Throughout our history Federal investment in transportation facilities, often on a massive scale, has been a feature of American life. Investment of public funds in transportation should aim at providing safe, efficient, and high quality transportation service to the American people, taking into account the effects of investment on other aspects of national life-for example, urban development. But to be most effective in promoting economic growth and prosperity, investment proposals should be evaluated on a consistent basis. Different kinds of transportation both compete with and complement each other. They all form a vital part of the Nation's complex transportation system. Investment in each cannot be judged in isolation from the overall picture.

Under present arrangements, however, there are no common standards for evaluating public investment in the light of the national transportation system. Nor are there common standards for weighing the effect of transportation investment on other areas of public policy.

To help remedy these deficiencies, section 7 of the bill authorizes the Secretary to develop, subject to Presidential approval, standards and riteria to be used in the formulation and economic evaluation of all proposals for the investment of Federal funds for transportation facilities or equipment, with certain enumerated exceptions.

The standards and criteria for economic evaluation of the transportation features of multipurpose water resource projects to be used by the executive branch in formulating proposals for the Congress would be developed by the Secretary after consultation with the Water Resources Council. They would be compatible with the standards and criteria for economic evaluation applicable to nontransportation features of such projects, and would be promulgated after approval by the President.

This feature of the act extends to transportation investments the same kind of procedures which are currently used on water resources projects. It was modeled on the concepts of the Water Resources Planning Act. It provides for the application of consistent standards to the formulation of executive branch proposals to the Congress for transportation investments just as S. 97 standards consistently are applied to the development of water resource proposals by the several Federal departments and agencies. Section of the bill now before the committee calls for interagency consultation. Moreover, since standards are to be promulgated only after approval by the President, the bill insures, in effect, that each interested agency has an opportunity to have its contribution to the formulation of standards considered.

The standards called for in section 7 are not in the form of detailed rules and regulations. Rather, these are to be broad criteria for evaluating project proposals-what types of benefits are to be condered, what costs are to be taken into account, what noneconomic social advantages are to be weighed, and the like.

With the authority granted by the bill, work on the development of meaningful standards can be undertaken. The Government can make a beginning on the consistent evaluation of transportation projects with a view to identifying unmet national needs and the most effective

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way of meeting them. The importance of this program will grow a both private industry and Government increase investments in transportation facilities.

One amendment concerned with airline subsidy payments is particularly significant and is related to the role of the Secretary in developing economic criteria and standards. The determination of airline subsidy payments is closely tied to the economic regulation of the airlines and should properly remain a function of the Civil Aeronautics Board. However, the Secretary of Transportation has an important function in developing economic standards and criteria affecting transportation programs. The Department's standards and criteria should be a factor in evaluating the value of such subsidy payments to the Nation's transportation system. Therefore, section 8(a) of the bill requires that the Board "take into consideration" the standards and criteria prescribed by the Secretary. This adds an important element to those which currently must be considered by the Civil Aeronautics Board in fixing and determining subsidy compensation.

I would like to stress that creation of the new Department in no way modifies or alters the basic laws applicable to the programs administered by the affected agencies. Moreover, there will be no break in the continuity of these programs.

It would be useful to mention briefly some areas which are not affected by the bill. The bill, except for the transfer of safety funetions, does not change existing relationships with the regulatory agencies. The agencies will continue to carry out their economic regulatory functions, as is currently the case. The transfer of safety functions should actually enhance the work of these agencies since agency members will be free to concentrate entirely on economic regulation. This should be a significant help in meeting the steadily expanding caseload of the affected regulatory commissions.

The Corps of Engineers, except for the transfer of a small number of minor functions, is not affected. Because of the multipurpose nature of many corps projects, it is neither feasible nor desirable to transfer responsibility to the Department of Transportation for corpconstruction projects. However, the corps, as well as other agencies. will be able to benefit from the increased capacity of the New Department to provide economic data and standards to be used in evaluating corps projects.

The bill does not change existing functions in the urban transportation area. In his transportation message, the President noted that

The future of urban transportation-the safety, convenience, and indeed the livelihood of its users-depends upon wide-scale national planning. If the Federal Government is to contribute to that planning, it must speak with a coherent voice.

Urban planning, transportation research, and transportation investment form a closely interwoven complex which cannot easily be unraveled. It is clear that these interrelated functions in urban transportation must be identified and analyzed before organizational decisions are made.

In order to insure that the Government's voice is, indeed, coherent, the President will ask the Secretary of Transportation and the Secre

tary of Housing and Urban Development to make a careful study of appropriate functions to be carried out by each of the departments. This study will be completed within a year and recommendations for any needed organizational changes will then be proposed.

