What’s the Purpose of Mass Transit? – Part 1

June 29, 2018

What’s the point of mass transit?

The question sounds flippant, but from the perspective of the federal role in funding mass transit, the question is crucial. Every federal program has had the following question asked about it at least once: “What is the primary purpose of this program?”

The primary purpose, or function, of a government program is used to assign that program its place in the overall budget (functional classification – done in the federal budget at the budget account level) and is often used to determine in what federal department or agency the program should be housed (and which set of Congressional committees have primary oversight of the program).

Tomorrow marks the 50th anniversary of the decision to move federal support for mass transit out of the Department of Housing and Urban Development, where it began, and into the Department of Transportation, which marked the official switch from thinking of mass transit as primarily an urban affairs program to thinking of it primarily as transportation. (The reorganization plan that made the move took effect on June 30, 1968).

I started thinking about this issue two years ago, when Alan Pisarski and I were lucky enough to get the opportunity to interview Alan Boyd, the first Secretary of Transportation, in conjunction with the USDOT 50th anniversary celebrations. Boyd was not just the first SecDOT – immediately prior to that, he was Under Secretary of Commerce for Transportation, and in that role, he ran the Johnson Administration’s task force that recommended creating a DOT. He then shepherded the bill creating DOT through Congress.

It was, therefore, quite a surprise when in part 3 of our interview, when I asked Sec. Boyd about the decision as to whether or not mass transit was more about transportation than it was about urban development, he responded “we won with it, but in retrospect, I think it was probably the wrong decision. I think it is so critical to housing, in retrospect, I didn’t think about it at the moment, you gotta have it, it’s transportation, period. But I think it would have been more successful [at HUD].” (The whole interview is here – part 1, part 2part 3.)

In his memoirs, published later that year (buy a copy!), Boyd expounded on this further:

Many decisions about what to include in the Department were fairly straightforward. One thorny issue, however, was what to do with urban mass transit. There were valid arguments for either placing it in the Department of Transportation or letting it remain in the Department of Housing and Urban Development. Our task force, along with the White House and the Bureau of the Budget all engaged in the debate. The ultimate, Solomon-like decision was to put it with Housing and Urban Development temporarily, until it could move to a new Urban Mass Transit Administration (UMTA) to be created within the DOT. Though I thought this was the right decision at the time, I now think it was a mistake. Although UMTA was “transportation,” I believe mass transit funding could have been utilized by HUD to enhance and support their other development programs.

-Alan Boyd, 2016

The question of whether mass transit is primarily about transportation or is instead primarily about urban and community development has been around since the very beginning of the federal role in mass transit, and the answer that a person gives to that question today often determines what types of mass transit they think should be funded.

The federal role in transportation. For most of American history, the federal government’s role in transportation was viewed as a subset of Congress’s authority under the Constitution “to regulate Commerce with foreign nations, and among the several states…” (A good summary of the development of Commerce Clause jurisprudence can be found in the Law Library of Congress annotated Constitution starting on page 176.) That power to regulate went along with a separate power to spend money “to pay the Debts and provide for the common Defence and general Welfare of the United States.” In 1916, when debating the first federal-aid roads bill, legislators could not agree whether or not federal aid for good roads was justified under the Commerce Clause, but they did agree that Congress did have the power to write checks to states, which is why the highway program is federal “aid” (reimbursements to states for programs run almost entirely by states) instead of a more direct federal program.

(Roads were unique among transportation modes in that the Constitution also grants Congress the power to “establish Post Offices and post Roads” which was a factor in the development of the road program.)

The Supreme Court cleared up the Spending Clause issue in a 1936 ruling which held “…the power of Congress to authorize expenditure of public moneys for public purposes is not limited by the direct grants of legislative power found in the Constitution.” But the federal role continued to be focused on interstate transportation as subset of interstate commerce, and this was reflected in the way the federal government was organized in the 1950s. President Truman had acquiesced to many the recommendations of the Hoover Commission in 1949 to centralize most federal transportation functions in the Commerce Department, so aviation and highways and inland waterway transportation was centralized at Commerce under an Under Secretary for Transportation.

But the power to spend does not carry with it the power to regulate – only to add conditions to the receipt of federal funds. (This is why Congress lately has had to insist, via funding restrictions, that state governments set up their own mass transit oversight agencies – because Congress does not have the power to directly regulate mass transit safety on strictly intrastate transit systems.)

The regulatory focus of the Commerce Clause was most clear in the railroad industry, which had been regulated since the 1880s by the federal government in the form the Interstate Commerce Commission, which set rates and routes.

The collapse of commuter rail. The railroad industry spent most of the 20th century in a state of decline, interrupted briefly by World War II. The growth of the automobile, and federal financial support for better roads, drew both passenger and freight traffic away from the railroads, and the growth of the airline industry (financially supported by the federal government through lucrative postal airmail contracts) sapped rail passengers away from longer-distance routes.

In 1957, commuter rail passenger-miles were down by 20 percent from a decade prior, and longer distance rail passenger-miles were down 48 percent over the same period. The Interstate Commerce Commission reported that the industry-wide “passenger train deficit” had hit $723.4 million in the year 1957 – the equivalent of  $6.4 billion today. And the regulatory scheme then in effect made it almost impossible for railroads to shed money-losing passenger route service.

