ments of the public find present rules by which carriers provide notice of general increases requests to be inadequate. While large shippers and others who regularly follow transportation matters maintain the resources to keep them cognizant of significant tariff changes, consumers and small businessmen individually lack such resources, and they are not sufficiently organized to obtain adequate representation collectively. Shippers with sophisticated traffic departments can look after themselves, the report observes, but there are many organizations vitally affected by pending and proposed increases that do not maintain such staffs.

The intent of the Commission's action is to make carriers' general increase proposals more understandable to the general public and to assure they are more widely disseminated. Filing of such proposals will now be required not only with the ICC, but also with state govenors and regulatory agencies. In addition, news releases prepared by the carriers, including explanatory criteria specified by the Commission, must be sent to the major wire services and the principal newspapers in the capital and four largest cities of each state served by the carriers and affected by the proposal.

Provisions are made for increasing the size and number of notices of proposed passenger fare increases that carriers must post in vehicles. Protests against proposed general increases in passenger fares now require the filing of seven copies with the Commission. To avoid discouraging bona fide protests, the order reduces this requirement to one

copy.

On June 12 the ICC served an order in Docket No. 35613 granting certain modifications of regulations for the transmission of tariffs and schedules to subscribers and other interested parties. The modifications involve the elimination of the cost-pricing formula and the wording of the alternative to the first-class mailing requirement. Presently that wording requires an agreement in writing by both the subscriber and carrier or agent. The modification would require only that the subscriber request in writing the method by which he wishes to receive the tariff matter. The Commission stated that rather than using the cost-pricing formula the tariff be issued at a reasonable charge not to exceed that assessed a subscriber. The Commission also noted that it will consider complaints regarding unreasonable tariff charges on an individual expedited basis subject to the standards set forth in Phoenix Horseshoe Company v. AT & SF Railway Company, 142 I.C.C. 663 (1928) and the Act's governing "reasonableness" standards.

In Ex Parte 314, Special Proceedings for General Increases Based On Revenue Needs, the ICC has begun a proposed rulemaking proceeding designed to formulate special procedures for the handling of general freight rate increases requests based on revenue need.

The procedures may be utilized by all common carriers subject to Commission regulation, except pipelines. This procedure would be available once during each calendar year, could not exceed five percent without suspension, would be subject to possible investigation, and could implement general freight rate increases of a limited percentage.

In the event such an increase were ultimately found unlawful, the public would be protected by imposition of special accounting procedures and refund provisions.

In its order the Commission said that "Although this proceeding involves proposed permissive general freight increase procedures," it is "equally concerned with encouragement of flexibility of ratemaking insofar as reductions are concerned. ""

As an example of this concern, the Commission said it "has emphasized that, when a carrier proposes to reduce a rate to a level which is not below variable costs, it will not ordinarily be suspended if it otherwise appears to be lawful. This concept, which has come to be known as the 'No Suspend Zone' does not deprive the shippers of any statutory protection because Commission review of protested tariff proposals prevent the establishment of unreasonable or discriminatory rates.

In Ex Parte 297, Rate Bureau Investigation, 349 I.C.C. 811, the ICC has announced major revisions in its regulation of rate bureaus. The principal change prohibits rate bureaus from opposing the independent filings of its member carriers.

The overwhelming number of participants found rate bureaus do serve a useful public purpose, and urged that they not be abolished.

The possibly stifling effect on price competition was cited as the principal reason for the prohibition against rate bureau protests against member filings.

Other major conclusions outlined in the report were: The proponent of a rate change need not be identified. It is believed that a carrier listed as suggesting higher rates could be subject to shipper reprisals. Time limits of 120 days will be imposed on rate bureau proceedings, and formal minutes must be kept. A rate bureau carrier member who is also affiliated with a shipper, cannot serve on any rate bureau committee that deals directly or indirectly with the ratemaking function. Under Section 22 the rate bureau is limited to the processing and publishing of rate quotations.

For the second time this year the ICC has refused to allow parties to withdraw complaints alleging serious violations of law. In this case the Commission denied a joint petition filed by Inexco Oil Company and Belle Fourche Pipeline requesting the withdrawal of a complaint filed by Inexco against the pipeline's pricing procedures. In its complaint, Inexco alleged that Belle Fourche, operating as a "single entity" with its corporate affiliates, discriminated against Inexco, and unlawfully preferred other oil shippers to Inexco's detriment. Citing the various issues raised, and the potential violations of the Interstate Commerce Act exposed by the pleadings, the Commission denied their request to dismiss the complaint, and authorized the Bureau of Operations to investigate the matters raised by the complaint.

