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tives to a governmental investigatory board in 1961 ; the information has not since been included in the annual reports of the Section of Locomotive Inspection.
The emphasis placed by the President upon safety in transportation demands that responsibility for accidents be fixed as definitely as possible, so that the causes may be removed. The call for immediate action makes the delay in accident reports as great a detriment now to the interested agencies of the Federal Government as that delay has increasingly been to representatives of railway employees in their efforts to safeguard railway transportation through collective bargaining. Typical of the kind of delay which ought not longer to be tolerated is in the annual Accident Bulletin published by the Commission. That Bulletin for the calendar year 1960, was published in December, 1961, less than a year after the close of the period covered; the annual Accident Bulletin for 1963 was released in August, 1965, an increase of eight months-two-thirds-in the time lag of publication.
Accidents due to defects in locomotives and other equipment are among those most susceptible of prevention. Inspections of equipment and reports upon accidents now being made by the Commission will be of the utmost value in action upon the President's message. These should be reviewed now, and brought to the highest efficiency possible, as a prelude to Federal action.
A major contributing factor to the dissatisfaction of the public with railway service has been the abandonment of railway lines, the discontinuance of trains, the closing of railway stations, and the curtailment or elimination of important elements of both freight and passenger service.
Reports now being made by the ('ommission do not permit the necessary comprehensive study of the total effect of this nation-wide railway deterioration. Whatever reorganization of governmental regulation of transportation, and particularly of railways, may follow from the President's insistence upon improred service, it will be of the utmost importance that the Congress, other agencies of government, and the general public be accurately advised of the extent to which the railways have retreated from their basic obligation to provide efficient and adequate service throughout the United States. That can and should be done by the Commission.
Accompanying such a general national survey, there should be instituted a system of reports, to and from the Commission, which will keep the government and the public currently advised not only of the discontinuance of trains and stations, but also of such diminutions of service as the partial or total abandonment of less-than-carload service to particular communities. Such reports would of necessity be developed in coordination with state regulatory agencies.
Much of the deterioration and abandonment of passenger service has resulted from railway corporation claims of losses suffered in rendering such service. Because of the vital importance of restoring, maintaining and extending passenger service, the basis of all such claims should be re-examined, with the introduction of a system of accounting that allocates to passenger service only the actual out-of-pocket expense incurred.
RAILWAY OPERATIONS AND FINANCES . Deterioration of railway service is very closely related to a major factor in the operating statistics and results of recent years. It has long been evident that the railways have been losing business because of the shortage of freight cars; the Commission has repeatedly called attention to this deficiency. That shortage ties in to one of the most startling and disturbing developments in railway mismanagement of the last decade,
Freight carrying cars owned by American railways on December 31, 1970 to. talled 1,745,778; Class I carriers owned 1,721,269, with an aggregate capacity of 90.5 million tons. For several years a determined effort has been made by the Commission to induce expansion of freight car fleets; but as of January 1, 1966, total railway ownership had decreased to 1,511,570 freight cars. The capacity of freight cars owned by Class I carriers was down from 1950 by approximately two million tons. Net revenue ton-miles of Class I railroads in 1967, however, were 13% above 1950.
The obvious decline in freight cars and capacity, especially relative to traffic, was partly offset by an increase of 46,000 in the number of "privately owned" freight carrying cars--more than 25%-over 1950. In the income accounts of Class I railroads this increase in privately owned freight cars is reflected in the
rentals paid for equipment. In 1930, Class I Line-Haul roads paid $140 million in "net equipment rentals;" in 1966 the total was $425 million. For cars thus rented from "private" companies the railways must pay a rental to include not only the annual book depreciation-clearly far above that chargeable on owned equipment-but also allowances for other expenses and the profit margin of the "private" company. These rentals are deductible before the calculation by the railroad of "net railway operating income." Not only are these totals far in excess of what would be the reportable cost if the equipment were railway owned, but it is also evident that a very large proportion of these "privately owned" cars are held in the name of subsidiaries of the Class I operating companies. The carriers are, in such instances, paying to themselves rentals far in excess of costs actually allowable if the cars were reported as owned by the parent company; the net from these rentals enters into the parent company account only as net income, defeating the purpose of governmental regulation of equipment depreciation and of the computation of net railway operating income and return on investment.