In response, Congress passed the Transportation Act of 1958, which made it easier for railroads to get rid of money-losing passenger lines. The report of the Senate Interstate and Foreign Commerce Committee accompanying the bill stated:

…basically the commuter service problem is a local one having both social and economic implications. However, it is also a matter of deep concern to the Federal Government because of the impact that losing commuter service can have on the ability of an interstate rail carrier to render its interstate service…Because of the burden that these losing intrastate services are imposing on interstate commerce, the subcommittee feels that the Federal Government can no longer stand aside to the extent it has in the past.

-Senate Commerce Committee, 1958

To sum up: the Commerce Committee believed that intrastate mass transit via rail was not interstate commerce, and thus not a federal concern, unless it affected the financial bottom line of interstate railroads and their ability to conduct interstate commerce, which was clearly a federal concern.

The 1958 regulatory changes had a profound effect on the commuter rail and mass transit systems then operated by ICC-regulated railroads. Mass transit historian George Smerk (and everyone even casually interested in how federal mass transit policy evolved simply must read his book The Federal Role in Urban Mass Transportation (Indiana University Press, 1991) which is the indispensable text on the subject) wrote that on the day President Eisenhower signed the law in August 1958, the New York Central issued a notice of abandonment of service to the West Side of Manhattan, closely followed by other railroads serving Boston, Chicago, and Philadelphia.

Unexpectedly, legislation aimed at helping the railroads had become the vehicle for a major threat to the commuter rail portion of urban mass transportation. At least one of the consequences of the 1958 Act was unexpected – it sparked the advent of federal policy in urban mass transportation.

-George Smerk, 1991

The first federal mass transit bill. The city that had what proved to be the winning response to the commuter rail crisis was Philadelphia. When Richardson Dilworth (“the last of the bare knuckled aristocrats”) was elected mayor in 1955, a local planning board had just recommended a combined road and rail transit building program for the city. Dilworth first tried to get the use of federal and state highway funds to purchase or build mass transit facilities, but was refused. (Smerk 96-97)

(Mayor Dilworth farmed out much of the legal work on Philadelphia’s eventual takeover of its mass transit systems to the private law firm in which he was a name partner, and in particular to a young attorney in his firm named William Coleman, who later became U.S. Secretary of Transportation. See pages 137-141 of Coleman’s autobiography, Counsel for the Situation.)

Dilworth then regrouped and got Philadelphia’s Congressman, William Green Jr. (D-PA), to introduce in April 1958 what may have been the first-ever bill for permanent federal assistance for mass transit funding. The bill (H.R. 11816, 85thCongress) would have created a Mass Transit Financing Corporation within the Commerce Department, authorized the corporation issue up to $500 million in capital stock and use the proceeds:

to purchase the securities and obligations of, or to make loans (1) to public and private transit companies, and railroads providing commuter service, in standard metropolitan areas as defined by the Federal Committee on Standard Metropolitan Areas, to finance the purchase of new equipment, other than buses, for the purpose of improving transit or commuter service or extending such service to new areas within any such standard metropolitan area, and (2) to municipalities to finance the purchase of such equipment for the purpose of making such equipment available by lease or otherwise to any such transit company or railroad.

-H.R. 11816, 85thCongress

But the federal corporation could only provide such aid if  “(A) the governing body of the municipality, with respect to which such company or railroad provides transit or commuter service, and (B) the State agency which exercises regulatory functions with respect to the service provided by such company or railroad, certify to the Corporation that such assistance is urgently needed to provide essential transit or commuter service.”

At the time, while the House Interstate and Foreign Commerce Committee had jurisdiction over “Regulation of interstate and foreign transportation“ and over “Railroad labor and railroad retirement and unemployment,” the Banking and Currency Committee had jurisdiction over “Financial aid to commerce and industry” generally, so the House Parliamentarian referred H.R. 11816 to Banking.

No action was taken on the bill by the Banking Committee before the 85thCongress adjourned sine die on August 24, 1958, but it set the stage for action in the next Congress.

The cities and the railroads get together. Dilworth and other mayors started holding meetings with the major railroads in January 1959 to discuss solutions to the problem. (Smerk 68) This led to a 1959 study by the American Municipal Association (what is now called the National League of Cities) describing the skyrocketing mass transit costs faced by major cities – especially how much extra highways to replace the lost rail transit service would cost.. AMA leaders worked throughout the year on urban transportation policy issues and made better urban transportation the theme of their annual meeting from November 28 – December 2, 1959 in Denver.

In mid-February 1960, the mayors of New York City, Philadelphia, Cleveland, and Saint Louis, the governor of Pennsylvania, and the heads of the Pennsylvania Railroad and the New York, New Haven and Hartford Railroad came to Washington to promote their plan to the White House and Congress. At a February 16 executive session of the Senate Interstate and Foreign Commerce Committee, Mayor Dilworth, speaking for the group, outlined the plan:

The program that we are suggesting is:

One: that a national policy should be established by the Congress for a balanced and coordinated national transportation system.

