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Senator DOMINICK. Yes; someone said that there were 66 railroad passenger carriers in the United States as I remember, and out of these 66 they were operating their passenger services at a loss. Is this about right, or is it 63 ?
Mr. WEBB. Yes; in the statement that we filed with the committee, Senator, I think that in 1963, out of 63 class I passenger carrier railroads, all except 1 incurred a deficit and the one exception was the Long Island Railroad. However, they did suffer a loss last year, 1964.
Senator DOMINICK. Let me ask you a question on this, philosophically? What justification is there for splitting of passenger services and giving a special subsidy for it in the case of one railroad, in order to try and help out and maintain its greater services and lines for general use, and not do it in the case of others!
Any railroad that is operating a losing passenger service, it would seem to me, has an equal right to say, “We are entitled to a subsidy to make this up so that we won't have to burden our freight carrying and our maintenance and our equipment and all the rest of it with this carrying charge as a public service that we are now doing for passenger purposes.
Mr. WEBB. Yes, that is correct, Senator. I understand that the Frisco Railroad has filed or will file an application to discontinue all of its passenger service. I would think that they would be entitled, under the provision of the Ribicoff bill, to apply for assistance if they thought it would be better for them to stay in the business rather than get out completely.
Senator PASTORE. Will the Senator yield for a question at this point? Mr. DOMINICK. Yes.
Senator PASTORE. But it would make a difference whether or not you allowed that petition of discontinuance as to whether or not they were making money on the freight service. In other words, if a railroad was making $100 million a year on freight and losing, let us say, $10 million a year on passenger service they would have to go some distance to get a discontinuance of passenger service, wouldn't they?
Mr. WEBB. I will ask Commissioner Tuggle to talk.
Mr. TUGGLE. Applications to abandon all passenger service is relatively rare. The Boston & Maine is the only one operating a considerable number of passenger trains that has applied to abandon them all. Ordinarily, they only apply to abandon two, four, or six trains and it is determined on the basis of the loss on those trains and whether the public convenience and necessity would require them to be kept running in the face of the loss that was incurred.
Senator PASTORE. Do you take into account the fact that they may be making money on the freight service!
Mr. TUGGLE. That is a factor, but even if the system is making money, we might still let them discontinue.
Senator PASTORE. I don't say it is a hard and fast rule but what I am making here is a distinction between that hypothetical question that you have and New Haven. The New Haven is losing money on both. The point is if they keep going on at this rate they will not only lose the passenger service, but will lose the freight service too.
Mr. TOGGLE. That is right.
Senator PASTORE. In order to save the freight service they are petitioning for discontinuance of passenger service. That is the way I understood the trustees.
Mr. TUGGLE. The statute, the discontinuance statute uses language that it constitutes a burden on interstate commerce. We look at it in that light.
Senator DOMINICK. I must say that I have a hard time seeing why in one railroad the freight should carry the passenger load, and in another railroad where they haven't generated the freight, the Federal Government should carry the passenger load because the basis for your recommendation that we move in or that the States do and the basis of this whole hearing is the fact that there is a public service involved to continue passenger service.
Now, if that public service is involved in this railroad, it seems to me it is involved in every other railroad.
Senator PASTORE. It might well be. It might well be.
Mr. WEBB. Yes, the Ribicoff and Dodd bills draw no distinction as to classes of railroads or their location.
Senator DOMINICK. Has the Commission gone into a study on the advisability of separating out passenger from freight service on the basis of public service and then as to what agencies of Government, if any, should support the passenger service?
Mr. WEBB. Our recommendation for Federal assistance was the outgrowth of our investigation of New Haven Railroad in 1960 and 1961. We had not prior to that time recommended any Federal assistance. In fact, we had indicated that we felt it to be a State and local responsibility. That view has been modified only in the sense that we see no alternative to this critical situation which exists particularly in the East and therefore, we recommend early aid as a temporary measure.
Senator DOMINICK. In other words, what I am trying to find out is whether or not there has been any thought given to a new kind of a principle, the principle on which you have lost passenger service and say this is a Federal and State responsibility, it doesn't have to be operated at a profit and we are going to divorce it from the freight and let the railroad run the freight and so on.
You have not done that?
Senator PASTORE. We have Mr. Martin and we have Mr. Kohl. We were going to conclude our hearings today at 4:30 and take it on at 10 o'clock next Wednesday. Would you prefer to testify now or come back next Wednesday?
Mr. MARTIN. Whatever you prefer.
Senator PASTORE. Would it be convenient for you to come back next Wednesday?
Mr. MARTIN. Yes, sir.
Senator PASTORE. You and Mr. Kohl are very important witnesses to these proceedings and we wouldn't want to go into it now and then bring you back anyway.
Are there any further questions of these witnesses here?
There being none, we will stand in recess until 10 o'clock tomorrow morning.
(Whereupon, at 3:55 p.m. the committee was adjourned to reconvene at 10 o'clock the following day.)
THE CRISIS IN PASSENGER TRAIN SERVICE
THURSDAY, MARCH 4, 1965
Washington, D.C. The committee met, pursuant to recess, at 10:10 a.m., in room 5110, New Senate Office Building, Hon. John Ó. Pastore presiding.
Senator PASTORE. The committee will come to order.
Senator RIBICOFF. Mr. Chairman and members of the committee, I am here to introduce Governor Dempsey, a long-time colleague and a great Governor of the State of Connecticut.
I wanted to come here especially because from my own knowledge and experience Governor Dempsey has assumed a State responsibility for the saving of the New Haven road. He has indicated his interest by substantial sums of money, by frequent consultations with the legislature, and a present willingness, not only as in the past, but in the future, for the State of Connecticut to do its share financially to save the New Haven Railroad.
