e development of Alaskа and the aеiense of the United Stat ith that contention there can be, of course, no quarrel, although nclined to the personal opinion that you might overemphas a bit the defense situation, because, although it is mentioned rganic act, it certainly was not a first consideration.

e important, the believed importance, of transporting coal fr Alaskan fields to tidewater for the Navy probably ranked fi fense considerations.

aring the intervening years, of course, as we all know, the railro ecome very important to defense.

the same time, would you not agree with me, Mr. Siedman, th rganic act notwithstanding, the feeling in Congress has been su the management of the railroad is obliged insofar as it is capa ing so to give whatever consideration may be given to the requi Es of the Railroad's organic act, to come out at least even, a the appropriation committees would look with jaundiced continuing deficits operating deficits?

r. SIEDMAN. That is certainly correct, Mr. Chairman. Bu x the point I would emphasize is "break even." And also of s ance is what cost elements would be included in the rate base. Chink, if you recall, a year or two ago a bill was sent up to prov che incorporation of the Alaska Railroad, and in that bill gnized the developmental purpose of the Railroad by propos all of the capital investment up to the present-that is, up time the bill was sent forward would be interest free, that al cost which would ordinarily apply to Government investm Id not be applied, because of the special purposes of the Ala road. But from that point on we would attempt to operate -oad on a break-even basis.

nd I think that is today the intent of Congress—that the railr ate without out-of-pocket cost to the taxpayers.

nator BARTLETT. And this policy has often, in my opinion, judgment on this, impaired the principal purpose for which ska Railroad was founded; namely, the development of Alas r. SEIDMAN. Certainly, at times I think that has been the case. enator BARTLETT. Now, Mr. Seidman, going over to page 4, om of the page, you state that the bill would require the Inters merce Commission to take into consideration national def irements and other national public purposes in determining Fulness of the Railroad's rates and charges, and then you go of e a conclusion that the Bureau of the Budget does not bel

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And given every desire on the part of the rankin there to do a competent job, they simply do not have tin knowledge. The specialized knowledge on such a subje regulatory agency concerned, the Interstate Commer in this case. It might be the Federal Maritime Commis and so forth.

I wish you would comment further on that.

Mr. SEIDMAN. This would not be a matter solely for tion of the Secretary of the Interior, to whom the fu gated under the act.

Normally, the way in which the executive branch a departments operate is that where there are matters w cern to other agencies, they are coordinated. Where a difference of view, for example, as between the Dep fense and the Department of the Interior as to what quirements are which the Alaska Railroad would be r in Alaska, this would be brought to the President and However, if there were a difference as between the merce Commission and the Department of Defense as quired in Alaska to meet defense requirements, tha brought to the President and resolved under this b problem.

And I might point out again these very special because even at the present time over 50 percent of the on the Alaska Railroad is for the military agencies. ment traffic. It is military traffic. This is a rather in that respect, the stake the Department of Defense h Railroad.

It has a stake in all railroads, and they do suppor the United States, but not to the same degree as the A

Senator BARTLETT. Well, it is unique in many ways. But it seems to me, Mr. Seidman, that agreement have to bring about a conviction on the part of peop in this that the Interstate Commerce Commission wa group of outlanders and they actually had no concern to national purposes, particularly those of defense would view any representations on that basis with d not even be willing to listen to the Defense Departme partment related its needs pertaining to the Railroad. Of course, I know that is not what you meant to impl Mr. SEIDMAN. Well, certainly, Mr. Chairman, none were in any way intended to imply that the ICC wa ested in these matters than anyone else. I have the

it when you start dividing authority, in this case dividing autho ut not responsibility, then I think you have a situation from tly management point of view, if nothing else, that is qui tisfactory.

he point is that where complaints have been made, or if the problems, these can be dealt with. I do not think it is correct hat the Alaska Railroad is unregulated. I do not think regul by the ICC is synonymous with regulation. The Alaska Ra is subject to regulation by the Federal Government. he same as a private carrier.

