Special Message to the Congress Proposing Transportation Legislation

To the Congress of the United States:

From the earliest days, ours has been a diverse and mobile society. Americans are constantly in motion. For much of our early existence, the history of America was in great part the history of the constant push westward, with the related development of our canals, our highways, and our railroads. And as we developed our internal transportation system, we also pushed out across the seas in our sailing ships, our steamboats, and later in our tankers and freighters and airplanes.

One of the foundations of our free society is our highly developed system of commerce. And that system of commerce is based on our diverse system of transportation. Transportation accounts for much of the progress we have made as a nation in 200 short years. We have developed sophisticated and effective ways to move goods and produce, and we have developed varied systems for moving people.

Recently, however, the energy crisis has underscored an important lesson: our system of national transportation is not working at maximum efficiency.

It is time to take another hard look at the overall structure of our national transportation system. It is time to improve on existing systems and to develop new ones designed to serve individual needs in individual communities. It is time for innovation and diversity.

As our society grows and our economy continues to expand, we must ensure that the efficiency of this system keeps stride with the changing demands placed on it. Our efforts must center on achieving the goals of flexibility in the use of our transportation system, economy in the use of our energy resources, and balance in the availability of diverse forms of transportation.

--Let us develop an outstanding system of public transportation within and between our cities and towns and rural areas, a system sufficiently flexible to serve the needs of diverse individuals in diverse communities.

--Let us revitalize our railroads so that once again they will be a healthy alternative form of transportation, moving people and freight efficiently and competitively.

--Let us complete the magnificent Interstate Highway System that provides a model for the world.

--Let us maintain our worldwide supremacy in air commerce.

--Let us continue to rejuvenate our maritime fleet so that it once again competes effectively on the world's seas.

--Let us press ahead with our safety programs in the air and on the highways, so that every American can travel free from fear of the drunk driver and the hijacker.

--In short, let us ensure that in the third century of our Nation's existence, our total system of transportation fulfills the promise of our first two centuries.

I. REGENT PROGRESS

Over the past five years, the Federal Government has laid considerable groundwork for a transportation network which can meet the challenges of America's third century. In addition to moving ahead effectively with programs already in existence, we have proposed, and the Congress has enacted, landmark legislation to expand capacity, to ensure safety, and to minimize the adverse impact on the environment of our transportation systems.

One of our highest priorities has been to help our cities reduce transportation pollution, energy consumption and congestion. Under the Urban Mass Transportation Assistance Act of 1970, Federal financial assistance to urban public transportation has grown from $125 million in 1968 to $1 billion this year. And for the first time, under the provisions of the Federal-Aid Highway Act of 1973, States and localities can now use a portion of their Federal highway funds for public transit purposes.

This assistance has already saved or improved public transportation in more than 150 cities. The annual decline in total transit ridership in the United States has stopped, and for the first time since World War II, the trend is moving upwards.

Five years ago, the steady decline of rail passenger service throughout the country threatened the Nation with the possibility that we might soon lose the alternative of traveling by train. With the enactment of the Rail Passenger Service Act of 1970, that threat was largely erased. AMTRAK, a private corporation created by the 1970 act, has preserved quality passenger service and reversed steadily declining passenger trends. Over the past year, the number of passengers carried has increased by 14 percent.

During the past year we were also faced with a major rail crisis in the Northeast and Midwest. I proposed and the Congress enacted the Regional Rail Reorganization Act of 1973, which provides for the restructuring of eight bankrupt railroads into a new streamlined system. Within the next several years, we expect that this new system will be able to operate profitably and can survive as a producer, not a consumer, of tax revenues.

In the water transportation area, the enactment of the Merchant Marine Act of 1970 marked the most comprehensive change in our approach to the problems of the U.S. flag merchant marine in nearly four decades. We have challenged our ship construction industries to rebuild our fleet at reasonable expense and our ship operating industry to move toward less dependence on subsidy. At the same time, we will continue to provide all essential support to make such a significant transition possible. The results of these efforts are becoming increasingly apparent, with private orders for ships at a record high of $2.4 billion and ship construction subsidy rates at the lowest level in history. Some ships are being built for the foreign trades without direct subsidy, and modern ships which will operate without direct subsidy are now under construction. Comparison of recent trends between our shipyards and those of foreign countries indicates a long-range possibility that we will be able to compete successfully in the world's ship construction market.

Another of our major concerns has been to protect the safety of the traveling public and the Nation's commerce. We have taken resolute and firm action to protect our air passengers from the threat of the hijacker.

The highway safety picture has both encouraging and discouraging aspects. While we have made steady progress in reducing the fatality rate, the total number of deaths has increased. Although the new mandatory 55 miles per hour speed limit seems to have resulted in a somewhat lower rate thus far this year, the problem of highway safety remains one of the toughest we face.

