executing a lease, disavowed the lease in court and again the judge terminated the arrangement.

In 1964 the lease agreement was approved by the trustees and the judge but lapsed because of the failure of a local government in New York State to appropriate its share of the proposed plan.

Efforts by New York State to get new equipment on the line and preserve the service are continuing.

Preserving and improving west-end commuter service on the New Haven Railroad:

In considering the future of the New Haven Railroad it is essential to separate the problem of the Connecticut-New York commuter services from the long-distance passenger and freight operation.

The persistent lumping together of all passenger services, commuter and long distance, confuses the situation and gives a false impression that the Connecticut-New York commuters are responsible for the losses of the long-distance service.

Parenthetically, it should be noted that the New Haven operates only 14 miles of passenger track in New York State and enters Grand Central Terminal over 11.8 miles of New York Central trackage. It must be emphasized that the Connecticut-New York commuter problem involves the following:

(1) Getting new and rehabilitated equipment on the line; and (2) Meeting the operating costs.

Governor Dempsey for Connecticut, and I for New York, have offered a plan which will provide the necessary equipment and will also provide funds for operating costs.

The program envisages a joint New York, Connecticut, Federal, and local government effort and offers a fine example of practical intergovernmental cooperation.

The program includes:

A. New commuter equipment: The program calls for the purchase of 80 new, modern design, air-conditioned commuter cars and the interim repair of 50 older cars.

The cost of this equipment is $20 million, but it would be leased to the New Haven commuter service at $1 a year.

To finance the equipment, New York State and Connecticut will each contribute $5 million and the Federal Government, through the Housing and Home Finance Agency, is being asked to match this sum with a $10 million capital grant toward this equipment under the existing appropriation made pursuant to the Federal Urban Mass Transportation Act.

Use of this new equipment will produce maintenance savings of $300,000 annually, based on the railroad's own estimates.

Status: New York State has already appropriated its $5 million. Connecticut has some $2 million already available and is expected to act on the additional $3 million tomorrow.

We shall shortly submit our joint application to HHFA and it is hoped that the Federal agency will move rapidly on the application for the $10 million capital grant as the need for new cars is great and it takes some 18 to 24 months to manufacture the cars.

B. Cash payments for station operation and maintenance: The joint program calls for Westchester County and the Connecticut Transportation Authority to each pay $400,000 annually for support

of the commuter service. This represents the cost of maintaining and operating the commuter stations.

Status: The Westchester County Board of Supervisors has already committed itself to this program as a matter of long-term policy and has appropriated its $400,000 for this year. The Connecticut Transportation Authority has available its $400,000 and has indicated its willingness to participate.

C. Interim financing through a mass transportation demonstration project: Governor Dempsey and I have asked the Tri-State Transportation Committee, the Connecticut Transportation Authority, and the New York State Office of Transportation to jointly develop a $4.5 million demonstration project to run for the next 18 months to 2 years.

This interim program is designed to give financial aid to the New Haven Railroad's commuter services and at the same time develop longer range programs for the preservation and implementation of this service.

Senator PASTORE. Is that all Federal money?

Governor ROCKEFELLER. No, I think I can give you the breakdown right now. A joint application for a $3 million demonstration grant from the HHFA has just been submitted to the Federal agency. The necessary $1.5 million of State participation-$750,000 from both New York State and Connecticut-is available now. So it is $3 million to $8.5 million.

D. State lease and contract for Connecticut-New York commuter service: 10 days ago, Governor Dempsey, of Connecticut, and I directed our staffs to explore the feasibility of entering into a commuter service contract with the New York Central and the New Haven in order to insure the service's continuation and its possible integration into a single operation managed by the New York Central.

We believe that such integrated operation, achieved by lease, trackage rights, rental or other arrangement on the part of the two States through the Connecticut State Transportation Authority and the recently proposed New York State Metropolitan Commuter Transportation Authority will not only preserve, stabilize, and improve commuter service for the future but also effect significant economies through the use of an integrated service out of Grand Central Station Terminal.