It

the Congress finds there is something wrong in the way that t ka Railroad is now being operated or if the Railroad is doing c things which in the judgment of the Congress it should not it would seem to me the answer lies in amending the Alaska Ra Act or, in the course of reviewing the budget of the Railroa ing it funds for purposes which Congress does not think app

e.

ou could even incorporate by reference the pertinent provisio e ICC Act in the Alaska Railroad Act and say to the Preside u carry those out."

nator BARTLETT. That is the fundamental difficulty that we fa true, Mr. Seidman, that heretofore the Congress has not impos of these regulatory duties upon the ICC, although it valian ht to do so in 1960.

ut, of course, prior to that time there was no need. The situati entirely different from that which exists today.

f course, it is a responsibility of the Congress, as I see it, into account changed times and changed needs, and S. 2413, or of which I am too modest to name, seeks to do just thatgnize (a) that Alaska is a State, and (b) that since the Alas road was founded, since it started operations way back when, or-trucking industry has grown up in Alaska, that there is a ne which did not exist then for a coordinated regulatory system. know that you have read the hearings that I conducted in Alas fall in which we went into all of these matters very extensive one point, Representative Chapados, a representative in the St slature, said that until all carriers in the State are regulated group or another or actually under regulation that certainly hal regulation by the Interstate Commerce Commission is goi e effective. I think that is a very pertinent point.

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concerned, and since no other Federal agency that i cerned, save and except the Bureau of the Budget against this, I think that Mr. Smith's remarks are d importance.

Mr. SEIDMAN. I think, Mr. Chairman, the General has also objected on the same ground.

Senator BARTLETT. I carefully qualified by saying cerned." But they are an instrument of Congress too. Mr. SEIDMAN. That is right.

Senator BARTLETT. We can handle them easier President.

And Mr. Smith went on to say, regarding the ob been made in one form or other to this bill:

I don't think they are insurmountable as long as a little j both sides. We still think that the economic regulation— that is, of the rates

would still be worth it.

By that he meant it would be worthwhile transfer ity over the Interstate Commerce Commission.

Elsewhere, in those same hearings, Mr. Sanders, he Motor Carriers' Association, who has some very dec of this, testified in these words:

I defy them or anybody else to handle freight for the rates "Them" in this case being the Alaska Railroad.

I do not certify to the correctness or error of his but I do want to say, Mr. Seidman, that aside fro considerations which you have presented and which taken into account, we have a very practical situati minds of those who are engaged in other forms of Alaska, cannot be solved until economic regulation another agency.

Here they consider that the Department of the In of the Alaska Railroad, is prosecutor, judge, and jury ing, in all truth, did have its inception some little thirties when there was a small motor-truc even,

Alaska.

Even in those days it was alleged that rates were ered on a seasonal basis to drive out competition. A ber vividly, because it is a rather colorful part of how it was the General Manager of the Alaska I

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sk Mr. McElroy if he has any questions.

. MCELROY. Mr. Seidman

. SEIDMAN. I would just like, if I may, Mr. Chairman, to mak comment, because, as the chairman knows, we have had very dly discussions of this particular subject for some years. nator BARTLETT. I hope this is still friendly.

. SEIDMAN. It is. And I think, despite our differences, we are in lete agreement on the objectives we want to accomplish.

hink the difference here is really one of means rather than end I still sincerely believe that there are ways of accomplishing wha would like to see done without the disadvantages of a bill such a

r example, it certainly would be possible-I think the shoe is o wrong foot here-to require the Secretary of the Interior and th dent in setting rates to give due consideration to the views of th state Commerce Commission, to seek their advice first. you know, a year or two ago the Department of the Interior o wn initiative utilized ICC procedures and appointed a hearin iner satisfactory to the ICC for holding a rate hearing. seems to me that something along these lines could be done whic d not then raise the kind of issues which are presented by th

course, the general problem of regulating transportation, as yo , is a very difficult and complex one, and even under this bill tl would not have all forms of transportation under their jurisdi The Congress excluded the carriers by sea, over the high se ICC control under the Statehood Act. They are still under t time Commission.

en, of course, we have the problem of pipelines, which are co ted by the military in Alaska.

w, I know we have heard from the Alaska Railroad on this su on competition coming from pipelines constructed by the militar nator BARTLETT. We are getting to them one by one.

. MCELROY. Mr. Seidman, your comment was very much alor nes of the questions I would want to put to you. But, first of a e get very clearly from you what you understand to be the pu of this legislation in terms of everyday business life in Alaska. .SEIDMAN. I think the purpose of the legislation, as I have u ood it from reading the hearings and reports, is basically e that the Alaska Railroad does not unfairly compete with oth a of transportation in Alaska.