Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: SUNDAY, November 19, 1995 TAG: 9511170115
SECTION: BUSINESS PAGE: G-1 EDITION: METRO
SOURCE: GREG EDWARDS
DATELINE: LENGTH: Long
The ICC is the oldest independent federal regulatory agency, but one that became much less relevant after Congress' deregulation of the railroad and trucking industries in 1980. The demise of such a long-entrenched federal player in American commerce should not pass by unnoticed.
Congress created the commission in 1887 to enforce the Interstate Commerce Act, which was aimed at curbing the excesses of the so-called robber barons who ran America's railroads. Western farmers and Eastern businessmen, who thought they were being treated unfairly by railroad monopolies, pressured Congress to act.
The law that resulted, among other things, required railroads to publish their rates and made it illegal for them to charge more for a short haul than a long haul.
At first, the ICC regulated only the railroads, but its scope was extended over time to all commercial surface transportation, including buses and trucks in 1935 and river barges in 1940. The commission even regulated telephone, telegraph and cable communications from 1910 until the Federal Communications Commission was created in 1934.
In addition to its reach, the commission's power was expanded over the years. In 1920, it moved from approving rail rates to actually setting them and railroad profit levels as well.
Since the Staggers Rail Act and the Motor Carrier Act, both passed in 1980 to deregulate and inject competition into the railroad and trucking industries, the ICC has seen its power diminish. Then-President Reagan tried to abolish the ICC during the 1980s but Congress refused to go along. This year, both Congress and the Clinton administration included closing the agency in their budget-balancing plans.
Congress was forced to move on the dismantling of the ICC after it passed a spending bill in October that provided money for the agency only through Dec. 31.
``When the ICC goes away, most people aren't going to notice,'' says transportation marketing expert Tom Mentzer, formerly at Virginia Tech and now at the University of Tennessee.
The original role of the ICC was to protect the public from the railroads, who had no competition, and, later, to protect the truckers from competition, Mentzer said. By the 1970s, however, Congress realized that the railroad industry was dying because of rules that kept it from effectively competing with other freight haulers and that the trucking industry would be better off with competition, he said.
The deregulation that followed has been good for industry and for the economy because it lowered the costs of transportation, Mentzer said. In terms of 1980 dollars, the cost of hauling freight has not increased over the past 15 years, he said.
Between 1930 and 1980, there were few rail mergers. An exception was the 1959 merger of the Virginian Railway into the Norfolk and Western. But during the 1980s after deregulation, the ICC approved 40 railroad mergers, Mentzer said. The mergers worked to improve the efficiency of the rail industry, he said.
The proposed merger of the Union Pacific and Southern Pacific railroads is among the 600 cases pending before the ICC. Most of them, however, are minor matters such as track abandonments. The ICC Termination Act transfers responsibility for those cases to a new decision-making panel that will get help from the Department of Transportation's staff. The panel, unlike the ICC, will have to be reauthorized by Congress every three years.
Employment at the ICC has dropped from 2,000 in the 1970s to 400, of which about 200 would get jobs with the new panel or the Department of Transportation, which oversees highway building and safety, rail safety, aviation, maritime research and the Coast Guard.
The House bill furthers the deregulation of the rail and trucking industries begun in 1980. For instance, railroad rates would not be regulated except in cases where one railroad dominated a market.
For the trucking industry, the bill reduces remaining rate regulation and eliminates federal grants of rights to operate trucking companies. ICC registration and insurance requirements would be transferred to the Department of Transportation.
Workers on shortline railroads lose, though, if the bill's severance-pay provisions make it into law. The bill provides for up to one year of severance pay for workers laid off when shortline railroads sell lines, compared with six years under the current law.
The railroad industry was pleased with the House bill, although it has some concerns that it says can be addressed as the bill makes its way through the legislative process. Edwin Harper, president of the Association of American Railroads, called the bill a ``balanced'' measure and complimented the House on resisting efforts by special interests for gaining ``special regulatory arrangements for themselves.''
The Senate Commerce, Science and Transportation Committee passed a similar version of ICC ``sunset'' legislation Nov. 9. By Christmas the agency should be a memory.
by CNB