Through these measures, the Connecticut-New York commuter service can be assured and any commuter deficit lifted from the New Haven Railroad.

Now, fifth. the long distance passenger service:

Although I have stressed the primary interest the State of New York has in west-end commuter service, the State has also an interest in the long distance passenger and freight services of the New Haven Railroad.

While New York State has a genuine concern over the future of these services, we believe that the Federal Government has the principal responsibility in this area pursuant to its constitutional responsibility for interstate commerce.

The concept suggested in some of the bills pending before this committee that the States served by a railroad should band together by compact into a multiple-State authority to preserve the long distance passenger service appears to run counter to the basic constitu

tional assignment of Federal responsibility for interstate commerce. Federal responsibility for the New Haven is further emphasized by the projected Boston-Washington "super railroad" for which study funds have been appropriated and for which the President has requested $20 million for research and development in his current budget.

Until these studies are completed and the Federal Government has determined what cause of action it intends to follow, the Federal Government should see to it that essential long distance passenger service is maintained and continued.

Proposals for multi-State authorities to subsidize long distance. passenger service must be viewed in a context wider than just the current New Haven Railroad situation.

The Erie-Lackawanna Railroad, for example, is in serious financial condition. It operates long distance passenger service from the New York metropolitan area to Chicago.

An extension of the multiple-State authority concept could call for New York, New Jersey, Pennsylvania, Ohio, Indiana, and Illinois to enter into an interstate compact to insure continuation of this service. And to carry the point further, by this concept New York and other States could be asked to enter into a compact to underwrite unprofitable passenger services by interstate air carriers, for example.

In my judgment, there can be no real or lasting solution to the interstate long-distance rail passenger problem except as the Federal Government provides it.

No facts have ever been presented to indicate whether or not longdistance passenger services can be provided at substantially less costs if the New Haven were more efficiently organized and managed as part of a merged system.

The New Haven Railroad and the Penn-Central merger: New York State has supported the Penn-Central merger and was among the first to suggest inclusion of the New Haven in the proposed PennCentral system. In urging the New Haven's inclusion it always assumed that the merged system would provide essential long-distance passenger service on the New Haven.

From available reports, however, under the projected arrangement between the New Haven and the Penn-Central, the Penn-Central would acquire the New Haven's freight services but not the passenger

services.

Presumably, the merged system would also acquire the New Haven's interests and its share of the incomes from real estate in the Grand Central Terminal area.

In 1964, the New Haven Railroad received over $5 million as its share of the income from this source. As the Grand Central Terminal area continues to be redeveloped, it can be expected that these ground rental incomes will continue to increase.

In light of these facts and the additional savings from the proposed merger of the Penn-Central estimated at more than $100 million annually by the railroads, the question must be raised as to whether public convenience and necessity require a wider assumption of the New Haven's services than the press reports indicate.

If we expect private enterprise to do this job, clearly it must have earnings to meet costs. In the situation before us, the facts are just not available as to whether this is possible.

Because of piecemeal consideration of railroad mergers and the lack of any clear Federal policy, and in the absence of essential data on which to base a judgment, New York and the other three States are being pressed if not coerced into precipitous assumption of a responsibility not of their making and whose dimensions are unknown. The Federal Government and the New Haven Railroad: When in 1962, the national administration ordered a management evaluation of the New Haven through the Whitman Committee, it was expected that a realistic appraisal of the railroad's potential would result from the examination. The Whitman report, or at any rate the portion made available, did not provide the answers or the factual material on which a judgment could be made.

The trustees of the New Haven, during the past 311⁄2 years, have not come forward with any plan for reorganization nor have they made any specific recommendations as to how public authorities could aid the railroad, except for demands that there be a general underwriting of deficits from the several public treasuries.

I need not remind the committee that the States have sufficient difficulty now in meeting their immediate problems without assuming the Federal responsibility for interstate commerce.

