5 1 tion provided in section 4 (b) not to exceed $ 2 which limit shall be increased to $ 3 1967, to $ on July 1, on July 1, 1968, and to $ 4 on July 1, 1969." 5 SEC. 5. Section 10 (c) of the Urban Mass Transporta6 tion Act of 1964 (as redesignated by section 3 of this Act) 7 is amended (1) by striking out the semicolon at the end of clause (3) and inserting in lieu thereof ", and the term 'Secretary' means the Secretary of Housing and Urban Development;"; (4); (2) by striking out "and" at the end of clause (3) by striking out "serving the general public” in clause (5) and inserting in lieu thereof "serving commuters and others", and by striking out the period at the end of such clause and inserting in lieu thereof the following: "; and the term 'mass transportation company' means any private company or public authority or agency providing mass transportation service; and"; and (4) by adding at the end thereof a new clause as follows: "(6) the term 'annual net operating deficit' means 1 2 3 4 5 6 6 that part of the annual operating costs of a mass transportation company which could reasonably have been avoided by the elimination of commuter service in an urban area, less the annual revenues derived by such company from the provision of such service." SEC. 6. Section 13 of the Urban Mass Transportation 7 Act of 1964 (as redesignated by section 3 of this Act) is 8 amended by striking out "section 7 (b)" and inserting in 9 lieu thereof "section 8 (b)". GENERAL COUNSEL OF THE DEPARTMENT OF COMMERCE, Hon. A. WILLIS ROBERTSON, Chairman, Committee on Banking and Currency, DEAR MR. CHAIRMAN: This is in further response to your request for the comments of the Department of Commerce on S. 2804, a bill to amend the Urban Mass Transportation Act of 1964 to authorize certain grants to assure adequate commuter service in urban areas, and for other purposes. This bill woud amend the Urban Mass Transportation Act of 1964. The bill declares that Congress would find that over 70 percent of the Nation's population lives in urban areas, that it is anticipated that by 1986 80 percent of the population will be in such areas, that transportation is the lifeblood of an urbanized society, and that mass transportation has for many years served capably and profitably the transportation needs of the urban areas of the country. The Congress would further declare that in recent years the maintenance of minimal commuter service has become so financially burdensome as to threaten the continuation of the service, that some mass transportation companies are currently carrying out projects to revitalize their commuter operations, and that immediate substantial Federal assistance is needed on an interim basis to enable many mass transportation companies to continue to provide service during the period required to revitalize commuter operations and place them on a sound financial basis. The bill would authorize the Secretary of Housing and Urban Development to make grants to any State or local public body or agency in any area to assist any mass transportation company operating in its area to defray operating deficits incurred as the result of providing service to the area. The amount granted would not exceed two-thirds of the annual net operating deficit of such company, and no grant would be made unless the public body and the company jointly submit to the Secretary a comprehensive commuter service improvement plan, to be approved by the Secretary. No company would be eligible to receive assistance for a period in excess of 10 years, except that the Secretary could authorize such assistance for an additional period, not exceeding 5 years, if he determines that an extension is necessary to enable the company to carry out its commuter service improvement plan. Section 4 of S. 2804 would provide additional amounts to finance projects but as presently drafted the dollar amounts are blank. The Department of Commerce is opposed to S. 2804. The bill would change the present urban mass transportation grant-in-aid program from one based on assistance for capital imrovements to one combining capital improvements and operating subsidy. An examination of the legislative history of the bills which led to the enactment of the Mass Transportation Act of 1964 as well as the specific language of the act shows that it was clearly the congressional intention not to provide operating subsidy for mass transportation systems. For example, in House Report No. 204, 88th Congress, 1st session, to accompany H.R. 3881, the statement is made at page 12, "No grant of funds will be permitted to be used for operating costs or for the payments of ordinary governmental expenses." This language is included in the act itself in section 3, 49 U.S.C. 1602(a), which reads as follows: "no such funds shall be used for payment of ordinary governmental or nonproject operating expenses." One of the situations which undoubtedly has led to the solution proposed by this bill is the problem of the railroads serving commuters in the New York metropolitan area. This problem is particularly acute because of the plight of New Jersey railroads and of the New York, New Haven & Hartford Railroad. The Department does not believe that the problem is typical of the national situation, which was explored extensively by the joint Commerce-HHFA study in 1961. This study led to the introduction of the administration's transit aid bill which became the Urban Mass Transportation Act of 1964. The thrust of this program was grants-in-aid with local participation for the procurement of capital improvements and for experiments in service. Although the subsidy to be provided under S. 2804 is labeled an interim program, its 10-year limit plus the provision for an extension of 5 years, would tend to make it a permanent part of the Federal program. In turn, the provision of a Federal operating subsidy for a 15-year period would tend to freeze the technology of commuter service at its present level and thus tie it to existing facilities. Present commuter services involving railroads rely more often than not on overage equipment and operating procedures. The provision of payment of subsidy for this system to make up operating deficits would not provide