We cannot hope to meet satisfactorily the transportation challenge facing this Nation with an organizational structure geared in part to the problems of the 1950's, the 1940's, or even the 1900's and even earlier years. The proposed legislation represents an attempt to rationalize the organization of the Federal Government which has grown through the years by fits and starts. It attempts to meet the challenge of today and the years ahead by, for the first time, allowing the President and the Congress to look to a single agency head with Cabinet status for developing effective transportation policies and carrying them out across the broad range of the Government's transportation responsibilities.

Establishment of the Department will emphasize the importance of transportation to the Nation's economy and the well-being of its people The bill does not make significant changes in existing programs. Rather, it is intended solely to develop an appropriate administrative instrument for the formulation and execution of well-balanced national transportation policies and programs.

In his transportation message, the President stressed the urgent need to create "a single coherent instrument of Government." The appropriate form for such an instrument is a Cabinet-level executive department. This is what is proposed for the approval of the Congress. We urge early and favorable action on this legislation. Chairman DAWSON. Mr. Holifield?

Mr. HOLIFIELD. Mr. Chairman, members of the committee, I believe that in order to have a full presentation of this matter, that if it meets with the approval of the chairman that we have the Secretary of Commerce give his statement now, and then have both the Director of the Budget, his staff, and the Secretary, before us, as we pursue the questioning period-if that meets with the approval of the chairman. Chairman DAWSON. I think that is a good plan, to get the whole matter before the committee.

First I will call on Mrs. Dwyer.

Mrs. DWYER. Mr. Chairman, this is a great pleasure for me, because the Secretary comes from my home district in New Jersey.

We miss you very much back home, but our loss is the administration's gain. I am very happy to welcome you to the Government Operations Committee, Mr. Secretary.

STATEMENT OF HON. JOHN T. CONNOR, SECRETARY OF COMMERCE; ACCOMPANIED BY HON. ALAN BOYD, UNDER SECRETARY OF COMMERCE FOR TRANSPORTATION

Secretary CONNOR. Thank you very much, Mrs. Dwyer.

Mr. Chairman, members of the committee, inasmuch as my statement emphasizes many of the points in the statement read by Mr. Schultze, in the interests of saving time for the committee, I suggest that I file the full statement, and just summarize some of the main points, if that meets with your approval, Mr. Chairman.

Chairman DAWSON. Without objection, that will be done. (The prepared statement of Mr. Connor follows:)

PREPARED STATEMENT OF JOHN T. CONNOR, SECRETARY OF COMMERCE

Mr. Chairman, I appreciate this opportunity to appear before your committee to testify in support of H.R. 13200, the administration bill for the creation of a new Cabinet-level Department of Transportation.

It is a tradition in our national life that the emergence of great social forces in our society be recognized in the creation of new departments of Government. This was true most recently when the Congress created the Department of Housing and Urban Development in recognition of the predominantly urban character of our society. It was true in 1953, when the creation of the Department of Health, Education, and Welfare became a response to our Government's concern with social welfare. Earlier, in 1947, the creation of the Department of Defense resulted from the universal recognition of the role of our country as leader of free world defense. Even earlier than that, the emergence of business as we know it today impelled the creation of the Department of Commerce and Labor in 1903, while the Nation's special concern for the status and activities of the working man led to the separation of labor functions from Commerce and the establishment of the Department of Labor in 1913.

Transportation has emerged today as a social force equal to those which have led to the creation of major departments of Government earlier in the 20th century. It has made possible a universal personal mobility which is transforming the nature of our society. It has created a national market for our industries, thereby increasing production efficiency and raising our standards of living. Transportation is the foundation of great industries supplying its vehicles, facilities, and supplies; it is a basis for great challenges in public administration due to its requirements for highways, airways, waterways, and good transportation facilities.

Total private investment in transportation is 10 percent of all privately owned assets in the Nation. Public investment in transportation is about $15 billion annually.

The magnitudes involved in transportation are great. The past rates of growth are phenomenal and will continue. We have 90 million motor vehicles today in place of fewer than 40 million in 1946. They operate over three and a quarter million miles of road, of which 900,000 miles are eligible for Federal aid. Our 100,000 aircraft use 230,000 miles of the Federal airways system. Our 17,000 barges and 4,000 towboats use 25,000 miles of improved inland waterways.

