Overcharges/duplicate payments/c.o.d.
Owner-operator problems

Unauthorized passenger carrier operations

Weight bumping

Those violations identified in the high emphasis group should receive the greatest allocation of enforcement resources. The allocation of resources to all other areas should reflect a reasonable anticipation of public benefit. Complaint experience should be used as one indicator of public need. Accordingly, OCCA is directed to continue to rely upon complaint data as an indicator of public need for Federal intervention. Where the "more serious" types of violations previously identified as items in the high emphasis group will not receive adequate attention as a result of complaint-driven investigations, OCCA is directed to allocate enforcement resources in order to address such areas.

2. Periodic review of the enforcement program

OCCA should be accountable for its use of enforcement resources. The May 1984 GAO Report recommended that the Commission improve its maintenance and use of data to assess how enforcement program resources are actually being applied and what results are being achieved in relation to the program goals and priorities.

OCCA is directed to proceed with modification of the enforcement data system, so that the revisions are operational by October 1, 1984.

OCCA is also directed to submit a quarterly report to the Commission on the enforcement program. This should be in two parts, with a separate section for each region in each part. The first part should be a forecast of activities and resources to be allocated in the ensuing quarter, and the second part should show the results achieved and the resources used in the preceding two quarters.

LOWER PRIORITY CATEGORY

Mr. ANDRE. One of the functions, which is in the lower priority category today, is undercharges. And yet today the OCCA, particularly in such cases as the International Paper case, and others similar to it, is nevertheless, counter to the instructions of the Commission, still pursuing undercharges vigorously.

Now, undercharges which are an agreement between a shipper and a carrier don't hurt any third person. And we have instructed them accordingly. And it is, I think, in good judgment that they should direct themselves to more fruitful areas where it does, in fact, impact on third parties where other people are injured.

And this is part of what I was referring to. The other portion of my remarks that were quoted has to do with newspaper clips. And I do have it here for the record, if you wish to have it, Senator, the activities of some of our enforcement people sending us newspaper clips. I can produce that for the record, if you like.

COAL RATES

Senator ANDREWS. There has been a coal rate proceeding before the Commission since 1983 that would automatically allow annual rate increases of 15 percent after inflation, if certain preconditions are met.

The coal industry claims that the 15-percent level per year is much too high since it could potentially quadruple rail coal rates over 10 years. On what basis was this 15-percent figure derived?

Mr. TAYLOR. Mr. Chairman, that is a proceeding that is currently before us. It is Ex Parte 347, Sub-1. The original proposal suggested,

not as a guaranteed floor but as a ceiling, that we would not let coal rates rise more than 15 percent per year.

We did not suggest for even a moment that they were to be guaranteed a 15-percent-a-year increase. That is the way that proposal has been construed. It was one of four constraints that were proposed at the time.

It was plucked out of the basket, held up for the world to see as hey, look what the ICC is doing now. They are going to guarantee the railroads a 15-percent increase a year.

That is not what was intended and not what was proposed. I think it is very clear from the oral argument we have already had, that the 15 percent is by the boards.

When we noticed the oral argument and suggested the matter should be discussed at that time, we made it clear to the parties that the 15 percent was no longer a consideration. Where are we now in the schedule of meetings that we have set forth? We have a scheduled conference to decide Ex Parte 347, Sub 1, the most important matter on our plate at the moment. It will be attended to at that time. I can't really say anything more about what the constraints will be and what that final rule would be.

Senator ANDREWS. But that conference on this rule, which is relatively important, will be an open conference?

Mr. TAYLOR. It most certainly will. That is the most important matter on our plate, and there is no other way we would do that.

Senator ANDREWS. You got part of the message last year. Last September the U.S. Court of Appeals overturned the Commission on its decision on export coal rates. What is the status of the Commission's appeal?

