Secretary of Transportation Rock Adams said yesterday his department will have separate proposals to deregulate the railroad and trucking industries on President Carter's desk by Dec. 15.
At the same time, Adams gave the first hint on how much of a rail freight rate increase the Carter administration might approve, in response to an industry proposal for an 8.3 percent hike. He said a 20 percent reduction in the $1.7 billion annual increase proposed might prove acceptable.
Asserting that the Interstate Commerce Commission, a 91-year old agency that regulates intercity surface transportation, has "just got sand in its gear," Adams said "we have to do something" to prevent additional Penn Central-style rail bankruptcies and to permit competition in transportation.
It is "likely" the deregulation plans will included in Carter's State of the Union message next January, Adams added.
Patterned on an airline deregulation act signed into law by Carter last month, the twin administration proposals would:
Sharply limit ICC controls over company decisions to enter or exit from business, including freedom for truckers to begin serving specific markets without prior government approval.
Provide company managements with much more flexibility in setting freight rates, in relation to changing cost and market conditions, without ICC action.
Eliminate many activities now performed under an exemption from federal antitrust statutes by regional rate bureaus, organizations of trucking and rail firms that currently set most rates for all members to charge.
Adams outlined his department's deregulation plans in an interview yesterday, before departing for Hershey, Pa., and a closed-door meeting with rail industry leaders last night.
Reacting to recent decisions of the ICC, many railroad presidents have concluded that most federal economic regulation should be abolished. Reportedly, they are drafting an industry legislative proposal to be sent to Congress early next year.
Adams conceded yesterday that "a lot of the (ICC) operations would be mooted by rail and trucking deregulations," but he said the administration to date is not advocating termination of the agency or absorbing remaining activities within DOT.
The secretary also emphasized that he would warn rail leaders that their proposed $1.7 billion freight rate increase, due to take effect on Dec. 15 if approved by the ICC, must comply with the administration's price guidelines or it will be opposed actively by DOT.
Most of the 8.3 percent freight rate boost would be accomplished by an across-the-board general hike of 8 percent, although one-third of shipements would be priced separately with some decreases and some increases higher than 10 percent. Overall the package is "to high" and a 6.6 percent increase may win administration support, he indicated.
Adams said yesterday he favors a higher percentage of individual commodity pricing instead of general increases, but rail leaders contend that with time-consuming ICC regulations, they have little choice but to seek overall price boosts to improve a low and declining level of profitability.
Nothing that ICC Chairman Daniel O'Neal and the commission itself recently have taken some steps to ease regulation in both trucking and railroads, Adams declared: "The ICC is moving in the right direction. . . but it takes forever for anything to happen over there."
Last week, O'Neal attempted to initiate a broad commission review of existing trucking regulation, but his fellow commissioners reacted with caution to the chairman's "working paper" that suggested elimination of controls over new truckers, permission for railroads to acquire trucking firms and an emphasis on competition that currently does not exist.
Trucking spokesman did react quickly however. They denounced O'Neal's proposals, threatened a law suit if the agency moves to reduce economic regulation sharply and called a hasty meeting in Chicago tomorrow to plan a lobbying effort aimed at detouring the deregulation bandwagon.
However, unlike the railroad industry, which currently is united on many but not all aspects of proposed deregulation, the trucking industry is sharply split.
The American Trucking Associations, a trade group that represents both truckers who favor deregulation and those who opposed, is trying to steer a middle course with a legislative proposal calling for some ICC reforms. Sen. Edward Kennedy (D-Mass.) is pushing for a more sweeping deregulation and the administration is moving closer to his proposals.
Most of the nation's 15,000 trucking companies, a large percentage of which are small businesses, already are exempt from ICC controls. About 4,200 truckers are regulated by the ICC and they carry 44 percent of all truck shipments. But that leaves 56 percent of intercity truck business outside federal regulation.
But many of the large interstate trucking companies support the status quo, arguing that if the rules are changed to permit service over their current routes by new competitors, they would lose business and chaos would result. About 8,000 applications to serve new routes are filed by truckers at the ICC each year, occupying a significant part of the agency's staff. And most applications come from established truckers.
A recent policy change at the ICC, shifting the burden of proof in truck route cases from firms that want new business to carriers that protest such applications, "will materially affect carriers' due process rights to protest administrative actions which would adversely affect them," ATA said last week.
In contrast with trucking, all of the approximately 60 major interstate railroads are regulated by the ICC and 100 percent of interstate rail freight business comes under the agency's controls.
During fiscal year 1977, the railroads and regulated truckers filed more than 270,000 individual freight rates with the ICC, which has more than 2,000 employes and an annual budget of $60.5 million. About 2,200 of the proposed rates were rejected by the agency that year.