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The original documents are located in Box 1, folder "Aircraft Noise (1)" of the James M.
Cannon Files at the Gerald R. Ford Presidential Library.
Copyright Notice
The copyright law of the United States (Title 17, United States Code) governs the making of
photocopies or other reproductions of copyrighted material. Gerald Ford donated to the United
States of America his copyrights in all of his unpublished writings in National Archives collections.
Works prepared by U.S. Government employees as part of their official duties are in the public
domain. The copyrights to materials written by other individuals or organizations are presumed to
remain with them. If you think any of the information displayed in the PDF is subject to a valid
copyright claim, please contact the Gerald R. Ford Presidential Library.
Stoph
OF
DEPARTATION
A Statement
UNITED STATES OF AMERICA
of National
Transportation
Policy
FORD : GERALD LIBRARY
by the
Secretary of
Transportation
September 17, 1975
Washington, D.C.
Digitized from Box 1 of the James M. Cannon Files at the Gerald R. Ford Presidential Library
FOREWORD
This National Transportation Policy Statement is my initial attempt to set
forth the broad policy considerations that should underlie the Federal govern-
ment's response to the Nation's transportation needs.
Policy is an evolving process that reflects and builds on existing laws,
precedents, programs and public perceptions. It indicates the changes that are
required to move toward a better transportation system, consistent with other
important national priorities.
Comprehensive policy also reveals to the public the inevitable inconsisten-
cies in laws and programs that arise from our pluralistic political processes and
changing conditions. This exposure is important because it helps us work
toward a more useful definition of Federal responsibility vis-a-vis the private
sector and State and local governments.
We summarize our policy direction and principles in Chapter I: Policy
Overview. The subsequent text discusses those principles in more depth, relating
them to programs and legislative initiatives. We have attempted to state our
views directly and candidly because it is important that the public understand
the reasons and thinking that underlie government decisionmaking.
Since policy formulation is a continuing process, the positions presented
here are preliminary and may be amended and refined as we learn from experi-
ence and as we listen to your views. Also, no transportation policy statement
may be fully implemented unless it has the support of the Congress, Federal
and State public officials, shippers, consumers, the industry and other concerned
citizens. Thus, we invite and urge your criticisms and comments. In fact, your
views are most necessary because a living, national transportation policy must
reflect an evolving consensus of what the American people want and expect
from their transportation system.
WILLIAM T. COLEMAN, Jr.,
Secretary of Transportation.
Washington, D.C. 20590
September 17, 1975
For sale by the Superintendent of Documents, U.S. Government Printing Office
Washington, D.C. 20402 - Price $1.15
Stock Number 050-000-00103-2
TABLE OF CONTENTS
Page
Foreword
i
I. Policy overview
1
The Federal responsibility
1
Multimodal policy
3
Policy principles underlying a national transportation policy
3
Policy priorities
5
Conclusion
10
II. Government and the private sector
11
The charge to the Federal Government
11
Private sector problems demanding Government attention
11
Alternatives for Government action
12
Non-economic regulation
13
Economic regulation
13
Subsidy
16
Government operation
20
Intermodal relationships
21
III. Federal expenditure programs
23
Direct Federal expenditures
23
Federal assistance to States and local governments
24
Policy for determining the appropriate program level
29
IV. Cross-cutting, national concerns: Safety, environment, energy, civil rights and
the consumer
33
Safety
34
Environment
36
Energy
38
Civil rights
39
Consumers
40
V. International transportation
43
Aviation
43
Shipping
46
VI. Concluding note
49
Appendices
51
iii
I. POLICY OVERVIEW
Transportation has substantially shaped the
safety of travelers, to protect the public from the
growth and development of the United States.
abuse of monopoly power, to promote fair competi-
Waterways led our ancestors to new frontiers.
tion, to develop or continue vital transport serv-
Today, our energy-efficient inland waterways and
ices, and lately to balance environmental, energy
merchant marine seek out new markets. Railroads
and social requirements in transportation planning
fed the hearths of an industrial revolution and
and decisionmaking.
now have renewed significance in the era of en-
In keeping with basic American economic
vironmental and energy consciousness. Highways
philosophy that the private sector should bear
made us the most mobile population on earth,
primary responsibility for meeting the Nation's
profoundly altered our land use patterns, and es-
transportation needs, the Federal government has
tablished the automobile, truck and bus as an im-
usually exercised restraint. Its role is limited by
portant part of the Nation's mobility and economic
the preference accorded the private sector, by con-
activity. Mass transit provided the lifeline to city
centration on issues of national importance and
centers and now offers hope for their revival.
by the finite financial resources available. Its role
Civil aviation extended its reach around the globe
is advanced, however, by our political commit-
and helped design the interdependent world in
ment to improve the economic and social well-being
which we now live. General aviation has greatly
of all Americans.
increased business and pleasure mobility and
opened up formerly unreachable territories. Pipe-
FEDERAL-STATE-LOCAL RELATIONS
lines are vital to energy independence.
The Federal interest in interstate and interna-
To sustain and enhance our economic vitality
and growth, the productivity of our commerce and
tional transportation is mandated by the Constitu-
the quality of our leisure, we need a healthy and
tion and defined by practical requirements of uni-
responsive transportation system. National trans-
formity and connectivity, and, in addition, for
international transportation, such Federal inter-
portation policy must serve these broad goals of
our society by helping to guide the development,
est is circumscribed by international law and for-
financing and maintenance of a safe, efficient, ac-
eign policy. In recent years, laws have been en-
cessible and diverse transportation system. Such
acted on mass transit, environmental quality and
a system should meet the needs of all Americans-
energy conservation which are as concerned with
local transportation as they are with interstate
as passengers, consumers, employees, shippers and
investors-in a way that is consistent with other
and foreign commerce. These laws have expanded
national objectives. The values and priorities of
the definition of Federal interest and require exten-
our society are changing as the land on which we
sive cooperation among Federal, State and local
live is changing, and transportation must blend
governments.
with other national goals in seeking heightened
Now, we must seek a more rational delineation
quality in the American way of life.
of responsibility among the levels of governments.
Most transportation activity involves primarily
THE FEDERAL RESPONSIBILITY
local movement. Consequently, the largest share of
existing Federal assistance programs requires
The Federal government has actively partici-
shared Federal, State and local priorities and
pated in building transportation's infrastructure.¹
decisionmaking. The extent of Federal financial
It has also assumed responsibility to ensure the
participation and program control is a function
of the national priorities served. As we decentral-
1 See Ann F. Friedlander, The Dilemma of Freight Transport
Regulation (Brookings Institution), pages 8 and 9, 1969.
ize authority and increase State and local program
1
to make better decisions and ensure steady progress
adverse effects of present imbalances. As we move
flexibility, States and localities must improve pro-
chaotic changes or abrupt policy reversals. We
each year in reducing accidents, enhancing the en-
toward support of new developments in transpor-
gram management and, where possible, increase
must also realize that financial commitments have
vironment and promoting equal employment op-
tation, we must constantly reexamine whether new
their financial participation in projects that pri-
been made under existing regulatory ground rules
portunity. We need to understand better the in-
programs require alterations in or elimination of
marily benefit their residents. We have a further
and we should be cautious in the application of
direct economic and social consequences of our
existing programs.
responsibility to define residual Federal inter-
theoretical solutions. Changes in public policy
actions, provide for programs that serve the long-
ests-connections to interstate commerce, preserv-
clearly are required. Increased emphasis must be
range public interest, find the most efficient means
POLICY PRINCIPLES UNDERLYING A NATIONAL
ing urban centers, overall national economic and
given to competition and the market mechanism
to achieve our program objectives and protect the
TRANSPORTATION POLICY
social well-being, civil rights, etc.-and to simplify
as a more effective judge of efficient resource al-
rights of the individual and the choice of the
the process by which responsiveness to these na-
location and a more reliable barometer of consumer
consumer.
A national transportation policy must be a liv-
tional priorities is assured.
preference. In air and surface transportation, we
MULTIMODAL POLICY
ing, evolving process responsive to changing con-
will seek more pricing flexibility, some liberaliza-
ditions and public perceptions of the Nation's
FEDERAL-PRIVATE SECTOR RELATIONS
tion of entry and exit policy, more efficient and
Underlying comprehensive transportation pol-
transportation needs. It reflects existing statutes
timely regulatory processes and the prohibition of
icy is the recognition that diversity and intermodal
and programs, habits and traditions, proposed re-
We also seek a more rational relationship be-
anti-competitive practices. We will also seek to
competition are essential to an effective transpor-
forms and the direction in which we intend to
tween the Federal government and the private sec-
determine the most efficient restructuring in vari-
tation system. Government policy must move in
move in the future. Certain basic policy principles
tor. The government must promote increased ef-
ous modes and to encourage new methods of in-
the direction of increasing equal competitive op-
help define the contribution that Federal leader-
ficiency, energy conservation, capital development,
termodal cooperation.
portunity among the transportation modes, pro-
ship must provide, consistent with the continuing
job opportunity and productivity through eco-
As these changes are implemented, we also rec-
nomic and regulatory policies that create a climate
moting cooperation among modes, minimizing the
reality that Federal and other governmental re-
ognize that large financial sums have been in-
conducive to healthy competition among financi-
inequitable distortions of government intervention
sources are finite.
vested in reliance, in part, on the present regula-
and enabling each mode to realize its inherent
We believe that the fundamental policy prin-
ally viable suppliers, carriers, operators and modes.
tory system. Therefore, some otherwise laudatory
advantages.
ciples are as follows:
In responding to specific short-term economic
reforms will have to be altered or staged over a
ills of an industry, direct Federal subsidy should
Our motor carriers, taking advantage of a
transitional period to enable appropriate adjust-
1. Government and the Private Transportation
be considered only as a last resort. We must recog-
ubiquitous highway network, which is paid for
Sector
ment to market conditions. We will evaluate the
nize that sustaining or restoring the basic health
only as it is used, have the ability to provide door-
consequences of each modification to assure that
a. A dynamic, competitive and efficient private
of the economy will create more certainly con-
to-door service for a broad range of commodities
the financial viability of the industry is preserved
sector should meet the Nation's transportation
ditions in which an efficient, well-managed indus-
with great flexibility as to time and nature of serv-
and other public interests are being served.
needs to the maximum extent feasible.
try will thrive, creating jobs and providing low-
ices. Similarly, intercity buses, using this highway
b. The private sector and government should
cost service. At the same time, Federal action
network, can provide service between densely
PUBLIC INTEREST RESPONSIBILITIES
interact effectively, performing functions and
populated cities, as well as between towns and
should not impede the ability of well-managed
pursuing priorities for which each is best suited,
firms to realize a reasonable rate of return on in-
Whereas less government intervention through
villages. Our water carriers can handle bulk com-
working in a mutually reinforcing way where ap-
economic regulation is desirable, this should not
modities at low cost between regions endowed with
vestment and attract the necessary capital to en-
propriate and at "arm's length" where necessary.
be at the expense of consumer protection or the fi-
adequate waterways. Our railroads can transport
able expansion and the purchase of safe, modern
c. Representing 10 percent of the Gross National
nancial well being of the industry. Government
a wide range of commodities economically over
Product, the transportation sector must attract
and environmentally sound equipment.
should devote sufficient resources to the develop-
long distances from major sources of supply to
adequate capital for sound investment in the fu-
Unfortunately, the Nation's economic regulatory
ment and enforcement of reasonable standards of
major points of demand. When speed is important,
ture and promote a stable and growth-oriented
structure in transportation has not kept pace with
safety, environmental protection and civil rights,
our air carriers can deliver high-value goods over
economy by exercising fiscal responsibility, help-
changes in industry and the economy. Responsi-
consistent with cost-benefit analysis where appro-
long distances. Passenger services provide a range
ing to control inflation and creating employment
ble action is needed to reform and modernize the
priate. Government must also promote consumer
of price, speed and quality options that respond
opportunities.
regulatory system in which surface, air and water
participation in public decisionmaking.
to varying consumer demands based on the dis-
transportation operate/However valid the original
Energy conservation has become a key deter-
tance to be traveled, the ability to pay and con-
2. U.S. International Transportation Concerns
purpose of promoting a fledgling industry and
minant in transportation decisionmaking. We
venience of access.
a. In a world of increasing international inter-
protecting the public from the tyranny of monop-
must be prepared to sacrifice some of the conven-
In designing a government response to the prob-
dependency, transportation must protect vital na-
oly or the chaos of predatory competition, the
iences long enjoyed in a world of cheap and plenti-
lem of a particular transportation mode, we must
tional interests by
public perception of the system now is that it
ful energy for the longer range preservation of
recognize and evaluate the consequences of gov-
(1) Enabling the United States to compete ef-
serves primarily to foster security in the industry
mobility.
ernment action on the competitiveness of other
fectively in the world market;
it is designed to regulate. In its operation, the
In striving to achieve progress in these areas,
modes. Although consistency and complete equity
(2) Enabling people, freight and mail to travel
existing regulatory structure is too often outdated,
we are not dealing in absolutes. The statutes, the
are not always possible in the government's allo-
abroad at the lowest possible price, consistent with
inequitable, inefficient, uneconomical and even ir-
courts, administrative processes and analytical
cation of resources to transportation, we must
rational
procedures provide the tools for weighing relative
make a concerted effort to remedy the imbalance
:A tabulation of transportation expenditures of all kinds (in-
cluding outlays for intermediate goods and services which are
values and the parameters in which discretionary
of past actions and assure fairness in future ac-
eventually adjusted out in GNP accounting procedures to ell-
We should seek balanced reform of the Federal
tions, or at least fully recognize and weigh the
minate double counting) would yield a sûm approximating one-
regulatory process-not deregulation, sudden
judgment is exercised. We need to use these tools
fifth the size of the GNP.
3
2
good, safe and regular service and an appropriate
(1) Promoting equal competitive opportunity
(5) Recognition of the real costs of transporta-
performance ¹ and its more intelligent and socially
rate of return on capital;
for all forms of transportation;
tion services, including their environmental con-
responsible utilization are matters of urgent and
(3) Enabling U.S. carriers to compete effectively
(2) Encouraging cooperation, connectivity and
sequences;
continuing concern. We will seek to preserve and
with foreign carriers;
integration among the modes;
(6) Allocating limited Federal resources on the
maximize its unique contributions. At the same
(4) Supporting national security requirements;
(3) Recognizing that previous policies premised
basis of comparative merit without reference to
time, however, we will strive to increase its energy
(5) Reducing dependency on foreign energy
on the monopoly power of individual transporta-
fixed trust fund revenues;
efficiency, economic and socially responsible use
resources;
tion modes need to be reexamined and regulatory
(7) Encouraging the user to pay for the full
and safety. We will continue to work with State
(6) Supporting continued U.S. leadership in
policies adjusted accordingly.
cost of Federally financed services and facilities,
and local governments to make better use of the
technology through sound research and develop-
5. The Federal Role-Predominant Concerns of
except where the public interest correctly dictates
automobile, particularly in urban areas, through
ment planning.
the Federal Government
a subsidy;
carpools, outlying parking facilities and improved
(8) Economic and regulatory policies that en-
traffic management.
3. Public Interests-Enhanced Quality of Life
a. The Federal Government should define its
able transportation industries to earn a reasonable
a. The transportation sector should contribute
role vis-a-vis State and local governments by exer-
rate of return on investment, attract capital, pro-
RAILROADS
substantially to an improved quality of life by:
cising responsibility pursuant to Constitutional
vide expanding job opportunities and protect the
(1) Attaining high standards of safety;
and statutory authority:
legitimate needs of the employee, consumer and
In an era of increasing awareness of the need
(2) Protecting our air and water from pollu-
(1) In international commerce;
investor;
for energy conservation and environmental pro-
tion, reducing excessive noise and supporting sound
(2) Over interstate commerce, particularly in
(9) Reasonable labor policies and practices that
tection, railroads must play a major role. Appro-
supporting the development, viability and mod-
land use patterns and community development;
will enable the efficient use of Federal transporta-
priate government decisionmaking requires a sepa-
èrnization of major interstate networks in rail,
rate discussion of rail freight and rail passenger
(3) Bringing people together and closer to the
tion funds in reducing unemployment and poverty.
highways, air and water;
service.
variety of benefits that our culture and economy
c. The Federal government should improve its
(3) In defining and working to advance na-
Rail Freight Service.-The development and
offer;
tional priorities through persuasion, incentive,
performance measures-in assessing the effective-
modernization of a nationwide, privately owned,
(4) Minimizing the waste of human resources
regulation and enforcement, where the magnitude
ness of alternative Federal program and policy
interstate rail freight system is essential to the
that results from congestion, inadequate trans-
of the problems and their national importance
options and evaluating the health and progress
national interest. Such a system is necessary to
portation service and inefficiency in transport
require a Federal response (e.g., safety, reviving
of the transportation system-even though the
assure at the lowest possible cost a means to meet
operations;
the city centers, energy conservation)
diversity in transportation needs and cost of pro-
with sufficient capacity the increasing transpor-
(5) Providing the lowest cost services to the
(4) In shoring up weak elements of the trans-
viding services make infeasible the formulation of
tation needs of a growing economy and to support
consumer consistent with safety, a reasonable rate
portation system on a temporary basis where the
uniform performance standards for all States and
national priorities of defense, energy conservation,
of return on capital, a sound government fiscal
national interest is served by helping to preserve
localities.
environmental protection and safety.
policy and other public interests;
diversity and prevent nationalization;
POLICY PRIORITIES
Special, short-term Federal intervention and
(6) Promoting the most efficient use of scarce,
(5) To assist States and municipalities on the
support are necessary to restore the operating and
finite and costly energy supplies;
basis of shared responsibility and priorities;
The Department of Transportation must at-
financial viability and modernization of major por-
(7) Creating and maintaining employment and
(6) In direct, selective investments in research
tach special importance to issues involving the
tions of a vital industry in which nine firms have
capital opportunities.
and development, planning and activities that are
more energy-efficient use of the automobile, the
gone bankrupt in the last 10 years and in which the
b. Our transportation system should be accessible
in the interest of national security and other ex-
financial viability of railroads and airlines, and
industry-wide rate of return on net investment
to and provide equal job opportunities for all our
clusively Federal concerns.
more effective urban transportation systems. We
after taxes has averaged only 3 percent over the
citizens-with special recognition of the needs and
b. The Federal government must move in the
must also address on a priority basis the Federal
last 11 years. Improving and modernizing the rail
potential contribution of the elderly, the handi-
direction of encouraging more rational public and
role in water transportation, the highway program
freight system and keeping it in the private sector
capped, the poor, minorities and women. It must
private financing of capital and operating costs in
and rural transportation. These and other critical
requires prompt Federal action to:
respond to varying demands of the tourist, the
the transportation sector, consistent with:
transportation issues should be resolved in the
Provide assistance to the industry in restruc-
family and business. The consumer should be an
(1) Sound fiscal policy and cost controls, in-
context of the policy principles set forth above.
cluding vigorous assessment of the inflationary im-
turing its system along more rational and
active participant in the formulation of transpor-
tation policy.
pact of Federal actions;
efficient lines, reducing excess, duplicative
AUTOMOBILE
(2) Increased participation, where possible, of
capacity and eliminating non-essential routes
4. Multimodalism-Maintaining Diversity and
The automobile is and will continue to be the
from the national interstate network, while
State and local governments in projects primarily
Competition
benefiting their residents;
most universally accepted form of transportation
rehabilitating and modernizing those facili-
a. The strength of our transportation system
(3) More equitable use of Federal subsidies,
in America. It is the most flexible and responsive
lies in its diversity, with each mode contributing
mode and provides the greatest freedom of mobil-
The Department is funding research and development of
insuring that they are necessary to achieve a
an automobile which will have the following characteristics:
its unique and inherent advantages, and respond-
clearly defined national interest and minimizing
ity. It accounts for significant employment oppor-
Not over 3,000 pounds in order to achieve at least 30 miles per
ing to different consumer demands at various levels
their detrimental impact on competing modes;
tunity. But, it is also a major contributor to
gallon, safely constructed to prevent fatalities at up to 50 MPH,
meeting a high level of environmental standards, and designed
of cost and quality of service. The government
(4) Careful assessment of the costs and bene-
fatalities, injuries, air pollution, high energy con-
to be both economically and esthetically appealing to the con-
sumer. See DOT Document Number 8580-207, Traffic Safety,
should preserve and encourage this diversity by
fits of alternative uses of Federal funds;
sumption and congestion. Both its technical
1973, pages 5-7.
4
5
ties remaining in the rationalized interstate
sistent with the evolution of a national inter-
AMTRAK's long term objective should be to
ward price flexibility subject to supervision
state freight system;
improve service and reduce costs through effective
by the CAB. Our entry proposals will free
system; Modernize Federal regulatory policies that
(c) Provide sufficient transitional operat-
management. This may require elimination of
carriers from cumbersome certificate restric-
have prevented the railroads from being effi-
ing support until the lines in the Northeast
services on routes where (a) transportation alter-
tions, permit some sensible expansion by exist-
cient competitors among themselves and with
and Midwest become financially viable.
natives exist, (b) rail passenger service is demon-
ing firms into new markets and encourage
other modes;
Rail Passenger Service.-Many of the reasons
strably uneconomical, and (c) national priorities
some new entrants)
Remedy the inequity of government subsidy
for supporting vital freight service also apply to
do not justify continuing Federal subsidy.
Take measures to foster more efficient use of
to the railroads' major competitors-water
passenger service. But national policy must dis-
Finally, special Federal assistance may be ap-
fuel, consistent with the national objectives
carriers and, to some extent, perhaps elements
tinguish between them. For example, rail passenger
propriate to support development of high-speed
of fuel conservation and market allocation of
of the motor carrier industry;
service does not play the same vital role as does
trains in certain densely traveled regions, such as
energy resources. (We have recommended to
Encourage the continued development of more
rail freight in the Nation's economy and defense.
the Northeast Corridor, where improved service
the CAB a temporary fuel-cost pass-through.
efficient labor and management practices in
Nevertheless, rail passenger service does support
promises to become economically viable and Inter-
Over the long term, the increase of load fac-
the railroad industry.
national priorities of energy conservation, environ-
state highway and airport congestion can be allevi-
tors from 55 percent to 65 percent will pro-
mental protection, alleviation of congestion and
ated by such rail service. A substantial Federal
mote more efficient use of fuel. The Federal
We intend to work closely with the railroads
safety.
investment in high-speed rail passenger service,
Aviation Administration will continue to
and the rail labor unions-through persuasion, fi-
nancial incentive and regulation-to further these
There is a strong Federal interest in determin-
however, raises again many of the complex issues
stress conservation measures.);
ing whether rail passenger service provided by
of equal competitive opportunity among the modes,
Strengthen the financial viability of the well-
policies. Our program to accomplish these tasks
AMTRAK without Federal subsidy can compete
Federal priorities of energy and environmental
managed carriers by ascertaining and en-
involves:
with other passenger modes. To reach a position
conservation, what corresponding changes, if
couraging the optimal domestic industry size,
Assistance, through expedited merger and ac-
where rails have an equal opportunity to compete
any, should be made in other Federal transporta-
number of airlines and route structure to pro-
quisition proceedings, in the creation of a pri-
will require additional Federal investment in re-
tion investments in the corridor (i.e., highways,
vide reliable long-haul trunk line service be-
vately owned and managed appropriate na-
structuring and rehabilitation. If rails cannot com-
airports) and the appropriate sharing of Federal
tween major cities, to assure adequate service
tionwide interstate trunk line rail freight sys-
pete successfully for passenger traffic, a basic
and State responsibility. We will work with the
to smaller communities and to enable healthy
tem which will provide at least two competing
policy decision must be made consciously as to
Congress to develop a program for high-density
competition between efficient carriers, permit-
lines between major industrial points, cities
whether the national priorities justify long-term
corridors, consistent with basic policy principles
ting them to earn a reasonable rate of return
and seaports;
Federal subsidy, and, if so, at what level. In the
set forth above.
on capital;
Federal guarantee of loans to provide needed
interim, our immediate policy for AMTRAK
AVIATION
Modernize Federal financing policies to deter-
capital to rehabilitate deteriorated plant and
includes:
Consistent with general transportation policy
mine when subsidies are appropriate for
equipment and to modernize facilities;
principles, the Administration is formulating an
maintaining essential services that are un-
Reform of the economic regulatory structure
Establishment of a multi-year commitment of
to permit pricing flexibility, abandonment of
Federal support to intercity rail passenger
aviation policy that will serve as a basis for co-
profitable but in the national interest;
service, enabling long-term planning and in-
ordination among Executive Branch agencies, for
Improve the equity of the airports and air-
unprofitable routes and a more efficient han-
advocacy before the Civil Aeronautics Board
ways user charge system;
dling of regulatory procedures;
vestment;
(CAB) and in the submission of Administration
Improve airport planning consistent with re-
Encouragement of State and local govern-
Establishment of a firm limit on that multi-
legislative proposals to the Congress. Our aviation
gional land use planning, projected capacity
ments or shippers to assume responsibility for
year commitment to ensure prudent invest-
policy initiatives include both domestic and inter-
requirements nationwide, fairness among
light density branch lines outside the appro-
ment and economical use of resources;
national issues.
State and metropolitan areas and environ-
priate nationwide interstate freight system,
Establishment of route criteria which will
mental protection (such as noise abatement)
with some transitional Federal economic as-
tend to depoliticize the selection of routes to
Domestic Air Policy Priorities:
Define the government's responsibility for
sistance;
be continued, added or deleted;
Maintain aviation's excellent safety record,
promoting financially viable and competitive
Steps to revitalize the railroad system in the
Placing on AMTRAK the responsibility for
enhance existing safety regulations, drop un-
air carrier, airframe and engine manufactur-
Northeast and Midwest, where eight railroads
the development and promotion of efficient
ing industries;
necessary regulations and continue to upgrade
have already gone bankrupt, as follows:
intercity rail passenger service which will
Recognize and support the development of
the air traffic control system to reflect the needs
(a) Create and assist a private corporation
general aviation, consistent with the need for
permit its management to respond to chang-
of different users;
(ConRail) to operate more efficiently, and
it to pay its own way to the extent appropriate.
ing demand with minimum regulatory inter-
Reform the air regulatory structure through
rehabilitate, much of the properties of seven
ference;
increased pricing flexibility, some liberal-
International Air Policy Priorities:
of the eight bankrupts;
Careful examination of the effect on com-
ization of entry and exit policy over a transi-
Seek a more rational international route struc-
(b) Encourage solvent railroads to pur-
peting modes of government assistance to
tional period, prevent anticompetitive prac-
ture by identifying routes that are in the na-
chase and operate profitably portions of the
AMTRAK;
tices and expedite administrative processes.
tional interest, maximizing fuel efficiency and
Northeast-Midwest bankrupt properties, con-
Encouragement of States to initiate intercity
(We will propose permitting air carriers to
minimizing adverse environmental impact,
We must make sure that any such abandonments do not
rail passenger service in conjunction with
lower prices without regulatory interference
developing improved domestic-international
foreclose proper access to future energy or other essential re-
AMTRAK.
to the direct cost level, permitting some up-
route system integration and establishing the
sources.
7
6
fective cost controls and a substantial State,
ment capability which is commensurate with its
relative roles of scheduled and charter serv-
flexibility in the use of Federal financial assist-
regional and local financial commitment;
legislative responsibilities.
ice. (For example, we will assess the relative
ance and offer new and expanded sources of funds
Encourage the planning and operation of
merits of an air policy for international serv-
for public transportation improvements. States
public transit on a coordinated, metropolitan-
HIGHWAY TRANSPORTATION
ice in which a few U.S. carriers provide most
and metropolitan areas must work together to up-
wide basis.
of our international service in comparison to
date their proposals for Federal funding on the
Highway transportation is essential to the pre-
a system in which U.S. international carriers
basis of changing conditions and a continuing
servation of American mobility and to our eco-
WATER TRANSPORTATION
would be encouraged to have domestic routes
comprehensive planning process.
nomic well-being. We intend to maintain, modern-
and present domestic trunk line carriers to ac-
Many Americans live in suburban places of
Water transportation is energy efficient and cost-
ize and improve our highway system, consistent
quire international routes with feeder service
lower population densities, which are well served
effective. We anticipate increased competition for
with the following policy:
behind major gateways, or variants of the
by the private automobile, and tend to commute
use of the waterways, coastal zones and port areas.
Interstate commerce and national security re-
foregoing.);
to work in central cities, which suffer from the
Because of competing demands for coastal re-
quire that a high level of performance be
Promote a stronger U.S. flag carrier system
adverse side effects of the automobile-congestion,
sources and the need to protect unique ecology, co-
maintained on our Nation's major highway
through an affirmative action program to
pollution-and thus would benefit from public
ordination among Federal, State and local govern-
systems;
represent U.S. foreign and commercial policy
transit. An efficient metropolitan transportation
mental authorities and comprehensive coastal zone
Cooperation among Federal, State and local
interests before international bodies and to
system, therefore, requires a mix of modes, public
planning is essential for port development.
governments and increased program flexibil-
protest vigorously anticompetitive and dis-
and private, properly coordinated and utilizing the
In water transportation, however, the split in
ity will enable each level of government, with-
criminatory practices by subsidized foreign
relative advantages of each.
responsibilities among various Federal agencies
in its sphere of interest, to best determine
carriers;
The burgeoning demand for increased public
complicates the development of coordinated policy
priorities and improve its transportation
Seek fare structures that permit efficient, un-
services, however, has put a serious strain on avail-
and planning and the achievement of balance
systems in thet most cost-effective manner;
subsidized U.S. air carriers to earn a reason-
able public funds, making it essential that Fed-
among competing transportation modes that would
Federal assistance to highway programs
able return on investment in order to attract
eral resources be allocated fairly and used with
result in the most efficient system for the Nation
should be altered to acknowledge that:
capital from the private sector and to provide
maximum effectiveness. Therefore, Federal policy
as a whole.
(1) Completion of the Interstate System is a
job opportunity;
should:
National inland waterway policy should be com-
top Federal priority, especially where con-
Facilitate efforts by the U.S. airframe and
Require analysis of the cost-effectiveness of
patible with national transportation policy. It has
nective intercity links are concerned. Where
engine manufacturing industry to maintain
transportation alternatives as a condition of
become apparent from the increasing criticism of
links are proposed that principally serve local
its leading role in international aviation.
eligibility for Federal assistance for any
adversely affected carriers that use of the existing
needs, we will expect State and local officials
major mass transportation investment;
public investment criteria for the water mode is in-
to justify these expenditures carefully.
URBAN TRANSPORTATION
Require as a condition of Federal funding the
equitable. Some common denominator is required
(2) Older segments of the Interstate System
Urban transportation policy must be part of a
development and implementation of transpor-
against which public investments in alternative
need to be modernized and rehabilitated.
coordinated and comprehensive approach to city
tation system management plans to improve
modes of transport can be assessed. Economic ef-
(3) Flexibility in other Federal-aid high-
and suburban needs. Each urban area is unique-
the efficiency of existing facilities and transit
ficiency and considerations of equity also lead in
way programs should be increased by provid-
with different needs and different development ob-
services and conserve energy (e.g., carpools,
the direction of some form of cost sharing. Insofar
ing State and local officials more options in
jectives-and each should be free to choose for
exclusive bus lanes, higher parking fees)
as it is practicable and administratively feasible.
their selection of projects within broad-based
itself the transportation solutions that best serve
Give increased emphasis to improved service
its objectives. At the same time, urbanized areas
the identifiable beneficiaries of Federally improved
program categories. Federal requirements
in the near term as distinguished from build-
across the country have many transportation prob-
and maintained waterways should bear some share
should be simplified, for example, by accept-
ing new facilities to meet anticipated trans-
lems in common.
of development and operating costs through a sys-
ing certification by the Governors that certain
portation demand over the long term;
Federal policy for urban transportation should
tem of user charges. The Administration is now
State management procedures are equivalent
Regard the present types of fixed rail sys-
at once respond to locally determined transpor-
studying water resources policy, including cost
to Federal requirements.
tems as appropriate only in a few highly pop-
tation goals and serve such national objectives as
sharing for navigation, under the provisions of
(4) The initial planning of most of today's
ulated metropolitan areas where State and
the enhancement of our cities as vital commercial
Section 80 of the Water Resources Development
highways was undertaken when energy was
local land use and development policies are
and cultural centers, control of air pollution, con-
Act of 1974.
cheap, considered in plentiful and unlimited
servation of energy, access to transportation for
explicitly committed to the generation of high
The probable extension of a U.S. economic zone
supply and environmental considerations were
all citizens and particularly the disadvantaged,
densities sufficient to support these modal
to 200 miles, along with increased off-shore drill-
not as prevalent. Now, we encourage State and
facilitation of full employment and more rational
choices on a cost-effective basis;
ing, the need for increased port capacity and the
local communities to rethink some of the high-
use of land.
Support efforts to develop a type of rail sys-
importance of protecting the marine environment,
way planning already done so as to determine
Because mass transit serves all these objectives,
tem which is much less costly to build, operate
will have a significant impact on Coast Guard re-
if a particular highway still offers the best
simultaneously and well, it merits strong Federal
and maintain;
sponsibilities. It is imperative that the Coast
transportation alternative. Where it does, we
as well as State and local support. This is now
Give preference in Federal funding to locali-
Guard, which is the primary law enforcement
urge that it be built as soon as possible; where
possible because of the National Mass Transporta-
ties that demonstrate consistency with broader
agency on the high seas as well as the agency re-
it does not, we urge policies that do not place
tion Assistance Act of 1974 and the Federal-Aid
community development goals, effective proc-
sponsible for maritime safety, have an enforce-
an undue disincentive on the alternative.
Highway Act of 1973, which provide greater local
esses for resolving jurisdictional conflicts, ef-
9
8
(5) Funding authorizations for highway
Reform the regulatory structure to remove
transportation programs should be adequate,
outmoded constraints on competition among
but consistent with other transportation and
carriers and modes;
national priorities; they should not be affected
Develop incentives for more efficient inter-
either way by the current revenue yields of
modal services through research, development
gasoline or other automobile taxes.
and demonstration programs;
The special problems of urban areas require
Identify and eliminate unreasonable barriers
an intermodal approach, utilizing the option
to intermodal cooperation-encouraging
II. GOVERNMENT AND THE PRIVATE SECTOR
to transfer Federal highway funds to mass
cross-modal terminals, through ticketing,
transit, where appropriate, and improving
multimodal ownership and container shipping
National transportation policy must reflect the
taged, poor, elderly, and handicapped, and
traffic management practices;
where efficiency, lower prices and convenience
Federal government's responsibilities and objec-
preventing monopolies or undue preference or
The special problems of rural America must
to shippers and consumers are the conse-
tives relating to the private sector of our econ-
discrimination;
be separately addressed and programs de-
quence;
omy. In this chapter, we will examine:
Promoting efficiency and productivity of
veloped to meet its particular needs; 5
Improve our information base, measures of
The broad policy set forth in the Department
transportation services.
Since large segments of the Nation's high-
performance, cost-benefit methodology and
of Transportation's statutory charter and re-
way infrastructure are now in place, we must
planning and program evaluation capability
lated laws;
PRIVATE SECTOR PROBLEMS DEMANDING Govern-
address the future requirements for and uti-
to respond more efficiently to transportation
Private sector problems currently demanding
MENT ATTENTION
lization of the Highway Trust Fund;
needs and understand the indirect effects of
government attention;
Vehicle and highway safety remains a high
our actions;
The range of policy instruments available to
Until some entirely new mode of transporta-
priority which we share with State and local
Recognize the need for a fair return on capital
the government;
tion technology emerges, the Nation's required
governments;
by the private sector providers of transporta-
Policies concerning non-economic regulation,
transportation infrastructure is for the most part
We will seek a more competitive trucking in-
tion services and the need for sound fiscal
economic regulation, subsidy, government
in place.¹ What is needed is not more capacity, but
dustry, eliminating archaic and energy-in-
responsibility in the provision of transporta-
operation and intermodal relationships.
modernization, repair and more effective utiliza-
efficient constraints on service;
tion services supported by public funds.
tion of existing capacity.
Intercity bus service meets an important na-
THE CHARGE TO THE FEDERAL GOVERNMENT
The immediate financial prospects of the private
tional need for economic travel between cities
As we implement our national policy, we will
transportation industries tend to reflect the gen-
and smaller communities.
monitor the effect of Federal actions in terms of
The Department of Transportation Act of 1967
eral health of the economy, both its structural
the following considerations:
calls for the development of national transporta-
soundness and its cyclical fluctuations. For some
CONCLUSION
(a) Is the public getting lower cost, safe and
tion policies and programs that will provide fast,
transportation companies, the outlook today is
As we work toward improving passenger and
efficient service!
safe, efficient and convenient low cost transporta-
threatening; the risk of major failures is quite
freight transportation service by air, water, truck,
(b) Are services accessible to those who need
tion. It establishes the Department of Transporta-
real. This is in part a product of inefficient eco-
bus and rail across the Nation, making more effec-
them?
tion to assure the coordinated, effective adminis-
nomic regulation, the impact of increasing labor
tive, intelligent and socially responsible use of the
(c) Is the private transportation sector operat-
tration of the transportation programs of the Fed-
and fuel costs combined with reduced revenues
private automobile, and protecting society against
ing in a competitive manner?
eral government, and to facilitate the develop-
caused by the economic downturn and, in some
adverse impacts of transportation, we will con-
(d) Is the transportation sector, including the
ment and improvement of coordinated transporta-
instances, deficient management or industry
tinue to emphasize comprehensive planning and
tion services, to be provided by private enterprise
structure.
manufacture of equipment, growing in produc-
multimodal solutions.
to the maximum extent feasible.
Our railroads face a critical need to modernize
tivity, developing new technology, improving
To this end, we will work to:
Consistent with our traditional economic philos-
their existing physical plant, to be freed from the
safety and performance?
Allocate Federal resources more fairly among
ophy, most transportation services are furnished
encumbrance of excessive regulation and to ration-
(e) Is the transportation system sufficiently
the modes;
by private operators. Federal transportation ex-
alize a network financially overburdened (a) by
Resort to subsidies, direct and indirect, only
flexible and adaptable to serve properly changing
penditures represent only three percent of the total.
excess capacity, (b) by a failure to manage physi-
when a clearly defined national interest re-
national priorities and lifestyles and new economic
Therefore, the logical solution to the Nation's
cal facilities properly and (c) by an overly frag-
quires the development, modernization or
and community needs?
transportation problems must be found, for the
mented management structure. Some firms in our
maintenance of essential transportation serv-
(f) Is the transportation sector attracting the
most part, in the private sector.
national air system suffer from serious short-term
ice;
capital it needs to modernize, provide employment
Government's responsibility toward the private
financial problems caused largely by the sharp
and render the desired service?
sector has principally been exercised in:
rise in fuel prices and depressed traffic levels as-
5 We must also review the special temporary and changing
transportation needs of Alaska and recommend programs that
(g) Is the U.S. international transportation sec-
Maintaining availability to the public of vi-
sociated with the economic recession from which
will support the development and transport of new energy and
tor able to compete fairly and effectively with for-
tal transportation services;
we are now emerging. Mass transit, which is re-
other resources, the population influx and access to remote rural
areas.
eign carriers?
Ensuring that our transportation system oper-
versing a 25-year decline in ridership, still needs
ates in conformance with the Nation's broader
better quality of service, better control of its labor
goals, e.g., safety; air quality; energy conser-
vation; national security; reduction of con-
Some additional urban fixed and light rail facilities, essential
segments of the Interstate Highway System and further transpor-
gestion; adequate service for the disadvan-
tation development in Alaska are examples of new infrastructure
10
that is still required.
11
costs and modern equipment and, in a few places,
ALTERNATIVES FOR GOVERNMENT ACTION
bear. The auto fuel economy improvement pro-
of monopoly, regional discrimination and arbi-
rapid or light rail facilities, in order to attract
gram, for example, seeks the voluntary coopera-
trary rate making, and out of a conscious political
greater patronage. The motor carrier industry,
Governmental responses to transportation prob-
tion of industry in producing more fuel-efficient
decision to develop the West. In the 1930's, the
despite a temporary decline in traffic earnings and
lems range from voluntary cooperative programs
autos.
infant truck and air carrier industries were
increased fuel costs adapts to economic downturns
with industry which enable the market to func-
More forceful government intervention includes
placed under regulation in order to stabilize their
better than most other modes and faces no threat to
tion more efficiently (such as the original Auto
regulation (non-economic and economic), subsidy
markets, promote their development and growth
its viability. While the industry generally is far-
Fuel Economy Labeling Program) to direct Fed-
and government operation. These require continu-
and prevent strong competing modes from thwart-
ing well, some trucking firms and independent
eral intervention (such as the Sky Marshal Pro-
ing evaluation because they may create inequities
ing their appropriate development. In the ensuing
owner-operator truckers are facing financial dif-
gram when aerial hijacking was at its peak). The
and inefficiencies.
years, a small part of the inland water mode was
ficulties. The outlook for the inland waterway op-
public looks to government as the only agent that
brought under regulation. Extensive structures of
will properly represent community and societal
NON-ECONOMIC REGULATION
erators is good. The prospects for the intercity
detailed regulations were developed for these sys-
bus industry will be affected by the extent to
interests and also is powerful enough to make in-
When the public welfare is endangered, the gov-
tems. Despite changes in the environment in which
which rising gasoline prices reduce auto travel and
dustry revise its practices. However, from the prin-
ernment must act through regulatory standards as
these industries operate, the regulatory patterns
by rail competition. The maritime industry, ex-
ciple that government should do only what the
soon as it is evident that adequate remedies will
have been resistant to change. In many ways, they
cept for idle tanker tonnage, should face no serious
private sector cannot or will not, it follows that
not emerge through the forces of the market place.
no longer serve the public interest as originally
problems in the immediate future.
government should intervene only to the extent
Safety and environmental protection are two such
intended.
Beyond the need for short-term economic ad-
necessary to serve important public needs.
areas.
Carriers, shippers and passengers frequently
justments, some segments of the transportation in-
The Federal government should operate ini-
The development of sound regulatory standards
face a web of restrictive government regulations
dustry are beset with more fundamental problems.
tially, to the maximum extent, through cooperative
requires public debate and extensive consultation
which stifle competition, discourage innovation
A number of once well-intentioned public policies
measures designed to improve the efficiency and
with industry and consumer groups. Standards
and foster inefficiency. The present regulatory
productivity of transportation systems. Such meas-
have produced operational rigidities and economic
may force industry to incur substantial costs-
structure is in many respects outdated, inequitable,
ures include supporting the development of new
inequities and imbalances among the industries.
costs which may have precluded voluntary re-
inefficient, uneconomical and frequently irrational.
technologies, research and special studies to im-
medial action in the first place. The costs may af-
It often misplaces incentive and disincentive, dis-
These unanticipated and undesired by-products
prove our knowledge about how the system oper-
fect different firms or industries inequitably, de-
torts competitive advantage, protects inefficient
of past Federal actions constitute an agenda for
ates, the collection and compilation of planning
pending upon the changes each finds necessary to
carriers from effective competition, overrestricts
current policy attention. Operations under monop-
data and selected experiments and demonstrations.
achieve compliance. The adoption of uniform per-
market entry, artificially inflates rates and mis-
oly and franchise have thwarted the business in-
Because of the importance of controlling the costs
formance standards (which give all parties the
allocates our Nation's resources. Under the current
centives which prevail in other markets, resulting
of transportation services, we are placing greater
same performance target) rather than uniform de-
system, for example, many products bear a higher
in distortions clearly detrimental to the public in-
emphasis on seeking out and testing improved
sign standards (which would impose on everyone
price tag because price fixing and other forms of
terest such as high prices, the cross-subsidization
methods of operation and on developing more
the same detailed product specifications) not only
shelter from competition sanctioned by our regula-
of some uneconomic markets by others and the pre-
efficient equipment and better techniques for the
is more even-handed, but will usually result in
tory agencies protect the least efficient carriers and
vention of integration among modes (e.g., rail-wa-
management of labor and facilities. The govern-
lower long-run costs to the consumer.
permit rates far over cost. The inflexibility of these
ter, rail-truck).
ment must ensure that the benefits of research and
The standards adopted must strike a judicious
outmoded regulations impedes the development of
To be effective, government must function as an
development are made available to private enter-
balance between results achievable, costs and sec-
lower cost, more efficient national transportation.³
adaptive system, continually seeking a judicious
prise and other governmental agencies through
ondary impacts. Complex transportation problems
The challenge today is to revitalize the privately
balance between preserving the vitality of a free
effective dissemination programs and appropriate
involve multiple agencies, multiple measures of
owned but regulated segment of the transporta-
incentives for their use.
good and often the redistribution of income. Sel-
tion system, while assuring that essential service
market and responding to the failure of the mar-
When the public interest requires that govern-
dom are we able to optimize only one given factor,
is maintained, that adequate safeguards are pro-
ket to provide the public with essential transporta-
ment intervene to change an industry practice, we
or enjoy the analytical luxury of absolute measure-
vided against the abuse of economic power and
services. Both the symptom-inadequate or un-
prefer to begin the process by working jointly
ment. We must be sensitive to second and third
that well-managed firms have sufficient earnings to
responsive market performance-and the systemic
with the private sector through voluntary coop-
order effects and care must be taken to ensure that
attract capital. The key to this policy, we believe,
problem-outmoded policy and regulation-need
erative programs. Joint industry-government ac-
the standards will achieve an overall net benefit
is increased reliance on competitive forces, free of
to be under constant review.
tion-including, where appropriate, the consumer
for the public. Finally, we must keep standards
unneeded regulatory constraints. Obviously, com-
In addition, the public interest requires a con-
or other representatives of the public-provides
under periodic review, evaluating their validity
petition implies the possibility that some poorly
tinuing Federal effort to mitigate the undesirable
greater opportunity to exploit the superior
under changing conditions and advancing tech-
managed enterprises will fail. Bankruptcies do not
side effects of transportation where the normal in-
technical knowledge resident in the industry
nology.2
necessarily signal the ill health of an entire indus-
centives of the private market place are inade-
and also enables the suppliers and operators
ECONOMIC REGULATION
try; in fact, they may serve the public by weeding
quate to the task. Substantial government inter-
to introduce changes gradually into their complex
The railroads were brought under Federal eco-
out the inefficient. The presence of the government
vention has become necessary to ensure safety, con-
and highly interdependent systems. A cooperative
nomic regulation in 1887 in response to complaints
should not render inoperable the rules or the risks
serve energy, reduce crime and minimize adverse
program will enable the industry to adapt to new
requirements more efficiently, minimizing the
3 More detailed descriptions of current problems may be
environmental effects. These issues are developed
Non-economic regulation is discussed more fully in Chapter
found in Chapter Five of the Economic Report of the President
Four.
more fully in Chapter Four.
added cost which the consumer must eventually
which was transmitted to the Congress in February 1975.
13
12
that prevail in other areas of commercial enter-
To reverse this decline and restore competition
far above the fully allocated costs of providing
shipping public, they also discourage pricing flexi-
prise. Unfortunately, in our regulated markets, too
as a primary concern, we have proposed amend-
service while others do not even cover their var-
iblity and service innovation by collusive price set-
many operators want to be protected and to be
ments to the Interstate Commerce Act to provide
iable costs. This results in some shippers sub-
ting and tend to hold rates above a competitive
guaranteed profits. For the government to continue
more competition among railroads and between
sidizing other shippers and in misallocation of
and compensatory level. We would prohibit rail-
to encourage this expectation, when essential trans-
railroads and other modes. We have also proposed
traffic among competitor modes. Railroads should
road and motor carrier rate bureaus from. voting
portation services are not being threatened, is a
a limited experiment in which certain commodities
be able to attract additional traffic by reducing
on single line movements and limit consideration
disservice to the public.
not regulated for truck and barge would not be
rates on overpriced rail service and removing the
of joint line rates to those carriers which partici-
Priorities for Reform.-In our current reex-
regulated for railroads. But, restrictions on undue
subsidy from that traffic which is not paying its
pate in the joint movement. We would also pro-
amination of regulatory policy, we are taking a
preference and predatory pricing practice would
way.
hibit rate bureaus from taking any action to sus-
much harder look at the way present regulation
remain. The experimental program, moreover.
We have proposed a definite time limit for com-
pend or protest rates. These changes would specify
protects markets and the effects of this protection
would apply only to certain selected areas where
pleting Interstate Commerce Commission (ICC)
those rate bureau activities that cannot be ap-
on cost-based prices, optimum productivity and
the railroads would be in effective competition
rate hearings and the establishment of a no-sus-
proved by the Commission and which will no
energy efficiency. We will work to achieve specific
with other modes.
pend zone in which carriers could introduce non-
longer be immunized from the operation of the
reforms in the regulatory system by advocacy be-
Similarly in aviation, we propose amending the
discriminatory rate changes without fear of Com-
antitrust laws. We also intend to propose legisla-
fore regulatory agencies and through proposed
Federal Aviation Act of 1958 to make maximum
mission suspension. Permitting greater carrier ini-
tion to prohibit certain unreasonable anti-com-
legislation. Among our priorities for reform, we
reliance on competitive market forces a primary
tiative in rate setting and requiring an expedited
petitive practices by the airlines.
propose statutory amendments to:
objective of CAB certification. We will soon rec-
ICC review will result in improved service, a more
Abandonment of Unprofitable Operations.-All
Make healthy competition a primary objec-
ommend legislation that will increase competition
economical distribution of traffic among the modes
carriers should be free to abandon unprofitable
tive of regulatory action;
while preserving the important national and con-
and a lower and more equitable overall freight bill
routes and services, except where there is a strong
Allow greater price flexibility and more price-
sumer interests that our airlines serve. We must
for shippers and consumers. Similarly, we will
national interest in retaining them or where State
service quality options, letting competition
move carefully during the transition to a more
propose measures for increasing the price flexi-
or local governments assert a special interest and
establish rates in the market place;
competitive system to ensure that all airlines have
bility of regulated motor carriers and airlines.
will assume financial responsibility. Where there
Prohibit anticompetitive practices and limit
an equal opportunity to adjust to the requirements
Entry-Discouragement of entry by new firms
are Federal, State or local interests in continuing
the right of carriers to set rates by collective
of the market place, that they are not penalized be-
and of innovation and new technology have been,
transportation services that are not economically
agreement through rate bureaus which are
cause of financial turbulence that a transitional
in some instances, an unfortunate by-product of
viable, then the nature of the interest, the route
immunized from antitrust law;
environment could foster and that the objectives
the regulatory proces. In naturally competitive
or service required and the responsible level of
Liberalize somewhat restrictions on carriers
of increased efficiency and safer service are in fact
markets, eased entry will produce more efficient
government must be identified and the level of
entering markets with new services and re-
being achieved. At the same time, we will study,
service, innovative technology and lower prices.
support determined through the appropriate po-
quire prompt regulatory consideration of their
and then recommend, what the appropriate market
We will encourage somewhat more liberal entry
litical process. Our abandonment polices, however,
requests;
structure of the domestic and international air
Permit carriers greater freedom to abandon
carrier industry should be.
policies, recognizing the need to balance freedom
must recognize (1) the need for sufficient advance
Price Flexibility.-For all regulated carriers, we
of entry with the requirements of safety, financial
warning to the communities affected and (2) the
unprofitable operations, discontinuing the in-
fitness and reliable and accessible service to all
fact that many communities were organized
equitable policy of cross-subsidization;
must replace overly rigid and inefficient price
consumers. We must also recognize as we make
around present rail or other facilities and thus
Abolish archaic constraints on service that
structures. Artifically low ceilings have held some
waste fuel and encourage inefficiency;
rates below competitive levels, driving businesses
changes that financial commitments have been
alternative methods of transportation must be
developed.
Encourage intermodal competition;
into financial crisis and preventing adequate main-
made under the present rules; thus, some of our
Our experience with the railroads teaches us
Encourage intermodal joint use of facilities.
tenance of facilities or investment in modern and
proposals will contemplate a transitional period.
that we cannot continue to ignore the real cost of
safer equipment. Artificially high rates above com-
Anticompetitive Practices.-Anticompetitive
Promoting Healthy Competition.-Outmoded
petitive levels have deprived consumers of lower
maintaining unprofitable services by prohibiting
practices are inconsistent with a policy of promot-
regulation has stultified the ability of the market
cost service and industry of the revenues that
exit or abandonment and by acquiescing in, if not
place to act as the ultimate arbiter of efficiency
ing greater reliance on market forces. Regulatory
would be generated by broader consumer partici-
encouraging, cross-subsidization. One consequence
and price. The current regulatory system prevents
agencies should not adopt policies that permit anti-
pation. We should move in measured pace in the
of such a practice is that firms are forced to post-
railroads from effectively competing for the kind
competitive practices where there are competitive
direction of greater price flexibility.
alternatives available that will serve the national
pone capital investment necessary to keep their
of traffic they can best handle by restricting cer-
We should encourage cost-based rates and
facilities modern, safe and efficient. Customers in
tain movements and prices. As carriers of bulk
interest as effectively. Under Section 5(a) of the
quality/cost alternatives that will meet the full
material and large shipments, railroads compete
spectrum of consumer needs with safe, reliable and
Interstate Commerce Act, regulated carriers are
profitable markets should not be forced to subsi-
dize those in unprofitable markets. Stockholders
with predominantly unregulated water carriers
accessible services, while optimizing the produc-
permitted to establish rates through rate bureaus
and employees should not have to face corporate
and pipelines, as well as with trucking, a substan-
tivity and efficiency of the industry.
approved by the ICC. Although rate bureaus pro-
We have proposed price flexibility for the rail-
vide valuable services to their members and the
bankruptcy because their firms are forced to con-
tial proportion of which is unregulated. In part
tinue nonprofitable services.
because of its inability to compete with these
roads, permitting carriers to set rates to reflect
We have proposed to the CAB that air carriers be permitted
A more flexible exit policy will enable each mode
unregulated competitors, the railroad industry
their efficiencies as long as they do not fall below
to pass through increasing fuel costs. We will also propose legis-
to concentrate on the kind of services it best pro-
has declined.
variable costs. At present, some railroad rates are
lation to permit them to lower or raise prices within reasonable
parameters (e.g., as long as direct costs are covered).
vides. As railroads exit from unprofitable local
14
15
service branch lines, motor carriers will find in-
further propose the elimination of unreasonable
Water Carriers.-The inland and Great Lakes
Air.-Privately owned trunk airlines receive no
creased consumer demand for their services. As
constraints on intermodal cooperation and multi-
water carriers do not maintain or pay taxes on the
direct public subsidy while local service airlines
railroads shed their nonprofitable routes, they will
modal ownership.
rights-of-way they use. The inland waterway sys-
receive some for the purpose of providing air serv-
be able to lower prices and concentrate on long-
In conclusion, the Federal regulatory struc-
tem is under constant improvement by the Corps
ice to small communities. The users of airlines pay
haul, bulk commodity service, where their energy
ture serves important public interests. It should be
of Engineers and enjoys the benefits of services
essentially their full share of airport and airway
efficiency and carriage capacity are unique assets.
reformed and made more efficient by expediting its
by the U.S. Coast Guard. International water
costs through ticket and waybill taxes. In contrast,
For the railroads, we have recommended that
review procedures and enhancing its capability to
carriers receive Federal construction and operat-
protect the consumer's interest. As the Supreme
general aviation, also privately owned, pays only
the process for initiating abandonments be modi-
ing subsidies.
fied. We would require prior notice of interested
Court said in American Trucking Associations V.
Motor Carriers.-The extent to which motor
about one-fifth of its share of the costs, primarily
parties, and allow local communities adequate
Atchison, T. & S. F. R. R., 387 U.S. 397 (1967)
carriers bear their share of the cost of construc-
through fuel taxes; the general Federal taxpayer
time to plan for alternatives. On lines that the
"Flexibility and adaptability to changing needs
tion and maintenance of the highways they use
pays the rest.
ICC determines may be abandoned, we suggest a
and patterns of transportation is an essential
has not been fully established. The most recent
Auto.-Privately owned automobiles pay to
mechanism by which States and localities may as-
part of the office of a regulatory agency. Regu-
study, which indicated underpayment, is soon to
maintain our streets and highways through regis-
sure continued rail service by making up the
latory agencies do not establish rules of conduct to
be updated. In any case, motor carriers are not
tration fees, tire taxes, and gasoline taxes paid at
losses. Similarly, for air carriers, we would modify
last forever; they are supposed, within the limits
required to make massive capital outlays for their
the State and local levels. The Federal gasoline
restrictions on exit, except where there is no alter-
of the law and of fair and prudent administration
use of highway rights-of-way.
tax has provided more than adequate capital funds
native service available, in which case a showing
to adapt their rules and practices to the Nation's
Railroads.-The Nation's rail freight carriers
for highway construction.
of sustained losses over a period of time would be
needs in a volatile, changing economy. They are
build and maintain their own rights-of-way and
Government subsidy practices thus reflect a con-
required.
neither required nor supposed to regulate the
often pay taxes on them.
flict in national concerns. On the one hand, gov-
Abolishing Archaic Constraints.-We must
present and the future within the inflexible limits
While the carriers in all of these modes are to-
ernment should provide equitable treatment to all
abolish artificially contrived restrictions on serv-
of yesterday."
day privately owned, our national transportation
modes because the market place is the best barom-
ices and supplies that are wasteful of energy and
Regulation should assure that transportation
policy often affects their respective cost structures
eter of efficiency and consumer preference and
other resources and that impose additional costs
services are reliable, prevent discrimination and
and the relative competitive relationships of the
for reasons of essential fairness. On the other hand,
and higher prices on the consumer. We have rec-
anticompetitive practices, provide the public in-
modes themselves. For example, if the barge oper-
formation about services and rates, encourage the
subsidies may be used to achieve Federal, State or
ommended or will shortly propose eliminating out-
ators were to be charged for rights-of-way now
development of innovative, energy-efficient, and
local objectives or to remedy problems which dif-
moded constraints on services through legislation
constructed and maintained wholly out of public
environmentally-sound transportation systems
fer among the modes, or the government may con-
and by advocacy before the independent regulatory
funds, parallel rail transportation would be better
and assure that national defense requirements and
sciously favor a particular mode because it pro-
agencies, including:
able to compete on price.
vides vital services consistent with other economic
an efficient postal service are maintained.
(a) Phasing out over five years some restrictions
In the passenger area, we see similar disparities:
and social benefits such as energy efficiency, clean
now contained in airline operating certificates (i.e.,
SUBSIDY
Urban Transportation.-Most intracity bus
air and water, elimination of congestion and im-
mandatory stops, prohibitions on carrying local
companies and all subway systems are owned and
proved community development and land use. Con-
traffic, etc.)
Federal subsidies, both direct and indirect, were
operated by the public and require Federal, State
sequently, differences in treatment are to be ex-
(b) Removal of unreasonable restrictions in mo-
in many instances developed without adequate
and local government funds to supplement cash
pected among modes, as well as among segments
tor carrier certificates-circuity, underloading,
consideration of the competing interests or at a
from the fare box in order to keep operating and
within modes. But, public policy now requires that
empty backhauls and some commodity restric-
time when conditions were unlike those of today.
for major capital improvements.
the differences be the result of consciously made
tions;
As a consequence, there are inequities in present
Rail.Some railroads continue to operate pas-
decisions and for specific reasons that are valid
(c) Alleviation of constraints on efforts by rail-
subsidy practice. We must, therefore, periodically
senger trains privately without Federal assistance
today other than habit, politics or historic
roads to eliminate duplicative and excessive facili-
examine Federal subsidies of private elements of
(e.g., the Southern Railway System). AMTRAK,
precedent.
ties, utilize rolling stock more efficiently and re-
the transportation sector for their continued
on the other hand, provides Federally-subsidized
We are now conducting an analysis of the pres-
structure more rationally and quickly.
validity. New requests for Federal subsidy should
rail passenger service which the private sector is
ent structure of Federal subsidies from general
Encourage Intermodal Competition-Regula-
be given careful scrutiny.
unwilling or unable to provide.
revenues to the transportation sector. Since sub-
tory reform will not only increase the efficiency of
The power of subsidy to promote national ob-
Intercity Bus.-Privately owned intercity bus
sidies appear in a number of guises, the results of
each mode, but it will bring about a more rational
jectives is exemplified by the mail rate subsidy
companies receive no direct payment of public
such a study depend somewhat upon what is in-
allocation of market shares among the modes with
which fostered the development of our national
funds and make a partial if not complete payment
cluded as a subsidy and how the amount is com-
each realizing its inherent advantages. More com-
and international air transportation system, now
to government at all levels for their use of the
puted. The preliminary findings on the direct 1974
petitive pricing, liberalized entry and exit policy
the best in the world. Conversely, the inequities
streets, roads and highways through fuel and li-
expenditures by mode indicate great contrast: The
and the removal of archaic service restraints will
that may result from such well-intentioned poli-
cense taxes. They receive a benefit in that they do
marine mode received more than one-third of the
help equalize the rules under which regulated and
cies may be illustrated by the present structure of
not have to make an initial capital outlay for their
direct Federal subsidy monies, while the pipelines
nonregulated carriers compete and offer consum-
Federal programs in support of the different sur-
right of way. They must compete, however, with
received virtually none. Urban mass transit was
ers the widest range of price/service options. We
face freight-carrying modes:
subsidized AMTRAK and local service airlines.
the second largest beneficiary followed by aviation,
16
17
highways and rail. Highway subsidies were about
the Highway Trust Fund is not proportionate to
twice as large as those of rail.⁵
their use of the Federal-aid highways-that there
AMTRAK can establish a financially stable, effi-
Capital assistance to facilitate rationalization
When subsidies are compared on the basis of
are substantial cross subsidies between cars and
ciently managed, service-oriented system, respon-
of excess or uneconomical service and facility
average Federal dollars per ton-mile or per pas-
trucks, between urban and rural users, between
sive to passenger demand. One of the benefits of
capacity;
senger-mile, the disparities come into sharper
those who seldom use the Interstate System and
the subsidy authorized by the Rail Passenger Serv-
Capital assistance on a one-time basis to assist
focus. Intercity rail receives a subsidy per pas-
those who use it extensively-tends to support the
ices Act is that it provides for the first time public
in rehabilitating and modernizing rail facili-
senger-mile that is almost one-third as large as
view that the gasoline tax is more a revenue source
exposure of the real cost of passenger rail service.
ties;
the amount received in revenues, whereas the com-
than a user charge. In FY 1974, the total amount
This will help focus the future appropriate public
Temporary transitional Federal assistance to
parable air carrier subsidy per passenger-mile is
obligated for the highway program was $5.3 bil-
debate on the extent to which the general Federal
local communities and other institutions ad-
about one-twentieth, and that of intercity bus is
lion. The very magnitude of this expenditure
taxpayer should continue to support rail service as
versely affected by rail rationalization.
virtually nonexistent. Similarly, in the intercity
tends to favor auto and truck transportation over
an alternative to the automobiles, air carriers and
movement of cargo, the size of the subsidy per ton-
other modes whether or not the gasoline tax is con-
intercity motor buses which, with the exception of
Such subsidies may take the form of grants,
mile of waterway movement is two-thirds or more
some local service air carriers, provide competitive
loans at varying levels of interest and terms or
sidered a recovery through user charges, as we
(depending upon how certain expenditures are al-
service on a self-supporting basis.
loan guarantees. Loans or loan guarantees are pre-
have assumed in the above comparative analysis.
located) of the amount received in revenues; in
Present Federal subsidy practices clearly act to
Policy Preferences.-In attempting to mitigate
ferred because they indicate the government's in-
the adverse consequences of subsidies on compet-
tention to recapture the investment, or part of it,
contrast, intercity movements by other competing
support some modes to the detriment of others.
modes are virtually subsidy free. Additional de-
Our administrators, legislators and the general
ing modes, we strongly prefer eliminating existing
through more efficient operations.
subsidies wherever possible through establishing
Inefficiencies and inequities in subsidy could be
tails may be found in Appendix 2.
taxpayer may rightfully ask whether the original
A complete analysis of subsidy practices should
rationale that gave rise to them is still valid and
appropriate user charges, rather than creating new
reduced somewhat if each mode were to pay its
also include the subsidy effects of governmental
consistent with today's national priorities. For ex-
subsidies to the adversely affected modes to equal-
own way through user charges. However, there
policies that are designed to meet other objectives.
ize Federal support.
is not necessarily a correlation between the
ample, subsidies from general tax revenues are
In general, capital subsidies should be used for
amount of social benefits derived from a public
One example is the provision allowing taxpayers
provided to privately-owned local service air car-
expenditure and the amount that users would
to deduct State gasoline taxes from Federal income
riers to ensure scheduled airline service will be
expanding or improving the infrastructure, al-
taxes. Although predicated on our long-standing
maintained to certain small communities. Is this
though care must be taken that their use does not
be willing to pay for the benefits. Public
aversion to double taxation, this measure amounts
subsidy, currently in the range of $70 million a
induce excessive or overly expensive capacity. An
expenditures frequently result in spillover bene-
to a Federal subsidization of drivers paying State
year, still in the national interest? Could the air
appropriate use of Federal capital subsidy would
fits to nonusers. Since there is no effective way to
and local user charges in excess of $2 billion per
be the support, on the basis of a reasonable Federal-
charge nonusers for these benefits and since users
taxi industry provide comparable service profit-
are generally unwilling to pay for benefits re-
year. In addition, where the rate-setting policies of
ably (or with lower losses) with its smaller and
local funding ratio, of the heavy initial capital
regulatory agencies cover the costs of less efficient
more economic equipment? Is it in the Federal in-
costs of needed cost-effective mass transit improve-
ceived by others, society would tend to buy less
carriers, the more efficient carriers receive a kind
terest to subsidize short-haul air travel, which may
ments that will generate more passenger revenues
of the particular goods or service than the social
of subsidy. While not a subsidy out of general rev-
compete with intercity buses and passenger
at less per passenger cost but which are beyond the
optimum might suggest. Conversely, users are
enue funds, the practice also has redistributional
trains? Is a subsidy of air travel consistent with
financial capability of most metropolitan areas.
sometimes willing to pay higher charges than the
effects, forcing excessive prices on some consumers
the goal of energy conservation!
Operating subsidies, where authorized, should re-
optimum. Since the amount users are willing to
and providing windfall profit to some carriers.
In the international market, two U.S. flag car-
sult in innovations and improvements in service to
pay in charges can be too much or too little, the
These redistributional effects will be mitigated
riers, after incurring extensive losses, petitioned
the consumer. Care must be taken that they do not
level of public expenditure for a given good or
somewhat by the proposed regulatory reforms
in 1974 for direct government subsidy. In this
become disincentives to making improvements and
service should not be determined exclusively by
cited previously.
case, the Administration developed instead an
better managing operations or substitute for State
the public revenues from user charges.
Another factor in the analysis of how Federal
action plan to help restore the financial health of
or local subsidies. We must also make certain that
In summary, our suggestions for a Federal sub-
expenditures affect the various modes is whether
U.S. flag carriers. Elements of the plan are dis-
such operating subsidies do not result in unreason-
sidy policy are as follows:
a particular tax (e.g., Federal gasoline tax) is
cussed in Chapter V.
able wage costs or other unreasonable operating
(1) Federal subsidies are necessary in certain
considered a user charge or an alternative source
The experience of subsidies for rail passenger
expenses. Further, State or local governments
instances to serve important national purposes.
of tax revenue (comparable to the Federal excise
service has been of a different nature. AMTRAK
should match Federal operating subsidies where
These include conservation of energy, protection of
tax on telephone service or the corporate income
was established by Congress under the Rail Pas-
their residents are the primary beneficiaries since
the environment, preserving the urban centers, re-
tax). The fact that the contribution of drivers to
senger Service Act of 1970 to maintain vital pas-
the higher the proportion of local participation in
lieving congestion in certain high-density corri-
senger service no longer provided by private car-
the subsidy, the higher the level of local respon-
riers. Despite increasing ridership, it remains
dors, promoting rational land use in metropolitan
This tabulation includes direct Federal grants, the cost of
sibility and commitment to the project.
Federally operated facilities, R&D and planning monies, and
unprofitable and has required substantial subsidy.
areas, preventing ultimate nationalization of a vital
several lesser entries after receipts from user charges (e.g., the
In the case of our railroads, where the national
In 1975, Congress authorized $1.1 billion of grants
service and maintaining access to remote areas;
Highway Trust Fund, Airport and Airways Trust Fund receipts)
and loan guarantees to AMTRAK to sustain inter-
interest is served by a viable, competitive transpor-
have been deducted. The net dollar amounts from general reve-
(2) Even when it has been determined that
nues for 1974, less user charges, were (in billions) Marine-
city rail passenger service over the next two years.
tation alternative that is energy-efficient and en-
Federal subsidies are really necessary, they should
$1.668 (of which $.805 is attributable to domestic marine
activity). Urban Mass Transit-$1.140, Aviation-$.973, High-
It should be more clear within three or four years
vironmentally sound, Federal subsidies may be
be periodically reexamined;
ways-$.545, Railroad-$.232, and Pipelines-$0, for a total of
used to restore that mode to a condition where it
$4.568 billion (see Appendix 2, Table 1).
hence whether, and under what service conditions,
(3) Wherever possible the costs of Federal sup-
may compete effectively by providing:
port should be recovered by user charges;
18
19
(4) The effect of subsidies on competing modes
the physical rail plant of many railroads has been
tem restructuring in the region, the plan proposed
ice. Our air carriers offer high speed and special
should be considered and where there is an adverse
permitted to deteriorate. These and other problems
by USRA would facilitate additional changes in
handling of quality goods. Comparable contrasts
effect the preference should be to reduce or elimi-
have created a financial situation in which the rail-
the future, if they prove desirable, so as to develop
in the advantages and disadvantages for the vari-
nate the subsidy or adjust the user charges so that
road industry as a whole is not making an adequate
a truly nationwide, interstate freight system of
ous passenger carrying modes can be cited. Ideally,
all users pay their full share;
return on its investments and is unable to maintain
private railroads.
government policies should not distort these dif-
(5) There should be a preference for capital
its physical plant or to attract new capital. A major
With respect to the rail situation on a national
ferent capabilities and unduly place one mode at
rather than operating subsidies; however,
rehabilitation, modernization, rationalization and
scale, some have proposed that the Federal gov-
the competitive advantage of another.
(a) care must be taken that capital subsi-
restructuring process must take place. Government
ernment purchase and maintain certain parts of
Nevertheless, most of our Federal programs
dies do not induce excessive investment,
ownership of the railroads or their rights-of-way
the rail right-of-way, viewing this as an answer
have been tailored to meet specific problems unique
(b) where State and local governments are
is not in our view the right or necessary answer to
to the Federal government's admittedly uneven
to one mode. Typically, each results in a differ-
involved in the decisionmaking and opera-
this problem. Rather, the government must facili-
treatment of the different modes and as a way of
ent course of government action and each bene-
tion, they should bear a share of the total cost
tate a private sector solution by helping shape an
avoiding total nationalization. As described above,
fits some modes to the relative detriment of the
sufficient to ensure commitment to efficient
efficient nationwide, interstate freight system as a
however, the economic problems of the railroads
others. Although consistency is clearly lacking in
management.
private sector activity. We have proposed a $2
do not reside solely in the right-of-way and can-
the Federal government's dealings with the pri-
(6) Where the political process determines that
billion loan guarantee fund for rehabilitating the
not be solved there. Further, Federal action might
vate sector, consistency is not always possible or
a subsidy is essential to the national interest be-
roadbed and other facilities. Loans would be con-
obscure the other problems which afflict present
appropriate in the world of complex issues.
cause a particular form of transportation serves
ditional on the industry's willingness to restruc-
railroad operations-excess facilities, an overly
these interests more effectively, we should be pre-
ture. Barriers to organization change, such as gov-
Equally of concern has been the inability of some
fragmented structure, a stultifying regulatory
pared to take the next step in order to get the full
ernmental restraints on the merger process, should
firms and industries in our transportation system
environment and those labor and management
benefit of the subsidy. This involves compatible
be reduced.
operating practices which study would show to be
to keep pace with and adapt to changing patterns
adjustments in the Federal support of competing
In the 17-State Northeast-Midwest quadrant of
outdated. In addition, removal of decisions on
of transportation demand. System improvements
modes (for example, by way of illustration only,
the Nation, the railroad viability problem reached
will usually be fostered under policies which pre-
right-of-way expenditures from the private sector
perhaps the discouragement of radially-oriented
acute crisis proportions with the bankruptcy of
could result in excessive investments in facilities,
serve the availability of choice. By maintaining
commuter roads into metropolitan centers that
eight railroads, accounting for roughly 45 percent
compete with mass transit or of new highways,
and operational decisions being politicized. With
the public's prerogative to select whatever modes
of the region's ton-mile freight volume. To deal
of transportation offer the best comparative ad-
or short haul air traffic, competing with a subsi-
with this problem on an expedited basis, the U.S.
regard to the issue of uneven treatment of the
vantage, we encourage innovations in price and
dized high-speed rail system in the Northeast Cor-
Railway Association (USRA) was established
modes, this problem could better be approached
under the Regional Rail Reorganization Act of
through adjusting the user charges on other inter-
service options to compete for patronage. Regula-
ridor). We should not be inconsistent by continu-
ing to subsidize competing modes, thereby divert-
1973 to plan for the restructuring of the region's
city freight modes so that all pay their full share.
tory reforms will better enable each mode to pre-
sent its services to the public in the most economi-
ing traffic away from the preferred mode and
rail system into a more efficient system capable of
decreasing its chances of economic self-sufficiency.
fulfilling the region's rail service needs.
INTERMODAL RELATIONSHIPS
cally efficient manner.
The potential of intermodal services remains for
On July 26 of this year, USRA submitted to
GOVERNMENT OPERATION
No treatment of government-private sector re-
the most part unrealized. The exploitation of the
Congress for its approval a final system plan
lations is complete without consideration of inter-
inherent efficiencies of modes working in combina-
which provides a blueprint for reorganizing the
The final recourse in maintaining essential serv-
participating railroads and commencing the in-
modal relationships. Our national policy has long
tion has been inhibited by an array of physical
ices is direct government operation. The degree of
dustry restructuring which is necessary to estab-
been that the inherent advantages of each mode
and institutional barriers, such as inadequate cross-
government intervention is dictated in part by the
lish a viable rail system. The long-run objective
are to be recognized and preserved. Our motor car-
modal terminals and regulatory inhibitions against
importance of that transportation element to the
is to have full ownership and management control
riers, taking advantage of an extensive highway
through-ticketing or multimodal ownership. We
national economy. In these instances, the policy is
in the private sector. The plan calls for a railroad
network-a right-of-way they pay for only as they
must systematically identify and remove barriers
to minimize the level of detail at which the gov-
structure under which two or three railroads
use it-have the ability to provide door-to-door
to efficient connectivity between modes.
ernment becomes involved in the management of
would operate in the region: ConRail, using large-
service for a broad range of commodities of vary-
The most fundamental intermodal problem,
the transportation enterprise, with the goal of re-
ly the old Penn Central properties, and the two
ing sizes and quantities, and with great flexibility
which requires continuing policy review, is the al-
storing it as soon as possible to the point where
large solvent railroads in the region, the Chessie
as to time and nature of service. Our water carriers
location of Federal resources. In the process of
ownership and control resume in the private sec-
System and the Norfolk and Western. A substan-
can handle bulk commodities at very low cost, but
achieving selected national goals, our administra-
tor.
tial infusion of government funds by way of soft
only at less speed and between regions endowed by
Currently, there is considerable national debate
tors and legislators are called upon continuously
loans and equity investment will be required to re-
waterways of the proper width and depth. Our
on how to maintain the vital services of the trou-
to modify policies and implement Federal pro-
habilitate and modernize ConRail's rundown
railroads can transport a broad range of commod-
bled rail freight industry. The major problems
grams which distinguish between competing
physical plant if it is to have any hope of self-
ities from almost any source of supply to any
in this industry are an excess of facilities, long
modes, between urban and intercity movement, be-
sufficiency. If properly managed, it should be able
point of demand but must now select which rates
delayed maintenance and rehabilitation, an excess
tween passengers and freight and between geo-
to achieve self-sufficiency with such appropriate
Federal financial assistance. ConRail should not
and rights-of-way can be maintained and still pre-
number of operators in certain markets and un-
graphic regions. This requires not only an order-
serve the overall economic viability of their serv-
due industry fragmentation. Since World War II,
necessarily constitute the end of the railroad sys-
ing of national priorities but also a knowledge of
21
20
what national benefits may be realized at what
realized at any predetermined level of expendi-
cost. This analysis should precede the determina-
ture.
tion of where Federal expenditures are most need-
We are now beginning to develop the necessary
ed, at what levels they should be set, how they
capability to make such analyses. This will re-
should be financed and how they should be allo-
quire new kinds of measurement including the de-
cated under our extant Federal structure. Man-
velopment of measures of performance for making
agement of these problems is the subject of the
comparisons on an intermodal basis. The recent
series of National Transportation Studies and
III. FEDERAL EXPENDITURE PROGRAMS
next chapter.
other newly introduced statistical programs rep-
The dilemma for the decision-maker lies in the
resent major steps toward assembling the requisite
Transportation must compete with other impor-
to manage the costs and services in an equitable
paucity of information by which to gauge what
data base and the methodology to measure the
tant national priorities for finite tax resources.
and efficient manner, consistent with other Fed-
improved levels of performance may be realized
performance of various elements of the transporta-
This competition puts a practical limit on what
eral objectives, such as safety, environmental pro-
with different expenditure levels, or by which to
tion system. Such improved information will make
can be accomplished with Federal, State or local
tection and energy conservation (e.g., FAA air
conduct comparative analyses of what improve-
it feasible for government at all levels to demon-
expenditures and opens public debate on the rel-
traffic control and air navigation systems, the con-
ments may be expected with the same expendi-
strate what increased productivity and efficiencies
ative merits of transportation programs. We
struction and dredging of river and harbor chan-
ture in different programs. In the past, we have
are possible by furthering intermodal relation-
should improve the process by which the compara-
nels by the U.S. Army Corps of Engineers; port
been unable to project with any degree of preci-
ships. However, this must be done in a way which
tive effectiveness of Federal expenditures is
controls and aids to navigation functions of the
judged and seek a more rational allocation of
sion where the government can realize the most
U.S. Coast Guard)
supports public decisionmaking but does not im-
Federal resources on the basis of a clear definition
pinge on the private prerogatives we work so hard
(3) Federal planning, administrative and regu-
benefits for the next marginal dollar of expendi-
of national, State and local interests. This requires
latory responsibilities required to serve national
ture or what aggregate national benefits can be
to preserve.
an improved capability to plan comprehensively,
transportation interests (e.g., economic regulation,
to compare benefits and costs and to monitor the
promotion of civil rights)
performance of the system, making adjustments
(4) Financing of international joint ventures
in policy and programs as required to achieve the
(e.g., St. Lawrence Seaway Development Corpora-
desired objectives.
tion)
In this chapter, we are concerned with:
(5) Federal research, development and demon-
The direct transportation expenditures of the
stration to seek new technology not likely to be
Federal government (including research,
developed in the private sector because of inade-
development and demonstration);
quate market incentives or high technological risk;
Federal capital and operating assistance to
(6) Subsidies to private sector firms or corpora-
State and local governments;
tions established by Congress (e.g., AMTRAK).
The financing of Federal outlays.
DIRECT EXPENDITURE PROGRAMS
These issues will be viewed in the context of a
more efficient use of Federal dollars to attain
Among the considerations that are helpful in
national objectives, a more rational division of
determining whether and to what extent the Fed-
decisionmaking and financial responsibility among
eral government should continue to be directly
Federal, State and local governments and the pri-
involved in these programs are the following:
vate sector, and a more equitable policy of financ-
(1) Does the program serve the public interest
ing transportation services and development.
and Federal priorities more effectively than would
alternative uses of the Federal dollar?
DIRECT FEDERAL EXPENDITURES
(2) Is the program meeting current needs, or has
Direct Federal expenditure programs in trans-
it fulfilled or failed to achieve its original pur-
portation are diverse. They include:
pose?
(1) Direct financing of projects or services
(3) Could the need be met as effectively by the
where there is clearly a Federal interest which is
private sector or by another level of government?
not properly the responsibility of any State or
(4) Are there alternative sources of financing?
local government or the private sector (e.g., road
(5) Is it administratively feasible and equitable
for the beneficiaries of the services to contribute
construction on Federal lands, U.S. Coast Guard
to the cost
policing of navigable waters) ;
(6) In what ways may management be im-
(2) Direct support from the general revenues
proved and costs reduced ? Given alternative means
to facilitate interstate and international commerce
of providing essentially the same service, is the
where the private sector probably would be unable
least cost method chosen?
22
23
consolidating the myriad Federal objectives into
Under the Airport Development Aid Program,
We should improve our capability to make cost-
within five years, 17 percent within five to 10 years,
broader more manageable statements of national
the national interest is primarily in the construc-
benefit comparisons of different Federal programs.
and the remainder beyond 1985.
interest, increasing transferability of funds within
tion and improvement of carrier airports¹ serving
For example, if we could measure the lifesaving
Although the payoff for most of our RD&D ef-
and among transportation modes and decentraliz-
the trunk lines and interstate traffic. We have rec-
impact of a given expenditure on Coast Guard
forts begins to accrue over the short term, the plan-
ing decisionmaking.
ommended modifications to this program to ear-
search and rescue operations and on FAA air traf-
ning horizon for important elements of our RD&D
To clarify the relative responsibilities of Fed-
mark increased funds for each carrier airport on
fic control systems, we would be more confident
program is long, taking us beyond the year 2000.
eral, State and local government in Federal as-
the basis of scheduled aircraft operations.
about allocating limited resources between them.
If we are properly to focus our RD&D today, we
sistance programs, it is useful to distinguish be-
In selecting carrier airports for funding, the fol-
must anticipate long-term needs, constraints and
tween programs that serve national interests be-
lowing considerations are relevant:
RESEARCH, DEVELOPMENT AND DEMONSTRATION
investments. For example, we can now foresee that
cause of their predominantly interstate character,
Airport planning should be in conjunction
(RD&D)
petroleum will be in increasingly short supply, an
and programs that primarily serve the transporta-
with planning for the other transportation
implication of which is decreased mobility. A part
tion needs of States and local communities but
modes and consistent with metropolitan and
Federal leadership in stimulating new technol-
of the RD&D program is to recognize, understand
which also involve Federal priorities derived, in
regional development plans;
ogy is needed to save substantial costs in future
and explore the alternative options for coping with
part, from the general welfare clause of the Con-
Federal support should emphasize airports
capital investment and operating expenses, to an-
this situation, both in the short and the long term.
stitution.
that serve national interests but are unable to
ticipate long-term transportation needs and to
Most changes in the transportation system will
finance the full costs (large airports are often
support integrated transportation policy.
PREDOMINANTLY NATIONAL (INTERSTATE)
be evolutionary in nature. To design an effective
the ones best able to finance development with-
Federal funds should not compete with or sub-
INTERESTS
RD&D program, we must perceive how this evolu-
out Federal aid)
stitute for RD&D programs financed by the pri-
tion will take place. Such an understanding will
A strong Federal interest prevails in the comple-
The role of "transfer hubs," such as Chicago
vate sector. Direct Federal expenditures for trans-
help us predict where opportunities for new tech-
tion of an integrated Interstate Highway System,
and Atlanta, should be evaluated and planned
portation RD&D are a reflection of a broader
nologies may arise, and it will permit us to pace
in carrier airport development and operations, in
in terms of the entire air carrier route
Federal desire to help create an economic climate
RD&D programs so that techniques mature at the
promoting the viability of a nationwide interstate
structure.
conducive to capital formation and RD&D in the
time they are needed. This sense of direction and
railroad network serving major freight and, on a
Railroads.-The predominant Federal interest
private sector. Limited Federal funds must serve
sense of timing provide the basis for a rational
selective basis, major passenger corridors and in an
in railroads is the maintenance of a vital nation-
very specific national interests, defined in authoriz-
RD&D plan.
extensive navigable inland waterway system.
wide interstate trunkline high performance rail
ing legislation, through internal programs and by
The value of RD&D expenditures is ultimately
Highways.-The 42,500-mile Interstate High-
freight system, preferably of at least two lines be-
contracting with the private sector. Therefore,
realized in their application in government opera-
way System is 86 percent complete. Completion of
tween major industrial points, cities and seaports.
RD&D policy should concentrate funding on proj-
tions or in the private sector. Consequently, effec-
the remaining high-priority portions of the sys-
The Federal government is also committed to re-
ects that:
tive dissemination of information about new tech-
tem-those systems which are integral, contiguous
storing the víability of efficient intercity rail pas-
(1) Support Federal regulatory responsibilities
nology, community demonstration projects and
parts of the national network-is the top priority
senger service where justified by the volume of
in maintaining the appropriate standards of safety
financial incentives to utilize cost-effective, energy-
of the Federal highway program. We must also
predicted use, eliminating service on those routes
and environmental protection, or serve high pri-
efficient technology are essential elements of a com-
modernize and rehabilitate the portions that were
where public transportation alternatives exist
ority national objectives where adequate private
plete RD&D program.
built in the early days of the program. Segments
and rail passenger service is demonstrably
sector investment may not be forthcoming (i.e.,
Potential multimodal payoff of RD&D is illus-
which are not essential to the network, particularly
uneconomical.
energy efficiency)
trated by the continued application of LORAN
commuter roads in metropolitan areas, should be
Waterways.-The Federal government, through
(2) Enable development of specialized equip-
C-a system developed by the Coast Guard to sup-
given a lower priority for Federal assistance.
the Corps of Engineers, has historically played an
ment to carry out Department of Transportation's
port its own operational responsibilities in aids to
State governments should consider whether the
active role in developing and operating the 25,000
operating responsibilities where the size of the
navigation-to other transportation needs. This
construction of these segments is still consistent
miles of commercially navigable waterways. This
potential market, or the degree of developmental
electronic navigation system may have applica-
with metropolitan planning and the new energy,
low cost mode is vital to the Nation's transporta-
risk, does not stimulate private sector par-
tions in highway traffic safety and emergency res-
environmental and urban congestion situation. We
tion of liquid and dry bulk commodities. Approxi-
ticipation;
cue efforts and as a domestic aviation navigation
have proposed legislative changes in the appor-
mately 300 billion ton-miles of freight per year are
(3) Serve as a catalytic agent in developing
aid assisting nationwide air traffic control.
tionment of funds and the operation of the Inter-
moved on the Great Lakes and inland waterways.
new transportation systems that may ultimately be
state program to accord a higher funding priority
Federal involvement also includes the Coast
FEDERAL ASSISTANCE TO STATES AND LOCALITIES
operated by non-Federal agencies or firms but
to expedite the completion of links essential to the
Guard S regulation of vessel safety and environ-
The nature and extent of Federal financial as-
national network.
where the private sector may not currently per-
mental protection. It is necessary for the Federal
ceive a high enough probability of developing it
sistance to States and localities is a function of the
Aviation.-For over a quarter century, the Fed-
government to continue to maintain and operate
into a viable market;
national interest involved. Our objective is to con-
eral government has provided financial assistance
these facilities and services to realize the Nation's
(4) Provide factual information useful in pol-
centrate Federal resources on today's national pri-
to States and municipalities for use in construction
icymaking and the development of regulations.
orities and increase the power and flexibility of
and improvement of airports for use by civil avia-
1 Air carrier airports are those having scheduled service pro-
rided by carriers with CAB certificates. General aviation air-
The Department of Transportation RD&D
State and local governments to respond to local
tion. The magnitude of this Federal assistance was
ports are not served by such carriers, though they may have
budget is expected to pay dividends in the rela-
needs. We will work with the Congress toward this
increased significantly with the enactment of the
scheduled air taxi service. "Rellever" airports are those which
tively near-term. About 77 percent of the budget
objective by eliminating antiquated Federal re-
Airport and Airway Development Act of 1970.
can accommodate general aviation traffic which might other-
wise use a congested air carrier airport.
for fiscal year 1975 is estimated to yield payoffs
quirements, simplifying the grant making process,
25
24
potential growth of waterborne traffic. Federal at-
rural transportation and highway safety improve-
for general aviation airports to each State to be
in preserving our central cities, vital to the Na-
administered by the State.
tion's cultural and economic life. There is a simi-
tention, in the near term, should focus on integrat-
ment. These three programs represent distinct,
ing the Corps of Engineers planning for water-
continuing, and simply expressed Federal
Rail.-Consistent with increasing State author-
larly strong Federal interest in promoting rational
way expansion with the Department of Transpor-
concerns. To increase the flexibility of the States,
ity over local transportation, it is appropriate to
patterns of development in our suburbs. Low
tation's policy and planning process for all surface
up to 40 percent of the urban funds and the rural
transfer financial responsibility as well. To allow
density suburban residential land use patterns, if
States the time to determine the conditions under
modes.
funds could be transferred from one program to
not balanced by industrial, commercial and higher
the other, although safety funds could not be trans-
which they will accept financial responsibility, a
density residential development, create a costly and
SHARED FEDERAL-STATE AND LOCAL INTERESTS
ferred. And, to facilitate State and local com-
transitional program may be provided. For exam-
inefficient sprawl of metropolitan growth in dis-
parisons of the need for highway construction
ple, we have proposed a transitional program of
regard of shrinking energy, land and environ-
The Federal government's interest in vital
Federal assistance to States and localities for the
mental resources.
nationwide, interstate transportation networks is
with other transportation and community develop-
continuation of railroad branch lines faced with
enhanced by effective intra-state systems which
ment requirements, we have proposed that, with
Effective metropolitan-wide transportation
the exception of the Interstate System, the high-
possible loss of rail freight service in the Northeast
planning is therefore necessary to meet Federal
provide "feeder" lines and access to such interstate
networks.
way program should be financed from general
and Midwest. These lines would not be a part of the
air quality and noise pollution standards and to
satisfy Federal laws protecting historic buildings,
Equally important Federal concerns, mandated
revenues. To provide additional State funds we
Conrail system. The States and localities would
by the Constitution's general welfare clause and
have proposed the State preemption of 1 cent of
assume financial responsibility after a two-year
park and recreational lands. It is also needed to
the current Federal gasoline tax.
transition.
assure that transportation in metropolitan areas
expressed in Federal statutes, create shared Fed-
eral and State interests in developing and main-
The Federal government will maintain its in-
These measures are illustrative of the broad pol-
is accessible to all citizens, including the disadvan-
terest in State and local highway management,
icy of clarifying and strengthening the role of
taged, for whom mass transit may be the only
taining transportation systems that serve the total
needs of communities.
monitoring performance in comprehensive plan-
State governments in transportation programs.
transportation alternative.
Highways.-For some 60 years, the Federal
ning, energy and environmental standards, safety
Administrative steps to simplify the grant proc-
Urban transportation policy must be part of a
government has required and fostered the devel-
and compliance with civil rights requirements.
ess (e.g., by accepting the Governor's certification
coordinated and comprehensive approach to city
Safety.-Highway, motor vehicle and boating
that certain standards are being met) are also
and suburban needs. While mass transit can effec-
opment of strong highway departments at the
safety are shared Federal-State and local responsi-
essential. The process of strengthening State au-
State level to manage the highway program and
tively serve the various Federal priorities, no sin-
insure that regional interests are adequately
bilities. While rail safety is predominantly a Fed-
thority and flexibility is an evolutionary one. We
gle mode can meet all the transportation needs of a
addressed.
eral concern, States should become increasingly
will continue to examine possible further steps and
metropolitan area. An efficient urban transporta-
The Federal-aid highway program has resulted
concerned as Federal, State and local jurisdictions
seek public participation in finding answers to the
tion system requires a mix of modes, public and
in a highway network in excess of three and a half
move in concert to help revitalize the railroads.
following questions:
private, working in a cooperative partnership as
million miles. But as highways were being built,
Because of the nationwide mass production and
(1) What additional program transfers or inter-
elements of a unified and coordinated metropoli-
the Nation recognized that this network was hav-
mobility of automobiles, Federal motor vehicle
modal flexibility would improve State and local
tan-wide transportation system-a system that in-
ing both positive and negative impacts on many
standards are needed, although State and locali-
authority and capability to respond comprehen-
volves not only the automobile and public transit,
aspects of life. Consequently, major changes in
ties have significant, commensurate responsibility
sively to transportation needs (e.g., transfers or
but also easy access to rail passenger and air serv-
the program over the last decade have been de-
in operator performance, inspection and enforce-
funding flexibility among highways, mass transit,
ice.² This is now possible, in part, because of the
signed to assure that highways would not be built
ment. In highways, the Federal government re-
rail branchline assistance, air and water, unified
National Mass Transportation Assistance Act of
without considering the impact of the facility on
tains an interest in broad safety standards for
trust fund, special revenue sharing, etc.) ?
1974 and the Federal-Aid Highway Act of 1973,
the environment and without fully and fairly com-
Federally funded highways; however, States must
(2) Should the States assume greater responsi-
which provide greater local flexibility in the use of
pensating individuals displaced. Moreover, where
provide the specific safety solutions designed to
bility for waterway improvement and operations?
Federal financial assistance and offer new and ex-
fit the unique requirements of each bend in the
(3) How may Federal requirements and proc-
desired, transportation funds formerly directed
panded sources of funds for public transportation
road. We have recommended an extension of the
esses be further simplified or eliminated
improvements. The Urban Transportation Pro-
solely for highways could be used to develop non-
highway transportation where that course of ac-
Federal Boat Safety Act of 1971, to enable the
(4) Should the States be authorized to under-
gram envisioned in our proposed new highway
take additional user financing?
tion made more sense.
Coast Guard to continue its grant program to
legislation would extend this flexibility to transfer
Today, except for a few areas, the Nation's high-
States for two years, during which an evaluation
(5) What should be the nature of Federal sup-
funds between highways and mass transit even
will be made of the effectiveness of this program
port for highways after the national Interstate
further. Ultimately, we would anticipate a com-
way infrastructure is largely in place, although
in helping to reduce recreational boating accidents.
System is completed
plete merger of highway and mass transit funding
we must now move to complete remaining seg-
Safety issues are developed more fully in Chapter
Urban Transportation.-The Federal interest
authority for metropolitan areas.
ments of the Interstate System where essential.
IV.
in urban transportation arises, in part, from trans-
To help elected State and local officials meet
portation laws of recent years, culminating in the
A Federal-local partnership of this magnitude
Airports.-General aviation airports serve pri-
their future transportation needs more effectively
National Mass Transportation Assistance Act of
should be premised on the principle that each ur-
marily the residents of the surrounding area and
and consistently with other State and local goals
are, therefore, an appropriate subject for in-
1974, and from other laws responding to the prob-
ban area is unique-with different needs and dif-
and objectives, we have proposed eliminating
creased State program flexibility and authority
lems of complex metropolitan areas and establish-
ferent development objectives-and each should be
numerous narrow categories of highway funding
with fewer Federal restrictions. We have recom-
ing new Federal priorities for the environment,
The bicyclist and pedestrian should also have an increasingly
and replacing them with three broad programs (in
mended amendments to the Airport Development
community development and energy conservation.
prominent role in urban transportation planning. By improving
Aid Program to provide block grants of assistance
There is a strong and continuing Federal interest
their pathways and safety, there will be substantial benefits to the
addition to the Interstate) : Urban transportation,
community and to the health of its citizens.
26
27
free to choose for itself the transportation solu-
efficiency of service as a condition of continued
tions that best serve its objectives. Federal support
operating assistance.
A special rural mass transportation program
specific modal systems, we can estimate the per-
for mass transportation must therefore be flexible,
(4) Demonstrate commitment to projects pro-
for which up to $500 million is authorized
formance improvements anticipated from a range
relying on local ability to assess requirements,
posed for Federal support by the extent of their
through fiscal year 1980;
of alternative investment levels. From this base, we
identify and evaluate opportunities for improve-
own financial participation.
The Rural Transportation Assistance Pro-
can develop guidelines for the appropriate amount
ment and initiate needed action.
Fixed rail systems are appropriate only in a few
gram, proposed in the Administration's high-
of Federal spending, suggest an optimal geo-
The Federal government, however, has an es-
highly populated metropolitan areas where State
way bill, which would consolidate several
graphic allocation and establish conditions to be
sential obligation to ensure that Federal funds for
and local land use and development policies are
Federal-Aid highway categories, and give
applied to Federal assistance.
mass transportation assistance are used prudently,
explicitly committed to the generation of high
State and local governments increased pro-
Conceivably, performance measures could be
and that there is a solid and defensible basis for
densities sufficient to support these modal choices
gram.flexibility to use funds for (a) highway
used to prescribe minimal Federal standards for
local transit decisions that are premised on Federal
on a cost-effective basis.
construction on or off the Federal systems,
levels of service, comfort and amenities. We do not
assistance.
Additional highway construction in major urban
(b) highway public transportation invest-
recommend this as of now (except in the case of
In assessing future Federal support for mass
areas, including nonessential segments of the In-
ments, (c) safety improvements and (d)
safety and environmental regulation). There are
transit. we believe that preference should be given
terstate System, should be the subject of careful
operating and acquisition assistance for rural
good economic reasons why performance charac-
to communities that
review and planning in order to avoid expensive
public transportation upon the completion and
teristics such as average speeds. congestion levels,
(1) Demonstrate innovative, comprehensive
lawsuits and the needless expenditure of the tax-
evaluation of a current demonstration project;
availability of service, and frequency of service
planning and propose cost-effective solutions, mak-
payer's money on the design of projects that fail
A program of partial Federal financial assist-
will vary across the country. For example, cities of
ing effective utilization of existing facilities. Un-
to meet the many tests of Federal, State and local
ance to maintain rural branch rail lines for
the same population may differ in density, topog-
der Section 5(d) (a) of the National Mass Trans-
priorities. New urban highways are appropriate
two years;
raphy, climate, existing transportation infrastruc-
portation Act of 1974. we will require each urban-
when they are part of a coordinated metropolitan
Research, development and demonstration on
ture, revenues allocated to transportation, cost
ized area, as a condition of Federal assistance, to
transportation plan and will help to alleviate con-
more efficient public transit, medical evacua-
of transit services, average per capita income. con-
submit a staged implementation plan listing the
gestion, air pollution, noise and energy waste by
tion and accident prevention in rural areas;
sumer preferences, location of shopping areas,
measures that will be adopted to improve the effi-
diverting through-traffic around city centers, or
A national policy on rural airports and air
medical facilities, schools, etc. An infinite number
ciency of transit services, conserve energy and im-
from side streets. New highways are inappropriate
service to small cities and remote regions.
of variables would make a national uniform service
prove air quality. This plan should include actions
where they induce more automobile commuters
Rural transportation programs substantially on-
criterion arbitrary, inefficient and inequitable. In
such as a coordinated network of reserved transit
into the city center, encourage suburban sprawl,
courage rural development and growth, help meet
some locations, service options simply cost more
lanes, improved transit scheduling and dispatch-
divert passengers from public transit and violate
the problems of rural poverty by facilitating ac-
than they are worth. Uniform Federal standards
ing techniques. traffic signal preemption, and other
environmental standards. Since some highway
cess to employment, education and better medical
would tend to neglect these cost differences and
bus preference techniques, parking restrictions, dif-
planning preceded recent public concerns with the
services, and insure accessible interstate transpor-
result in uneconomic use of resources. Given the
ferential highway tolls and transit fares to pro-
environment and energy, the State and local
tation for our citizens. A rural transportation pol-
variations in quality of service among cities, areas
mote off-penk travel, staggered work hours, and
communities should be encouraged to review these
icy should be coordinated with other Federal ef-
and regions a more useful concept for evaluating
incentives to shift people from private cars to tran-
proposals to make sure that new highways are
forts in rural development as part of a broader
Federal expenditures and determining the opti-
sit and carpools.
still the best solution to their transportation prob-
national policy on rural and urban growth.
mum level of investment may be service improve-
(2) Demonstrate how transportation planning
lems. Where there is an acceptable and preferable
ment over time.
responds to long-term metropolitan planning ob-
transportation alternative, it should be selected;
POLICY FOR DETERMINING THE APPROPRIATE
One factor in determining appropriate levels of
jectives in meeting urban problems, assuring ef-
where the highway is still the appropriate solution,
PROGRAM LEVEL
Federal assistance (and in designing matching
fective processes for resolving conflicts among jn-
it should be built as soon as possible.
ratios, specific program categories or similar con-
risdictions and interest groups and harmonizing
Accurate, current and comprehensive informa-
ditions) is better information about how State
RURAL TRANSPORTATION
with land use and community development objec-
tion about the performance of our existing trans-
and local governments respond to different Fed-
portation systems is an important policy tool.
eral-aid levels. Federal-aid is only one of several
tives.
The transportation needs of our rural citizens
(3) Propose alternatives that do not involve
Through the National Transportation Studies of
resources available for improved transportation,
have not recently had the visible political attention
high capital investment costs and the prospect of
of urban areas, perhaps in part because some of
1972 and 1974, we have made major strides in
but it will often affect the availability and use of
the Federal concerns, such as air pollution and
assembling such an information base. describing
others. For example, will the availability of high-
substantial continued operating subsidies, and that
will provide improved service in the near term.
congestion, are not as prevalent in rural areas.
the dimensions as well as cost and performance
way funds distort State comprehensive transpor-
tation systems planning by inducing the State to
Government cannot afford indiscriminate massive
Consequently, less has been done at the Federal
characteristics of the major intercity and urban
build highways rather than improve mass transit
open-ended construction programs. We will en-
level to formulate a coordinated rural transporta-
freight and passenger systems.
Will increases in Federal funds or higher Federal
courage urban areas to implement their transpor-
tion policy to meet today's needs. This must and
Information from performance measures is
matching ratios cause States to make additional
tation plans in a time-phased, incremental fashion
will be remedied.
helpful in assessing the effectiveness of alternative
improvements in transportation, shift State funds
so that tangible benefits can be realized from the
We have in place or under development sev-
Federal program and policy options. By compar-
to other priorities or reduce taxes? The Depart-
investment in the short run. We will also empha-
eral elements of a rural transportation policy,
ing information from State and local agencies on
ment of Transportation (hereafter The Depart-
size the need to improve the quantity. quality and
including:
their future investment plans and programs to
ment) receives information about the financial
generalized descriptions of the performance of
conditions of States and localities, their sources of
28
29
funds for transportation improvement and their
Our long-range policy toward planning assist-
sion of this concept to other Federal assistance
general fund rather than the trust fund is clearly
use of Federal assistance for different types of
ance is to provide State and local authorities with
programs should be given serious consideration.
fallacious. The gasoline excise tax is an effective
projects in order to better gauge State and local
more flexibility in the use of planning funds and
We further recommend the development of regular
way to raise needed Federal revenues. There are
responses.
to encourage multimodal planning.
accounting of sources and uses of public funds for
many other Federal excise taxes (telephone tax,
Examples of Analysis of Performance Versus
different transportation activities and the periodic
stock transfer tax, etc.) where the revenues go into
Cost.-Examples of this kind of analysis can be
FINANCING OF FEDERAL EXPENDITURES IN
publication and presentation of this to the Con-
the general funds and services related thereto are
found in the 1974 National Transportation Report.
TRANSPORTATION
gress, to provide information useful in the formu-
in no way controlled by the level of collections un-
In analyzing the effects of different investment
lation of tax policy.
der the tax. So long as there is a deficit in the
With respect to the financing of Federal ex-
levels on the performance of urban transportation
The argument that the gasoline tax should be
Federal budget, there is no rationale for eliminat-
penditure programs in transportation, it has been
systems, the Report points out that local policies
eliminated merely because the tax will go in the
ing a well-accepted method of raising revenues.
pointed out that distinct public benefits will be de-
increasing the relative price of auto travel or other-
rived from a policy that provides for:
wise restraining private auto use may be as effec-
(1) User charges.-Users should ordinarily pay
tive in reducing automobile use and increasing
for the public costs of providing their transporta-
transit ridership as heavy investments in transit to
tion, except where it can be shown that society as a
improve system performance to encourage greater
whole benefits from the protection of a specific sub-
use. Elsewhere, the study relates the aggregate
sidized service, or where special considerations are
level of rural highway investment to future
involved, such as with handicapped or otherwise
changes in speed and accident experience, conclud-
disadvantaged users.
ing that investments significantly smaller than
(2) Flexibility.-States and localities should
those now contemplated in State plans would main-
have the flexibility to transfer funds among modal
tain the current level of service on rural arterial
categories, as their local needs require and as na-
highways. In addition, an analysis in the Report
tional interests and the law permit. Funding flexi-
of large airport hubs shows that the broad applica-
bility can be obtained without the necessity of ear-
tion of certain airport operating strategies is likely
marking user revenues, either for a particular
to reduce the need for capacity-related invest-
modal use or for transportation in general. Trust
ments. While several major airports have applied
funds tend to create special problems. First, ex-
these strategies on their own, their full potential
perience with trust funds shows that a rather in-
has by no means been exploited.
flexible relationship is created between earmarked
revenues and the pressure for expenditures. Con-
PLANNING ASSISTANCE PROGRAMS
versely, total expenditures could be constrained
Planning assistance programs exist for highway,
at an uneconomically low level because of limited
mass transportation and airport planning. In ad-
inflows of revenues. In addition, criteria other than
dition, a need might be identified for State-level
user financing are also involved in setting tax
planning in connection with rail freight system re-
levels associated with specific forms of transporta-
organization and branch line abandonment. We
tion.
strongly encourage a multimodal approach to
Transportation trust funds, hence, tend to dic-
planning. We are also moving away from long-
tate the level of program expenditures. It would
range development plans, sometimes involving
make better policy sense if Federal transportation
large capital expenditures which ultimately can-
program expenditures were decided on the merits
not be financed, and moving toward operational
of such expenditures. in advance of decisions on the
planning and shorter-range programming de-
level of taxation and independent of any fixed
signed to make better use of existing facilities.
"trust fund". Nevertheless we will continue to ex-
To promote more effective metropolitan-wide
plore whether there is intrinsic merit in any type
comprehensive planning, we are encouraging the
of overall Transportation Trust Fund. Our pre-
development of short-range capital improvement
liminary thoughts are that. if such a concept is
programs that have the general support of local
adopted. there should not be a required correlation
officials in urbanized areas. No project for high-
between what the modes contribute to the fund
ways or mass transportation receives Federal aid
and what they receive from it.
unless it is part of such a program. This mechanism
This year, the Administration has proposed leg-
is designed to focus planning attention on more
islation to substitute general fund financing for all
realistic projects and operational strategies with
Federal-aid highway programs except the Inter-
greater promise of being implemented.
state Highway System. In future years, the exten-
31
30
IV. CROSS-CUTTING NATIONAL CONCERNS: SAFETY, ENVIRONMENT, ENERGY,
CIVIL RIGHTS AND THE CONSUMER
The Federal government has a continuing re-
exercised. But we must recognize that we are not
sponsibility to assure safe, environmentally sound,
dealing in absolutes. There is considerable inter-
energy-efficient, economic transportation services,
action between these areas of concern, notably
accessible, where feasible and practical, to all citi-
safety, environment, energy and the costs of serv-
zens and responsive to the consumer.
ices. Attempts to optimize in one area may have
The basic policies addressing these concerns are
adverse consequences for another, or may be too
set forth in the Department of Transportation Act
costly in terms of the actual benefits. We need to
of 1966, the National Environmental Policy Act,
make progress along all fronts, finding what is on
the National Traffic and Motor Vehicle Safety
balance in the long range public interest and pro-
Act of 1966, the Federal Railroad Safety Act of
tecting the rights of the individual and the choice
1970, other relevant statutes, Presidential state-
of the consumer. To this end we believe:
ments and Departmental Orders. Specifically, it
Statutes should establish broad public policy
is the policy of the Department of Transportation
and deadlines for achievement, but we must
in:
continually evaluate their effectiveness and
Safety.-To provide the highest practicable and
recommend modifications as experience teach-
feasible level of safety for people, property and
es us the total consequences of our actions;
the environment associated with or exposed to the
The courts should provide important inde-
Nation's transportation system;
pendent guidance on the application of statu-
Environmental Affairs.-To utilize transporta-
tory intent to complex facts, and we welcome
tion to improve the environment wherever eco-
their direction on certain key policy questions.
nomically possible and to avoid or minimize trans-
At the same time, we must recognize the courts
portation's adverse impacts on the environment;
often are not the best way to resolve policy
Energy.-To increase efficiency in the utiliza-
conflicts in a democratic society; thus, we must
tion of energy in the transportation sector and to
seek ways to improve administrative due proc-
improve the effectiveness of the Nation's energy
ess and conflict resolution so that the judi-
distribution system;
cial branch is not overburdened and public
Civil Rights.-To take aggressive and consci-
decisionmaking delayed unnecessarily;
ous action to achieve equal employment and capi-
We need to improve the process by which we
tal opportunities for minorities, women, the poor,
reach decisions to insure that the safety, en-
the elderly and the handicapped, to fight discrimi-
vironmental and economic consequences of
nation and to insure to the extent practical and
alternative courses of action are anticipated
economically feasible that the transportation sys-
and understood and that we move expeditious-
tem is accessible to all citizens including the poor,
ly to resolve or minimize any conflicts before
the elderly and the handicapped;
we decide what action to take. Consumer and
Consumer Affairs.-To insure the participation
industry participation is an important safe-
of consumers or their representatives in public
guard in achieving these objectives;
decisionmaking and to encourage their involve-
We must continue to improve the informa-
ment in private sector decisionmaking.
tion base for decision making. Sound experi-
In striving to achieve these objectives, the sta-
mental and operational data should be ob-
tutes, the courts, administrative processes and
tained to the extent possible prior to imple-
analytical methodology provide tools with which
menting regulations. Cost-benefit analysis
competing interests are weighed and establish the
is one useful mechanism for making compara-
parameters in which discretionary judgment is
tive evaluations among alternatives. A pre-
33
sumptive guideline for rational investment is
While Interstate highway travel calls for similar
For example, the automobile fuel economy tech-
to the national 55 mph speed limit program
uniformity of standards, the States should have a
that future benefits, fully identified and prop-
nology improvement program began as a joint
(although reduced driving because of the gasoline
erly "discounted," should exceed the total
greater role in inspection and enforcement.
government-private sector voluntary effort. This
shortage also contributed). The profoundly bene-
costs of the investment, also properly dis-
Industry management normally has a range of
approach reflects the Federal preference for using
ficial effect that safety measures are having on
counted. We must make sure that all benefits
persuasion and voluntary action to implement na-
safety options involving technical, economic and
highway travel is seen in the following table
and costs, including those that cannot be
tional policy whenever possible. The program has
consumer choice. As long as there is adequate pub-
which shows a continually declining trend in
easily translated into monetary terms or even
lic understanding and candor, the consumer should
fatalities as a function of vehicle miles traveled:
considerable potential benefits for conserving
quantified at all, are included in the analysis
energy but could have adverse consequences for
have some choice about how much he is willing to
Highway fatalities per 100 million vehicle miles traveled
and weighed in the decisionmaking process.
safety, since smaller cars tend to be less safe while
pay for additional safety, especially in private
1971
4.68
transportation systems. When hazards affect the
1972
4.53
In addition to improving the framework in
some safety equipment adds weight and reduces
safety of others, government as a protector of the
1973
4.27
which Federal decisions are made, we must define
fuel efficiency. The program could slow down the
and express the policy guidelines that help recon-
effort to improve air quality and could increase the
public interest has a greater responsibility to step
1974
3.60
1975 (projected)
3.30
in and make the choice.
cile diverse Federal priorities. This is important
cost of automobiles. It is, thus, important that the
For decades, Federal transportation programs
In our continuing efforts to reduce transporta-
not only as a discipline for more rational decision-
program be designed to minimize these potentially
tion-related fatalities, injuries and property dam-
adverse consequences. A Congressionally-man-
have given major attention to safety-in highway
making but also to increase public understanding
and vehicle design; in air traffic control; in air-
age, we have a four-pronged policy to promoting
of the actual reasons that underlie government
dated study is addressing these complex issues.
decisions.
There are also instances where we must dis-
craft and pilot certification; in ship construction
transportation safety:
approve or postpone programs that could advance
standards and seamen licensing; and in railroad,
(1) Accident Prevention.-We are working to
While conflict among competing interests is
certain national objectives because the adverse con-
motor carrier, pipeline and hazardous material
prevent accidents by upgrading the pathway and
often inescapable, some policies simultaneously
promote several basic objectives and have only
sequences for other priorities are too great. If, for
transportation regulation. The result is a U.S.
terminal, the vehicle and the vehicle operator. We
minimal adverse consequences for other national
example, the imposition of technologically superior
transportation system with an outstanding safety
are improving pathways and terminals through
record relative to other industrialized nations.
priorities.
but very expensive noise control devices on rail-
highway design standards and spot improvements,
Nevertholess, because the U.S. is the most mobile
Enforcement of the 55 mph speed limit, for ex-
roads would bankrupt an environmentally efficient
rail track inspection and maintenance require-
means of transportation, then meeting the nar-
nation in the world. while the rate of accidents
ments, grants for separation or signaling at rail
ample, contributes to the attainment of Federal
rower objective would not justify sacrificing the
and fatalities is low, the absolute number is high.
grade crossings, effective operation of the air traffic
objectives in motor vehicle highway safety, energy
conservation and environmental protection. Fos-
broader goal. If, having reduced the emission of
Transportation accidents were responsible for over
control system, airport safety regulations, vessel
tering the utility and acceptability of mass transit
hydrocarbons and carbon monoxide from auto-
60,000 fatalities in 1973 and for over 50,000 fatali-
traffic control systems, pipeline safety regulations
in urban areas also supports energy, safety and
mobiles to about one-fifth of their pre-control
ties in 1974. Highway and traffic-related accidents
and hazardous material packaging regulations. We
environmental objectives. The Federal Aviation
levels, we find that the cost of further incremental
accounted for the largest number of fatalities—
will continue to improve vehicle safety through
aircraft, ship and boat construction standards,
Administration's seven-point program for fuel
improvements would be substantial and would
over 90 percent in both years.
conservation promotes the Federal priorities of
jeopardize energy conservation objectives, then we
The transportation safety record is readily seen
railroad and motor carrier regulations, and motor
lower cost to the consumer and environmental
should seek consensus on slowing the rate at which
in perspective in the following table, which shows
vehicle safety regulations. We have established
protection. Programs to achieve improved utiliza-
we work to achieve the ultimate emissions objec-
standards for air carrier, motor carrier, ship and
fatalities per 100 million passenger miles:
tion of existing urban transportation facilities—
tive.
rail operators and have developed programs to
The need plainly is to achieve a balanced ap-
Fatality rates per 100 million passenger milcs'
improve automobile and truck driver, bicycle and
such as carpooling, express bus lanes and signal
proach in a complex interdependent world in
motorcycle rider safety.
preemption for transit vehicles-are designed to
Domestic
Passenger
which all of our national concerns cannot be satis-
scheduled
Railroad
auto-
U.S.
(2) Accident Survival.-We are striving to in-
serve energy and environmental objectives and to
air
passenger
mobiles
general
Year
carriers
trains
Buses
and taxis
aviation
alleviate congestion. Since such low cost measures
fied at once.
crease accident survival by upgrading the path-
SAFETY
way (e.g., improved roadside barriers), the vehi-
may obviate the need for new highway construc-
1949-51
1.26
0.36
0.21
2.87
47
1959-61
.67
.10
.18
2.20
24
cle (e.g., protection of motor vehicle occupants
1971-73
.13
.28
.21
1.80
20
tion or fixed rail systems, they also are consistent
No value is greater than human life and no Fed-
through passenger restraint systems, redesign of
with Federal economic policies of fiscal responsi-
eral transportation responsibility more important
1 Except for general aviation which is fatal accidents per 100 million plane
rail vehicles for better seat anchorages, flotation
miles. (This translates into approximately 19 fatalities per 100 million pas-
bility and cost control.
than the safety of the passenger, driver, trans-
senger miles in 1971 to 1973.) Source: FAA statistical handbooks.
requirements for pleasure boats, and nonflamma-
Automobiles, taxis and general aviation include fatalities to all occupants,
In other areas, a program to implement one na-
portation worker, pedestrian and others exposed to
including the operators. Other modes do not include the operators.
ble and nontoxic materials in aircraft passenger
tional priority has mixed consequences for other
the transportation system.
compartments), and by improving operator train-
The record in improved air carrier transporta-
Federal interests. In these programs, we must
The responsibility for safety is shared among
ing and procedures (e.g., for aircraft emergency
tion safety is second to none. The domestic air
determine how important and substantial the bene-
the various levels of government, the industry and
evacuations).
carrier fatality rate declined by 90 percent from
fits of the program will be, whether it can be
the general public. The international and interstate
(3) Emergency Response.-We are encourag-
the 1949 to 1951 average to the 1971 to 1973
designed to maximize consistency with other Fed-
character of air carrier traffic, for example, clearly
ing improved emergency response through efforts
eral objectives and whether there is an alternative
calls for direct Federal involvement in aircraft
average.
directed at early communication of accident oc-
The recent dramatic and sustained decrease in
that will achieve substantially the same objectives
currence and location, quick transport of emer-
safety through research and development, stand-
highway fatalities can be attributed in large part
gency vehicles to the site, emergency medical aid,
with less adverse consequences.
ard promulgation, inspection and certification.
35
34
removal of survivors to qualified trauma centers,
ing the coastal and navigable waters of the con-
as well as search and rescue for downed aircraft
tinental United States. In addition, in order to deal
many years have served as a model for general
grant programs which would permit transporta-
with the problem of increasing congestion of vessel
government legislation dealing with the equitable
tion projects to include such land acquisition as
and waterborne vessels.
(4) Research Data Collection and Evaluation.-
traffic coupled with increasing amounts of hazard-
and enlightened treatment of persons displaced by
is necessary to assure compatibility with adjacent
public programs. Similarly, many of the Depart-
We have extensive efforts underway in safety re-
ous cargoes, the number of vessel traffic systems
lard uses. The inclusion of necessary noise barriers
ment's programs have longstanding policies on
search, data collection and accident investigation
operating in our major ports will be increased.
in Federal-aid highway construction costs is an-
public involvement in government decisionmaking
Finally, we are conducting safety training for
other example of internalizing the environmental
which are essential to achieving the foregoing
such as the extensive public hearing process which
the Nation's transportation personnel at our
costs of transportation projects.
priorities. Consonant with the President's empha-
has long been a feature of the Federal-aid highway
sis on examining the cost-benefit aspects of all non-
Transportation Safety Institute. Courses are con-
In many specific areas of environmental impact,
ducted in the fields of aviation, marine, highway,
program.
we have formulated relevant objectives and pol-
economic regulatory activities, we are undertaking
The statute which created the Department of
icies. Four of these are discussed in more detail
a critical review of the safety standards and regu-
pipeline and hazardous materials. Over 4,000 peo-
ple from Federal, State and local governments
Transportation required a special effort in the De-
below.
lations we have issued. The goal is to determine
which of these provide net social benefits. To do
and from the industry attend each year.
partment's programs to "preserve the natural
NOISE
In surface transportation we must give consid-
beauty of the countryside and public park and rec-
this requires good data, analytical capability and
eration to the promotion of liability for injury
reation lands, wildlife and waterfowl refuges, and
We will move toward the goal of confining
sound judgment. We cannot place an infinite value
policies not based upon fault. Clearly states should
historic sites." More recently, aided by the enact-
severe aircraft noise exposure levels around U.S.
on human life. To do so would require us to close
ment of the National Environmental Policy Act
airports to the areas included in the airport bound-
our highways and ground our aircraft. Given the
adopt appropriate no-fault auto insurance laws.
lack of an absolute standard, we must define cri-
We are closely watching to see if sufficient state
(NEPA), our policy has been to give augmented
ary. This policy will be advanced through regula-
progress is made along this line. If not we will
attention to the many potential interactions of
tions on aircraft engine noise, aircraft operational
teria and establish a process that will help us ar-
transportation with the environment in order to
procedures and airport grant program require-
rive at reasonable actions in the public interest
consider further Federal actions. Since aircraft
eliminate or minimize any possible adverse con-
ments, including those relating to compatible land
and assure incremental improvements in safety
accidents could result in catastrophic claims for
each year commensurate with advancing technol-
liability we must consider developing a better
sequences of transportation on the human environ-
use around airports. We do have to weigh, how-
ment.
ever, the financial and inflationary effects of apply-
ogy, improved facilities and consideration of other
system of liability and catastrophic claims han-
In implementing NEPA, it is our policy not only
ing retroactively subsequently developed higher
Federal priorities such as energy and the control
dling since it is becoming increasingly difficult to
to comply scrupulously with the statute's proce-
noise standards to aircraft certified by the FAA
of inflation.
cover liability by private source of insurance.
dural requirements but also to utilize the process
before such higher standards were adopted. With
We expect to continue to make significant prog-
(5) Crime in Transportation.-A safe and se-
to address in a substantive way the relationship
respect to highway noise, our policy is to assure
ress in safety in the future. In highway travel, the
cure transportation system requires national at-
between transportation and such environmental
that new highways constructed with Federal
adoption of new motor vehicle safety standards
tention to the prevention of crimes, ranging from
concerns as air quality, noise and water pollution;
funds include noise reduction features and to re-
such as safety belts, better traffic law enforcement
violent crime against persons on transit systems,
impacts on land use and urban growth; impacts
duce noise from existing highways through spot
and adjudication, and improved driver perform-
vandalism and cargo thefts, to aerial highjacking.
on parklands, recreation areas, wildlife and water-
improvements and through enforcement of truck
ance programs are expected to result in a continued
Crime prevention is not only a Federal, state and
fowl refuges, wetlands and historic sites; commu-
noise standards.
reduction in deaths and injuries. We also are at-
local government responsibility, it is also a shared
nity disruption and relocation, and considerations
AIR QUALITY
tempting to develop a model automobile the oc-
responsibility of the private sector to remove the
relating to pedestrians, bicyclists and the handi-
cupants of which would survive a 50 mile per
opportunity for such crimes. The Federal govern-
We will encourage the utilization of less pollut-
capped and elderly. The Department of Trans-
hour head on crash.
ment will continue to provide guidelines on pre-
ing forms of transportation wherever possible and
portation has written more environmental impact
In aviation, the FAA's upgraded third genera-
vention, experiment with new methods for tracing
support the efforts of other agencies (primarily
statements than any other Federal agency, analyz-
tion air traffic control system will further enhance
stolen cargo. improve design and architectural
ing the environmental impact of specific proposed
the Environmental Protection Agency) which
safety through aircraft separation assurance and
features to deter crime, coordinate a national
actions and considering alternative actions which
have regulatory responsibilities over air quality.
wake turbulence detection among other things.
cargo security program to reduce the enormous
better protect and enhance the environment.
