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TUESDAY, MARCH 2, 1965

U.S. SENATE,
COMMITTEE ON COMMERCE,

Washington, D.C. The committee met, pursuant to notice, at 10:08 a.m., in room 5110, New Senate Office Building, Hon. John Ó. Pastore presiding.

Senator PASTORE. This hearing will please come to order.

Today the full Committee on Commerce meets to receive testimony on four very important bills which relate to passenger railroad transportation.

The first of these, S. 325, was introduced by Senator Ribicoff on January 7, 1965. It would amend the Interstate Commerce Act to authorize the ICC to provide economic assistance to railroads for the purpose of preserving and improving essential passenger train services and facilities.

Without objection, a copy of S. 325 and an analysis of its provisions will be printed at this point in the record.

(The bill follows:)"

[S. 325, 89th Cong., 1st sess. ] A BILL To amend the Interstate Commerce Act, as amended, to authorize the Interstate

Commerce Commission to assist common carriers of passengers by railroad in preserving and improving essential passenger train services and facilities, and for other purposes

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the “Railroad Passenger Train Assistance Act of 1965."

SEC. 2. The Interstate Commerce Act, as amended, is amended by inserting immediately after part V thereof the following new part:

"PART VI

“PURPOSE

"SEC. 601. It is the purpose of this part to provide for assistance to common carriers of passengers by railroad subject to this Act to aid them in preserving and improving essential passenger train services and facilities, and to encourage State and local governments and their public instrumentalities to extend tax relief and other assistance toward the same end, to encourage the employment of labor, and to foster the preservation and development of a national transportation system adequate to meet the needs of the commerce of the United States, of the postal service, and of the national defense.

"DEFINITIONS

"SEC. 602. For the purposes of this part"(a) The term 'Commission' means the Interstate Commerce Commission.

"(b) The term 'expense’ means expenditures for labor, materials, services and other costs incurred in maintaining, repairing, or renewing road property used

Staff counsel assigned to this hearing: Joseph R. Fogarty and Stanton P. Sender.

in transportation service which are chargeable to the maintenance of way and structure operating expense accounts in accordance with the uniform system of accounts for railroad companies prescribed by the Commission.

"(c) The term 'expenses,' in referring to expenses directly assignable as solely related to railroad passenger service or to that portion of common expenses assignable to railroad passenger service, means expenses assignable in accordance with rules governing the separation of operating expenses, railway taxes, equipment rents, and joint facility rents, between freight service and passenger service prescribed by the Commission.

"APPLICATION FOR AID; CONDITIONS PRECEDENT TO GRANTING "Sec. 603. In order to carry out the purpose declared in section 601, the Commission is authorized and directed to consider the application of any railroad subject to this Act for financial aid in the operation of a passenger train or trains required by the present or future public convenience and necessity. No such application shall be approved by the Commission unless it determines that (1) the continuance of passenger train operations specified in the application is required by the present or future public convenience and necessity; and (2) the granting of the aid applied for is necessary to carry out effectively the purpose of this part. Applications shall be under oath or affirmation and in such form as the Commission shall prescribe. A statement of the findings of the Commission under the provisions of this section shall be made a matter of public record by the Commission with respect to each application considered under the provisions of this part.

"DETERMINATION OF AMOUNT OF AID “SEC. 604. (a) The amount of financial aid extended under the provisions of this section shall be determined on the basis of a final accounting respecting passenger train operations conducted during the calendar year preceding the year in which the application is filed and shall be payable as soon as practicable after the end of each such calendar year.

“(b) The maximum amount of financial aid available to any applicant shall be:

“(1) Expenses incurred by the applicant in the preceding calendar year in the maintenance of way and structures which are directly assignable as solely related to railroad passenger service; plus

(2) Any expenses incurred in the preceding calendar year in the maintenance of the applicants' way and structures by any State, municipality, or other political subdivision, or any public instrumentality thereof, which, if incurred by the ap plicant, would be an expense directly assignable as solely related to railroad passenger service; plus

“(3) That portion of common expenses incurred by the applicant in the preceding calendar year in the maintenance of way and structures which is assignable to railroad passenger services: Provided, however, That the amount of any grant determined in accordance with the provisions of this paragraph shall not exceed the amount of assistance including tax relief, but excluding any assistance available under paragraph (2) above, made available to the applicant in the preceding calendar year by any State, municipality, or other political subdivision, or any public instrumentality thereof, which, in the judgment of the Commission, is reasonably related to the purpose of this part.

"(c) In determining the amount of aid to be extended to an applicant under the provisions of this section, the decision of the Commission shall be final.