incentive for establishing new and better ways of urban mass transportation. Moreover, mass transportation developments in the New York metropolitan area are in the direction of State and local support for railroad operations. The State of New York has recently acquired title to the Long Island Railroad. The States of New York and Connecticut are now cooperating to find a solution to the New Haven commuter problem. This problem is also involved in the forthcoming Penn-Central merger decision by the Interstate Commerce Commission. Moreover, the Commission is considering an application by the New Haven to discontinue commuter train service. The decision, in this case, may well involve the Commission's appraisal of the current New York-Connecticut assistance program. In addition, the State of New Jersey has had, for several years, a railroad subsidy program. Extensions of this program are under consideration by the State legislature. In summary, the Department does not believe that the current mass transportation problems of New York and other cities justify a Federal program of operating subsidy. Rather, we believe this is a proper local and State responsibility with Federal assistance as provided by the Mass Transportation Act of 1964. We have been advised by the Bureau of the Budget that there would be no objection to the submission of our report from the standpoint of the administration's program. Sincerely, ROBERT E. GILES, General Counsel. THE SECRETARY OF HOUSING AND URBAN DEVELOPMENT, Subject: S. 2804, 89th Congress (Sen. Williams). Chairman, Committee on Banking and Currency, DEAR MR. CHAIRMAN: This is in further reply to your request for a report from this Department on S. 2804, a bill to amend the Urban Mass Transportation Act of 1964 to authorize certain grants to assure adequate commuter service in urban areas, and for other purposes. This bill would set forth congressional findings that immediate interim Federal assistance is needed to enable many mass transportation companies to continue to provide vital community service while commuter operations can be revitalized and placed on a sound financial basis. It would amend the Urban Mass Trans portation Act of 1964 to authorize a new program of grants to assist States and local public bodies to defray operating deficits which public and private mass transportation companies incur through commuter service. Such grants could be for up to two-thirds of the annual net operating deficit of the assisted company. over a 10-year period, extendable to 15 years where the Secretary determined that to be necessary. Grants could be provided only where the public body and the mass transportation company have prepared a commuter service improvement plan, meeting criteria established by the Secretary, for commuter service capital improvements and for placing commuter operations on a sound financial basis. The bill would also extend through fiscal year 1970, in unspecified amounts, the annual mass transportation grant authority under the 1964 act. This authoriza tion now extends through fiscal 1967. This Department cannot recommend the enactment of S. 2804. The problem of maintaining public transportation service has in recent years become acute in many urban areas, large and small, throughout the United States. As part of this problem, increasing numbers of railroads have been petitioning regulatory agencies for abandonment of commuter and other passenger service, mainly in the large eastern metropolitan areas. This proposal is aimed mainly at assisting these railroad commuter operations, and is intended to provide interim assistance to preserve commuter service until a permanent solution is found. The proposal is thus directed toward an important and urgent problem. Regardless of the nature of the public or private actions and decisions which may have led to the present situation, there are at least some cases in which assistance by some level of Government is now necessary for transit operations in order to continue a system in being, until more effective long-term arrangements can be provided. Our present mass transportation capital grant program is not designed to provide such interim assistance. It is true that financial assistance for new rolling stock, station improvements, and other commuter capital improvements can very substantially aid in reducing operating deficits. Indeed, one of the basic premises of the program is that systems with capital investments adequate to provide effective transit service are in the long run less, rather than more, expensive to operate. This is, howover, a long-term effect. It takes time, particularly in railroad commuter operations, to plan and carry out a capital improvement program, and it takes still more time for the results to show in increased ridership and more efficient operations. The issue, then, is who is to provide the interim assistance that may well be needed in order to avoid both the dislocation and hardship to commuters and others dependent upon mass transportation service in danger of abandonment, and also the extra cost of reinstituting, rather than continuing, such service after personnel have been scattered and facilities neglected or disposed of. We believe it desirable to continue the present Federal policy of leaving the responsibility for such emergency interim assistance in the hands of the localities and States. There are two interrelated reasons for this position. First is the fact that there is an inherent danger in the provision of operating subsidies for commuter and other mass transportation systems. These can well become a palliative which contributes to the continuance of inadequate mass transportation arrangements rather than the locality taking a "hard look" at what is really needed in the area-with respect, for example, to increased long-term capital investment; to increased, rather than merely continued, service; and to coordinated area wide service. We consider it very important, therefore, for a locality deciding to provide operating subsides to be committing its own money to that decision. To the extent that Federal funds are instead provided, there will be a danger that the necessary local "hard look" will be deferred. 1 |