The Interstate Commerce Commission yesterday took two giant steps toward lifting government restraints from the railroad industry when it deregulated rates on coal shipped by rail for export and on all rail boxcar traffic.
Both actions came on 3-to-2 votes and were reported without comment or text in a terse late-afternoon announcement. Both will take effect 90 days after the official decisions are filed, which is expected within two months.
Specific details and the commissioners' views are thus unknown, but railroad and federal officials who could be contacted agreed that the decisions appear to permit the railroad industry to be much more responsive to market conditions.
"This means we can set rates with a shipper over the telephone" instead of through complicated, time-consuming filings with the ICC, an industry official said.
The decisions will also eliminate much work the ICC presently does in reviewing export coal rates; rates that apply to boxcar movements, and the charges railroads impose on each other for moving and storing empty boxcars.
This does not mean that the ICC is dead; it will still have much to say about the prices of hauling many commodities, including domestic coal and grain by both truck and rail. It also has a continuing role in monitoring the deregulation of the intercity bus system. But it does mean that the commission is taking advantage of the freedom it was given in the rail deregulation act of 1980 to back away from many of the details it has covered for years.
The decision could also add impetus to proposals on Capitol Hill to either eliminate the ICC and transfer its remaining functions to the Transportation Department or to substantially reorganize the remaining transportation regulatory bodies into one independent body that would handle rail, trucks, buses, airlines and shipping.
The ruling on export coal affects an important and growing segment of railroad traffic. Coal is about 40 percent of railroad business nationwide today, and about 20 percent of that moves for export.
Coal industry officials and critics of deregulation have worried, however, that if the ICC removes itself from all rate-making questions on export coal, the railroads will charge so much that U.S. coal will not be competitive in the world market.
"We can't," an industry official said. "The reason is there is a given price at which American coal can be sold abroad. It's more important to the railroad industry to keep those rates competitive than it is for a handful of bureaucrats who don't have a vested interest."
Robert W. Blanchette, Federal Railroad administrator in the Transportation Department, called the export coal decision "courageous." The administration has supported that outcome.
Freight rates on coal shipped for domestic use will still remain under ICC purview. Last week, however, the ICC proposed new regulations on how those rates could be increased; if railroads can meet tests outlined in advance in the proposal, the ICC will not interfere. The proposal permits as much as a 15 percent annual rate increase after inflation without ICC review.
The boxcar decision was one sought primarily by Conrail, the federally owned Northeastern railroad, which has found itself (it has alleged) holding many empty boxcars belonging to other railroads and having to pay charges on them because the other railroads were in no hurry to reclaim them.
Conrail sought to retaliate by offering substantially reduced rates to shippers who could load up the boxcars and send them back home, a practice that has been controversial with Conrail's competitors.
It is not clear precisely what the ICC has done in that area, although an official in the commission said that Conrail will be permitted to charge mileage on empty cars moving back to other carriers and that Conrail will not have to pay rental on others' cars in storage until the owner reclaims them.