Mr. TAYLOR. The matter has been appealed to the Supreme Court. At the present time, the Commission, with the Solicitor General, is seeking a writ of certiorari from the Supreme Court. We probably will have an answer, the Acting General Counsel tells me, by sometime late April or perhaps in May as to whether or not the Supreme Court will grant certiorari. Of course if it does, it will be sometime after that before the case is decided on the merits.

REVENUE ADEQUACY

Senator ANDREWS. A key financial test in determining how much pricing freedom railroads can have is the cost of capital test used to determine revenue adequacy. The Commission has held that a railroad is revenue adequate if it earns a rate of return equal to the current cost of capital. A revenue adequate carrier does not have the same rate freedoms as a revenue inadequate carrier.

First, what is your latest revenue adequacy figure for the railroads and what railroads meet that standard?

Mr. TAYLOR. I don't think any of them meet it. It is 15.3 percent. Senator ANDREWS. How can a revenue inadequate railroad like the Norfolk Southern, purchase Conrail with a bid of $1.2 billion? That bothers us. How accurate are the revenue adequate figures anyway?

Mr. TAYLOR. Ron, do you want to talk a little bit about revenue adequacy? By way of background, that is a proposal that was done and adopted, and it has been upheld in court, on current cost of capital. There have been all kinds of suggestions since, that we ought to look at other kinds of things.

The CURE legislative proposal suggests we ought to examine a lot of things. But the utilities would have us get into the same straight jacket they are in. Maybe the public utilities need a Staggers Act; I don't know.

Revenue adequacy is a term that is used by the Commission to measure the long-term financial health of the railroad. It has nothing to do with cash funds that are available in the short term. It has nothing to do with cash that the Norfolk Southern may have as a result of ERTA and other legislative actions taken here by Congress. It has to do with long-term financial strength and viability.

Another thing a lot of people don't remember is when these acquisitions occur, they are made by a parent company and not by a railroad. One of the reasons that the parent companies have decided to diversify and get into things other than railroads is because railroads haven't been all that profitable as such. Otherwise, they wouldn't have gotten themselves involved in other endeavors.

Senator ANDREWS. Mr. Chairman, I have a number of other questions I would like to submit for the record. They are somewhat technical questions that are important to us in consideration of this matter.

But because he has a busy schedule, I would like to yield to Senator Chiles now. And, as a matter of fact, I have to chair another hearing in 10 minutes. Senator Chiles?

GOVERNMENT IN THE SUNSHINE

Senator CHILES. Thank you, Mr. Chairman. At last year's hearing we learned that the ICC had not held a public meeting in 19 months and it conducted about 3,000 votes by notations, including such controversial issues as export coal and boxcar deregulation.

On May 10, 1984, the Commission adopted a new rule to require all significant cases to be discussed and voted on the public record. Since May 10, 1984, the ICC has taken 7,427 votes and handled 1,916 cases.

Of those, 12 cases have been voted on in public. One of those was the May 10 meeting to establish the new process and two of the public meetings were to discuss the 1985 supplemental and the 1986 budget.

Therefore, only 9 substantive transportation issues out of 1,916 cases or less than one-half of 1 percent of the cases decided since May 10 of last year were handled in public.

Mr. Taylor, as you know, following last year's hearing the Senate directed the ICC to follow the intent of the spirit of the Sunshine Act in scheduling all significant issues to be discussed and voted on in public meetings.

Is it your judgment that holding less than 1 percent of your votes in the public satisfies the spirit and the intent of the Sunshine Act?

Mr. TAYLOR. Let me say, Senator, that we developed this rule with the full understanding that we had not had, as you criticized us for last year, enough public meetings. I welcomed the new rule. As you know, I discussed it with you in advance of its being officially adopted by the Commission.

A member of your staff was present when we discussed openly the adoption of the open meeting rule. We announced at that time the cases that we were going to hear last year that were within the rule of significant matters of major transportation importance.

We combed the Commission to identify all of those. And I think in terms of the rule that we have adopted, there is no question but that we have lived within the spirit of it.

