randa, correspondence, and other documents for the inspection and copying authorized by this paragraph, and motor carriers, persons controlling, controlled by, or under common control with such carriers, brokers, and lessors shall submit their lands, buildings, and equipment for examination and inspection to any duly authorized special agent, accountant, or examiner of the Commission upon demand and the display of proper credentials."

SEC. 15. Section 313(a) of the Interstate Commerce Act (49 U.S.C. 913 (a)) is amended to read as follows:

"Sec. 313(a) The Commission is hereby authorized to require annual, periodical, or special reports from water carriers, persons controlling, controlled by, or under common control with such carriers, lessors, and associations (as defined in this section), and to prescribe the manner and form in which such reports shall be made, and to require from such carriers, persons controlling, controlled by, or under common control with such carriers, lessors, and associations specific and full, true, and correct answers to all questions upon which the Commission may deem information to be necessary. Such annual reports shall give an account of the affairs of the carrier, any person controlling, controlled by, or under common control with such carrier, lessor, or association in such form and detail as may be prescribed by the Commission. Said annual reports shall contain all the required information for the period of twelve months ending on the thirty-first day of December in each year, unless the Commission shall specify a different date, and shall be made out under oath and filed with the Commission at its office in Washington within three months after the close of the year for which the report is made, unless additional time be granted in any case by the Commission. Such periodical or special reports as may be required by the Commission under this paragraph shall also be under oath whenever the Commission so requires."

SEC. 16. Section 313 (c) of the Interstate Commerce Act (49 U.S.C. 913 (c)) is amended to read as follows:

"(c) The Commission may in its discretion, for the purpose of enabling it the better to carry out the purposes of this Part, prescribe a uniform system of accounts applicable to any class of water carriers, persons controlling, controlled by, or under common control with such carriers, and a period of time within which such class shall have such uniform system of accounts, and the manner in which such acounts shall be kept."

SEC. 17. Section 313(e) of the Interstate Commerce Act (49 U.S.C. 913 (e)) is amended to read as follows:

"(e) The Commission may, in its discretion, prescribe the forms of any and all accounts, records, and memoranda to be kept by water carriers, persons controlling, controlled by, or under common control with such carriers and lessors, including the accounts, records, and memoranda of the movement of traffic, as well as of the receipts and expenditures of money, and it shall be unlawful for such carriers, persons controlling, controlled by, or under common control with such carriers, or lessors to keep any accounts, records, and memoranda contrary to any rules, regulations, or orders of the Commission with respect thereto."

SEC. 18. Section 313 (f) of the Interstate Commerce Act (49 U.S.C. 913 (f)) is amended to read as follows:

"(f) The Commission or its duly authorized special agents, accountants, or examiners shall have authority to inspect and copy any and all accounts, books, records, memoranda, correspondence, and other documents, of such water carriers, persons controlling, controlled by, or under common control with such carriers, and lessors, and of associations (as defined in this section). The Commission or its duly authorized special agents, accountants, or examiners shall at all times have access to all lands, buildings, or equipment of such carriers, persons controlling, controlled by, or under common control with any such carriers, or lessors, and shall have authority under its order to inspect and examine any and all such lands, buildings, and equipment. All such carriers, lessors, and persons shall submit their accounts, books, records, memoranda, correspondence, and other documents for the inspection and for copying authorized by this paragraph, and such carriers, persons centrolling, controlled by, or under common control with such carriers and lessors shall submit their lands, buildings, and equipment for inspection and examination, to any duly authorized special agent. accountant, or examiner of the Commission, upon demand and the display of proper credentials."

SEC. 19. Section 412(a) of the Interstate Commerce Act (49 U.S.C. 1012(a)) is amended to read as follows:

"Sec. 412(a). For purposes of administration of the provisions of this Part, the Commission is hereby authorized to require annual, periodical, or special reports from freight forwarders, persons controlling, controlled by, or under common control with such freight forwarders, and associations (as defined in this section), and to prescribe the manner and form in which such reports shall be made, and to require from such forwarders, persons controlling, controlled by, or under common control with such forwarders, and associations specific, full, true, and correct answers to all questions upon which the Commission may deem information to be necessary. Such annual report shall give an account of the affairs of the freight forwarder, persons controlling, controlled by, or under common control with such forwarder or association in such form and detail as may be prescribed by the Commission. The Commission may, in its discretion, for purposes of administration of the provisions of this Part, prescribe a uniform system of accounts applicable to freight forwarders and persons controlling, controlled by, or under common control with such forwarders, and the period of time within which they shall have such uniform system of accounts, and the manner in which such accounts shall be kept. The Commission may also require any such forwarder to file with it a true copy of any contract or agreement between such forwarder and any person in relation to transportation facilities, service, or traffic affected by the provisions of this Part.