Our total transportation bill, public and private, is $125 billion and increasing yearly. Total intercity passenger-miles are at the rate of 900 billion annually and will at least double in 20 years. Freight ton-miles now equal 1.6 trillion, and 20 more years should bring at least a doubling of this figure. These magnitudes are related in a direct way to our national economy. Our gross national product was $675 billion in 1965 and may well be over $725 billion this year. In the very near future we shall experience our first $1 trillion year in terms of the size of the gross national product. This kind of an economy will bring about a greater demand for transportation and a greater challenge to public policy to meet the developing needs.

This collection of activities and investments known as transportation is becoming increasingly more complex, more decisive from the standpoint of the social and economic life of the Nation, and more in need of full-time research and development as an element of conscious national policy.

In my position of Secretary of Commerce, I can especially appreciate the sig nificance of these facts. Transportation is such a vast entity that it requires the full time and attention of a major policy making official. In my opinion, it is unrealistic to think of pulling together the scattered transportation functions into the Department of Commerce and therefore the only way of achieving the worthy objective of common management of transportation functions within the Federal Government is the establishment of a completely new Department of Transportation.

Realizing the interest and concern of the Congress in any new department of Government, I shall emphasize the factors and forces which have led the President to recommend the creation of a Department of Transportation. The Department of Transportation will emphasize promotion and development. It will be principally a developmental agency. It will not deal with economic regulation

and will not include any of the economic regulatory functions of the Interstate Commerce Commission, Civil Aeronautics Board, and the Federal Maritime Commission.

Of course, the interest in a Department of Transportation is not new. As President Johnson pointed out in his message, official recommendations for such a department were made as early as 1936 by a Senate Select Committee on Government Organization. In 1949, the task force of the first Hoover Commission made such a similar recommendation, but the Hoover Commission itself recommended a consolidation of promotional activities in transportation in the Department of Commerce. This recommendation was essentially carried out in the early 1950's, but unfortunately the results that were hoped for and expected have not materialized. The steps that were taken have left us short of our goal. In the past 16 years we have seen the needs for transportation development grow at a tremendous rate and the responsibilities for managing the Government programs has clearly become a job requiring the full-time attention of a Cabinet official.

Today, we are in a better position to understand the need for a Department of Transportation. We have extensive experience in official efforts to form a developmental policy for transportation, and can see the need for strengthened administration more clearly than in the past. We can also see more clearly the emerging shape of future transportation needs and problems.

Promotion and development are emphasized in line with President Johnson's concern with economic growth of this country. Projected economic growth will require transportation policies and programs which will transcend those which we have now. Our economy has experienced a growth of 4% percent annually in recent years. We expect to maintain that rate in the years ahead. This will generate transportation problems far beyond the capacity of our present system. When we add to this factor the dynamic changes which we can anticipate in technology, along with other elements of social change, a fundamental rethinking of our transportation policies and programs is essential. Policy leadership must be combined with administrative reorganization if the great social force inherent in modern transportation is to benefit the Nation in the future.

We can see the developmental character of the Department of Transportation when we look at the agencies and programs which are to be included. The programs, enumerated in the order listed by the President in his transportation message, are the present elements of the Office of the Under Secretary of Commerce for Transportation; the Bureau of Public Roads, concerned with highway development; the Federal Aviation Agency, concerned with aviation safety, prohotion, and investment; the Coast Guard, concerned with marine safety and navigation; the Maritime Administration, responsible for developing a U.S.-flag merchant marine; the safety functions of the Civil Aeronautics Board and Interstate Commerce Commission, dealing with aviation, railroad, motor carrier, and pipeline safety; the car service functions of the Interstate Commerce Commission; and the Great Lakes Pilotage Administration. The St. Lawrence Seaway Development Corporation and the Alaska Railroad will be transferred to the new Department by Executive order.

Approximately 95,000 civil and military employees will be included in this great Department.

The new Department will bring together many agencies and programs. But it will in no sense be a mere catchall for the wide variety of governmental activities associated with transportation. It will be a department with a firm entral responsibility: to shape the transportation programs into policies of the Nation to support our continued growth and development.

At this time, I would like to discuss some of the outstanding problems which will call for a high degree of substantive knowledge in the field of transportation. New problems are emerging with respect to systems for personal transportation, for freight transportation coordination, safety in transportation, new research and development opportunities, and the need for environmental controls associated with transportation.

Let us turn for a minute to the issue of personal mobility. Our country has rapidly become an urban society. Higher standards of living and more intensive conomic activity have greatly increased the need of individuals to move rapidly from place to place in large numbers. Government, in the future, will be greatly cerned with the development of systematic approaches to this problem inending the possibilities of new systems of transportation. We see this need emerging today in such programs as our current study of the post-1972 highway