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Urban transportation problems, including the appropriate roles of mass transit and highways in urban development, will be the subject of joint analysis by the Secretaries of Housing and Urban Development and the Department of Transportation during the year following establishment of the Department of Transportation. Any necessary reassignment of functions or changes in program direction or emphasis will be recommended by the President to the Congress upon receipt of the advice of the two Secretaries. Meanwhile, the two Departments will continue to consult and collaborate in seeking harmonious and mutually reinforcing programs.

Section 7 will not apply to urban mass transit projects during this period. It is clear, however, that a means will have to be developed for assuring compatibility between standards and criteria employed by the Department of Housing and Urban Development and the Department of Transportation when these two sets of standards and criteria are applied to urban transportation investments.

TRANSPORTATION ACTIVITIES TO WHICH SECTION 7 DOES NOT APPLY

As used in Section 7 of the bill, transportation investment does not mean any of the following: 1. The acquisition of capital goods by the Government for its own use, as for example, MSTS aircraft, Panama Canal improvements, or mail trucks.

2. The costs of operating, maintaining and administering Federally-financed transportation facilities or equipment.

3. Property acquired in pursuit of Federally-financed transportation research and development programs per se, though any permanent capital investment made as a result of such research and development would be subject to Section 7 of the bill.

4. Any property acquired to implement transportation demonstrations of a transitory nature such as that being planned for high speed rail services between Washington and New York, but again, any permanent capital made as a result of such demonstrations would be subject to Section 7 of the bill.

5. The established methods of financing existing transportation programs; for example, the highway trust fund will not be changed.

CONCLUSION

Government investment in transportation facilities will almost certainly increase over the next decade. Since the Congress and the President will look to the Secretary of Transportation for advice on the scope and direction of transportation investment programs, it is important that he develop explicit and objective standards and criteria by which to guide his policy advice on transportation investments.

Section 7 extends an approach tested out over a long period in the water resources development field to transportation investments. It will ensure that all administration proposals to Congress for investment of Federal funds in transportation facilities are based on a common approach.

This responsibility of ensuring that transportation investments are based on a common approach will overlap with other areas of responsibility. The Water Resources Council responsibilities for standards and criteria in the development of water resources is one clear area of overlap. This is also true for urban transportation facilities and roads that are part of an economic development plan for a region.

Whenever such an overlap occurs we must develop a mechanism to insure compatibility among the several standards and criteria. Section 7 provides the Secretary of the Department of Transportation with the authority necessary for him to work with other interested agencies in assuring the necessary compatibility.

ATTACHMENT A

THE USE OF STANDARDS AND CRITERIA IN THE FORMULATION AND EVALUATION OF FEDERAL WATER RESOURCES DEVELOPMENT PROJECTS

THE EARLY YEARS THROUGH 1936

The application of standards and criteria in the formulation and evaluation of the Federal water projects has a long history, with roots in the River and Harbor Acts of 1902 and 1920 as well as the Flood Control Act of 1936. This latter Act stated, in part:

**** that Federal Government should improve or participate in improvement if benefits are in excess of costs."

Following passage of the 1936 Flood Control Act, Federal agencies concerned with water resource development began to apply new evaluation techniques and standards in an effort to develop specific cost and benefit information. However, the lack of any effective procedures through which the programs of the various Federal water agencies might have been coordinated led to a wide divergence of standards and techniques which were adopted by the several agencies.

1936 THROUGH 1946

In the 1930's and early 1940's the National Resources Planning Board conducted reviews of water project proposals. These reviews were made on a project by project basis rather than against any specific set of standards. While the Planning Board identified the need for coordination and, more specifically. the establishment of comparable standards for all water programs, it made no effort to issue such standards. In 1943, the Planning Board was dissolved and President Roosevelt, recognizing the continuing need for coordination, issued Executive Order No. 9384, which required agencies to submit all reports relating to Federal public works expenditures to the Bureau of the Budget for review. That order is still in effect.

1946 THROUGH 1955

Shortly after the war even more attention was devoted to the need for appropriate and consistent standards. This interest resulted in the appointment of the Cooke Commission by President Truman to study water development policies. It also led to the formation of the Inter-Agency River Basin Committee (initially composed of the Chairman of the Federal Power Commission and the Secretaries of the Departments of Agriculture, Army, Commerce, Interior and, later, Health, Education and Welfare). This River Basin Committee, in 1950, issued an interim report (the "Green Book") which set forth appropriate procedures for the treatment of various elements of cost-benefit analysis. Although the interim report was never formally adopted, its influence throughout the Federal government was substantial.

