The Carter administration warned Congress yesterday that pulling back on the rate flexibility provisions of its bill to deregulate the railroad industry could endanger the overall purpose of the bill: to put the rails back on their fee.
It makes "no sense" for Congress to declare that railroads must be freed from rate and service regulation so that they can complete among themselves and with other transportation modes in offering freight services and then retain substantial review and veto power over railroad actions, Robert E. Gallamore, Deputy Administrator of the Federal Railroad Administration, told the Senate Surface Transportation Subcommittee yesterday.
"The opportunity for control invites its use," he said. "We should not be swayed by the pleas of those who are merely comfortable with the status quo, or who have found particular favor under the regulatory system as it exists now.
"It is time we let the railroads and their customers come into the market-place and act like other business," he said.
The Senators in attendance were skeptical, however, worrying aloud that lifting federal controls over maximum rates the railroads could charge would leave some so-called "captive shippers" paying exhorbitant rates but with no viable shipping atlernatives.
"Why can't you draft a bill that encourages competition and not monopoly?" subcommittee chairman Russell B. Long (D-La.) asked. "I personally favor doing whatever it takes to make the railroads profitable . . . but we should not encourage competition that victimizes anyone."
"How capable of monpolistic practices is an industry that has lost half the relevant market since World war II?" Gallamore replied. He also suggested that the shippers had more "market power" to deal with the rails than the shippers claim.
In other testimony:
Interstate Commerce Commission Chairman A. Daniel O'Neal called termination of maximum rate regulation "the single most objectionable portion" of the bill but agreed that the rails need more pricing flexibility than they have. The bill, however, "tilts" too much in favor of the railroads in an effort to solve their financial problems, he said.
Thomas H. Boggs, Jr., representing a committee composed of 14 major companies, among them steel and auto-makers, agreed that reliance on market forces if required to enhance the railroads' competitive and financial position but contended the DOT proposals did "not sufficiently protect the captive user."