In No. 36162, Disclosure of Compensating Balances and Short-term Borrowing Arrangements, the ICC has instituted proceedings to consider revisions to the uniform systems of accounts, which contemplate disclosure in financial statements filed with the Commission of com

pensating balance arrangements and certain short-term borrowing arrangements between carriers and financial institutions.

The intent of this proposal is to adopt guidelines and interpretations regarding disclosure of compensating balances and short-term financing arrangements similar to those prescribed by the S.E.C. Accounting Series Release No. 148. All companies filing reports with the S.E.C. must make the prescribed disclosures. Such disclosures are also included in financial statements to stockholders.

DEPARTMENT OF TRANSPORTATION

WILLIAM L. SLOVER, Editor

Inside the Department

Regulatory Reform

Dot Proposals Continue To Emerge

In the wake of increasing criticism aimed specifically at it Rail Revitalization Act and more generally at its entire regulatory reform position, the Department of Transportation continues to expand its attack on the citadel of regulation. Specifically, the DOT has proposed legislation which would further reform the rail industry.

The new legislation, as characterized by Secretary Coleman, would initiate "a limited experiment in which certain commodities not regulated for trucks and barges would be deregulated for railroads. The experimental regulation would apply only to certain areas where the railroads would be in effective competition with other modes."

Additionally, the new legislation removes restrictions which severely limit the railroads' ability to operate trucking firms and reap benefits obtainable from intermodal operations.

DOT Secretary Testifies At Reform Hearings

Transportation Secretary William T. Coleman, Jr. was the leadoff witness in hearings held on rail regulatory reform by the House Interstate and Foreign Commerce Committee.

Commenting on the prospect of a nationalized rail system, Mr. Coleman stated that such a plan :

will not solve problems but will merely change their focus.

The tremendous subsidies associated with the experience of foreign rail nationalization, supports the reluctance to embrace nationalization as the appropriate solution. Even a nationalized system must maintain its physical plant and find a means of earning its keep.

There is an alternative to nationalization, and it lies in freeing rail management from the constraints of the present outmoded regulatory system. I firmly believe that adoption of the rail revitalization act is one critical step in setting the railroads in a new direction.

In assessing the current regulatory system, Mr. Coleman stated that rather than protecting shippers from the exercise of rail monopoly, it keeps the railroads from effectively competing for the kind of traffic they can best handle. The Secretary went on to state that:

The ICC recently has taken certain steps to modernize the regulatory system, and we commend them for this action. But the steps they have taken are really quite limited and do not address fundamental inefficiencies of rail regulation. The current regulatory system is still stifling.

Secretary Coleman also said that ICC regulatory control of the railroads "is particularly disastrous when you realize that much of the competition of the railroads is not regulated."

Finally, Mr. Coleman emphasized to the Committee that "we are proposing regulatory reform, not total deregulation nor abolition of the ICC. The bill would expedite the ratemaking process, introduce a significant but controlled amount of pricing flexibility, and outlaw the anticompetitive aspects of rate bureaus."

DOT Faults Language In ICC Proposal

While the Department of Transportation has stated that it backs the substance of the ICC's proposed consumer-oriented household goods carrier regulations, it has moved to strengthen and clean up what it characterizes as "unintelligible" and "vague" rule language.

DOT stated that:

We believe that some of the Commission's actual proposed language does not completely reflect the conclusions and intentions of the interim report. DOT also believes that in some instances the Commission places reliance upon published regulations or upon carrier practices to correct problems which should properly be addressed by perfecting the contract of carriage.

Most importantly, we believe that household goods shippers are in a uniquely vulnerable position and are, therefore, deserving of explicit protection in ways clearly understandable by them.

DOT's recommendations centered on the clear receipt problem, an area in which the Commission has been slow to act. Citing the Commission's reliance upon internal policing by the carriers themselves, the DOT stated that: "More rules won't eliminate the problem, and those discussed by the Commission will not even reach it.” The problem, said DOT, can be corrected only by explicit provisions in the terms and conditions of the uniform household goods bill of lading.

Rail News

DOT's FRA Implements Safety Recommendations

The Federal Railroad Administration is taking immediate action to implement some of the recommendations found in a recently completed study of rail safety. The study, which was conducted by an independent consulting firm, contained an evaluation of present safety practices and developed approaches for improvements. Acting Federal Railroad Administrator Asaph H. Hall stated that: