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DEPARTMENT OF TRANSPORTATION AND RE

LATED AGENCIES APPROPRIATIONS FOR FISCAL YEAR 1986

THURSDAY, MARCH 28, 1985

U.S. SENATE,
SUBCOMMITTEE OF THE COMMITTEE ON APPROPRIATIONS,

Washington, DC. The subcommittee met at 10 a.m., in room SD-138, Dirksen Senate Office Building, Hon. Mark Andrews (chairman) presiding.

Present: Senators Andrews, Abdnor, and Chiles. Also attending, Senator Pressler.

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INTERSTATE COMMERCE COMMISSION

STATEMENT OF REESE H. TAYLOR, JR., CHAIRMAN
ACCOMPANIED BY:

HEATHER J. GRADISON, VICE CHAIRMAN
MALCOLM M.B. STERRETT, COMMISSIONER
FREDERIC N. ANDRE, COMMISSIONER
J.J. SIMMONS, COMMISSIONER
PAUL H. LAMBOLEY, COMMISSIONER
ANDREW J. STRENIO, JR., COMMISSIONER
MARTIN E. FOLEY, MANAGING DIRECTOR
RONALD S. YOUNG, DIRECTOR, BUREAU OF ACCOUNTS
J. WARREN MCFARLAND, DIRECTOR, OFFICE OF COMPLIANCE AND

CONSUMER ASSISTANCE
ROBERT S. BURK, ACTING GENERAL COUNSEL
EDWARD J. SCHACK, SPECIAL COUNSEL

OPENING REMARKS

Senator ANDREWS. The subcommittee will come to order. We appreciate the turnout for today's meeting on the Interstate Commerce Commission budget. I welcome those commissioners in attendance.

The hearing will closely examine a very serious issue, the merits of the Commission's request for a fiscal year 1985 supplemental. The Commission we are told will, starting April 1, be faced with the possibility of a furlough that would in effect result in approximately a 20percent reduction of time and pay for Commission employees.

We intend to explore this issue. We also intend to explore what the Commission did, knowing as they did, well in advance of the beginning of this fiscal year, to arrange their budget so they wouldn't have this

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kind of crisis. And it is important, of course, for the committee to find out how much of the present crisis is due to the level set by the Appropriations Committee and signed into law by the President, and how much of the crisis is due to the dereliction on the part of the Commissioners in failing to realize that that level was indeed and in fact the law.

It is very appropriate that we look at the supplemental request knowing that the appropriated level was established in law. A number of people who are knowledgeable about such things in Government say that the ICC's action is probably the most flagrant rejection of an act passed and signed into law by the President that they have ever seen on the part of a commission.

To go and spend as though that level had not been set by law, certainly doesn't smack of sensible management on the part of the Commissioners. But these are the things, of course, that we want to find out as well as exploring the fiscal year 1986 request.

Before we proceed to the testimony of Chairman Taylor, we have a statement submitted by Senator Chiles.

(The statement follows:)

STATEMENT OF SENATOR CHILES I would like to join Chairman Andrews in welcoming Reese Taylor, Chairman of the Interstate Commerce Commission, and the 6 other Commissioners to our hearings this morning. I would like to especially welcome Commissioners Lamboley, Strenio, and Simmons to our hearing this morning as they are newly appointed to the ICC since our last appropriations hearing.

For the benefit of the new Commissioners, I'm sure you have now had a chance to review last year's hearing record when we discussed the need for the ICC to hold open conferences and to conduct all significant matters in public, consistent with the letter and intent of the Government in the Sunshine Act. On May 10, the Commission held its first open meeting in almost 20 months and adopted a new rule which would require all significant matters to be discussed and voted on in public session. I am sure you know that this new rule gives each and every Commissioner the right and the authority to request open meetings and upon the request of any Commissioner, an open meeting will be scheduled by the chairman. This morning I look forward to reviewing with you the progress you have made in conducting open meetings.

I am also concerned, as is Chairman Andrews, with the implications of the supplemental request. From what we have been told, the ICC has been spending at a rate which will greatly exceed the $48 million appropriated to it without draconian measures being taken. Instead of planning from the beginning of the year to live within the $48 million provided to the ICC, the Agency has, instead, chosen to spend at an annual rate of approximately $52 million, and now the only way to live within the $48 million would be to furlough all employees 1 day a week for the rest of the fiscal year. While having 1 extra day off a week may be welcomed by some, I am sure that a 20-percent pay cut for all ICC employees would not be popular. Surely we will need to discuss in some detail your supplemental request and the decisionmaking process that led you to the edge of the fiscal cliff.

I look forward to hearing your testimony.

STATEMENT OF REESE TAYLOR

Senator ANDREWS. We are happy to have you here. Chairman Taylor and Commissioners, we would hope that you might summarize your statements, if you wish, and we can assure you that the prepared state

ments will be made a part of the record as though given in their entirety.

So, Mr. Chairman, you may proceed.

INTRODUCTION OF ASSOCIATES

Mr. TAYLOR. Thank you, Mr. Chairman. Let me begin by introducing those at the table with me this morning. On my left is Vice Chairman Gradison. On her left are Commissioner Andre, Commissioner Lamboley, and Commissioner Strenio.

On my right is our Managing Director, Martin Foley. And on his right are Commissioner Sterrett, Commissioner Simmons, and on his right is Ron Young, the Director of our Bureau of Accounts.

Thank you for inviting me here today to discuss the Interstate Commerce Commission's fiscal year 1985 supplemental appropriation request. I would like to highlight some aspects of this request, and then I will turn to our appropriation request for fiscal year 1986.

FISCAL YEAR 1985 SUPPLEMENTAL REQUEST

Of the total supplemental request of $4.463 million for fiscal year 1985, $3.4 million is requested to finance the program operations at the staff-year levels approved in the conference report accompanying the continuing resolution. The balance, or just over $1 million, is requested to fund the additional 35 staff-years needed by the Commission to carry out its current responsibilities.

These supplemental resources are required primarily to enable the Commission to continue to perform critical functions in a timely manner. These functions are statutorily based, and the volume of workload in many instances is uncontrollable because it is generated by the public. As long as our existing legislation remains in effect, we must continue to implement and enforce it.

The current authorization of $48 million represents a reduction of over $8.5 million from the amount expended in fiscal year 1984 and $6 million from the amount originally requested for fiscal year 1985, which approximated our spending rate at the beginning of this fiscal year.

The authorized funding will support only about 860 staff-years, which is far below what is authorized under the conference report for the continuing resolution and also approximately 200 staff-years below the onboard strength at the beginning of the fiscal year.

By the time the continuing resolution was approved in mid-October, we had already begun fiscal year 1985. Therefore, there was no opportunity for the Commission to properly plan and implement spending reductions of $6 million and at the same time maintain a staffing level anywhere near what was authorized by the continuing resolution.

Because of the long leadtime required to effect reductions in force and the extremely high costs of the terminal leave, severance, and unemployment compensation payments associated with separating a highly tenured work force, significant savings in personnel compensation cannot be quickly achieved.

At the Commission's request, our Managing Director explored every possible reduction alternative short of totally closing down the Agency. His study revealed that if the supplemental request before you is not approved, we either would have had to reduce our work force to less than 700 positions by separating almost 400 employees or furlough every employee for up to 30 work days. In either event, the effect upon our personnel and the work of the Commission for this fiscal year would be devastating.

After considering various options, the Commission voted unanimously on October 25, 1984, to request restoration of the funds necessary to conduct operations at the minimum level of this supplemental request and to adopt an action plan to cut spending to that level or below, if possible.

ACTION PLAN The action plan placed a freeze on hiring as well as severe restrictions on all nonpersonnel expenditures. To date, the action plan has been very successful in reducing expenses. We currently estimate that if the plan must remain in effect for the balance of this fiscal year, it will result in a cost reduction of $2.7 million compared to the spending rate at the beginning of the fiscal year.

Despite this success, the cost reduction falls far short of the $6 million cut from the budget request. In addition, the continuation of these actions will have a significant adverse effect on operations, since key personnel cannot be replaced, program travel is severely restricted, and certain basic expenditures for such things as training, incentive awards, equipment, and supplies have either been canceled or deferred.

The Commission also instructed the Managing Director to develop an emergency plan which would cut staff-years and spending to the conference report levels in case the supplemental request were denied or only partially granted.

FURLOUGHS On January 18, 1985, we voted to have the Managing Director prepare a plan under which, in the event no funds or insufficient funds are forthcoming in the supplemental, every employee will be furloughed without pay 1 day per week, commencing in April, for approximately 26 work days, or until our spending level falls within the continuing resolution appropriation for the fiscal year.

This is an extremely painful choice, but in our view it is the only reasonable one available to us under the circumstances. The furlough plan has been negotiated with the unions, pursuant to our labor/management agreements, and formal 30-day notices to the employees went out on March 1, 1985.

Originally, we had planned to begin furloughs on April 1. However, in the hope of getting some positive word from this committee on our supplemental, we have voted to delay implementation of the furlough plan to the last possible moment our current numbers will allow, April 14. If we receive no positive indication from this committee by April 11 that the supplemental appropriation will be approved, we simply will have no choice but to begin the furloughing program.

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