Thus, in our environmental analysis of transporta-
With respect to marine safety, legislation is now
cost estimated at over $1 billion in cargo-related
Through the process of environmental analysis,
tion projects, we consider the impact of proposed
before Congress to implement new international
thefts. and regulate an appropriate airline high-
public involvement and scrutiny, and extensive co-
projects on air quality to be a significant element
rules of the road for preventing collisions at sea.
jacking security program.
ordination with governmental agencies at all levels,
of concern, and we require that projects be consist-
If adopted, it would require all vessels under U.S.
numerous transportation projects during the past
ent with State and local plans to improve air qual-
jurisdiction on the high seas to comply with the
ENVIRONMENT
several years have been substantially revised, ter-
ity. Moreover, the urban traffic management meas-
convention adopted by the Inter-Governmental
minated, or transferred in location or even trans-
ures discussed earlier are part of the effort to
Maritime Consultative Organization. With respect
A central thrust of the Department's policy since
portation mode in order to serve better social,
improve air quality through reduction of unneces-
to domestic waters. the three different sets of rules
its inception has been to reduce transportation's
environmental and community objectives.
sary automobile usage. We support the national
of the road now in effect for the Western Rivers,
adverse impacts on the quality of the human en-
It is our continuing policy to seek additional
effort to reduce automotive emissions, recogniz-
Great Lakes and Inland Waters should be made
vironment and to protect and enhance that envi-
methods and tools to enhance our ability to pro-
ing however that as abatement approaches 80 per-
to conform as closely as possible to the interna-
ronment where possible.
tect the human environment and to "internalize"
cent and higher the incremental economic and
tional rules. The Coast Guard is proceeding with
For example, policies which have been incorpo-
rated into the Federal-aid highway program for
environmental "costs." Thus, we are currently
energy costs rise rapidly and the incremental ben-
the establishment of navigation networks cover-
seeking authority in the highway and airport
efits become smaller. Without regressing in the
36
37
continued improvement of air quality, we must
proceed with determination, on the basis of scien-
tion sector do its share in decreasing U.S. reliance
CIVIL RIGHTS
allow abatement technology to catch up with de-
tific fact and with a proper appreciation for the
on foreign imports (now more than 37 percent of
mands for energy efficiency.
economic costs involved. Just as we will not take
U.S. consumption) and in conserving the use of
In transportation, as in other areas of our so-
any Federal action with a significant impact on
limited domestic resources, our policy should be:
ciety, there has been in the past a neglect of our
LAND USE
the environment without an impact analysis and
recently-recognized obligations toward women,
Continued promotion of improved fuel effi-
Because transportation has such a significant
statement, neither should we seek narrow solutions
minority racial and ethnic groups, the poor and the
ciency through technological improvements,
to environmental problems without an apprecia-
disadvantaged. It is our policy to improve this
impact on land use, which in turn is a crucial
more efficient, intelligent and socially-respon-
tion of their consequences for other governmental
situation with particular emphasis on three areas:
element in determining the quality of the human
sible use of the automobile and public trans-
environment, we will continue to integrate trans-
goals. In addition, we are establishing procedures
port, more rational route structures and the
Employment and capital opportunities both
portation planning and decisionmaking into over-
which will result in a speed-up of the time to com-
removal of unreasonable regulatory con-
in the public and private transportation
all land use planning and decisionmaking. For
plete the environmental review process. With rea-
straints on service, voluntary joint programs
sectors;
many years, the Department's programs affecting
son and foresight, we will continue to build a bet-
with industry to conserve fuel and promote
The service rendered by transportation;
urban areas have been developed with the partici-
ter transportation system that will contribute to
efficiency, and amendments to safety and envi-
Planning and decisionmaking.
pation of local officials having responsibility for
the quality of our environment.
ronmental requirements that do not compro-
planning and implementing land use requirements.
mise their primary purpose but which provide
EMPLOYMENT AND CAPITAL
ENERGY
Institutional barriers may arise at the local level
a more energy-efficient alternative;
because of dispersed responsibility for implement-
The Arab oil embargo highlighted the near-
Encouragement of railroads and inland water-
Massive amounts of Federal money are being
ing programs affecting land use. Nevertheless, we
term problems of rapid increases in energy prices
ways as energy-efficient alternatives for the
used to build and revitalize the Nation's transpor-
must assure that the impacts of transporta-
and uncertainties in the supply of imported petro-
movement of bulk freight over long distances;
tation system. Our policies must assure that mi-
tion programs on land use are brought to the
leum. The longer-term problem revolves around
Support of energy conservation programs for
norities and women participate fully in the em-
attention of local officials and that every effort is
the finite nature of U.S. and world petroleum
trucks and intercity passenger travel;
ployment and capital opportunities thus provided.
made to assure that transportation serves local
resources. Major uncertainties are associated with
Priority funding for proposals for subsidy,
Women and minority group persons are under
land use objectives. Our continuing policy will be
quantifying recoverable petroleum reserves and
new facilities or RD & D that demonstrate
represented in the employment structures of the
to provide increased flexibility to local officials in
with predicting the time frame within which sub-
comparative energy efficiency;
transportation industries and in the public sector
the use of Federal-aid urban transportation funds,
stitute energy sources will be available in major
In most instances, full assimilation by the
transportation agencies at all levels of government.
enabling these funds to be used for either highway
quantities. Transportation is particularly vulner-
private sector of the increased cost of energy,
This is particularly the case with higher level posi-
or transit needs as best serves local transportation
able to increased costs and supply interruptions
with the market place as the ultimate allocator
tions, in policy-making and management. It is our
and land use objectives.
since it currently is almost completely dependent
of energy resources;
policy to enforce effectively the civil rights laws
on petroleum-based energy.
Development of short range policies to help
and responsibilities. We are moving to hire signifi-
WATER
Near-and-mid-term options for addressing these
some of the transportation modes adjust to
cant numbers of women and minorities and to place
In the marine environment, the Coast Guard is
problems include:
sudden, sharp increases in fuel cost as they
those qualified in management and policy-making
the primary law enforcement agency responsible
occur.
Conservation and efficiency improvement;
We will continue to emphasize key energy con-
positions. We are also encouraging present em-
for enforcing Federal anti-pollution laws and
Expansion of domestic supply;
servation programs such as:
ployees to upgrade their management and policy
treaties. Past actions have concentrated on devel-
Establishment of a strategic petroleum re-
oping adequate cleanup capability for removing
The 55 mph speed limit, now a condition of
development skills through a variety of training
serve in order to reduce the impact of any
oil and hazardous materials from the water.
Federal-aid highway project approval;
opportunities. These efforts will be undertaken in
future interruptions in imported supply;
Increasing emphasis is being directed toward
The automobile fuel economy improvement
such a way as not to affect adversely other groups.
prevention, including regulations related to the
International consumer country arrangements
program;
We are strongly encouraging the transportation
transportation of hazardous substances and the
such as those proposed by the International
Carpooling promotional and information pro-
agencies at other levels of government and the pri-
disposal of vessel wastes and sewage.
Energy Agency.
grams;
vate sector transportation industries to make every
Our concern for marine environment has re-
Transportation policy has a dual role to play
Improved urban traffic management and tran-
effort in this direction. A major policy initiative
sulted in exhaustive studies of segregated ballast
in these measures. As a major consumer of energy,
sit services as a condition of urban highway
during the coming year will be to seek out innova-
for oil tankers. While such construction techniques
transportation must participate substantially in
and mass transit funding;
tive ways of using the substantial employment
may offer protection to the coastal waters. immedi-
energy conservation programs and must increase
The FAA seven-point program for jet fuel
and capital opportunities generated by Federal
ate establishment of the Vessel Traffic System
the efficiency with which energy is used. Secondly,
conservation, including revision of gatehold
transportation expenditures to help achieve full
(VTS), coupled with increased LORAN-C cover-
as part of the Nation's energy supply infrastruc-
and air traffic flow procedures, increased use
employment, with particular emphasis on the dis-
age and separated sea lanes, should offer improved
ture, transportation must provide an efficient
of optimum cruising speeds and altitudes, use
advantaged. We also wish to assist women and
cost beneficial protection against oil spills caused
energy distribution network.
of flight simulators for training and check
minorities in becoming involved in the actual con-
by collisions and groundings.
Energy conservation is a national imperative
flights, accelerated installations of instrument
struction, management and ownership of such
In summary, improvement of our environment
and has become a major factor in transportation
landing capability on approach runways and
transportation facilities or of the companies which
is a continuing national commitment. We must
decisionmaking. In order to help the transporta-
improving runway and taxiway technology.
build or operate them.
38
39
SERVICE
Meaningful public hearings on major policy
the different types of consumers, we fail to see how
surface and water transportation policies. But
issues conducted by the top executive officers
The transportation service provided by the pub-
these diverse views can be represented by a gov-
more general public concern, expressed through
of the Department in different locations
lic modes often neglects the needs of the spectrum
ernment consumer advocate. So, we seek solutions
more effective organization, is required to bring
around the country;
of groups whose mobility is limited:
through opening up the process to all consumers.
transportation consumers up to the level of in-
Periodic public opinion surveys to gauge the
For making consumerism work requires the com-
fluence that they should have, commensurate with
Those persons in urban and rural areas who
adequacy of transportation services from the
mitment of those who use, benefit from, or are de-
the strong lobbies of other segments of the trans-
are too poor to afford either personal or pub-
consumer's perspective;
prived of transportation services. A few groups
portation sectors and with the effective record of
lic modes of travel and who are consequently
Workshops and conferences to identify prob-
have helped significantly In the formulation of air,
many consumer groups involved in social policies.
shut off from many of the benefits of society
lem areas and formulate government policies
to which they are entitled;
that are responsive to consumer needs;
Those who are too young or too old to drive;
Funding research on transportation issues of
Those persons who are suffering from tem-
special interest to consumers;
porary or permanent physical disabilities.
The integration of consumer views into the
It is our policy to assure that, where feasible
Department's planning and decisionmaking
and economically practicable, service alternatives
process rather than isolating consumer views
are created that will be available to meet the
in a separate consumer advocacy function.
needs of these persons and will be inexpensive, safe
It is our policy to assure that consumer interests
and easy to use.
receive full consideration in the decisionmaking
process. Citizen involvement in the development
PLANNING AND DECISION MAKING
of rules and regulations is essential, and all De-
partment of Transportation components have been
For transportation to serve adequately the needs
directed to use the Federal Register advance notice
of women, minority groups and disadvantaged
of proposed rulemaking; to allow a minimum of
persons, they must be involved in the planning for
the future of transportation and in the decision
45 days for public comment, and to evaluate con-
making that will implement the systems of the fu-
sumer comments carefully before the promulga-
ture. Full and accurate understanding of the prob-
tion of final regulations and standards. In addi-
lems faced by these groups cannot be gained ade-
tion, we will seek increased consumer participa-
tion on the advisory committees that serve the
quately in any other way. This involvement may
come through employment of women and minority
Department, and we will continue to require citi-
group persons in key planning and executive posi-
zen participation in transportation planning at the
State and.local levels as a condition of many Fed-
tions, and more pervasively, through their partic-
ipation in the community discussion and review
eral transportation grant and assistance programs.
To enable consumers to participate knowledge-
that should be a part of making transportation
ably, our policy encourages dissemination of in-
plans and decisions. We will encourage such com-
formation to consumers about transportation
munity involvement in our work with State and
issues, including:
local governments to improve the process of trans-
portation planning.
Education programs and curriculum guides
TRANSPORTATION CONSUMERS
for teachers from kindergarten through the
adult level to enable students to become effec-
A major concern of the Federal government is
tive transportation consumers and, ultimately,
to be responsive to the needs and concerns of the
more knowledgeable participants in commu-
individual transportation consumer-the user,
nity transportation planning;
purchaser and shipper of transportation goods
Informational pamphlets on drinking and
and services, those for whom adequate transpor-
driving, the use of seat belts, boating safety,
tation is not physically, economically or geo-
and similar subjects.
graphically accessible, and those affected by trans-
Effective consumer participation is vital in order
portation systems.
to make government truly responsible and respon-
Our consumer participation policy will continue
sive to the public interest. Since the consumer point
to emphasize:
of view, however, may rightfully be as diverse as
40
41
V. INTERNATIONAL TRANSPORTATION
In an increasingly interdependent international
The compatibility of equipment employed
economy, U.S. transportation provides vital links
for international multimodal services, includ-
among the world's Nations. Since the end of World
ing the containerization of cargo;
War II, international trade and travel have grown
The development of appropriate interna-
at exponential rates and the U.S. has become in-
tional legal regimes on such questions as lia-
creasingly dependent upon the foreign markets
bility and claims procedures, balancing equi-
and foreign resources which international trans-
tably the interests of carriers and shippers;
portation makes accessible.
Simplification and standardization of the
While the basic policy goal remains the same-
documentation and processing required to
i.e., the assurance of safe, efficient and economical
serve both private sector and governmental
service for our Nation's commerce rendered by
needs;
privately owned transportation companies-the
The flow of travelers and baggage across in-
area of international transportation presents spe-
ternational borders subject to customs and
cial challenges. Foremost is the need to deal with
other types of inspection processing;
the interests of other Nations. Governments may
The viability and profitability of U.S. pri-
share the objective of efficient transportation serv-
vate flag carriers when much of their foreign
ice but differ sharply about how such transporta-
competition is governmentally owned or sub-
tion should be organized, regulated, developed and
sidized;
promoted. We must recognize that international
The prospect for continued world preemi-
transportation is based upon international law
nence of the U.S. aeronautical manufacturing
and treaties and, since many parts of the world
industry in light of the challenge from subsi-
have economic and governmental philosophies dif-
dized European competitors.
ferent from those of the U.S., policies by which
An important element of international transpor-
we conduct our international transportation might
tation policy is "facilitation." i.e., simplifying and
not be the same as those by which we are able to
expediting the international movement of passen-
conduct our domestic transportation. International
gers and goods through terminals. Facilitation
transportation, thus. calls for both political and
saves both time and money. We will work vigor-
economic accommodation. Nowhere is such ac-
ously to simplify entry and departure clearance
commodation more required than in aviation. the
procedures for passengers and cargo, improve
most widely regulated and most highly visible
terminal layout and baggage and cargo handling
international transport mode.
facilities and standardize documentation require-
Currently, a very broad range of issues and
ments for carriers and shippers. We will exploit
policy decisions confront the United States in the
fully electronic data processing techniques in order
field of international transportation:
to eliminate most documents and improve passen-
The organization and regulation of interna-
ger processing, ticketing. baggage control and fare
tional air transportation;
and rate determination.
The structure of international shipping serv-
ices;
AVIATION
The safety and environmental consequences
International aviation moves about 100 million
of international transportation operations, in-
passengers and six billion ton-miles of cargo
cluding the pollution controls and the noise
yearly. In the past several years, the Nation's par-
and other standards required on international
ticipation in this vital sector of world transpor-
transport equipment entering the U.S.;
tation has been threatened by the serious financial
43
problems of U.S. air carriers. While these prob-
While many countries are hesitant to reduce the
lems were in large part caused by the rapid three-
operations of their flag carriers, equitable solutions
No U.S. flag service is now available to a number
try and for the continued development of civil
fold increase in world fuel prices and the world-
to the excess capacity problem must be pursued
of European cities. As the competitive environ-
aeronautics and air commerce;
wide economic recession, they were aggravated by
until they are achieved. The pursuit of capacity
ment has changed, the Administration has encour-
To assure a fair and competitive role and the
uneconomic route structures. excess passenger ca-
agreements in the international transportation
aged route restructuring and suspension of cer-
opportunity for major participation by pri-
pacity, increasing foreign subsidized carrier com-
field, while the Department has generally opposed
tain operations for U.S. flag carriers. As man-
vate enterprise U.S. air carriers in interna-
petition, the need to clarify U.S. international air
them in the domestic field, is merely recognition
dated by the International Air Transportation
tional air transportation and a favorable im-
policy (i.e. how many U.S. carriers in the interna-
that the international transportation policy must
Fair Competitive Practices Act of 1974, the Ad-
pact of the international air transportation
tional business and with what domestic route sup-
consider the economic and political views of the
ministration is also encouraging the maximum use
system on the economic growth, economic sta-
port), noncompensatory fares, disproportionate
foreign countries.
of U.S. carriers. Where direct service is available,
bility and security of the United States;
foreign carrier usage by U.S. passengers and un-
The general fare increases of the past few years
all government-funded passenger and cargo traf-
To contribute toward and be consistent with
fair foreign competitive practices.
have not substantially helped the finances of U.S.
fic must be carried by U.S. flag carriers.
United States national defense and foreign
Currently, international air transportation oper-
carriers, in part at least because of the wider use
In the United States, international airports
and commercial policy objectives, and other
ates in a complex and changing regime of law and
of lower promotional fare arrangements simul-
charge fees to carriers reflecting, in general, only
national objectives.
politics involving a few multilateral treaties, many
taneously introduced to help compete with char-
their direct costs. Currently, only a portion of the
bilateral arrangements and a wide collection of
ters and attract new customers. For example, in
Federal costs of operating the air traffic control
Among the specific issues under consideration
are:
national laws, regulations and policies. In this con-
1973, approximately 70 percent of all North At-
system are covered by user charges. By contrast,
text, continuation of a U.S. flag air transportation
lantic passengers on scheduled flights used these
an increasing number of foreign countries are
Multilateral approaches to aviation problems;
system will require continuing negotiations be-
reduced fares. While this pricing strategy may
recovering all, or at least a major part of, their
An appropriate regulatory environment;
tween the United States and other Nations to ar-
have stimulated some additional traffic, it also seri-
full system costs directly from the carriers. This
The relationship between demand, capacity,
range equitable operating rights and privileges,
ously eroded the scheduled carriers' revenue base.
raises costs for U.S. international air carriers be-
costs and rates;
including most favored Nation treatment for U.S.
Moreover, the extensive illegal discounting and
cause many foreign carriers which pay the same
The role of facilitation in the improvement
international transportation and tourism services.
rebating within the international air travel indus-
landing fee may recoup such costs from general
of air transport services;
Most Nations today pursue, in varying degrees,
try erode the revenue of all carriers. Such prac-
government subsidies.
The relationship between scheduled and
a policy of promoting their own air transport en-
tices undercut the fares established by agreement
Under the International Air Transportation
charter services;
terprises and protecting them against competition
through the International Air Transportation As-
Fair Competitive Practices Act of 1974, the Exec-
The relative roles of the private and public
from foreign, and perhaps more powerful or ef-
sociation (IATA) and approved by the CAB.
utive Branch must review all forms of discrimina-
sectors in international aviation;
ficient, operators. Where a Nation subsidizes its
Certain types of illegal charter groups have also
The IATA system of rate determination;
tion or unfair competitive practices to which U.S.
airline, it may try to shield it from competition
diverted some traffic from the scheduled carriers.
New approaches to international route defini-
air carriers may be subjected and take action to
IATA has estimated that such practices cost the
tion;
by restricting the traffic or service offerings of
eliminate them. As discriminatory charges by for-
its foreign competitors. U.S. policy, by contrast,
international air carriers $500 million annually
The role of the U.S. aerospace industry in
eign governments or airport operators or charges
has always sought and will continue to seek great-
on the North Atlantic routes alone.
international aviation.
er liberalization of the economic operating en-
To obtain better tariff enforcement, the U.S.
that unreasonably exceed comparable user charges
in the United States are documented, we will initi-
As we resolve these issues, we must keep in
vironment for international air transportation.
government is moving on several fronts. The CAB
mind the U.S. public interest in having economi-
ate talks with the other governments, seeking ad-
However, this policy is predicated on the as-
has instituted formal proceedings against a num-
cally viable, privately owned U.S. air carriers and
justment of the charges before a countervailing
sumption that the U.S. air carriers' opportunity
ber of foreign airlines for tariff violations. The
the fact that other countries might not accept our
charge is assessed by the U.S. government on their
to participate fully in the international air trans-
Department of Transportation has completed a
ways of solving our domestic airline problems.
air carriers.
portation system is assured. U.S. bilateral air-
two-phase study of the impact of the travel agent/
The broader question in U.S. international avia-
Recognizing that international aviation is a
tour operator industry upon U.S. air carrier op-
tion policy concerns the optimal structure for U.S.
transportation agreements include provisions for
rapidly changing industry. an interagency com-
flag carriers and international routes. Should we
governmental intervention if change in market de-
erations. Because the International Air Transpor-
mittee is currently reviewing international avia-
emphasize one or two U.S. worldwide carriers, or
mand levels require major capacity adjustments or
tation Fair Competitive Practices Act of 1974 only
tion policy to update the government's 1970 pol-
should we seek to give the U.S. international car-
if foreign carrier scheduling practices place U.S.
prohibits ticket agents from giving rebates to the
icy statement. For this review, four objectives
riers some domestic routes and to liberalize entry
carriers at a competitive disadvantage. Conse-
public, new legislation is under consideration that
have been adopted:
for other U.S. carriers into international markets
quently, during 1974, discussions were initiated
would outlaw carrier discounting and rebating to
moving toward a regionally-oriented structure
with certain foreign flag carriers and their re-
ticket agents and subject persons found guilty of
To best meet the needs of the consumer by
with strong domestic feeder support in each
spective governments about the problem of excess
such practices to civil and criminal penalties.
providing for the international transporta-
region?
capacity. Capacity control agreements have been
Competition has intensified over the North At-
tion of people, mail and goods safely, effi-
A healthy, financially viable U.S. air carrier
approved between U.S. carriers and the flag car-
lantic, with 30 scheduled and 17 charter carriers
ciently and at reasonable costs wherever a
industry causes the development and continuation
riers of Venezuela, Switzerland, the United King-
now operating. The U.S. flag share of scheduled
substantial need for air transportation service
of a healthy aircraft manufacturing industry. The
dom, Greece and Italy. Meetings are continuing
North Atlantic traffic has dropped from more than
exists;
demand for new generation aircraft first by U.S.
with other individual airlines on capacity control.
60 percent in the early 1950's to about 39 percent.