"ACQUISITION AND MODERNIZATION OF EQUIPMENT "SEC. 605. In order to carry out the purposes declared in section 601, the Commission is authorized and directed to consider the application of any railroad subject to this Act for financial aid in the acquisition and modernization of passenger cars, including multiple-unit commuter cars, required by the present or future public convenience and necessity. The Commission will apply the same conditions precedent to granting aid under this section as set forth in section 603.

"DISCONTINUANCE OR CHANGE OF CERTAIN PASSENGER OPERATIONS OR SERVICES

"SEC. 606. In the determination of any proposed discontinuance or change in passenger operations or services under the provisions of section 13a of this Act, the Commission shall give appropriate weight to any representations relative to the present or future public convenience and necessity which may have been made by the carrier involved under the provisions of this part and to the amount

of tax relief or other assistance extended to the carrier involved by any State, municipality, or other political subdivision, or any public instrumentality thereof which, in the judgment of the Commission is reasonably related to the purpose of this part.

"ASSISTANCE OF DEPARTMENTS OR OTHER AGENCIES "SEC. 607. (a) To permit it to make use of such expert advice and services as it may require in carrying out the provision of this part, the Commission may use available services and facilities of departments and other agencies and instrumentalities of the Government, with their consent and on a reimbursable basis.

“(b) Departments, agencies, and instrumentalities of the Government shall exercise their powers, duties, and functions in such manner as will assist in carrying out the objectives of this part.

ADMINISTRATIVE EXPENSES "SEC. 608. Administrative expenses under this part shall be paid from appropriations made to the Commission for administrative expenses.

"APPROPRIATIONS “SEC. 609. There is hereby authorized to be appropriated not to exceed $100,000,000 to carry out the purpose of this part, and any amounts so appropriated shall remain available until expended."

SECTION-BY-SECTION ANALYSIS OF S. 325

(Introduced by Senator Abraham Ribicoff, Democrat, of Connecticut,

January 7, 1965) Section 1. Short title: "Railroad Passenger Train Assistance Act of 1965."

Section 2. Amends the Interstate Commerce Act, by adding a new Part VI, as follows:

PURPOSE Section 601. The purpose of this part is to provide Federal financial aid to common carriers of passengers by railroad to enable them to continue essential operations until more lasting solutions to passenger service problems can be put into effect.

Section 602. Definitions. (a) “Commission” means the Interstate Commerce Commission.

(0) "Expense” means expenditures for labor, materials, services, and other costs incurred in maintaining roadway and structures, which include, among other things, roadbeds, ties, tracks, tunnels, bridges, stations, communication equipment and power plants.

(c) “Expenses assignable to railroad passenger service" are those expenses which can be distinguished from expenses assignable to freight service.

Section 603. Application for aid ; conditions precedent to granting.

The Commission is authorized to consider the application of any railroad for financial aid in the operation of a passenger train the operation of which the Commission determines is necessary for the convenience of present and future passengers.

Section 604. Determination of amount of aid.

(a) The determination of the amount of aid to be extended shall be based on passenger train operations conducted during the calendar year preceding the year in which the application was filed.

(6) The maximum amount of financial aid available to any applicant in any year shall be the total of

(1) Expenses incurred in the preceding calendar year in the maintenance of way and structures (see sec. 602 (b)) directly related to railroad passenger service; plus

(2) Direct payments in the preceding calendar year by any State or other political subdivision for the maintenance of way and structures which are directly related to railroad passenger service; plus

(3) Expenses incurred in the preceding calendar year in the maintenance of way and structures which are assignable but not directly related to railroad passenger service (see sec. 602(c)). Federal aid under this subparagraph shall not exceed the amount of aid made available by any State

or political subdivision to any applicant. Section 605. Acquisition and modernization of equipment.

The Commission is authorized to grant to any railroad funds to assist in the acquisition and modernization of passenger cars. The amount of such grant is to be determined by the Commission on the basis of public convenience and necessity.

Section 606. Discontinuance or change of certain passenger operations or services.

Before the Commission shall grant any railroad the authority to discontinue or change any passenger operations or services, the Commission shall give appropriate consideration to any previous representations made by an applicant under this part that the future public convenience and necessity requires continuation of such service, and to the amount of financial aid granted by any State or political subdivision which is reasonably related to the purpose of this part. Section 607. Assistance of departments or other agencies.

The Commission may use available services and facilities of departments and other agencies with their consent and on a reimbursable basis.

Section 608. Administrative expenses.
Administrative expenses under this part shall be borne by the Commission.
Section 609. Appropriations.

The amount authorized to be appropriated to carry out the purposes of this part shall not exceed $100 million.