New York State, for over 4 years, has realized that the New Haven,. as constituted, is not a viable railroad. We have, however, attempted to deal realistically with the problem within our competence and direct responsibility-the west-end commuter service.

New York State and Connecticut have made a determination regarding west-end commuter service. This service is essential. We are taking the initiative in helping to not only preserve this service, but improve it.

In this task we are asking for some Federal aid under the existing Federal mass transit legislation as this service is a mass transit service. The exact dimension of the need for long-distance passenger service must be ascertained by the Federal Government.

When the actual dimension of the need for this service is ascertained and costed, then the Federal Government should assume its responsibility. If the Federal Government deems this service essential in the interest of the national economy, interstate commerce, and the national defense and a public subsidy is necessary to provide it, the formula of Federal-State contribution for the interstate highway program (90 percent Federal, 10 percent State) might well be applied.

The very fact that the Federal Government is planning to spend $20 million for research and development for a Boston-Washington corridor rail service is a recognition of its responsibility.

I suggest that an action program be quickly undertaken and that such a program clearly reflect the extremely pertinent Federal policy now being developed in regard to a Boston-Washington "superrailroad."

Federal authorities concerned with this program should give careful evaluation to the role the New Haven right-of-way and properties might play in the projected high-speed Northeast corridor rail system.

I do not know whether plans for this super-railroad service involve the Federal Government taking over certain of the New Haven's properties and right-of-way, or whether thought is being given to the alternative of leasing these properties for the program. Nor is it clear

whether private enterprise will be called upon to build and operate this service.

Clearly, only the Federal Government can provide the answers to those questions, and only the Federal Government can therefore resolve the question of the future of the New Haven's long-distance passenger service.

New York State during the past 6 years has committed over $200 million through tax relief, the commuter car program, and other programs in order to help railroads providing services within the State. The States of Connecticut and New York have expressed their willingness to deal with the Connecticut-New York aspects of the New Haven Railroad commuter problem.

But obviously the States cannot resolve for the Nation the major problem of interstate transportation, of which the New Haven is but one example.

Only through the enactment of a clear national transportation policy can we hope to avoid such crises, and provide for the kind of integrated transportation system the national economy requires.

In this pursuit of a solution for the interstate problems of the New Haven Railroad, your committee can make an important contribution in this respect.

Thank you very much, Mr. Chairman, for your kindness.

Senator PASTORE. Governor, you consider the commuter service west of New Haven very essential to New York and Connecticut? Governor ROCKEFELLER. Mr. Chairman, that is correct.

Senator PASTORE. You are cognizant of the fact that a petition has already been filed by the trustees to discontinue that service? Governor ROCKEFELLER. I am.

Senator PASTORE. You intend to fill in the gap through the agreement you have made with Governor Dempsey to the effect that you will put up $5 million and Connecticut will put up $5 million, and the Federal Government, which has no transportation program, will put up $10 million, and with that money you will modernize some cars and you will buy new cars and you will rent them back to the New Haven for a dollar. Then each State is to provide about a half a million, if I remember correctly following your statement, either $400,000 or $500,000, to maintain these stations that you talked about. Governor ROCKEFELLER. Plus the tax relief from both States. Senator PASTORE. That you are now giving?

Governor ROCKEFELLER. Yes, sir.

Senator PASTORE. Which is $1.5 million from New York and the complete

Governor ROCKEFELLER. $1.2 million from Connecticut.

Senator PASTORE. Now, in the event that in this process if the main line dies, what happens to your commuter service?

Governor ROCKEFELLER. Mr. Chairman, you present the problem very succinctly, and we have had conversations with the New York Central and Pennsylvania who are hopefully anticipating approval of their merger, perhaps within the year, and who have had conversations with the trustees and the judge and have publicly expressed their willingness and readiness to take over the freight service of the New Haven. Of course, that would involve trackage and we are ready to lease a line, the commuter line, from the Connecticut area to New York City and contract with the New York Central and the trustees