COOK, HENDERSON & SAXBE, P. C. Honorable Jennings Randolph May 4, 1977 In approving the imposition of tolls as part of 2 The earlier legislation, contrary to the Secretary of Transportation's assumptions and assertions, could not, did not, and was not intended to provide legislative or constitutional precedent for a bill such as S. 790. The Secretary compounded his errors, constitutional and otherwise, by analogizing tolls for the passage or navigation of maritime vessels to payments by railroads and airlines for "rights of way". But, perhaps the most egregious of errors committed by the Secretary consisted in his equating waters within the special maritime and international jurisdiction of the Federal Government with domestic and inland waters over 3 which States have extensive ownership and jurisdictional rights, an equa tion that is all the more astounding because of the Secretary's own 2. See generally, 25 Am. Jur. 2d Easements and Licenses Sec. 7 (1966); 65 Am. Jur. 2d, Railroads Secs. 50-51 (1972); 78 Am. Jur. 2d, Waters Sec. 377 (1975). 3. Compare 18 U.S. C. Sec. 7 with 18 U. S. C. Sec. 10. 88-866 77 - 22 responsibilities over the international boundary formed by the Saim 4 Lawrence River and the Saint Lawrence River Seaway. 5 The final event occurring after the Conference's submission up which the Conference feels compelled to comment at this time relates t the oral statement by the sponsor of S. 790 at a Subcommittee hearing that Huse v. Glover, 119 U. S. 543 (1886) resolved questions of S. 790's constitutionality. Huse involved action by the State of Illinois that was upheld as permissible State action. It is elementary that Huse is not judicial precedent either for the proposition that the Federal Governme has the same constitutional power that was upheld for the State of Illing or for the proposition that, assuming such power for the Federal Gover ment, the power can constitutionally be exercised in the manner that S. 790 would authorize. Even more fundamentally, Huse did not have a "bill origin" clause issue. The Conference submits that numerous cas address State ownership and control over highways and tolls but that n of these is precedent for Federal action that is contemplated or that w be authorized by S. 790. Even if it were assumed arguendo that this c tention by the Conference is a legal point short of constitutional magni 4. 46 U.S. C. Secs. 216-216a. 5. 50 App. U.S. C. Sec. 2292, and Exec. Ord. No. 11490 Secs. 1303 ( 1303 (7). and public interest--unlike the other points raised by the Conference herein--the complete vacuum in the Subcommittee's record on this issue alone would compel the Committee to excise S. 790's user "charge" provisions if the Committee chooses to proceed. The Conference recognizes that all too often legislators hear the unsubstantiated cry that a particular bill is "unconstitutional". Conversely, it must be recognized that in most of these situations the clamor centers on contentions that proposed legislation would be unconstitutional for substantive reasons. The Conference submits that S. 790 is unconstitutional on procedural as well as substantive constitutional grounds; that the Subcommittee has already acted unconstitutionally and illegally in violation of the "bill origin" clause; that the Conference's constitutional and other authorities have not been challenged by sponsors and supporters of S. 790 who, to the extent that they have done so, have cited or relied upon authorities or sources that have no legitimacy; and, that the only way in which the Committee can proceed is to delete the user "charges"/"fees" provisions of S. 790. Senator GRAVEL. Will the railroad panel please come forward? Gentlemen, I understand you have a time constraint, and you wan to go first this morning so you could all catch your planes. If we all cooperate, you could still make your airplane schedu that you had laid out for late morning. I appreciate your operation. Mr. DEMPSEY. Shall we proceed? Senator GRAVEL. Yes; introduce yourself and your colleagues. STATEMENTS OF WILLIAM DEMPSEY, PRESIDENT, ASSOCIATION AMERICAN RAILROADS; WILLIAM TAYLOR, PRESIDENT, IL NOIS CENTRAL GULF RAILROAD, CHICAGO, ILL.; T. S. CART PRESIDENT AND CHIEF OPERATING OFFICER, KANSAS CI SOUTHERN RAILROAD, KANSAS CITY, MO.; FRED MCKIM, GI ERAL MANAGER, WEST BEND ELEVATOR CO., WEST BEND, IOW WILLIAM MAHONEY, ATTORNEY-REPRESENTING C. J. CHA BERLAIN, CHAIRMAN, RAILWAY LABOR EXECUTIVES ASSOC TION, WASHINGTON, D.C.; AND W. A. WAHLER, PRESIDE WAHLER & ASSOCIATES, PALO ALTO, CALIF. Mr. DEMPSEY. I am William Dempsey. I am president of the sociation of American Railroads (AAR). I am here with a group