Also in 1950 the Cooke Commission published its recommendations on standards and criteria to be used in formulating and evaluating water resource development projects. As a direct result of the Commission's recommendations, the Bureau of the Budget issued Circular A-47, which promulgated the standards and procedures which the Bureau expected to use in reviewing project proposals and budget estimates. These standards and criteria covered such matters as the method of calculating benefits, the period of evaluation, the appropriate interest or discount rate, and cost allocation. The purpose of Circular A-47 was to ensure both the consistency of standards and the consistency of their application during the growth of water development programs in the post

war era.

1955 TO 1960

In the late 1950's the need to modify and revise the standards and criteria embodied in Circular A-47 became evident. In 1957, the Senate adopted Resolution 148 calling for improvement in the procedures used to evaluate water and land resource projects. The Resolution also called for the water agencies to provide other data on costs, benefits, repayments, allocations, and time periods in addition to what was set forth by Circular A-47. During this same period, the Inter-Agency Committee on Water Resources (the successor to the InterAgency River Basin Committee) updated and reissued an interim report on project evaluation in the form of a second "Green Book."

1960 TO PRESENT

In the early 1960's new standards were finally promulgated. In 1961 President Kennedy established the Ad Hoc Water Resources Council, consisting of the Secretaries of Agriculture, Army, Health, Education and Welfare, and Interior. The first task of this group was to review the existing standards with a view towards updating and modifying them. The modifications and revisions ultimately recommended by the Ad Hoc Council were approved by the President in May 1962 and printed as Senate Document No. 97, 87th Congress. Subse

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quently, all Federal water development projects have been formulated and evaluated in accordance with the standards promulgated in this document. About the time of the establishment of the Ad Hoc Water Resources Council, the President proposed legislation to make the Council a permanent body. With the enactment of this legislation (P.L. 89-80) in 1965, a Water Resources Council was established, with a membership similar to that of its predecessor, except for the addition of the Chairman of the Federal Power Commission. The President subsequently appointed the Secretary of the Interior as Chairman of the Council.

Among other things, the Council is empowered by law to establish principles, standards, and procedures for Federal participants in the preparation of comprehensive regional or river basin plans and for the formulation and evaluation of Federal water and related land resources projects. Such principles, standards and procedures are to be developed, however, in consultation with interested Federal and non-Federal entities and are to be established only with the approval of the President.

APPENDIX

(The following was submitted by the Bureau of the Budget in response to a request noted on p. 89.)

GOVERNMENT ACTIVITIES RELATING TO THE AIRPORT NOISE PROBLEM

In line with the President's statement in his transportation message, the Director of the Office of Science and Technology, Dr. Hornig, has formed a task force composed of representatives of FAA, NASA, HUD, and Commerce to develop a comprehensive program to investigate and find ways to ameliorate the airport noise problem.

Meanwhile both FAA and NASA are conducting numerous studies on various aspects of the problem.

FAA will spend about $1.8 million in 1966 and $1.9 million in 1967 for research and theoretical studies of how jet noise is generated in jet engines, the effects of terrain and atmospheric conditions on the transmission of the noise to the ground, and of community reactions to various levels of jet noise. Several projects are designed to develop means for supressing noise at the source. Others will investigate ways that the problem can be alleviated by modifying take-off and landing procedures. Also, in the SST development program, the contractors are devoting considerable funds and effort to devising means of minimizing the noise which may be produced by the larger SST engines and aircraft.

NASA at the same time is carrying on parallel-but not duplicating-studies on the sources of jet noise, and possible changes in operational procedures to reduce the noise problem. NASA has budgeted $1 million in 1966 and nearly $3 million in 1967 to carry forward and expand this work, nearly half of which will be done through contracts with universities and industry.

Section 1113 of the Housing and Urban Development Act of 1965 directed HUD to conduct a study of feasible methods of reducing economic loss and hardship suffered by homeowners as a result of the depreciation of values following the construction of airports in the vicinity of their homes. Funds for the study were requested last year but were not approved by the Congress.

It is expected that the new task force formed by the Director of the Office of Science and Technology will review work done and planned, and will shortly develop a coordinated program for a concerted attack on the problem. Each of the interested agencies will be given clear direction on how the program will be carried out, and what their respective responsibilities will be.

APPENDIX 5

(The following was submitted by the Bureau of the Budget in response to several requests at various points in the transcript and contains a discussion of accident investigation and safety investigation in the proposed Department of Transportation, with attachments of statutory authorities. The statement was prepared in collaboration with the Coast Guard, the Federal Aviation Agency, the Interstate Commerce Commission, and the Civil Aeronautics Board.)

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