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Administrative Action: Battle over Trucking Deregulation

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The most significant action in the battle over trucking deregulation occurred on the administrative front, with the appointment of three new commissioners to the ICC: Marcus Alexis, chairman of the Economics Department at Northwestern University in Evanston, Illinois; Darius Gaskins, Jr., formerly chief economist at the Civil Aeronautics Board under Alfred Kahn; and Thomas Trantum, a Wall Street transportation financial analyst. The White House had nominated the three men the previous February, along with James Gray, secretary of the executive cabinet of Kentucky governor Julian Carroll. But Gray, who was backed by the Teamsters Union, withdrew from consideration in March.

The three nominees appeared before the Senate Commerce Committee in late June at a confirmation hearing. Alexis gave little clue as to how he would vote on major deregulation issues. But Trantum told the committee that he believed "free markets are the most efficient and desirable way to allocate goods and services," and Gaskins said his experience with airline deregulation had indicated "that there may be substantial advantages to relying on competition." Gaskins was questioned closely by Sen. John Warner (R-Va.), who said fleet operators and Teamster representatives had expressed strong misgivings to him about Gaskins' nomination.

Despite the ATA's opposition, the three nominees were confirmed by the committee--and later, pro forma, by the full Senate. Gaskins, the most controversial nominee, received a ten-to-three committee vote; Trantum and Alexis were both approved fourteen to one.

In early September, the public got its first look at the new commissioners in action. At a special meeting called to discuss a staff task force report, a majority of the eight commissioners--including Alexis, Gaskins, and Trantum--endorsed sweeping reform proposals that had received only O'Neal's support when he first outlined them a year earlier. Demonstrating his commitment to change, Gaskins said the staff's ambitious entry proposal--which called for removing virtually all controls over twelve specialized segments of the industry--"may not go far enough."

Chairman O'Neal all but laid down the gauntlet when Robert Gresham, one of two commissioners who opposed the proposed reforms (a third was noncommittal), said Congress, not the ICC, should properly consider such actions. "The commission has wide discretion written into the Interstate Commerce Act," O'Neal replied. "If Congress doesn't like the direction we're taking, they can let us know."

Bennett Whitlock immediately issued a statement saying the ICC proposals "far exceed the commission's statutory authority." "This backdoor approach to deregulation shows contempt for the congressional process," Whitlock said, adding that the ATA would sue the commission if it proceeded with its unlawful proposals.

The ATA's threat had little impact, however, and in mid-October, the commission adopted a policy making it considerably easier for new firms to enter the trucking industry. The action did away with a forty-three-year-old test requiring an applicant for operating rights to prove that the proposed new service couldn't be performed as well by existing carriers.

Within days, Congress picked up the ICC's gauntlet. At an ICC- sponsored workshop in Reston, Virginia, Senator Cannon complained that independent regulatory agencies were ignoring Congress and going their own way. "We're mad as hell," said Cannon, "and we aren't going to take it anymore. It is time that the agencies began to listen to the Congress." Cannon urged the commission to forego making "irreversible" changes in trucking regulation until Congress had been given a chance to act. He set a deadline of June 1, 1980, to have legislation on President Carter's desk "expressing the will of Congress."

Both O'Neal, who had announced his plan to leave the commission at year's end, and Darius Gaskins, whom Carter had designated to succeed O'Neal as chairman, said later that Cannon's request would at least delay final commission action in some matters. Gaskins singled out commission proceedings aimed at limiting the ability of rate bureaus to set rates collectively and at issuing "master certificates"-across-the-board entry approval for entire classes of truckers. "We can ... gather the information, make it available to Congress and for our own uses, and if Congress doesn't act, we could go through with a final rule," said Gaskins.

Several days later, the Senate Appropriations Committee backed up Cannon by directing the ICC not to implement any new regulations easing entry into the trucking industry until Congress had been given an opportunity to pass legislation. The committee's directive actually represented a softening of language it had adopted a few days earlier ordering the commission not to initiate any new trucking regulations. The House and Senate Appropriations committees also denied the ICC's request for $2.5 million to study the effects of deregulation.

Following Cannon's speech, O'Neal and Gaskins wrote to the senator promising him to delay major regulatory reforms until Congress had passed legislation or until June 1. Nevertheless, in early December, the ICC proposed a significant regulatory change that would allow trucking companies to begin serving all intermediate points on their authorized routes on a temporary basis. The proposal was designed to save fuel during the winter months when energy demand was greatest and to assure transportation service during the ongoing fuel shortage.

Industry reaction was predictably strong. "This will kill us," said a spokesman for the ATA's Local and Short Haul Carriers Conference. "The bigger carriers will pick up the most profitable loads, taking away business from our fellows. This could be the deciding factor in putting a lot of people out of business."

But the Washington Post sided with the ICC in an editorial that said the potential fuel saving was "adequate justification for putting the change into effect immediately": "The opportunities for energy conservation and cost reduction in this notoriously inefficient industry are vast. Not all of them should be held back until Congress gets done trying to work out a better regulatory system for companies and a union that like things the way they are."

While Congress remained silent in that debate, ten days later, Cannon used a letter to the president of the Teamsters to warn the ICC against another step it was reportedly about to take-granting master certificates to carriers hauling shipments for the federal government In their letter to Cannon, O'Neal and Gaskins had singled out the government-shipment proceeding as one they felt they could go ahead with even as Congress debated major legislation. While Cannon never answered their letter, he did tell a meeting of minority truckers--whom the reform was primarily intended to benefit--that "the liberalization of entry into government traffic is the kind of limited rule-making that need not come to a halt while Congress is considering legislation." Cannon's letter to Fitzsimmons in December represented an apparent turnaround. Conceding that he had publicly stated his support for less restrictive entry in the government transportation sector, Cannon wrote to Fitzsimmons that "I am, however, not certain that the master-certificate approach is the best way to achieve that reform."

S. 2245: An "Unexpectedly Tough" Proposal

Committee aides and others close to Cannon had seen the senator become increasingly sympathetic to the need for deregulation during the summer and fall, even as he took seemingly antagonistic actions. But to the trucking industry, Teamsters, supporters of decontrol, and the press, it came as a surprise when Cannon, together with Sen. Robert Packwood of Oregon, the ranking Republican on the Commerce Committee, introduced a strong reform bill. Packwood's position was no secret. He called the bill "a move" toward the sharp deregulation that he favored, though he added, "It isn't as much of a move as I want to see."

The Washington Post described the Cannon-Packwood bill as an "unexpectedly tough legislative proposal." Most unexpected was the strong provision on rate bureaus. Much to the industry's abhorrence, it called for elimination of antitrust immunity for single-line ratemaking as of 1983. To provide for immediate rate flexibility, the bill created a 10 percent zone of pricing freedom. The bill also shifted the burden of proof for entering the industry, though it barred the ICC from issuing master certificates. In other provisions, the bill called for substantial elimination of route restrictions, expanded the list of commodities exempt from regulation-most significantly to include bananas and red meat-and gave owner- operators authority to carry regulated goods on the backhaul.
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