprehensive, national approach; to consider intermodal impacts; to balance needs with resources on a national basis; and to plan for the future. The most recent statements of national transportation policy incorporate these aims, but the structural framework necessary to accomplish these goals has never been fully realized. In establishing the Coleman Report, p. 54. 24-275 O - 78 - 14 |