Insofar as this practice is being followed, and the extent is very great though not precisely determinable from any reports made by the Commission, the railways are charging perhaps as much as three times the proper cost of the "privately owned” equipment. The possibility of serious abuse in these practices is obvious; the difference between equipment rentals charged in 1950 and 1965 amounted to more than one-third of the net income, and 30% of the net railway operating income, of Class I railroads in 1965. Otherwise expressed, net equipment rentals were 14% of net railway operating income in 1950-and 44% in 1965.
The situation calls for a thorough investigation by the Commission, analogous to those into contracted equipment maintenance and freight forwarder operations in the 1930's. As a part of that investigation, the railroad ownership of the "private" companies should be determined, and the portion of equipment rentals going to railroad controlled companies calculated. Future reports of railway operating companies should require a separation of equipment rentals as between companies in which the railroads, or any railroad corporation officers, have a financial interest, and those which are in fact separately and independently owned. The carriers should not be allowed to charge, by any such circuitous accounting, any greater amount to net equipment rentals than would be permissible as operating expense if the equipment were owned directly by the parent corporation. The resulting reduction in equipment cost should be of assistance in any calculation of the possibility of expanding the total equipment in service.
INTERMODAL TRANSPORTATION COMPETITION Many governmental and other decisions upon railway financial and operating conditions have turned upon the question of competition between the railways and other modes of transportation. Two aspects of this situation have direct and close relation to the form and content of reports now being made by the Interstate Commerce Commission.
The first of these is with respect to ownership or control by the railways, of companies engaged in other forms of transportation. A major part of this intermodal operation is in the control of truck lines by railways. The Commission reports upon motor carriers of property, and includes without separation in such reports data on carriers having one or another type of railway connection. The emphasis in the President's message upon "a coordinated transportation system" makes it especially important now for the government and the public to know to what extent such coordination is already in existence, and what are its results. The Commission could serve this need first, by a detailed study of joint traffic, including rail-controlled motor carriers as well as the actual total movement of trailers now being “piggy-backed,” and second, by a new continuing separate report of traffic and operating results of motor, water, and pipeline carriers con nected with railway carriers. The very great increase in trailer-on-flat-car traffic in recent years makes it likely that with respect to much of that traffic, railway and highway carriers are not competitive, but complementary.
A more serious defect in Commission reporting upon intermodal transportation is with respect to the proportion of intercity freight traffic being transported by rail, highway, pipeline and waterway. The studies made by members of the Commission staff since 1919 have uniformly classified motor truck transportation from farm to city, or city to farm, as "intercity" traffic. Those reports have been so prepared as to make the increase in motor traffic-largely non-competitive, and in great part a change from horse-drawn and other unrecorded traffic-as
diversion from railway traffic. Further, the omission since 1949 of coastal and intercoastal water transportation has made it appear that the great proportional increase in pipeline transportation has been a diversion from the railways, when it represents largely a shift from coastal tankers. The great decline in railway use of coal has reduced revenue traffic of those railways supplying others with that fuel—but has correspondingly improved the position and net revenue of other carriers. Foreign traffic on the Great Lakes has been classified as intercity. Employee representatives have gone into these and other grave defects in the Commission reports and studies of intermodal transportation; detailed analyses, insofar as the information is available, have been presented in hearings before Commission examiners, Nevertheless, the errors continue to be published in the annual reports. National transportation policy has in the past been formulated with reference to these grossly erroneous reports; the 1966 annual report of the Council of Economic Advisers (p. 125) bases important conclusions upon the same data. The dimensions of the error may be in part indicated by the fact that the Commission study represents the railway proportion of intercity freight traffic to have declined from 62.4% in 1939 to 43.5% in 1964—when the actual decline in the railway proportion has been little if any more than 1%.
The obvious flaws in the Commission's reports on intercity freight transportation have been so clearly pointed out, the size of the error has been so well outlined, and the past and possible future damage resulting from their use is so great that there should be no delay in the issuance of a general warning about further reliance upon this series of reports. The Commission might well undertake a revision of this series, in a basic study going back to 1939, and take steps to make certain that accurate data will be compiled in the future, and the erroneous material no longer be issued.
