Hoping to take advantage of the atmosphere of deregulation in Washington, the nation's railroads urged the Interstate Commerce Commission yesterday to lift all of its rules governing the price of coal that railroads ship for export.
At a five-hour hearing, the railroads argued that ICC's regulation hampered the companies' ability to enter into long-term contracts and to change rates quickly--without worrying about lengthy ICC proceedings--to keep up in the increasingly competitive worldwide market for U.S. coal.
Rates charged by coal producers and ocean shipping lines are not regulated, the railroads said. "We're the only ones involved in exporting coal that are regulated," complained R. Eden Martin, who represented Norfolk Southern Corp. and the Chessie System Railroads. These two railroads are the largest shippers of export coal in the country, accounting for more than half the 92.4 million tons shipped overseas last year. Overall, U.S. coal amounted to about one quarter the amount of coal shipped in world trade.
The railroads' request, which has been pending before the commission for more than a year, promises to be one of the most controversial of ICC's issues in 1982.
Although the commissioners have repeatedly stressed their desire to deregulate wherever possible, coal producers, exporters and several key congressmen have mounted strong opposition to the railroads, arguing that it is only an attempt to raise more profits at the coal producers' expense.
The issue already has split the Reagan administration. The Department of Transportation has filed a legal brief before the ICC on behalf of the railroads.
The departments of State and Commerce, however, have opposed the railroads, arguing that deregulation will result in higher rail rates, thereby raising the price of coal shipped abroad. Such a move could price U.S. coal out of the export market and, as a result, have a detrimental effect on the U.S. balance of trade.
Based on the questioning by commissioners yesterday, observers predicted a similar split among the commissioners, with a very close vote likely.
ICC Chairman Reese H. Taylor Jr. promised a decision in the long-pending issue "within a reasonable period of time."
"Deregulation of rail export rates for coal will be tantamount to an invitation to increase those rates," charged Sen. Walter D. Huddleston (D-Ky.), leading off the hearing.
Presenting most of the arguments of the coal industry, Huddleston charged that under deregulation, railroads would not need to worry about a decline in exports. All they would have to do is increase coal export rates "to make up for any shortfall in revenues created by any reduction in tonnage."
The coal industry is captive to the rail industry, coal-industry proponents added, noting that 95 percent of U.S. coal mines have no choice but to ship by rail, given their location and the length of the haul. Until there is an adequate transportation alternative with which the railroads will have to compete, deregulation should not be granted.
Deregulation will give railroads "unbridled power" and be "simply murder" for coal producers, charged Sen. Orrin Hatch (R-Utah).
The railroads, however, contended that it is they who are the captives, not the coal producers. Without coal to haul, they have no business. As a result, they say it is in their interest to keep rates as fair as possible--in order to encourage the continued growth of export coal.
"We're not so foolish to price our services to put our clients out of the export coal market," commented railroad attorney G. Paul Moates.