making that evaluation. That alone has made it a very difficult assessment process.

It seems to me that perhaps we could do something more than we are doing now in this area. What we can devise, I do not know, but we will keep you posted.

Senator BAUCUS. The Commission's 1977 holding company study concluded that the BN is widely diversified and that the financial strength of the BN is due in large measure to the existence and development of its nonrailway assets and that the railroad is only marginally profitable standing alone. That is on pages 51 and 52 of that 1977 study.

Are these the present conclusions of the Commission? Are those ICC conclusions still valid today?

Chairman TAYLOR. I really do not think they are, Senator. I did bring along some financial data on the Burlington Northern. Perhaps I can give that to you now. The Burlington Northern during the last 5 years has generated a very strong growth in earnings. That is very apparent. Coal traffic has risen substantially. Although the railroad may have properly been considered marginal 5 years ago—and that, of course, would have been 1977-it is now certainly financially sound. I do not think we could characterize it as anything else.

Management appears to be dedicated to expanding railroad operations, as evidenced by its aggressive approach to increasing coal traffic and also its recent merger with the St. Louis-San Francisco Railroad. About $1.1 billion was invested between 1976 and 1980 to increase coal hauling capacity. A comparison of revenues and earnings during the last 5 years shows the following. First, operating revenues have risen 123.5 percent between 1977 and 1981. Second, income from railroad operations has increased from $61.5 million to $167.6 million, or a rise of 172.5 percent. Net income has also risen substantially.

In fact, I can give you some figures on net income: 1977, $74.9 million; in 1978, $113.6 million; and 1979, $175.2 million; in 1980, $222.7 million; and in 1981, $267.9 million.

I think that indicates the situation today is not like it was in 1977.

Senator BAUCUS. You indicated earlier that the Commission had not adopted that report. Does that mean that it is an old report? Is it likely to be adopted? Is it not going to be adopted?

Chairman TAYLOR. The only thing I wanted to make clear was not that we would not adopt it if given consideration. It was 5 years ago, and it has not been under consideration by the present Commission. We have a lot of new commissioners coming.

I would have no problem with submitting it to the Commission to determine what their current views on it are, particularly when we get our full complement on board which, hopefully, will be within the next month or 6 weeks.

Senator BAUCUS. The Commission studied the cost and benefits of ex-postmerger analysis. We touched on this earlier. Could you again give me your views on whether such analyses are available or proper, the extent to which they are proper?

Chairman TAYLOR. I think it is proper. It is a question of how meaningful it is, particularly on a cost-benefit basis with our some

what limited resources. I would be perfectly willing, despite the fact that staff tells us that the Princeton study was not really all that meaningful and the difficulties that exist in connection with setting up a proper set of projections and the variables that can change those projections, to have a look at it. I feel myself, as I think I said, that there ought to be something we can do to have a look. Even though it is difficult to make a valid assessment, I would be perfectly happy to examine the possibility of exploring the after-effects.

We have some very important merger cases coming. The NorfolkSouthern, of course, is behind us, but we have got the Guilford situation up in New England. Then, of course, the most important case which the Commission may decide for some time yet, the so-called "Mop-Up" case, the Union Pacific, which is of enormous signifi

cance.

To the extent that is approved subject to conditions-and I do not want to imply there is any decision that has been made in that matter yet-I certainly would like, in terms of some of the representations that have been made, to study the effects of that consolidation.

Senator BAUCUs. Are there any staff or Commission analyses or memoranda on this subject, that is the degree to which it makes sense to proceed?

Chairman TAYLOR. I do not thank there are now, Senator.

Senator BAUCUS. But you are indicating that the Commission may look into the question?

Chairman TAYLOR. It is something that I am going to look into. That I can promise you.

Senator BAUCUs. I would appreciate it if you would do so and also provide this committee with it.

Chairman TAYLOR. Supply that for the record as well?

Senator BAUCUS. Right, a copy.

Chairman TAYLOR. We shall do so.

Senator BAUCUS. Without objection, it will be included in the record.

Senator BAUCUs. Mr. Taylor, I am soon introducing a bill to have the Commission as well as the CAB and the Federal Maritime Commission compile a study on all transportation subsidies, those that are currently provided and also those past subsidies that still affect the transportation marketplace. Do you believe that we have a good overall understanding of transportation subsidies?

Chairman TAYLOR. That you have a good understanding? Senator BAUCUS. Do you believe that the Congress, the transportation regulatory network has a good understanding of what all of the direct and indirect transportation subsidies really are in regard to various transportation industries?

Chairman TAYLOR. I think I would have to answer that no; I do not think we do have, particularly insofar as indirect subsidies are concerned. I think we all know it goes on, and we all have a feel for it in certain areas or certain things. But, in terms of having a real handle on it, I do not think we do.

Senator BAUCUs. I appreciate that. I agree with that. That is, obviously, why I am introducing the bill. In fact, I am going to make

97th CONGRESS 20 Session

S.

IN THE SENATE OF THE UNITED STATES

Mr. Baucus introduced the following bill; which was read twice and referred to the Committee on

A BILL

To establish the Committee on Transportation Subsidies, and for

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other purposes.

Be it enacted by the Senate and House of Representatives

of the United States of America in Congress assembled, That

(a) there is hereby established the Committee on

Transportation Subsidies'' (hereinafter referred to in this Act as the Committee'').

(b) The Committee shall consist of four members as

7 follows: the Chairman of the Interstate Commerce Commission,

the Chairman of the Civil Aeronautics Board, the Chairman of

the Federal Maritime Commission, and the Secretary of Transportation.

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(c) with the permission of agencies referred to in subsection (b) of this section, the Committee is authorized to use the facilities and personnel of such agencies to the extent necessary to carry out the provisions of this 'ct. Sec. 2. (a) It shall be the duty of the Committee to

16 compile a summary of all Federal subsidies provided to any State or local government, government agency, municipality, individual, corporation, partnership, or other business entity, for all activities related to the transportation of 20 freight and passengers.

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(1) include the Federal program and source of

authority for all such subsidies, and the monetary amount attributable to each program,

(2) contain all applicable figures through fiscal

year 1982 and future projections of the figures based

upon existing law,

(3) determine the amount of such subsidies

attributable to-

(A) freight services,

(B) passenger services,

(C) various modes of transportation (including in the amount of such subsidy the cost of any program necessary to administer the subsidy), and

(D) freight and passenger service within each

mode of transportation.

(c) (1) For purposes of this Act, the term 'subsidies'

shall include, but not be limited to, cash or other grants, 18 gifts, loans, loan guarantees, forgiveness of debt, purchases

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of securities, employment protection, financial assistance to 20 pension funds and exemption of pension benefits from Federal income tax, Federal tax provisions benefiting a mode of transportation, land grants promoting transportation, and the

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23 transfer of any monetary value by the Federal government to any State or local government, government agency,

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municipality, individual, corporation, partnership, or other business entity.

(2) In determining the amount of subsidy attributable to land grants the survey shall discern the proceeds realized by railroads from the sale or lease of lands or mineral rights, 30 the current value of the lands and mineral rights still retained by railroads, railroad affiliates or holding

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32 companies, and the income currently received by the

33 railroads, railroad affiliates, or holding companies from the 34 resources or other property values of such lands and rights.