Two: that the Federal, state and local governments be asked to develop rational tax policies for the railroads.

Three: that Federal loans be made available where necessary to municipalities or publicly constituted bodies for new commuter equipment and improved facilities and for the improvement of intracity mass passenger transportation facilities; these to be long term, low interest loans.

Four: that a study be made of grants-in-aid by the Federal government to communities or duly constituted public bodies which have a sound plan for the permanent improvement of commutation or other intracity transportation facilities, this to be modeled on the present urban renewal program.

-Mayor Dilworth, 1960

Simultaneously, the AMA proposed draft legislation based largely on the 1958 Green bill, but with a few key differences. This legislation was introduced in the House in early March 1960 by several different Representatives (see H.R. 10808, 86thCongress, as an example) and also referred to the Banking Committee. The major differences between the 1958 bill and the 1960 AMA version are shown below.

Smerk summarized the changes in the bill as making it “more attractive to cities without rail transportation by calling for aid to mass transportation in general rather than big-city commuter railroads and rapid transit in particular; that, it was hoped, would gain support from traffic-beleaguered cities throughout the country.” (Smerk 70)

The Eisenhower Administration’s Bureau of the Budget performed an analysis of the AMA bill on March 11 and recommended that the Administration oppose it:

If Federal aid is believed necessary, it should be limited to metropolitan areas with well considered transportation plans which are coordinated with comprehensive land use plans and which are administered by public agencies with area-wide responsibilities for all types of transportation and with adequate local financial support; Federal aid for such plans can be obtained from the present HHFA [Housing and Home Finance Agency] urban planning grant program. The Federal government should avoid new subsidies, including loans with subsidized interest rates, but might provide more latitude in the use of existing urban highway grants as an aid to meeting mass transportation needs. Properly organized and supported local agencies can reasonably be expected to borrow the necessary funds privately, but, if necessary, modifications should be considered in the present ICC railroad loan guarantee program or in the public facility loan program at HHFA.

-Bureau of the Budget, 1960

The revised Mass Transit Financing Corporation bill went nowhere in Congress.

Enter Pete Williams.

Pete Williams’ First Try. Senator Harrison “Pete” Williams (D-NJ)’s one-line legacy in the history books could have been “father of the federal role in mass transit.” However, his pivotal role in mass transit policy is overshadowed by one-line legacies like “resigned from the Senate to avoid expulsion”  or “first Senator to go to federal prison in 80 years” or just the single word “Abscam.”

Regardless of his later crimes, Williams (who represented the Garden State in the U.S. Senate from 1959 to 1982), was indisputably crucial to the creation of federal aid for mass transit. And a key part of that legacy revolves around the fact that, as a freshman Senator in January 1959, he was assigned to the Banking and Currency Committee – not the Commerce Committee or the Public Works Committee.

Williams introduced his own mass transit aid bill on March 24, 1960 (S. 3278, 86thCongress) with eleven bipartisan cosponsors, to place responsibility for mass transit aid at the Housing and Home Finance Agency (the forerunner of the Department of Housing and Urban Development). The bill was referred to the Banking Committee because it amended the Housing Act of 1954 and the Housing Amendments of 1955, both of which were Banking Committee bills.

The Williams bill had two parts. It amended the existing HHFA program that made grants to cities for urban planning to make them include mass transportation in their plans and to encourage grants for studies of mass transportation systems and “the interrelationship of transportation and urban development, including the impact of land use and metropolitan growth on the total transportation needs of such areas.” And it amended the existing HHFA public housing loan program to allow low-interest loans to cities to buy, improve, and operate mass transportation and commuter transit systems. Transit loan volume was to be capped at $100 million.

The HHFA Administrator wrote to Congress on May 6 supporting the planning grant provision of S. 3278 but opposing the loan provision, both on the grounds of its interest rate and because “the proposed financing of this new loan program through the present public facility loan fund would provide it with ‘back door’ financing, not subject to Appropriations Committee approval.” The Treasury Department opposed the bill on May 9. However, the Interstate Commerce Commission chairman declared the bill “a step in the right direction” while noting that the bill itself was outside ICC jurisdiction. But the Secretary of Commerce wrote on May 31 that “The Department would not favor the enactment of S. 3278…This Department takes the position that the mass transit problem is basically one for cooperation between the communities involved and the carriers, whether publicly or privately owned. The entire spectrum of costs, both capital and operating, is relevant, and the situations may vary significantly from area to area. Encouraging gains have been made in the processes of community carrier cooperation but no set pattern has evolved.” (Extensive hearings were held by the Senate Housing Subcommittee in May 1960, in which all of the agency letters expressing views on the bill were printed.)

It should be noted that in March 1960, the Eisenhower Administration had just completed a comprehensive statement of national transportation policy organized by the Commerce Department. That policy stated clearly that urban transportation was “primarily a local problem. But the Federal Government contributes toward the problem with its huge highway program. It also has a deep concern in the railroad commutation passenger losses because of their effects upon the health of the railroad system and upon the extent to which the Nation can secure the benefit of the railroads’ capability for mass long-distance transport of freight.” However, the principal staff authors of the study, Ernie Williams and David Bluestone, took the unusual step of submitting their own appendix to the study that argued for a more balanced approach:

From the standpoint of total cost, serious problems are raised by these trends. Mass transportation is clearly much less expensive per passenger-mile than total costs of the private automobile withan average of less than two occupants. From the standpoint of efficiency, there is little doubt that per passenger, the streetcar, bus and transit vehicles are far more efficient in terms of space occupied: in downtown areas, buses are about four times as efficient as automobiles; in outlying areas they are about two and one-half times as efficient; on urban freeways they are about seven times as efficient. Rail lines are similarly much better space-users.

The present highway program has provided substantial sums for improving access to our major metropolitan areas. However, the present program does not require any test to determine the most efficient use of these funds in terms of passenger movement. Merely adding highways which will attract more automobiles which will in turn require more highways is no solution to the problems of urban development.

-Ernie Williams and David Bluestone, 1960

(Ernie Williams was a pivotal figure in 20th century U.S. transportation policy, though barely known to the public. He started advocating for the creation of a U.S. Department of Transportation back in 1945 while an analyst at the Bureau of the Budget, then again as a staffer on the Hoover Commission in 1948, and then again during a stint with the President Eisenhower’s internal advisory committee on government reorganization in 1954-55, and then again as a consultant with the Commerce Department in 1959-1960.)

Despite the Administration opposition, Senate Banking chairman A. Willis Robertson (D-VA) (father of televangelist Pat Robertson) allowed the panel to consider the Williams bill at a business meeting on June 14, 1960. After some discussion to clarify that the loan authority was at the discretion of the Administration and of the interest rate of the loans, the bill was reported to the Senate the following day (Senate Report 1591, 86thCongress).

Williams took the bill to the Senate floor on June 27 (see the debate starting on page 14447 here). Williams argued that his bill was the right prescription because it allowed local governments to determine how best to address their own transportation needs: “local public bodies, rather than the Federal Government, should have primary responsibility for determining the allocation of funds within prescribed limitations. In many cases, the greatest need may be for the purchase of new railroad commuter cars. In other cases, there may be a need for the relocation of an antiquated railroad station closer to new population centers and arterial highways. The need in another city may be for the improvement and expansion of a downtown bus terminal, or the elimination of a stub-end subway terminal, or construction of fringe-area parking lots adjacent to bus or rail stations, or the modernization of traffic control systems. The needs will vary with each urban area.”

Opposition to the bill on the Senate floor was led by Sen. Strom Thurmond (D-SC), who said: “I know of no authority under our Constitution for the National Government to enact a law of this kind. I know of no authority under our Constitution for the central Government in Washington to give or lend money to cities for the purposes specified in the bill. In my opinion we have passed many measures for which there is no constitutional authority.” He also complained about the cost of the measure.

This brings up an interesting and still-relevant trend that Smerk and others have pointed out: by the late 1950s, big cities were beginning to view the federal government as a necessary counterweight to the dominance that rural and small-town legislators held in state government. While the “blue island in a red sea” issue is a real one in many states today, it was much more pronounced before the U.S. Supreme Court started ordering one-man, one-vote redistricting for state legislative seats in the 1961 Baker v. Carr decision and especially the 1964 Reynolds v. Sims case. Prior to the latter, many states had equal representation in their state Senates for individual counties, much like the U.S. Senate has equal representation for states – regardless of population. This naturally put big cities at a huge political disadvantage.

And it should also be pointed out that the big cities were also trying to get around their highway-dominated state transportation agencies. After all, the American Association of State Highway Officials didn’t get around to adding “Transportation” to their name until November 1973 to recognize that they had any kind of non-highway mission at all.

Federal aid flowing directly to cities was a way to bypass state governments that were largely disinterested in urban problems.

Despite Thurmond’s efforts, S. 3278 passed the Senate by voice vote on June 14, the same day it was brought to the floor. But it saw no action in the House, which oddly enough was more dominated by rural interests at that time than was the Senate. This time, however, the House Banking Committee at least held hearings on the issue. The legislation died on September 1, 1960 when the 86th Congress adjourned sine die. But the subsequent election of a Democrat to the White House – a Democrat from a big Northern city who grew up taking mass transit – gave rise to hopes that transit legislation could be enacted during the next Congress.

Pete Williams’ second try. Williams hit the ground running in 1961, re-introducing a revised version of his bill on January 11, 1961 as S. 345, 87th Congress (see his introductory remarks, followed by text of the revised bill, starting on page 553 here). This time the bill provided for up to $250 million in HHFA mass transit loans, up to $75 million for mass transit planning grants to municipalities, and a greater HHFA role in assisting cities with their transit planning.

Nine days later, John F. Kennedy was sworn in as President – but he was in no hurry to decide urban transportation policy. Instead, he sent Congress a special message on March 9, 1961 saying that he had ordered the Commerce Department and the Housing and Home Finance Agency jointly to “undertake an immediate and extensive study of urban transportation problems and the proper role of the Federal government in their solution. Williams did not like the delay – according to a White House memo, Williams requested and received a meeting at the White House the following day (March 10) where he “expressed concern about the delay implied in the joint HHFA-Commerce study of urban transportation requested by the President in his Housing Message, and asked whether the administration would have a position by the time of the Senate Commerce Committee hearings, scheduled for March 20-22.”

At that point, according to the memo, Bureau of the Budget staff immediately discussed the issues with Morton Schussheim at HHFA and Wilfred Owen at Commerce. According to the BoB memo:

We indicated to them that the administration (a) would not support the loan program, (b) might not support demonstration grants, and (c) strongly desired to avoid a jurisdictional dispute between HHFA and Commerce, which we thought could be deferred by limiting the program to planning grants, at least until decisions have been made on a Department of Housing and Urban Affairs and possibly on a Department of Transportation. We proposed the legislation be build on the agreement for joint financing of comprehensive planning, including transportation planning, worked out by HHFA and Commerce at the instigation of the Bureau last year…

In subsequent meetings, Owen expressed satisfaction with this proposal, but Schussheim reported that HHFA (a) would not accept a statutory requirement of joint financing of urban transportation planning with Commerce, (b) wants demonstration grants, and (c) wishes to give further consideration to the Williams loan program. We understand that a HHFA effort on Friday, March 31, to obtain White House approval for HHFA endorsement of a slightly modified Williams bill was rebuffed. It is doubtful that further constructive steps can be taken at staff level.

-White House Bureau of the Budget, 1961

The Budget Bureau memo also included the draft of a proposed Kennedy Administration “Urban Transportation Planning Act of 1961” to be based around the planning grants mentioned above. The Bureau memo said that their draft bill maintained a “scrupulous neutrality” between Commerce and HHFA and noted that it avoided “identical authorizations to two agencies…at the price of giving HHFA the major role in mass transportation planning.”

In mid-March, the Under Secretary of Transportation sent a memo saying that “There is no recognition in S. 345 that the Department of Commerce has basic responsibilities with respect to transportation, and more particularly, the Department has policy and planning responsibilities for all forms of transport…” The memo closed with an acknowledgement that urban mass transit is multi-modal, but suggested that Commerce was the ideal place to house all such modes. (All the documents mentioned in the previous few paragraphs can be found here.)

Williams went ahead and testified on his revised bill before the Senate Banking Committee on March 20, 1961 (the Budget Bureau memo was wrong – it was Banking, not Commerce, that had the hearings scheduled). At the end of three days of hearings, Williams (who by that point was chairing the hearing) summarized that “the witnesses have conclusively documented the need for action this year. They have simultaneously urged a broader vision for long-range improvements in mass transportation, which would be coordinated with urban renewal, housing and community facilities under the Housing and Home Finance Agency, and, hopefully, ultimately under a Department of Urban Affairs.”

On April 13, White House aide Lee White sent a memo to senior aide Ted Sorensen describing the Commerce-HHFA feud and said that the total transit program “can be broken down into two distinct segments: planning and operational program. With regard to the planning, there is no question but what HHFA should have the sole or dominant role…if there is an impasse, the planning function can be assigned with a reservation of the final decision on operations pending the HHFA-Commerce study to be undertaken during the next few months. My recommendation would be to give the whole program to HHFA and if forced to, postpone the operation end of it until Fall.”

An unsigned White House memo found in White’s files dated that same day said that the Administration could support Williams’ bill with changes to reduce the demonstration project amount from $50 million to $10 million, increase the federal share of the planning grant from 50 percent to two-thirds, and prohibit federal transit loans from being used for operational subsidies.

By April 20, the Bureau of the Budget was sending memos to the Senate Banking Committee outlining the kind of legislation the Administration could support, based on the April 13 White memo (planning grants at a two-thirds federal share, limit the demonstration grants to $10 million). On the night of April 27, Senator Williams talked with Lee White, and Williams sent White a confidential letter the next day with a new version of his bill that was, in his words, “recast as a temporary emergency program to be operated on a total demonstration basis.” Williams also asked for the Administration’s blessing for his bill before the coming Banking Committee markup because “I am very much afraid there will be a Republican move to add mass transportation to the omnibus housing bill unless we act first.”

The Bureau of the Budget responded with a scathing critique of the revised Williams bill on May 4, calling it a “poorly drafted bill…it does not define the basic conditions under which grants or loans should be made for planning purposes…Unless this is done, there will be grave danger that federal money will be spent on projects that deal with the problem in a purely fragmentary fashion.”

Also on April 28 (the day Williams sent the White House his revised bill), the nonpartisan U.S. Advisory Committee on Intergovernmental Relations was holding a meeting at which the Commission voted in favor of “substantial endorsement of the objectives and major provisions of S. 345.” This was conveyed to the President in a May 3 letter prior to the official Commission report being released on May 22. The Commission also supported the creation of metropolitan area and interstate compact transit agencies and suggested state governments should assist localities in planning and organizing their transit needs. The Commission letter made a particularly strong statement on this last point:

It is an abdication of the constitutional role of the State if it takes no action on a problem affecting its local communities when at the same time local officials of those areas are pleading with the President and Congress for Federal financial aid. By becoming a partner with the local governments in the field of urban transportation, the State can play a vital role.

-U.S. Advisory Committee on Intergovernmental Relations, 1961

By May 9, White was writing to the President to make clear what had been implicit – that HHFA had won the jurisdictional battle over Commerce – and that a compromise bill was in sight:

White also warned that “The only Administration position objectionable to Senator Williams is that which would postpone until January 31, 1962, recommendations for the manner in which the program for actual construction and operation of mass transit systems should be federally assisted…there are excellent reasons for not including any operating program until the committee established by the Housing agency and the Commerce Department concludes its study on October 17 of this year.”

Scheffer Lang was an assistant professor of transportation at MIT in 1961 who had been called to Washington to consult with several transportation agencies, including both Commerce and HHFA. In a later oral history interview, he recalled:

…there was a strong body of opinion within the then Kennedy Administration that the program should logically be put into the Department of Commerce, more specifically in the office of the Under Secretary for Transportation in the Department of Commerce. It was finally concluded, and I know that Senator [Harrison A., Jr.] Williams of New Jersey who was the principal congressional advocate of this legislation, that the Bureau of Public Roads was so totally highway-oriented and so completely anti- any other form of transportation that they with their rather substantial bureaucratic strength within the Department of Commerce would succeed in killing off any program for other than highway transportation development in the urban areas if it were allowed to get very close to them, as it would be if it were in the office of the Under Secretary for Transportation in the Department of Commerce who also had responsibility for the Bureau of Public Roads. So the decision was made almost at the last minute in that 1961 housing act, or legislation, to lodge the responsibility for this new program in the Housing and Home Finance Agency rather than in the Department of Commerce.

-Scheffer Lang, 1968 oral history interview

The fact that HHFA won that battle may have had something to do with personalities. In a November 1968 oral history interview, Robert Weaver, who was HHFA head from February 1961 (and later HUD Secretary) said that “in 1961 no one intended to have urban mass transportation. But Pete Williams – Senator Harrison Williams of New Jersey – almost single-handedly got that bill into the White House and got it up before the Congress. The question was then who would run it. And the question was whether it should be in Commerce, which had an office of transportation, or whether it should be in HUD [he meant HHFA]. I got it largely because the man who would have gotten it in Commerce was not high on the list of people to run things, and this is how I accidented into it in the first place.” (Weaver seems to have been talking about Under Secretary of Commerce for Transportation Clarence D. Martin, Jr.)

The Senate Banking Committee held a three-day markup of the overall housing bill starting on May 16 and ordered a bill reported on May 18 that included the compromise Williams language scattered throughout the bill. The section-by-section summary of the housing bill (S. 1922, 87th Congress) indicates that the bill had $50 million of urban renewal capital grants set aside for mass transit demonstration projects in section 303, increased the federal share of planning grants to two-thirds and made transportation planning eligible in section 311, and made the changes to the loan program to allow $100 million in mass transit loans in section 402.

The Senate started debating the bill on June 6, 1961. On June 8, Sen. Frank Lausche (D-OH) offered an amendment to strike the $50 million for mass transportation demonstration grants, which were vigorously defended by Pete Williams (see debate starting on page 9881 here). The Lausche amendment failed by two votes – 44 yeas, 46 nays. The housing bill then passed the Senate on June 12.

However, the housing bill and its House companion legislation (H.R. 6028, 87th Congress) – which did not include any transportation provisions – had had trouble getting a rule from the conservative-dominated House Rules Committee. President Kennedy had to send a formal message to Speaker Rayburn on June 19 transmitting the Administration’s proposed mass transit bill (introduced as H.R. 7787, 87th Congress), separate from the housing bill. Kennedy noted that “Because mass transportation is a distinctly urban problem and one of the key factors in shaping community development, the proposed bill assigns the administration of the program to the Housing and Home Finance Agency. This responsibility, together with the other functions of the Agency, will be transferred to the new Department of Urban Affairs and Housing upon enactment of legislation which I have previously proposed.”

Kennedy also left open room for transit to move separately from the pending housing bill: “Since the Senate has already concluded its consideration of the Omnibus Housing Bill and has adopted an amendment containing a mass transportation program, I hope it will be possible for the House to hold hearings on the subject in order that a satisfactory program can be enacted during the current session.” The following day, the Rules Committee granted a rule for the housing bill.

During consideration of the housing bill in the House, on June 22, the chamber rejected an amendment by Rep. William Cahill (R-NJ) to add all of the Senate-passed mass transit language to the House bill to make it “non-conferenceable,” but after Rep. Abraham Multer (D-NY) argued that he was about to have hearings in the Banking Committee the following week on the mass transit bill (H.R. 7787, 87th Congress) submitted by the White House (hearings that President Kennedy himself had requested), and then hopefully bring it to the floor on its own, the Cahill amendment failed by voice vote. (See pages 11125-1127 here.) S. 1922 then passed the House and was sent to a House-Senate conference committee.

Those House Banking Committee hearings on the Kennedy transit bill were held on June 27-28, but by that point, the House-Senate conference negotiations on the housing bill were already underway. On June 28, Rep. Cahill testified that “I am happy to note that the conferees did accept the Senate version, and I hope that the House will go along with the conference report so we can have this aid for transportation.” The conference report was filed later that day.