Let me say a couple of other things. This is just a beginning. I don't want to tell you that as of this point in time we have done all that the Commission can do to promote collegiality in the Sunshine. I think there is a lot more to be done.

One of the things you have mentioned is all of these other cases, and it is not even really fair to characterize it as an apples and oranges comparison. It is more like comparing a watermelon to a holly berry, because we do literally hundreds and hundreds and hundreds of little, tiny miniscule cases that do not involve major issues, such as a very short piece of track that is to be abandoned where no one protests the abandonment. That doesn't require any intellectual output, as far as the Commissioners are concerned. It is almost in the nature of being a ministerial task. And yet those decisions have to be made.

We are, in the course of the reorganization study that we are involved in now, endeavoring to figure out some way that we can handle those more routine cases in some more routine fashion, perhaps by employee boards, perhaps in a different way than they are currently being handled at the moment.

When we are done with that, what we will have left is just the terribly important and significant matters.

So, when you talk about a comparison between 1,916 and 12 that went to conference, that is really a very, very unfair comparison, because what we are talking about is a lot of routine, almost ministerial decisionmaking.

NUMBER OF SIGNIFICANT CASES

Senator CHILES. Is what you are telling me then that you consider that less than one-half of 1 percent of your cases involve significant issues?

Mr. TAYLOR. I don't know whether it is 1.5 percent or whether it is 2 percent or 3 percent, but it is a very, very small percentage of cases that are of the kind like the CSX-ACL barge case, or the Milwaukee case, in which enormous numbers of hours go into the preparation of those decisions, not only from the staff but from the Commissioners and from their staffs.

And they are not just one case. In a case like the Milwaukee, you have a multifaceted issue situation, where there may be 25 or 30 dif

ferent issues, all of which have to be carefully explored, carefully examined, voted upon, and discussed. Those are terribly complex cases.

We have the Southern Pacific merger case coming down the pike. You cannot put that side by side with abandoning one-half mile of track that everybody in the Commission is in agreement with. The only problem you may have in the abandoment case is correcting some typographical errors, which, by the way, if we were to do in a conference downstairs, probably wouldn't get attended to. Nobody in the public is enlightened by that sort of thing.

As a matter of fact, if we can work it out, that kind of decisionmaking should probably be done through some kind of an employee board or different arrangement from what we have now, so that the Commission can concentrate on the small percentage of terribly important cases that really demand our attention.

We are trying to do that within the context of the reorganization study that is now in progress.

Ms. GRADISON. It is like comparing a quorum call to a vote on the MX.

Senator CHILES. What I am trying to determine is whether you have a rule that isn't really promoting Sunshine, if there are significant cases that are not being held in the open, or if you are following the rule. I see some of the cases that you held in the open meetings and it looks like to me that those are meaningful cases. I am glad to see that.

But, on the other hand, if 99.5 percent of your cases are insignificant, and are not important, if you are handling less than one-half of 1 percent, maybe we ought to be looking at sunset up here rather than a setup there without the Sunshine.

Mr. TAYLOR. That is one of the things we have been proposing for some time, in the trucking area particularly. You cannot believe the paper shuffling that goes on in the trucking area today.

it.

Yet Congress has not acted, so we are compelled to go through with

STATUS OF TRUCK DEREGULATION

Senator CHILES. What is the status of truck deregulation?

Mr. TAYLOR. We hope very much there is going to be a bill proposed. There was one that we worked on together with DOT a couple of years ago.

Senator CHILES. Last year you told us you supported total economic truck deregulation by January 1, 1987.

Mr. TAYLOR. I did and I do. What we need now is congressional action. I understand Senator Packwood is going to have a bill that he is going to propose sometime this fall, according to the trucking industry and Commerce Committee staff as well.

Senator CHILES. Has the administration submitted the bill?

Mr. TAYLOR. We hear they are working on a bill. The last time I had a discussion with Secretary Dole about this, I was led to believe there was a bill being prepared, but I haven't seen it. We haven't been involved in it.