SEC. 20. Section 412 (c) of the Interstate Commerce Act (49 U.S.C. 1012 (c)) is amended to read as follows:

"(c) The Commission may, in its discretion, prescribe the forms of any and all accounts, records, and memoranda to be kept by freight forwarders and persons controlling, controlled by, or under common control with such forwarders, with respect to service subject to this Part, and the length of time such accounts, records, and memoranda shall be preserved, including the accounts, records, and memoranda of the movement of traffic, as well as of the receipts and expenditures of money, and it shall be unlawful for freight forwarders and persons controlling, controlled by, or under common control with such forwarders to keep any accounts, books, records, and memoranda contrary to any rule, regulation, or order of the Commission with respect thereto."

SEC. 21. Section 412(d) of the Interstate Commerce Act (49 U.S.C. 1012(d)) is amended to read as follows:

"(d) The Commission or its duly authorized special agents, accountants, or examiners shall at all times have access to and authority, under its order, to inspect and examine any and all lands, buildings, or equipment of freight forwarders and persons controlling, controlled by, or under common control with such forwarders; and shall have authority to inspect and copy any and all accounts, books, records, memoranda, correspondence, and other documents of freight forwarders and persons controlling, controlled by, or under common control with such forwarders and of associations (as defined in this section).

"Freight forwarders and persons controlling, controlled by, or under common control with such forwarders shall submit their accounts, books, records, memorauda, correspondence, and other documents for the inspection and copying authorized by this subsection, and freight forwarders, persons controlling, controlled by, or under common control with such forwarders shall submit their lands, buildings, and equipment for examination and inspection, to any duly anthorized special agent, accountant, or examiner of the Commission upon demand and the display of proper credentials."

SEC. 22. Section 660 of title 18, United States Code, is amended to read as follows:

"$ 660. Carrier's Fund Derived from Commerce; State Prosecutions.

"Whoever, being a president, director, officer, or manager of any firm, association, or corporation engaged in commerce as a common or contract carrier, person controlling, controlled by, or under common control with such carrier, or whoever being an employee of such common or contract carrier riding in or upon any railroad car, motortruck, steamboat, vessel, aircraft, or other vehicle of such carrier moving in interstate commerce, embezzles, steals, abstracts, or willfully misapplies or willfully permits to be misapplied, any of the money, funds, credits, securities, properties, or assets of such firm, association, or corporation arising or accruing from, or used in, such commerce, in whole or in part, or willfully or knowingly converts the same to his own use or to the use of another, shall be fined not more than $5,000 or imprisoned not more than ten years, or both.

53-970 O-75 - 22

"The offense shall be deemed to have been committed not only in the district where the violation first occurred but also in any district in which the defendant may have taken or had possession of such moneys, funds, credits, securities, properties or assets.

"The offense shall be deemed to have been committed not only in the district where the violation first occurred but also in any district in which the defendant may have taken or had possession of such moneys, funds, credits, securities, properties or assets.

"A judgment of conviction or acquittal on the merits under the laws of any State shall be a bar to any prosecution under this section for the same act or acts."

SEC. 23. The amendments made by the foregoing provisions of this bill shall become effective ninety days from the date of their enactment.

[Whereupon, at 2:55 p.m. the committee was adjourned, to reconvene at 10 a.m. Friday, May 9, 1975.]

UNITED STATES RAILWAY ASSOCIATION

PRELIMINARY SYSTEM PLAN

FRIDAY MAY 9, 1975

HOUSE OF REPRESENTATIVES,

SUBCOMMITTEE ON TRANSPORTATION AND COMMERCE, COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE, Washington, D.C. The subcommittee met at 10 a.m., pursuant to notice, in room 2123, Rayburn House Office Building, Hon. Fred B. Rooney, chairman, presiding.