To provide for a viable, economical and effi-
carriers ultimately creates foreign demand for
cient international air transportation indus-
such U.S. aircraft. We must adopt policies that
44
45
coastal ports and refineries. New deepwater off-
Another barrier to efficient international mari-
will enable the U.S. aircraft manufacturers to re-
tial in event of national emergency. However, we
loading facilities, sometimes called superports, will
time transport arises from the outdated interna-
tain their world preeminence since the industry
have not interfered with the routing of purely
be required. Such facilities, exposed to the open
tional legal regimes covering cargo data and cargo
yields the second largest balance of payments bene-
commercial cargo through various types of flag
sea, present a variety of structural and operational
liability. The applicable provisions of the govern-
fit to the U.S.
preference or cargo sharing to the extent practiced
challenges and will require stringent standards and
ing Brussels Convention have not been modified
Within the foregoing framework, we will con-
by some other Nations.
regulation if the ocean and coastal environment is
since their adoption in 1924. In this modern age
tinue to seek the appropriate liberalization of the
Recent technical developments in ocean shipping
to be preserved. Under the Deep Water Port Act
of container shipping, these rules make efficient
economic operating environment for international
have had a major, if not revolutionary, impact on
of 1974, the Department of Transportation is de-
cargo movement very difficult.
air transportation and greater simplification of
the industry and will affect its economy and orga-
termining the requirements for constructing such
United States international shipping policy
procedures for the entry and departure of pas-
nization in profound ways. Foremost of these has
facilities in American waters.
should be re-examined to provide clear guidelines
sengers and clearance of cargo.
been the growth of unitized cargo systems. These
The above developments may require a more
for future action in the following areas:
new systems have opened vast opportunities for a
active Federal role in port development planning.
SHIPPING
more efficient through-transportation between in-
On the organization of the ocean shipping
We should not spend Federal and local funds on
The vast preponderance of our foreign trade
land points, with cargoes transferred rapidly and
market, we must determine our position on bi-
more port development than the Nation needs. We
securely between the maritime and other modes.
lateral and multilateral devices for restrict-
moves by ocean vessel, and we expect this will al-
can determine with reasonable precision the over-
They have also promoted the development of new
ing competition. This will require reconciling
ways be true. For this reason, the cost and quality
all economic efficiency requirements for the Na-
of maritime transportation is now and will con-
families of ocean-going vessels which, being cap-
our requirements as consumers of shipping
tion. But we also need to develop specific criteria to
ital rather than labor-intensive, tend to reduce the
and our requirements for a viable U.S. mer-
tinue to be of vital concern to our economy. Our
guide decisions on national port development ef-
competitive disadvantages of U.S. vessels. Thus.
chant marine in the context of various inter-
policy is designed to achieve the most efficient,
forts where there are competing State and local in-
safe and economical flow of traffic. However, our
fewer ships carry more cargo and, with shorter
national constraints;
terests involved as well as other national priorities,
maritime situation differs from most other areas
port turnaround times, are able to make more voy-
We must determine to what extent flag pref-
such as the environment and the discouragement of
ages. Pressures for changes in the organization and
erence on certain government cargoes, con-
of transportation in that although we maintain
and promote a U.S. flag merchant marine, it car-
practices of shipping conferences are developing,
reliance on petroleum imports.
struction and operating subsidies and other
The St. Lawrence Seaway Development Cor-
ries only a small part of our foreign trade. As a
and as these innovations permit container ports to
promotional measures are needed to achieve
serve larger hinterlands, the established competi-
poration is unique as it is the only waterway in
national goals;
Nation, we are consumers rather than producers
tive relationships among ports and conferences are
the Nation maintained entirely through user
We must re-examine the Federal role in port
of ocean transportation services. Thus, we need
to balance two goals-the preservation of a viable
being altered. Because containers and similar
charges. The Federal government should lend its
planning and establish criteria which promote
full support to programs, such as lengthening the
U.S. merchant marine adequate to serve our na-
equipment provide through-service across national
the economic self-sufficiency of all our ports
tional interests and the availability of reliable,
borders, new international clearance arrangements
shipping season, which generate additional traffic
by avoiding investments that exceed future
and cargo for this valuable resource.
low cost shipping services to sustain our foreign
are becoming necessary.
requirements and result in massive and un-
Along all of our coasts, including the Great
The balance between competitive and noncom-
warranted financial obligations;
commerce.
Lakes, ports have been driven by their historically
petitive forces in international shipping appears to
As a fundamental principle, the United States
Working with other Nations, we must revise
competitive relationships to meet the requirements
be shifting substantially in favor of the latter. De-
obsolete international laws and conventions
has always favored free competition among the
world's ocean carriers. To provide stability, the
of the new technology. Container handling facili-
veloping countries, at both carrier and intergov-
concerning cargo movement.
ties involve enormous investments, and adequate
ernmental levels, are creating systems of cargo
Congress has permitted carriers in our trades to
combine in liner conferences and to establish com-
returns on these investments will require a high
pooling and allocation that would subject ship-
ALTERNATIVE POLICY APPROACHES
mon tariffs and arrangements for service. How-
level of utilization. It appears most unlikely that
ping conditions and rates increasingly to cartel
ever, such conferences must be open to all quali-
all U.S. ports now preparing for container services
arrangements and administrative direction, rather
Much of the controversy inherent in interna-
will prove economically viable. On the contrary, it
tional transportation stems from a lack of agree-
fied carriers, and the right of non-conference lines
than to the play of market forces. Examples in-
to serve our needs must be protected. The Federal
is more probable that the economies of scale per-
ment on the basic premises for operating interna-
clude an increasing number of bilateral arrange-
mitted by the new technology can be realized only
tional services. Some argue that international
Maritime Commission should prevent any con-
ments between Nations which reserve the bulk of
by concentrating container terminals at fewer lo-
transportation should be regarded as any other in-
ference practices which threaten to disadvantage
their common trade to their national fleets, gov-
shippers.
cations. We must develop policies which will per-
dustry in the free enterprise system; others argue
ernmental encouragement of conference pooling
mit these choices to be made in the national in-
that it should be viewed as a public utility.
At the same time, we have sought to maintain
systems that exclude independents or third-flag
a U.S. merchant marine and a supporting ship-
terest.
Proponents of the public utility approach argue
carriers and the recent international endorsement
that:
building capabilty. Because the national interests
A second major innovation has been the super-
involved are substantial, they have not been left
tanker. This vessel type has raised special prob-
of restrictive bilateral agreements contained in the
(1) Terminals-whether water or airports-
United Nations Conference on Trade and Devel-
lems of structural integrity, navigation and traffic
are generally considered to be public utilities;
to the chance that these industries would prosper
separation, pollution potential and adequacy of
opment (UNCTAD) Code of Conduct for Liner
(2) In many countries, internal or domestic
in the open international competition otherwise
port facilities. The ability of the United States to
Conferences. We are examining the implications
common carriage is either heavily regulated or na-
desired. Subsidy, flag preference on certain gov-
ernment cargoes and other promotional measures
take full advantage of the economies of scale which
of commercial cargo preference in terms of both
tionalized;
have been adopted to sustain a national maritime
have stimulated the growth of the supertanker fleet
the cost and quality of services to shippers over
(3) The substantial promotion of merchant ma-
industry of reasonable size with expansion poten-
has been denied by the shallow approaches to our
the long run.
rines and airlines by many foreign governments
47
46
reflect a judgment that international transporta-
of international transportation is as economically
tion is vital to national interests and must be sup-
undesirable as any anticompetitive practice by
ported even if not competitive in the world market.
users or carriers which similarly increases cost.
The principal argument for using the free en-
Our objectives in international transportation
terprise or "workable competition" approach is
should include adequate services at fair rates for
that the market provides the best means for allo-
users, the end of discriminatory promotional pol-
cating resources. Moreover, implicit in the public
icies by governments and the evolution of car-
VI. CONCLUDING NOTE
utility approach is the eventual need for some form
telized ratemaking into more competitive arrange-
of supranational regulatory agency which would
ments. Despite efforts by a number of governments
In our democratic constitutional society,a trans-
needs of the future, consistent with our envir-
have to exercise control over rates as well as entry
to find a better substitute, the market mechanism
portation policy statement issued by the head
onmental and new energy concerns;
and abandonment of services. In the light of past
still appears to be the best device for resource allo-
of one Federal Department does not become
Progress each year in safety performance, en-
domestic experience with transportation regula-
cation. However, achieving workable competition
the Nation's transportation policy. Even more im-
vironmental protection, energy conservation
tion and the importance of national sovereignty,
in international transportation will require a tre-
portant, a transportation policy is not a plan.
and transportation crime prevention;
the public utility approach does not appear to be
mendous effort in modifying the present environ-
Policy helps direct decisionmaking along more
Comprehensive urban transportation systems,
a promising one for improving international trans-
ment.
rational lines toward national goals and provides
involving efficient mass transit and a mix of
portation services.
It will not be easy to obtain these objectives. Car-
the reasons for proposed changes, but it does not
modes that are consistent with broader metro-
International transportation should provide
riers will have to receive sufficient revenues to sup-
define the optimal infrastructure or transporta-
politan goals;
adequate, efficient and reliable service in an en-
tion system for the future, or identify the cities
port their services, replace their equipment and
Safe and modern rural transportation facili-
vironment capable of adopting new technology and
in which we will build rapid transit systems or
provide an adequate return on their investment.
ties, providing access to the Interstate net-
responding to changing user needs at prices estab-
designate which railroads will become the appro-
Users will have to be provided with the services
work and creating an infrastructure that en-
lished within a competitive framework. Efficient
priate nationwide interstate freight railroad
hances rural living and development;
management should be able to earn a reasonable
in a manner and at rates that will reduce impedi-
system.
A strong international transportation sys-
profit in order to attract capital from the private
ments to the international movements of people
It may be useful, in conclusion. however, to
tem with the participation of privately owned
market. Implicit in this approach is preference for
and goods. Governments will have to be assured
anticipate what the transportation system might
financially healthy, unsubsidized U.S. flag
competition over both its substitute, regulation,
that essential national requirements will be met
look like if the policy set forth in this statement
carriers;
and its opposite, monopoly, as the means of allocat-
and that public monies invested in improved in-
were first adopted and then successfully translated
More equal competition between firms and
ing resources for transportation. In this view, any
frastructure will return adequate benefits to the
into programmatic action. We would see a more
among modes, freed from the encumberance
governmental action which reduces the efficiency
respective national economies.
safe, efficient, accessible, diverse, competitive
of outmoded regulatory restraints;
transportation system, mainly in the private sec-
New, more cost-effective, energy-efficient and
tor, which would enhance the Nation's environ-
intermodal technology;
ment, economy and quality of life, by providing:
Accessible transportation for the poor, the
Privately owned, financially healthy and
minority, the handicapped and the elderly;
competitive high performance national net-
Opportunities for employment and advance-
works of marine, rail, truck, bus, pipeline and
ment for all citizens, particularly women, mi-
air freight and passenger service;
norities and the disadvantaged;
A system of feeder lines and links that pro-
An economy conducive to adequate capital
vide access to the nationwide interstate sys-
formation, enabling private firms to earn a
tems and effectively meet the transportation
reasonable return on investment and keep
needs of urban, suburban and rural areas.
facilities and equipment modern. safe and en-
privately maintained where possible, and sup-
vironmentally sound.
ported, on a fiscally responsible basis, pri-
A more perfect transportation system will evolve
marily by States and local governments with
primarily through the efforts of an innovative,
Federal financial participation where neces-
competitive, and forward looking private sector.
sary;
The Federal Government must support this evolu-
A safer, more energy-efficient, environmen-
tion, reinforcing the strengths of our system and
tally sound automobile that will be utilized
shoring up its weakness.
At a time when there is claimed to be an erosion
more intelligently and with greater social
of public confidence in the capacity of govern-
responsibility but which will continue to be the
ment to respond to public needs efficiently, it be-
most pervasive form of transportation, essen-
comes imperative to define clearly and realistically
tial to our life style and economic activity;
the responsibility and potentiality of the Federal
A modern highway system which serves the
Government.
48
49
Only when the reality of limited Federal re-
Only when the level of government closest to the
sources is fully recognized and expectations ac-
problems has the necessary financial resources, pro-
cordingly brought into balance with that reality,
gram flexibility and management authority, will
will the gap between the promise of legislation and
we succeed in blending transportation systems with
the performance of the government be narrowed.
broader national and community development
Only when we cease to seek narrowly focused
goals.
solutions to the problems of each transportation
Although there are old habits and ways of think-
APPENDIX 1
mode and begin to plan comprehensively, will the
ing, and strong forces of politics, precedent and
TRANSPORTATION SYSTEM PERFORMANCE MEASURES
distortions of Federal intervention yield to the ef-
program inertia at work, we must now seek new,
ficiency of intermodal competition and coopera-
more efficient ways of responding to the Nation's
The various elements of the Department are working
SUMMARY OF PERFORMANCE MEASURES REPORTED BY STATES
together to develop programs for more useful measures
UNDER THE 1974 NATIONAL TRANSPORTATION STUDY
tion.
transportation needs. This document is an initial
of the present and projected performance of the Nation's
Only when we realize that practices of the past
attempt to do so. It may well contain inconsisten-
transportation system.
HIGHWAYS
do not necessarily provide the best transportation
cies, omissions and policies that the public will
Currently, data are reported on the performance of
systems needed today, will we have the courage to
not accept. It is hoped, however, that it will stim-
today's systems and estimates of the performance of
1. Freeway capacity measures.
terminate programs that have fulfilled or failed to
ulate discussion of the issues so that there will be
planned systems yet to be developed. They provide a basis
2. Average travel speeds.
for understanding how our Nation's transportation facili-
3. Congestion levels on freeways.
attain their original purposes, and seek new solu-
progress and ultimately consensus on a policy
ties are currently performing. how they are expected to
4. Amounts of total highway travel occurring on free-
tions to the needs of tomorrow.
which we will all work to implement.
perform in the future, and how that performance might
ways.
vary among the States and urban areas. When collected
5. Average trip lengths (time and distance).
and examined over a period of time, they permit the
6. Accident injuries and fatalities.
evaluation of particular investment programs and policies
7. Population and job dislocation from highway con-
in terms of changes in system performance.
struction.
The attachment summarizes some of the more important
8. Pollutant output levels.
performance measures which have been identified for
measurement and reporting by State and local govern-
URBAN PUBLIC TRANSPORTATION
ments.
The great variation existing in the level and sophistica-
1. Accessibility of residential population and employ-
tion of planning in the different modal areas tempers the
ment areas to public transportation.
extent and sophistication of the performance measure
2. Average operating speed.
data which can be requested. Some of these measures
3. Average headways.
are actual "on the ground" measurements of performance,
4. Average trip lengths.
whereas others are the results of planning estimates or
5. Density of public transportation service.
the output from simulation models. Some of the data
6. Average vehicle occupancy.
items shown in the listing are in the nature of "impact
7. Fleet utilization.
measures," (e.g., pollution output, household dislocations,
8. Fares.
etc.) but can also be interpreted as measures of perform-
ance of the transportation facilities. Finally, the report-
9. Accident related injuries and fatalities.
ing units for these measures vary between the different
10. Pollutant output levels.
modal categories. For example, the transportation plan-
11. Population and job dislocation from transit facil-
ning assistance programs of the FHWA, UMTA, and FAA
ity construction.
allow for the reporting of transportation performance
measures on an individual urban area basis. In the smaller
AIRPORTS
urban areas and for rural areas. performance information
is far less obtainable at this time. Many States and urban
Air Carrier (A/C) or Reliever Airports Serving Hubs
areas are just recently initiating programs which will
1. Annual and peak hour passenger enplanements and
result in transportation performance measurement. The
A/C operations.
Department is actually supporting the expansion of such
2. Annual cargo tons handled.
activity through the operating administrations' planning
3. Peak hour delay per operation.
assistance programs and through the National Transpor-
4. Access time from central business district to airport.
tation Studies. Our current plans are to expand and
5. Out of pocket cost to travel from central business
standardize the actual measurement of "on the ground"
district to airport.
performance, as opposed to simulation output or engineer-
ing estimates. This would be done in order to improve
6. Distance to nearest alternative A/C airport.
the comparability while at the same time focusing only
7. Population and jobs relocated as a result of future
on certain key measures, some of which might be meas-
airport construction or modification.
ured every two years, and others less frequently. At the
8. Annual pounds of pollutants emitted by aircraft.
same time, planners from the various operating elements
9. Population and jobs within 30 minutes driving time
of the Department will continue efforts targeted at the
of each primary system airport.
identification of those performance measures which are
10. Noise exposure within the 30 and 40 NEF contours
most useful in carrying out the Department's functions.
(number of residents and employees).
50
51
MARINE TERMINALS
only the difference between overall expenditures and re-
TABLE 2.-Percentage of net Federal subsidies per unit
ceipts. (For instance, total fiscal year 1974 authorizations
of transportation
1. Cargo (tons and number of containers) handled per
under the Federal-Aid Highway Act were $6.049 billion;
Net Federal subsidy ¹ as a percent of the net Federal plus user
day.
of this $5.566 billion was financed from the Highway
expenditure, per unit of transportation service (units:
2. Cargo handled during peak day of the year (by type).
Trust Fund, leaving a net of $483 million. To this must be
freight-ton-miles, passengers-passenger-milles)
3. Average number of weeks per year port is closed by
added expenditures from general tax revenues for roads
in the Appalachia Region, $168 million, plus expenditures
Urbanized area passenger travel:
Percent
ice.
Private auto.
1.9
4. Number of ferry passengers served during peak day
under the Highway Beautification program, $55 million,
Taxi
minus funds expended on urban transportation, the re-
0.2
of year.
Bus
5. Classification of types of berths available as well as
sults of which appear as the entry on line 1 under High-
29.2
ways.).
Rapid rail
58. 5
cargo handling capability (slurry, lash, etc.).
Rail commuter
23. 5
2. The national aggregate receipts classified as user
RAILBOAD, BUS AND TRUCK TERMINALS
charges may overlap with those which would be inter-
Other domestic passenger travel:
Private auto
preted elsewhere as taxes for purposes of raising general
nil
1. Number of vehicles and passengers which can be
Bus
nil
revenues. (For instance, within the highway example, the
handled during the peak hours and annually.
Rail
taxes paid are not directly proportional to use and there
23.0
2. Amount of cargo (tons and containers or trailers)
Air carrier.
5.0
are extensive cross subsidies among users; i.e., between
which can be handled per hour and annually.
General aviation
cars and trucks, between urban users and rural users and
13.0
between those who seldom use the Interstate system and
Domestic freight:
APPENDIX II
Air
those who use it extensively.).
21
3. Although the figures demonstrate the relative bal-
Highway
0.9
Total Federal transportation subsidies-general
Rail
ances between expenditures and receipts for each mode
0.7
Marine
There is no standard government usage of the term
(e.g., the preponderance of Federal highway costs are met
0-52. 2
subsidy. As used here it is net Federal subsidy, defined as
by compensating receipts), they do not convey the rela-
1 Net Federal subsidy is defined as in table 1. Receipts from user
total Federal expenditures minus user charges received.
tive impacts on the modes of these Federal programs (e.g.,
charges have been deducted from the totals.
Therefore:
the very magnitude of the Federal-Aid Highway program
Depends on allocation of: (a) Marine safety expenditures
between passengers and freight: (b) marine water pollution
1. The figures in the following table do not reflect the
tends to favor auto and truck transportation over other
expenditures between shore and waterborne sources, and (e)
relative magnitude of the various Federal programs, but
modes).
search and rescue expenditures between rescue associated with
aviation and marine. and within the marine category between
domestic marine freight haulage and other marine activity (for
TABLE 1.-Total Federal Transportation Subsidies
example, foreign ships, fishing vessels, recreational boating, etc.).
(In thousands of dollars]
Aviation
Urban mass
Highways
Railroads
Marine
Pipelines
Totals
transportation
1. Federal grants less user
charges
73,462
925,500
621,270*
205,204
428, 176
0
2. Federally caused cross sub-
sidies
0
96,000
(96,000)
0
0
0
3. Federal services and facil-
ity operations less user
charges
593,000
0
0
0
1,121,377
0
4. Assumption of legal risks
8,000
0
Unknown
0
Nil
0
5. Deferred tax payments
0
0
0
0
13,466
0
6. Federal R. & D. and plan-
ning
280,810
120,500
0
24,350
40,000
Nil
7. Administrative and regula-
tory costs
18,000
7,000
20,000
2,700
35,000
0
Subtotals
973,272
1,149,000
545,270
232,254
1,638,019
Nil
4,537,815
Urbanized area travel subtotals
1,149,000
101,135
1,250,135
Rest of domestic travel sub-
totals
949,552
426,135
232,254
805,227
Nil
2, 413, 168
International travel subtotals
23,720
18,000
832,792
874,512
Notes: (1) Based on 1974 actual expenditures where readily available. (2) Capital Investments were not annualized. (3) Totals do not Include general revenue
sharing funds spent on transportation ($1,005,000 largely on highways and urban mass transportation), risk assumed on loans, Federal reimbursement of local
user charges ($2,577,000 for highways), differences in regulation or economic regulatory costs.
52
53