Our comprehensive highway safety program has encouraged the production of safer motor vehicles, eliminated many hazardous areas on the Nation's highways, and sought new ways to improve driver performance. In the next fiscal year, funding for State and community highway safety programs will be increased to $148 million. Half of this increase will be earmarked for a program authorized by the 1973 Highway Act which allows special incentive grants to States which pass mandatory seat belt laws. And continued emphasis will be placed on keeping the drunk driver off the road. In addition, I have proposed in my fiscal year 1975 budget, a $250 million highway safety construction program. This will, for example, help eliminate dangerous obstacles on our highways.

Finally, I would note that over 35,000 miles of interstate highways are now open--an increase of about 8,000 miles since 1968. By the early 1980's, when completed, this system will carry more than 20 percent of all highway traffic.

II. NEW DIRECTIONS

To continue the forward progress of recent years, I propose that we take new actions in 1974 on two major legislative fronts: public transportation and Federal rail regulations. I am submitting proposals to the Congress in both of these areas. They are designed to increase the flexibility of our Federal transportation programs, to allow State and local officials more latitude in the way they spend Federal transportation dollars and to modernize Federal regulation of the railroads.

1. UNIFIED TRANSPORTATION ASSISTANCE

PROGRAM (UTAP)

It has long been apparent that dramatic improvements were needed in our public transportation systems. Now the energy crisis has given new urgency to that need.

Currently most of the Federal funds available for public transportation are provided under the Urban Mass Transportation Act. While this program has enabled us to make a substantial improvement in our urban transportation systems, it can be improved in several important respects. First, it is administered on a project-by-project basis, requiring extensive Federal involvement in reviewing these projects. Priorities have been determined in Washington, not back home where it counts. In addition, communities are unable to predict how much money they will receive from one year to the next. Finally, local communities are restricted in the ways they can spend the money.

By reforming the Federal highway aid program in 1973 to permit some of its funds to be used for public transportation, we took an important step toward increasing the financial resources available to large cities.

As we look to the future, it is apparent that we must further broaden our programs of public transportation assistance, providing more funds and giving greater flexibility to those who spend the money. Our public transportation system itself must be diversified and strengthened. We need not only more physical assets, such as buses, but also sufficient financial support to assure that our buses, trains, and other public conveyances can be operated with greater frequency and reliability and comfort for our communities in both urban and rural areas.

We have also too long taken the transportation systems of rural America for granted. Often, the social and economic needs of our rural citizens are left unfulfilled because of the lack of good public transportation. Expanded public transportation will be a key element in our program to assist rural community development.

To reach these goals, I am submitting to the Congress today legislation to create a Unified Transportation Assistance Program. This program would provide $15.9 billion to urbanized areas over a six-year period and $3.4 billion for small urban and rural areas through fiscal year 1977. This act would mark the largest single commitment by the Federal Government to metropolitan and rural transportation in our history.

This legislation would make several critical improvements over current programs:

--It would permit recipients of funds-State and local communities--to determine their own transportation priorities.

--The recipients could spend the money not only on capital improvements, such as new buses, new rail cars, new rapid transit systems, and non-interstate highways, but also on other transit needs. Broadening the law in this way would permit local tradeoffs between capital investments and costs to improve services. I believe this is the most effective way for the Federal Government to provide transit assistance, and I will continue my strong opposition to any legislation which establishes a new categorical program solely for local operating assistance. Such a program would unnecessarily inject the Federal Government into decisions which can be far better made by State and local governments.

--UTAP also would allocate over two-thirds of metropolitan funds on a population-based formula so that our cities would receive an assured flow of transportation assistance. We are aware of the concerns voiced by some that our proposed formula should be altered to meet the unique problems of some of our largest cities. We intend to work closely with the Congress, elected officials and others, in examining alternative formulas.

--Finally, UTAP would also provide additional, more flexible assistance for public transportation systems in smaller urban and rural areas. Most of these funds would probably be used by the localities for improving the service and safety on main highways and roads. Funds would also be available for public transportation equipment and demonstrations in smaller urban and rural areas.

Enactment of the Unified Transportation Assistance Program would augment my budget for fiscal year 1975, which already calls for an increase of 50 percent in spending for transit capital improvements under existing programs.

2. TRANSPORTATION IMPROVEMENT ACT

(TIA)

The problem of transporting freight between our communities is as crucial as transporting people within them.

Our railroads, once the pride of the Nation, have been gradually deteriorating. Frequently, the blame is placed upon poor management and rigid labor contracts, but a more fundamental cause lies with our outmoded complex system of Government regulations which govern the railroads. These regulations were drawn up early in the century to protect the public from monopolistic practices by the railroads and to protect the companies within the industry from each other. Over time, however, industry has increasingly given up its managerial powers to the Government, while the rules applied by the Government have become inflexible and inefficient.