The final bill produced by the conference committee largely stuck with the Senate version. The dollar amount of mass transit demonstration project grants was cut in half (to $25 million) in section 303, section 310 made the changes to the planning grants, and section 501 made the changes to the loan programs (again, cutting the amount of transportation loans in half from the Senate version, to $50 million). And, the loan authority was temporary, having an expiration date of December 31, 1962. The bill was signed into law as Public Law 87-70 on June 30, 1961.

Scheffer Lang said in his oral history interview that the fact that the new program had been lodged in HHFA

“…was a cause for continuing concern among those of us who were involved with the then new HHFA program in 1961 because we felt very strongly, and I feel today very strongly, that the establishment of a strong interaction between the highway program and the Urban Mass Transportation Program is absolutely essential to the development of any kind of a balanced transportation in our urban areas. So as a partial substitute for the program’s being lodged in Commerce, which it was not, those of us who were involved, and I was involved, in the choice of a man to head up this new program in the Housing and Home Finance Agency were anxious to find someone who had good contacts and communication with the professionals in the highway business. And we were successful in doing that.

John Kohl, who was then a professor of transportation engineering at the University of Michigan, was the man who two or three others and myself got nominated to then administrator Weaver as the best qualified man to head up this program. John was, and had been for many years, quite active professionally in highway engineering affairs and was very well known to the top management in the Bureau of Public Roads and very well liked. John appreciated the importance of trying to develop this program at the metropolitan area level.

I think that his success in developing and maintaining a good relationship with the Bureau of Public Roads was not complete, but this I’m afraid was a problem that was somewhat beyond his ability or the ability of the professionals in the Bureau of Public Roads to control entirely because there were, and are, large special interest groups that stand behind each of these two somewhat different programs. These special interest groups want as little to do with each other as possible. So despite the best efforts of the bureaucrats and the professionals, a good bridge was never built between these two programs, although they did interact with each other.

-Scheffer Lang, 1968 oral history interview.

Congress followed up the enactment of the authorization with a supplemental appropriations act for 1962 enacted on September 30, 1961, which appropriated $42.5 million for the new mass transportation programs at HHFA. However, the proviso in the appropriation prevented HHFA from using the full amount of the authorization without further appropriations – a harbinger of things to come.

A few months later, when transmitting the fiscal 1963 budget request to Congress, the Bureau of the Budget classified the mass transit appropriation not as a transportation program but as part of budget subfunction 553, “urban renewal and community facilities,” which was a subfunction of budget function 550, “housing and community development.” Thus the budget, which proposed an additional $100 million appropriation for the program in 1963, did not count mass transit spending towards government-wide transportation funding totals, which were then part of budget function 500, “commerce and transportation.”

The Commerce Committee strikes back. The White House had insisted that no permanent aid program be put in place before the joint Commerce-HHFA study on urban mass transportation was complete. An undated draft of the study from sometime in late 1961 called for an additional $500 million in grants through HHFA over three years, with a two-thirds federal cost share for new projects that are part of comprehensively planned systems and a 50 percent project cost for preservation of existing facilities. It also called for increasing the existing 1.5 percent federal-aid highways statewide planning set-aside to 2.0 percent, with the extra half-percent going to urban planning, and a new requirement that after 1965, all new federal-highway projects in urban areas “be made contingent on a finding by the Secretary of Commerce that such projects are consistent with adequate, comprehensive development plans for the metropolitan area or are based on the results of a continuing process carried on cooperatively by the States and local communities and that the Federal-aid system so developed will be an integral part of a soundly based, balanced transportation system for the area involved.”

However, even though the study was ready in late 1961, its release was put on hold pending the finalization of President Kennedy’s comprehensive national transportation policy (including rate regulation, etc.) that was not sent to Congress until April 5, 1962. Part 2 of the President’s special message dealt with urban transportation and more or less repeated the recommendations of the joint Commerce-HHFA study, the final version of which had been sent to the President on March 28 and which was acknowledged by him in a letter dated April 19.

But work to extend the program had long since been underway on Capitol Hill. In January, at the start of the session, Senator Williams sent Senate Majority Leader Mike Mansfield (D-MT) a letter imploring him to stand up to the House Appropriations Committee on funding for mass transportation. On March 5, Williams sent the White House a draft bill he had prepared extending and expanding the program and Lee White responded on March 15, telling Williams to be patient and that the White House bill should be ready in another week or so. An internal White House document dated that same day compares the draft Budget Bureau bill, the draft HHFA version of the bill, and the Williams bill. HHFA had a revised draft bill ready by March 27, and at the same time, Commerce was readying a draft federal-aid highway reauthorization bill implementing the relocation assistance and metropolitan planning portions of the program. (All documents mentioned in this paragraph may be found here.)

The final Administration bill was transmitted to Congress by HHFA Administrator Weaver on April 5 and introduced by request in both chambers. (The House Banking subcommittee chairman prepared a committee print of bill text, section-by-section summary, and the final Commerce-HHFA report which is useful.) Senate Banking held hearings on that bill and several others (including a bill introduced by Sen. Clair Engle (D-CA) at the request of Los Angeles which used massive loan guarantees in lieu of grants) later that month. House Banking hearings were held the following month.