Senator PASTORE. The second bill, S. 348, was introduced by Senator Pell on January 8, 1965, and cosponsored by Senator Dodd, Senator Kennedy of Massachusetts, Senator Kennedy of New York, Senator Ribicoff, and myself. S. 348 is designed to provide a permanent framework for the resolution of the crisis confronting the New York, New Haven, and Hartford Railroad. It would authorize the creation of a four-State public authority to operate the New Haven's passenger service on a guaranteed basis. Under the terms of the proposed legislation, the States will pledge to meet the New Haven's operating deficits while the Federal Government will guarantee the bond issue of the authority to the extent of $500 million.

Without objection, a copy of the bill, S. 348, and an analysis of its provisions will be printed at this point in the record. (The bill follows:)

[S. 348, 89th Cong., 1st sess.)

A BILL To encourage the preservation and development of a modern and efficient pagsenger rail transportation service in the northeastern seaboard area by granting the consent and approval of Congress to the States of Massachusetts, Rhode Island, Connecticut, and New York to negotiate and enter into a compact to create their own Northeast Rail Authority, and by guaranteeing certain loans and other credit to such authority

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, TITLE I-SHORT TITLE AND STATEMENT OF FINDINGS AND

DECLARATION OF POLICY

SHORT TITLE Sec. 101. This Act may be cited as the "Northeast Rail Authority Act of 1965”.

STATEMENT OF FINDINGS AND DECLARATION OF POLICY SEC. 102. The Congress finds that it is necessary to the national defense and to the general welfare of the Nation as well as that of the area involved that passenger rail transportation be preserved and properly maintained within the northeastern seaboard area. The Congress therefore declares that it is the continuing policy and responsibility of the Federal Government to encourage the State governments to enter into a compact to create their own Northeast Rail Authority, to own and operate such a system.

TITLE II-NORTHEAST RAIL AUTHORITY COMPACT

CONSENT AND APPROVAL OF COMPACT SEC. 201. The consent and approval of Congress is hereby given to the States of Massachusetts, Rhode Island, Connecticut, New York to negotiate and enter into the Northeast rail authority compact for the purpose of creating a multistate authority to own, lease, or otherwise acquire the right to operate a passenger rail transportation system within the Northeastern States. Such compact shall be as follows:

"NORTHEAST RAIL AUTHORITY COMPACT “The states of Massachusetts, Rhode Island, Connecticut, and New York, hereinafter collectively referred to as signatories, any one of them being referred to as a signatory, do hereby covenant and agree as follows:

"ARTICLE I “There is hereby created the Northeast Rail District, hereinafter referred to as the 'District', which shall embrace Massachusetts, Rhode Island, Connecticut, and New York.

“ARTICLE II "The signatories hereby create the Northeast Rail Authority, hereinafter referred to as the 'Authority', which shall be a body corporate and politic, having the powers and jurisdiction hereinafter enumerated, and such other and additional powers and duties as may be conferred upon it by the legislatures of the signatories and concurred in and approved by Congress. The Authority shall have the right and authority to own, lease, or otherwise acquire the right to operate a passenger rail transportation system within the District.

"ARTICLE III "1. The Authority shall consist of four Commissioners, one each to be appointed by the Governors of Massachusetts, Rhode Island, Connecticut, and New York. Each Commissioner so appointed shall serve for a term of four years.

"2. The Authority shall have a Federal representative, if such a representative is appointed by the Secretary of Commerce pursuant to title III of the Northeast Rail Authority Act of 1965. The function of such representative shall be (a) to have the authority to veto any matter relating to the issue and sale of bonds or other indebtedness guaranteed by the Federal Government pursuant to such title III, and (b) to report to the Secretary of Commerce with respect to the activities of the Authority.

"3. No Commissioner shall have financial interest in any corporation or other entity engaged in the business of providing public passenger transportation within the District or engaged in the manufacture or selling of passenger transportation facilities.

"4. The Authority shall annually elect a chairman from its number and may appoint such other officers as it may require for the performance of its duties, and shall fix and determine their qualifications and duties.

“5. Each Commissioner shall receive basic compensation at the rate of $100 per diem, to be paid by the Authority as current expenses. Commissioners shall be reimbursed for actual expenses, including traveling and subsistence expenses incurred by them in the performance of their duties.

"6. The Authority shall appoint an Executive Director, who shall be responsible for the day-to-day management of the operations conducted by the Authority. The Executive Director shall receive compensation at the rate of $30,000 per annum.

"7. In addition, the Authority may employ such engineering, technical, legal, clerical, and other personnel on a regular, part-time, or consulting basis as in its judgment may be necessary for the discharge of its functions. The Authority shall not be bound by any statute or regulation of any signatory in the employment or discharge of any officer or employee, except as may be contained in this compact.

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