This inflexibility is most evident in the rate-making process where it prevents rail managers from managing their affairs effectively and competitively. The low earnings of our railroads are directly linked to this rate-making inflexibility.

The current system of regulations is also harmful to the railroads because it prevents them from abandoning lines that have become unprofitable. In 1971 the Interstate Commerce Commission required the railroads to maintain service on 21,000 miles--about 10 percent of the total--of lightly traveled track for which revenues were less than operating costs. To make up the difference, the railroads have sought to charge higher rates on other, more profitable lines. Economic distortions have been inevitable, so that today we often have railroads carrying freight on short runs even though trucks would be more efficient, while trucks carry freight on some of the longer hauls even though the railroads would be more efficient.

The inability to compete in a more open market has seriously affected the railroad industry. Often railroads cannot afford to make necessary improvements in tracks, terminals and equipment, and their service has steadily declined.

Within recent years the Federal Government has been forced to rescue the Penn Central railroad from collapse and, through the Regional Rail Reorganization Act of 1973, to save seven other railroads of the Midwest and Northeast from undergoing liquidation. While we cannot afford to let railroads like the Penn Central fail, neither can we afford to bail them out every time they get in trouble. Our economy cannot afford it, and our taxpayers will not tolerate it. If we are to revitalize this industry we must instead find a modern approach to Federal regulation of railroads.

To serve that purpose, I am today submitting to the Congress the Transportation Improvement Act of 1974, a bill aimed at restoring this Nation's railroads to their proper place in the national transportation system.

This new legislation would substantially overhaul the Interstate Commerce Act to permit liberalized railroad abandonment in cases where rail service is continually shown to be uneconomic. State and local governments, as well as private interest parties, would have the opportunity to provide an operating subsidy to a railroad for the continuation of such uneconomical service or to arrange outright purchase of the right of way if that is their desire. Furthermore, substitute service by land or water carrier would be required prior to abandonment.

Beyond this liberalization in abandonment policies, the bill would provide improvements in the rate-making procedures and would abolish discriminatory State and local taxation of interstate rail carriers. If rail managers are truly to direct their own affairs, the ability to raise or lower rates without engaging in a protracted and complex rate-making process is essential.

The Transportation Improvement Act would also provide significant financial assistance to the railroads for long-term improvements. Some $2 billion in Federal loan guarantees would be provided to finance improvements in rights of way, terminals, and other operational facilities and systems and rolling stock where needed. In addition, $35 million would be available for a research effort to improve freight car utilization through design of a national rolling stock schedule and control system.

The thrust of this entire legislation is to revitalize and modernize freight rail service throughout the country and to provide an economic regulatory environment which would permit the sort of efficient and economical service that can only result from fair competition, free from burdensome and unnecessary regulation.

I recognize that this bill would not solve several basic problems that confront our railways. In the future, substantial investments will be needed in better transportation technology, in improvements and diversification of types of freight service, and in rehabilitation of deteriorating physical facilities. Be[ore such investments are made, we must also complete a comprehensive evaluation of the regulatory and institutional structure of both the railways and of the rest of the surface transportation industry. The Department of Transportation and others within the Federal Government will be conducting such an evaluation in the coming months. In the meantime, however, the Transportation Improvement Act can serve as a vehicle for making important improvements in the condition of the railroads, and I urge its enactment during this session of the Congress.

While the focus of the Transportation Improvement Act is on freight service, we must continue to be equally concerned about the quality of passenger service on our railroads. It is clear from the energy crisis that an increasing number of Americans are anxious to build and use a better passenger system. My budget for fiscal year 1975 provides significant new capital and operating funds for AMTRAK to expand and improve its current service. In addition we will move ahead promptly in carrying out the Regional Rail Reorganization Act of 1973.

One of the most exciting moments in our history occurred in 1869 when the Union Pacific Railroad, building west from Omaha, met the Central Pacific, building east from Sacramento. The joining of our Nation in this manner opened a whole new era of economic growth for America. Today our railroads are more necessary than ever. They make efficient use of fuel with little negative impact on the environment, and they deliver nearly 35 percent of the Nation's freight at low cost. The essential tracks are there, the system that crisscrosses the country with a web of steel rails is in place. Now we must make it work again.

III. CONCLUSION

For too long we have focused a great deal of attention on some forms of transportation to the detriment of others, we have permitted decision-making at the Federal level to scramble priorities at the State and local levels, and we have begun to lose the diversity and flexibility in transportation systems that encourage competition and, therefore, great efficiency and greater effectiveness in the employment of these systems.

We have a clear understanding of these problems now, and we have begun to come to grips with them. I believe 1974 will see a crucial breakthrough in expanding and enhancing America's national system of transportation so that it once again serves our Nation with a maximum of flexibility, diversity, and balance.

RICHARD NIXON

The White House,

February 13, 1974.