CHANGES IN REPORTS
As has been suggested above, changes in reports to or by the Interstate Commerce Commission should be made only on ample advance notice to all parties affected. In making any such changes, the greatest care should be taken either to make the new data derived from changed reports continuous with that earlier compiled, or to revise all earlier reports to insure as great continuity as possible.
In particular, it has indirectly come to the attention of employee representatives that the Commission has received and is entertaining proposals for the modification of the reports upon employee hours and compensation. Any such proposals are of the greatest importance to the employees, not only in collective bargaining but also in the handling of any proposals for the modification of Federal and state legislation bearing upon employee conditions. It is inconceivable that any responsible officials in the Commission could have known that the employees had not been immediately informed of any action upon any such proposals, and had not been given an opportunity promptly to submit any objections or other comments. It is to be hoped that steps will be taken to prevent a recurrence of this neglect of the group most seriously and directly affected by a proposed change in Commission reporting regulations.
We invite your careful consideration of the suggestions set forth herein and respectfully urge favorable action by the Commission at an early date. Very truly yours,
G. E. LEIGHTY, Chairman.
INTERSTATE COMMERCE COMMISSION,
Washington, D.O., June 7, 1966. Hon. HARLEY O. STAGGERS, House of Representatives, Washington, D.C.
DEAR CONGRESSMAN STAGGERS : In accord with the information set forth in the letter of April 1st from Mr. G. E. Leighty, Chairman of the Railway Labor Executives' Association, I am submitting herewith the response and evaluation of the contents thereof. Sincerely,
John W. Bush.
INTERSTATE COMMERCE COMMISSION,
Washington, D.C., June 7, 1966. Mr. G. E. LEIGHTY, Chairman, Railway Labor Executives' Association, Washington, D.C.
DEAR MR. LEIGHTY: Your letter of April 1st, previously acknowledged, has been given careful consideration and the spirit of public interest in which it was written is appreciated. Your views and recommendations on the various subjects discussed will be studied and weighed in reviews of policies and procedures involved. However, a number of points mentioned by you require our comment at this time.
A principal proposal made in your letter is that the Commission undertake an investigation into its reporting and statistical activities, prefaced by a public hearing open to railway patrons, employees, and managements, as well as to governmental agencies.
The Commission's reporting and statistical programs are subject to continuous review and change. Over the years, many revisions of reports have been made, and new reports programs have been instituted to keep the Commission, the government, and interested parties informed regarding the ever-changing transportation industry.
As is inevitable in reports and statistical programs, the time arrived when it appeared appropriate to review the Commission's activities in this area with the objectives of (1) re-evaluating the needs for transportation data, (2) assuring that such needs are adequately met at minimum burden to the government and industry, and (3) maintaining reporting programs at levels consistent with the essential information needs of the Commission and other vital interests. The Commission established a Staff Committee on Reduction of Paperwork Burden in October 1959. The success of this review program was attested by the commendations received during the Congressional investigation of the Federal "Paperwork Jungle.” Recommendation 6 of House Report No. 1700, Committee on Post Office and Civil Service, 87th Congress, 2nd Session, stated that other transportation agencies should undertake similar self-evaluation programs, with a view to reducing excessive and unnecessary reporting requirements and to applying the resulting savings to the correction of existing gaps in information.
As you are aware, programs such as that instituted by the Commission are in accordance with Executive and Congressional policy that all possible measures should be taken to reduce the paperwork burden of reporting to the Federal government. The primary object of the reports review program was not to save money for carriers but to examine how needs for appropriate and timely data could best be met. Any resultant reduction in reporting and publications programs was incidental to the prime purpose of the review.
In consideration of the needs for information, we took into account the interests of other government agencies, the Congress, the general public, labor, and industry, as well as those of the Commission. In some cases where Commission publications were reduced, it was a matter of eliminating duplications. In most other cases where continuous general publication did not appear to be warranted, the data are still available to those interested directly from carrier reports.
While we do not believe that there are sufficient compelling reasons to require general public hearings at present, we desire to assure you that we will give your suggestion careful evaluation and consideration.