Mr. ROONEY. The subcommittee will come to order.

Our first witness this morning is the very distinguished Governor from the Commonwealth of Pennsylvania, Governor Milton Shapp.

We welcome you to this committee today. I personally know your great involvement in not only railroad transportation, but transportation as a whole. Governor Shapp is the chairman of the National Governors Conference Committee on Transportation and he is also chairman of the Middle Atlantic Governors Conference, and Governor Shapp's involvement in railroads dates back to the early sixties when he was the only one at that time who opposed the merger of the Pennsylvania and New York Central Railroads.

I think Governor Shapp will make a commendable witness and will add much to the input of the various witnesses appearing before this subcommittee.

Governor Shapp, we welcome you to this committee and you may proceed.

STATEMENT OF HON. MILTON J. SHAPP, GOVERNOR, COMMONWEALTH OF PENNSYLVANIA, ACCOMPANIED BY NORVAL D. REECE, SPECIAL ASSISTANT FOR INTERGOVERNMENTAL RELATIONS; GORDON P. MacDOUGALL, PENNSYLVANIA DEPARTMENT OF JUSTICE; ARTHUR B. SHENEFELT, TRANSPORTATION ADVISER, PENNSYLVANIA DEPARTMENT OF COMMERCE; AND MARTIN MARGOLIS, OFFICE OF STATE PLANNING AND DEVELOPMENT

Governor SHAPP. Thank you, Mr. Chairman.

Before reading my statement, I would like to introduce the people here with me at the table this morning. Mr. Gordon MacDougall is with the department of justice in Pennsylvania and he represents the Commonwealth before the regulatory agencies including the ICC. Mr. Art Shenefelt is Department of Commerce, Pennsylvania, and

Martin Margolis is from the office of State planning and development, serving on the Governors Committee for Economic Development in Pennsylvania.

Mr. Chairman and members of the committee, I wish to thank you for the opportunity to appear this morning to discuss the U.S. Railway Association's preliminary system plan. Although I serve as chairman of the National Governors' Conference Committee on Transportation, Commerce and Technology, and although I have discussed rail problems with many Governors and know of their concerns, my statement today represents my personal views. Let me summarize them.

One: We desperately need a new comprehensive national transportation policy if we are to refuel our recession-worn economy.

Two: We must recognize that railroads are a mainstay of our economy. A first priority, this new national transportation policy must focus on rehabilitating and modernizing our freight and passenger rail service. The high transportation costs and poor service resulting from the operation of our run-down rail plant are a major cause of both inflation and the present recession.

Three: I see no need to nationalize our railroads. In fact, I suspect that many of those who advocate public ownership do so more out of desperation and frustration with our failure to produce a sound rail policy than out of genuine preference.

Four: I am opposed to the "controlled liquidation" proposal of the Ford administration. Such a policy would plunge our rail system into chaos and our economy into a massive disorder. Implementation of the controlled liquidation" program would be sheer folly. It might give a few strong rail carriers inroads into new markets, but in the not too distant future, it would so disrupt the national economy that it would create a disaster far greater than the collapse of the Penn Central.

Five: I am also opposed to the USRA preliminary system plan with its call for massive abandonments and further mergers. The plan also fails to devise a program to assure rehabilitation of our railroads. Unless the USRA's final plan is drastically revised, I would urge the Congress to reject it.

Six: I do not believe a massive branch line subsidy program is the answer. I fear that a 2-year subsidy-no matter who pays the cost-it little more than a short-term phaseout of rail service in the area affected.

Seven: In place of the ill-conceived proposals of the administration and the USRA, I recommend that we rebuild and modernize all railroads in the Nation. This can be done by establishing a rail trust fund.

Eight I also recommend that we create a viable rail system in the Northeast by splitting the Penn Central into two separate carriers in a manner similar to what I proposed last February.

Adoption of these last two policies will allow America to develop the most modern, high speed transportation system in the world, without the need to dip constantly into the public treasury for massive subsidies.

Now let me turn to specifics.