With a slap at railroad industry management, Rep. James J. Florio (D-N.J.) yesterday proposed a sweeping rail deregulation bill that for the first time will provide a uniform system of evaluating the costs of rail service.
"The rail industry is years behind other industries in this country in establishing accurate cost information," Florio, chairman of a House transportation subcommittee, said in a speech to the National Industrial Traffic League.
Florio said that railroads that have tried to alter the industry's age-old economic inadequacies "rely heavily on system averages which do not adequately reflect accurately the real cost of specific movements. w
"Not only does this cause a serious problem for shippers and others, but also it causes the most serious problem for the railroads themselves," Florio said.
"The railroads are unaware of their actual costs," he said. "They are unable to determine when they are making money and when they can adjust a rate up or down to maintain existing traffic or seek additional traffic.
"The sophisticated accounting and costing systems which are a trademark of any modern, well-run business in the United States are non-existent in the rail industry," he said. "I believe the present regulatory system has allowed and encouraged rail carriers to avoid making sound decisions to invest in accurate cost and accounting systems."
Florio's solution to the railroad accounting problem is to set up a Railroad Accounting Standards Board, an unprecedented concept in the industry and one that is likely to be greeted with considerable skepticism by rail executives.
The four-member board, which would have a three-year life would be made of the Comptroller General, who is the chief executive of the General Accounting Office; an accountant, a rail executive, a shipper and a representative of the Interstate Commerce Commission, the primary rail regulatory agency.
The board would be charged with identifying the costs associated with rail service, and rail lines would be forced to comply with those standards. Failure to do so could cost a railroad at least $50,000, according to the Florio plan.
The unique Florio suggestion, which could be interpreted as increasing the federal role in rail policy-making, is part of a broader package, which, in effect, frees railroads from a great deal of their regulatory umbrella.
The bill, which Florio proposed for comment yesterday in conjunction with Rep. Edward Madigan (R-Ill.), comes at a particularly important time for the rail industry.
The Senate Commerce Committee has already sent to the full Senate a modified rail deregulation bill, which is thought to have a reasonable chance of passage. Florio hopes to have his own bill to the House Commerce Committee within six weeks.
In addition, the Rock Island Line, the bankrupt 128-year-old midwest railroad, is only 10 days away from possible liquidation, under a court order.
An ICC order that permitted another railroad to operate on the Rock Island's tracks is set to expire on the same day, although a coalition of House and Senate members is attempting to delay the line's possible shutdown.
Just yesterday, a Department of Transportation official suggested that the Carter administration would recommend that the service be extended for at least a month.