The enclosed contains our comments under appropriate headings with respect to the specific suggestions and eriticisms contained in your letter. Sincerely,
John W. Bush,
APPENDIX REPORTING ACCIDENTS, CASUALTIES AND EQUIPMENT DEFECTS AND FAILURES Because of the limited resources available, it is not possible for the Interstate Commerce Commission to make a coinplete audit of each railroad's accident and casualty files. Hence, of necessity only spot checks of these records are made. During the fiscal year ended June 30, 1965, field personnel of the Bureau of Railroad Safety and Service reviewed 25,573 such accident and casualty files and found a total of 32 infractions. These 32 infractions were referred for prosecu
tion. This compares with 21,679 instances of accident or casualty files reviewed during the previous year when 22 infractions were noted and referred for prosecution.
This method of enforcement of the Accident Reports Act has proved its effectiveness because as a general rule our spot checks disclose the fact that most railroads file timely, correct and complete monthly reports of railroad accidents. Whenever we find a carrier consistently reports some of its accidents late, we take appropriate action to get compliance by bringing the late reporting to top management's attention by correspondence and/or conference. When these methods fail to produce timely reports, enforcement action is instituted.
During recent hearings before the Senate Committee on Commerce relating to administration of Public Law 88-108 (Railroad Work Rules Dispute), a representative of the Brotherhood of Locomotive Firemen and Enginemen testified that nearly 100 recent accidents had not been reported to the Commission. After this testimony was presented, on request of the Bureau of Railroad Safety and Service, he identified each of said alleged non-reported accidents. This is apparently the "illustrative evidence *** offered to the Commission * * *” referred to in the letter of April 1, 1966. On receipt of this information, it appeared about one-half of the incidents were clearly not reportable. The remaining 47 incidents were investigated by our Safety and Service Agents. Of these, 5 accidents were deemed reportable and evidence of violation in each of said 5 instances was obtained for prosecution,
In 1965 substantial delays were experienced in date of issue of the Statement M-400, Summary of Accidents Reported by All Line-Haul and Switching and Terminal Railroad Companies, and the Accident Bulletin. These delays resulted from conversion of the Commission's accident record keeping to electronic data processing which replaced the Commission's earlier automatic data processing system first applied to accident data in January 1962. Similar delays were experienced in publishing the M-400 and other accident data while adapting the earlier system to accident reporting data. The present electronic data processing was adopted to more efficiently and economically meet the Comission's responsibilities. When this system is fully operative, the accelerated publication dates and greater accuracy because of built-in checks in the programming will outweigh the temporary delays experienced during the installation and adaptation.
The delays in release of the M-400 during 1965 were substantial for the foregoing reasons. We are now reducing the delay and we are confident that the serious time lag in release of M-400 material will be overcome in the near future.
Statement M-450, Preliminary Report of Railroad Accidents and Resulting Casualties, is a publication based upon information supplied by carriers on their form V reports. These M-450 reports are on a current basis. The February 1966 M-450 report was released on April 19, 1966. Since reports of accidents occurring in March 1966 are not due to be filed until April 30, 1966, the M-450 for March could not be compiled until after that date. The M-450 report is usually released between 10 and 15 days after the due date of filing.
The M-450 is intended to reflect preliminary accident data for the month covered. The data have been neither verified nor corrected. Howerer, a comparison of accident data as shown on the M-400 and M-450 reflects a remarkable similarity in trend, though the number of accidents shown on the M-450 is usually less than the total shown on the M-400 for the same month. The practice of showing on the M-150 the preliminary data for the current month and the final figures for the corresponding month in the preceding year from M-400 iras adopted solely to reflect promptly the accident picture of the two years long before it is possible to provide detailed, verified, and corrected data for the current month. No direct comparison was intended or possible because the M-450 data are preliminary.
However, since the comparison of preliminary statistics with final statistics may give an erroneous impression of accident trends, we are taking steps to revise the M-450 report form so as to eliminate final statistics shown for corresponding months of the preceding year. The revised report would show only preliminary data.
Although the Annual Reports of Locomotive Inspection for fiscal years 1961, 1962, 1963, and 1964 were dated October 3, 1961, December 3, 1962, December 2, 1963, and December 2, 1964, respectively, these reports were released on January 10, 1962, January 6, 1963, February 4, 1964, and January 25, 1965, respectively. Thus the date on the report has no significance as to when the data therein became available to the public. It was for this reason that no date was shown