But the bills became bogged down over how to pay for the program. As transmitted to Congress, the bill was a simple authorization for up to $500 million in appropriations over three years. A letter from the Under Secretary of the Treasury to the White House on April 2 had insisted on taking this route and not requesting non-appropriated multi-year contract authority instead:

On May 24-25, Senate Banking marked up the Administration bill in subcommittee and adopted a Williams amendment to make the $500 million contract authority instead of a simple authorization. Williams defended this in a letter to White the same day, asking for White House support. (The Williams letter and the aforementioned Treasury letter can be found here.)

In part because of this dispute (and possibly because Banking chairman Robertson was not a huge fan in the first place), the full committee did not even start marking up the bill until July 12, and did not order a bill reported until August 3. On August 29, Senator Lausche took to the floor to announce that the transit bill, “while it deals substantially with commerce, was referred to the Banking and Currency Committee for consideration, and not to the .Commerce Committee, where it properly belonged” and that, with the support of Commerce chairman Warren Magnuson (D-WA), “when the new subsidy bill comes before this body, I shall ask that we abide by the rules and send the bill to the committee which, under the rules, legitimately has juris- diction of it.” (See p. 18100 here.)

The Senate didn’t even move to consider the bill until September 12, and on the 13th, the first person to take to the floor was Lausche, who then got into a lengthy debate with Williams over the extent to which commuter rail was interstate commerce versus local transportation. The following day, Williams admitted that “this bill does, in some degree, have interstate commerce…There are a very few areas of the country in which mass transportation plans could be involved with travel between States, though this is still essentially an urban development problem.” He then acceded to a Lausche unanimous consent request to send the bill to the Commerce Committee for ten days (see p. 19531 here).

The Commerce Committee then held four days of hearings on September 17-20, chaired by Lausche, the core of which was testimony from his home-state transit agency in Cleveland that the promise of possible federal aid had caused them to cease their efforts to pay for transit upgrades through their own bond issuances to be repaid by farebox revenues. On September 24, Commerce reported the bill back to the Senate “without recommendation” or amendment. But by that point, the end of the session was near, and since the House had never taken up the bill (the White House bill was approved by committee and reported on July 3 but was unable to get a rule from the conservative-dominated Rules Committee and thus never went to the floor), the 87th Congress was forced to punt. On October 4, the Senate took up and passed S. J. Res. 235, a simple extension of HHFA’s mass transit loan authority expiration from December 31, 1962 to June 30, 1963. It passed the House the following day and then became Public Law 87-809.

But while the effort to pass a mass transit bill was unsuccessful, part of the Kennedy urban transportation agenda did get enacted in the Federal-Aid Highway Act of 1962 on October 23. Section 5 of the bill provided the first financial assistance for persons relocated by road construction, section 9 contained the requirement that no highway projects be approved in urban areas starting in fiscal 1966 unless they were part of a comprehensive metropolitan transportation plan, and section 11 set aside a half-percent of state highway formula funds for metropolitan planning.

Planning for next year. Transit advocates then started planning for next year, On December 13, 1962, a meeting was held in Washington where representatives from HHFA, Williams’ office, the House Banking Committee, the transit and railroad associations, and a variety of individual railroads and city transit agencies plotted strategy for getting a bill similar to the recently deceased Senate bill through the upcoming 88th Congress. The minutes of that meeting reveal the following:

  • The White House did not want contract authority but did want the bill referred to Banking, not Commerce.
  • No one except Los Angeles liked the loan guarantees idea.
  • House Banking staff estimated that Rules Committee chairman Howard Smith (D-VA) “will not be able to sit on the bill for two years, and the Rules Committee will approve the bill if it has an opportunity to vote.”
  • The group wanted Williams to work with the White House and Mansfield to get the transit bill re-introduced as S. 1, “to get the prestige benefit of the low number.”
  • “The consensus of the group is that ‘contract authority’ is important to the program but difficult to get. It was agreed that the strategy should be the same as last year: Senator Williams will try to get the amendment reported by the Senate Banking Committee, and efforts should be made to retain it in the Senate bill, but no attempt will be made to include it in the House bill. Efforts should go to retain it in the Conference bill.”

When it came to the all-important issue of committee jurisdiction:

The consensus of the group was that it was vital the initial referral should be to the Banking and Currency Committee. Pat McLaughlin [the City of Philadelphia representative] pointed out it was important the Administration make it clear to Senators Mansfield and Magnuson, Chairman of the Commerce Committee, that the bill should go to Banking and Currency. McLaughlin also suggested that we might propose joint hearings to prevent success of an initial referral move to Commerce Committee. It was agreed that action must be taken to counteract [a] move to refer the bill initially to Commerce Committee including an early meeting of mayors with the President and Administration representatives and the Senate Leadership, and expressions of opposition to Commerce jurisdiction by mayors, public officials, and industry officials in the State of Washington to Senator Magnuson.

-minutes of Dec. 1962 transit lobbyist meeting

[This story will be continued – part 2 can be read here.]


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