of my colleagues to present the views the rail industry with respect to locks and dam 26 and the charge issue, and of the rail unions. To my immediate left is Mr. William J. Taylor, president of Illinois Central Gulf Railroad. Next to him is Mr. Thomas Carter, the president of the Kansas City Southern Railroad. Next is Mr. William Mahoney, who represents the Railway La Executives Association. To my immediate right is Mr. William Wahler, president of Wahler & Associates. Finally, Mr. Fred McKim, manager of the West Bend Elev Co. of West Bend, Iowa. We also will be submitting statements of Dr. Joseph L. Carrol Pennsylvania State University; Mr. John Sward, a senior ma analyst; and Mr. Mark L. Smith, the director of marketing of Missouri Pacific Railroad Co. We are also offering a statement of Dr. Robert Haveman of University of Wisconsin. (See p. 794.) Senator GRAVEL. Their statements will be included in the rec Mr. DEMPSEY. I will begin, Mr. Chairman, by stating the I tion of industry with respect to user charge questions. My leagues will address, by and large, the question of lock and dam because we do have, of course, two issues before the committe I have a prepared statement which I would like to ask be n part of the record. (See n. 659.) Senator GRAVEL. It will be. Mr. DEMPSEY. I will not infringe on the committee's time reading that statement. I would like to take a few moment address what seem to be the central issues of the user char particularly in light of the statements made this morning. IS I would be available to answer any questions from the committee. I think I can state to you the position of the industry rather swiftly. I am sure the committee knows what it is. I think it is not perhaps critically important to know what the position of the industry is. But the committee may want to hear about the question of public policy that is raised by the user charge proposals. I am not an economist. I cannot employ the language that economists use to express my views about what appear to me to be central in terms of the economic issues that are at the heart of the user charge question. Let me simply state it in a less profound way but the only way that I can. It seems to me really at heart, the user charge question is not a complicated one. It may be a difficult one for a number of reasons. But at heart, the basic issues do not seem to me to be complicated. At root what we have is this, a system that has existed now since the last century, in which the operators of barges on the inland waterways system are, in effect, furnished by the Federal Government with a very large subsidy relating to the construction and operation and maintenance of the inland waterway system. Railroads are expected to construct, and maintain, and operate their rights-of-way and it costs many billions of dollars to do that. On top of that, we pay taxes. The waterways are in effect given by the Federal Government their rights-of-way, free of charge. This has a number of serious consequences. What happens then, In the first place is that traffic that really should travel by rail because rail is the lowest cost mode of transportation, does not, it travels instead by barge. What it means, as has been frequently observed, is for one thing the Federal taxpayers are paying the cost of this aspect of barge operations. It has been pointed out many times transportation doesn't come free. Barge transportation is not free. These costs are genuine costs. and they must be borne by someone; in this case, the taxpayer. What it means is that we have much less in the way of revenue to Cover our very heavy fixed costs. That means that users of rail Transportation are in that respect subsidizing the users of barge transportation. We have every sympathy, as I am sure you will understand, with the desires of Archer Daniels Midland, and all shippers who use the railroads to provide a better service than we are now able to do, given our financial limitations. One reason we are not able to perform in some situations as well as we would like is because of the constraints of the capital market. We simply have not been able to raise enough capital to rehabilitate, modernize our system. One reason is this kind of unequal Federal subsidy of one of our principal competitors. I would suggest that in everything that has been said this morning, really there has been nothing, nothing offered to justify in terms of public policy, and that, after all, is what we are concerned with here today, this kind of unevenhanded kind of treatnent among different modes of transportation, and among different shippers and among different consumer groups. |