COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION HOWARD W. CANNON, Nevada, Chairman WARREN G. MAGNUSON, Washington EDWARD ZORINSKY, Nebraska JAMES B. PEARSON, Kansas BARRY GOLDWATER, Arizona BOB PACKWOOD, Oregon HARRISON H. SCHMITT, New Mexico AUBREY L. SARVIS, Staff Director and Chief Counsel DOUGLAS W. SVENDSON, Staff Counsel TIMOTHY LYNCH, Professional Staff Member SUBCOMMITTEE ON SURFACE TRANSPORTATION JOHN C. DANFORTH, Missouri HOWARD W. CANNON, Nevada 078 Adams, Hon. Brock, Secretary of Transportation----. Prepared statement__. Questions of the committee and answers thereto_- Cole, Donald, president, United States Railway Association; accompanied by Frederic W. Yocum, vice president for operations__ Questions of the committee and answers thereto---- Dempsey, William H., president, Association of American Railroads_- Jordan, Edward G., chairman, Consolidated Railroad Corp., Transportation Center; accompanied by Richard D. Spence, president and chief operating officer; James M. Beggs, executive vice president, Aerospace, General Dynamics Corp.; Oscar A. Lundin, former vice chairman of the board of of directors, General Motors Corp.; James J. McTernan, Jr., former vice president, finance, Communications Satellite Corp.; Ralph W. Nicholson, former Senior Assistant Postmaster General, Finance, U.S. Postal Serv- ice; John Pirie, attorney, Hartman & Crain; and L. Chester May, chair- man and chief executive officer, Chicago Bank of Commerce_-- Prepared statement of Mr. Jordan____ O'Neal, Hon. A. Daniel, Chairman, Interstate Commerce Commission___ Prepared statement with attachments__ Snyder, Jim, national legislative director, United Transportation Union; Prepared statement with enclosures__ Cole, Donald C., president, United States Railway Association, letter with 106 Sweeney, John L., ConRail, letter with enclosures of May 19, 1978---- Tierney, Paul I., Transportation Association of America, letter of April 21, (III) UNITED STATES RAILWAY ASSOCIATION AMENDMENTS ACT OF 1978 THURSDAY, APRIL 13, 1978 U.S. SENATE, COMMITTEE ON COMMERCE, SCIENCE, AND TRANSPORTATION, Washington, D.C. The subcommittee met at 9:30 a.m. in room 318, Russell Senate Office Building, Hon. Howard W. Cannon (chairman of the full committee) presiding. OPENING STATEMENT BY THE CHAIRMAN The CHAIRMAN. The hearings will come to order. These hearings get under way for the purpose of examining Con Rail's first 2 years of operation as well as its request for additional funding. I find myself wanting to stand back for a moment to try to refocus, and, hopefully, come up with a better perspective on the problems confronting us today in the transportation sector. Certainly the fast approaching May 15 budget deadline contributes to a feeling we all get from time to time that legislative schedules allow too little time for detailed, thoughtful analysis, but in addition, sheer magnitude of the dollar requests made on this committee by transportation is more than enough to give one pause to ask, truly, where are we headed. I can't help but recall that within the last 48 hours, this committee has had to deal with money requests covering two railroads totaling anywhere from one-quarter to $212 billion maybe even $612 billion over the next few years, if ConRail's financial assumptions are later found to be erroneous. First, in a regularly scheduled meeting, we approved $650 million for Amtrak for fiscal year 1979. Today, we are being called on again for a billion plus by Con Rail. For our efforts thus far, on behalf of Amtrak, all we have heard is we are insensitive to Amtrak's need and they get along losing a mere $500 million a year. I hope our efforts on behalf of ConRail don't generate the same response, especially if the best we can do is only $500 million or perhaps $600 million, which is called for by the introduced bill. I note from Secretary Adam's testimony that the administration now proposes to fund the entire $1.3 billion estimated shortfall, whereas we had originally proposed to make up the 1979 shortfall of $600 million only. (1) While I would not automatically reject such an approach, I question whether this committee would not be giving up its responsibilities to closely oversee ConRail's operations, by leaving many questions over the next few years to the Appropriations Committee. A new GAO study, for example, says Congress should reassess its needs for information. In order to make its own judgments about ConRail's profitability and that Congress will probably be requiring even more information analysis about Con Rail rather than just less. I hope our witnesses will have some answers to these questions, and, Mr. Secretary, we are happy to have you here today, and have you lead off on this very important subject. [The bill follows:] [S. 2788, 95th Cong., 2d. sess.] A BILL To amend section 216 of the Regional Rail Reorganization Act of 1973 to authorize the purchase of an additional $600,000,000 of the series A preferred stock of the Corporation, and for other purposes Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That this Act may be cited as the "United States Railway Association Amendments Act of 1978". SEC. 2. (a) Section 216 of the Regional Rail Reorganization Act of 1973 (45 U.S.C. 726) is amended by striking out "$1,100,000,000" each place it appears therein, and inserting in lieu thereof in each such place "$1,700,000,000". (b) Section 216(b) of such Act (45 U.S.C. 716(b)) is amended by striking out "$2,100,000,000" and inserting in lieu thereof "$2,700,000,000". SEC. 3. The amendments made by section 2 of this Act shall become effective on the date of enactment of this Act. STATEMENT OF HON. BROCK ADAMS, SECRETARY OF Secretary ADAMS. Thank you, Mr. Chairman. Mr. Chairman, I would like to request permission to put my statement in full in the record, and then I will summarize and be most pleased to answer your questions. The CHAIRMAN. All right, sir. Secretary ADAMS. First, before entering my statement, I would like to indicate that I am in agreement with many of the remarks that you made in your opening statement. I am deeply concerned about the amounts of money that are being requested for Amtrak, and I wish to explain to you in my testimony today why we suggest a rolling 5-year forward authorization for the ConRail operation. There will be another date, I am certain, when we will discuss Amtrak in greater detail, but I wanted to state to the chairman before going into the details of this, that I am very concerned about the management problems at Amtrak, and that we are presently attempting to obtain a new head and operating officer for that organization. And we will be working very closely with this committee on what the future should be. The criticism, I think, is very proper, and it is one that I share. Mr. Chairman, I am certain that you are aware, since you were very much involved in this, as was I, that the 3R and 4R Acts were basically the attempt by the Congress to meet the problem of how to maintain freight service in the Northeastern part of the United States. We had three very bad alternatives then. We have not improved those alternatives in this period 2 years. I am certain that the chair |