Consequently, from his experience, working with this problem, as would the Governor during the period as Governor, and since 1961 on his own, you are faced with a witness who understands the problems of the New Haven and is very anxious to do something for the entire road and the people who use it.
I want to thank you very much for allowing me to introduce Governor Dempsey.
Governor DEMPSEY. Thank you.
Senator PASTORE. Now that compels me to introduce my own Governor.
He is a very distinguished son of Rhode Island and a very distinguished son of a distinguished father who has been a friend of mine over the years. John Chafee is a credit to his State and I know he is very much interested in this problem, and we look forward to what his suggestions will be for its solution.
Governor CHAFEE. Thank you very much.
We have just heard from Governor Volpe, who won't be here until 10:45, and it is his suggestion that we proceed. We shall comply with that suggestion.
First of all, I should like very much to thank Governor Chafee and Governor Dempsey, who are very distinguished Americans, for complying with the invitation of this committee to appear here this morning. I don't think there is anyone who understands the problem that besets us with reference to the New Haven Railroad more than these two gentlemen, and Governor Volpe of Massachusetts and Governor Rockefeller of New York.
This committee has before it now four bills: One bill is the so-called Pell bill. That provides for a long-range solution to this problem. In essence, it calls for a four-State compact to set up an authority. This authority would take over and run the New Haven passenger service, and would be authorized to issue bonds with Federal Government guarantee up to $5 million. It would require the States to pick up whatever deficit there may be in the operation of the railroad.
Then we have the Ribicoff bill. The Ribicoff bill is more or less a stop-gap bill. It is intended to meet the emergency. The Ribicoff bill provides for an authorization of $100 million, which is to be matched by the States. That bill is national in scope and applies to any railroad in any part of the country. It does not apply exclusively to the New Haven Railroad. That bill is being supported by the Interstate Commerce Commission.
As I have said, where the railroad itself spends any money for maintenance of its equipment, the amount does not have to be matched by the States. That amount can be contributed by the Federal Government in its entirety. But with reference to the rest of it, each State would have to make a contribution and that would be matched 50-50.
Now we have the Dodd bill. The Dodd bill calls for an authorization of $75 million, which is to be spent over a period of 5 years. That would be an outright grant for the first year, up to $20 million, and then the second year a formula of 80 to 20 would apply, 80 being the Federal Government contribution 20 on the part of the State, and then it declines until it gets down to 50–50.
Then we have the Javits bill. The Javits bill calls for a two-State compact between the State of New York and the State of Connecticut. That provides for a matching formula, to meet the deficit, one-third Federal and two-thirds State, which is to expire in a period of 2 years.
So that is essentially what these four bills would provide.
We are not limited as a committee to any one bill. We can take a combination of all of them, or we can adopt any other ideas that develop during this hearing. But, essentially, all of us are very much interested in resolving this problem, and I think myself that it has been ballooned all out of proportion.
What we are talking about here is an operation deficit of $12 million on the passenger service of the New York & New Haven Railroad, which includes the commuter and the long haul. It was testified here yesterday that the amount that could be allocated for the commuter service in Massachusetts would approximate $1.5 million, and that is already being worked out by the State of Massachusetts.
The amount of deficit that may be attributable to the commuter service in New York comes to approximately $6 million, and I understand a proposal is now being worked upon by the State of Connecticut and the State of New York. This leaves a deficit of about $6 million for the long haul.
The long haul may be included in the merger when that takes place, but we were assured here by Mr. Webb yesterday that is not an elementary consideration of the merger.
Now I think, myself, with the affluence of New England and New York, with the desire of the Federal Government to do what it can in order to preserve transportation in the national interest, I think
if we all put our heads together and develop one single plan, we can readily solve this problem which would be disastrous to the economy of a very important section of this country if we fail to do so.
Mr. Dempsey, I understand that you are our first witness, and we are ready to hear you, sir.
STATEMENT OF HON. JOHN N. DEMPSEY, GOVERNOR OF THE STATE
Governor DEMPSEY. Thank you very much, Mr. Chairman. May I, for the record, Senator Pastore, express to Senator Ribicoff my sincere thanks for his very, very wonderful and warm introduction, and may I say to you, sir, that I concur 100 percent with the remarks that you have just concluded.
Mr. Chairman and distinguished Senators, I am grateful for the opportunity to testify on behalf of the State of Connecticut at this most important hearing.
We in New England, and in the State of Connecticut in particular, have a direct and immediate interest in Federal legislative action designed to help our States preserve essential rail passenger transportation service.
Connecticut has an especially vital stake in such action. Our economic life, and the welfare of great numbers of our citizens, depend upon the continued provision of rail service by the New Haven Railroad.
The importance of the services of the New Haven Railroad to our very survival as a State is clearly set forth in the report on transportation prepared by the Connecticut Development Commission as part of the Connecticut interregional planning program, undertaken with substantial Federal assistance.
With your permission I will file this report in evidence, and call the attention of the committee in particular to pages 11 through 54 of this report, dealing specifically with rail transportation in Connecticut.
The report gives detailed evidence in support of the conclusion which we in Connecticut reached long ago, and that is that the New Haven must be saved.
We cannot accept the loss by 5,000 Connecticut men and women, and their families of the railroad employment on which their livelihoods depend.
We cannot accept the loss of thousands of fine Connecticut citizens who will be forced to leave the State if their journey to work is barred.
We cannot accept the economic dislocation which the loss of these citizens would bring to their home communities.
We cannot accept the factory shutdowns which interruption of freight service would cause.
Connecticut has long recognized not only our dependence on the preservation of essential rail service but also the urgent need for joint governmental action to assure its continuance.
In October of 1960, the Governor of Connecticut joined with the Governors of Massachusetts, New York, and Rhode Island in developing a program of joint State assistance to the New Haven.