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75 Rail Deregulation: Market Dominance, Contract Rates and Exemptions 75 RAIL DEREGULATION: MARKET DOMINANCE, CONTRACT RATES AND EXEMPTIONS JOINT HEARING BEFORE THE SUBCOMMITTEE ON ECONOMIC GROWTH AND STABILIZATION OF THE JOINT ECONOMIC COMMITTEE AND THE SUBCOMMITTEE ON TRANSPORTATION AND COMMERCE OF THE COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE U.S. HOUSE OF REPRESENTATIVES NINETY-SIXTH CONGRESS FIRST SESSION ON HIR. 4570 A BILL TO REFORM THE ECONOMIC REGULATION OF RAIL- ROADS, TO IMPROVE THE QUALITY OF RAIL SERVICE IN THE UNITED STATES THROUGH FINANCIAL ASSISTANCE WHICH ENCOURAGES RAILROAD RESTRUCTURING, AND FOR OTHER PURPOSES SEPTEMBER 27, 1979 Serial No. 96-111 (Committee on Interstate and Foreign Commerce) Printed for the use of the Joint Economic Committee and the Committee on Interstate and Foreign Commerce U.S. GOVERNMENT PRINTING OFFICE 5-551 0 WASHINGTON: 1980 JOINT ECONOMIC COMMITTEE (Created pursuant to sec. 5(a) of Public Law 304, 79th Cong.) LLOYD BENTSEN, Texas, Chairman RICHARD BOLLING, Missouri, Vice Chairman SENATE HOUSE OF REPRESENTATIVES WILLIAM PROXMIRE, Wisconsin HENRY S. REUSS, Wisconsin ABRAHAM RIBICOFF, Connecticut WILLIAM S. MOORHEAD, Pennsylvania EDWARD M. KENNEDY, Massachusetts LEE H. HAMILTON, Indiana GEORGE McGOVERN, South Dakota GILLIS W. LONG, Louisiana PAUL S. SARBANES, Maryland PARREN J. MITCHELL, Maryland JACOB K. JAVITS, New York CLARENCE J. BROWN, Ohio WILLIAM V. ROTH, JR., Delaware MARGARET M. HECKLER, Massachusetts JAMES A. McCLURE, Idaho JOHN H. ROUSSELOT, California ROGER W. JEPSEN, Iowa CHALMERS P. WYLIE, Ohio JOHN M. ALBERTINE, Executive Director Louis C. KRAUTHOFF II, Assistant Director-Director,SSEC RICHARD F. KAUFMAN, Assistant Director-GeneralCounsel CHARLEs H. BRADFORD, Minority Counsel SUBCOMMITTEE ON ECONOMIC GROWTH AND STABILIZATION LLOYD, BENTSEN, Texas, Chairman SENATE HOUSE OF REPRESENTATIVES ABRAHAM RIBICOFF, Connecticut LEE H. HAMILTON, Indiana GEORGE McGOVERN, South Dakota MARGARET M. HECKLER, Massachusetts PAUL S. SARBANES, Maryland JOHN H. ROUSSELOT, California JACOB K. JAVITS, New York WILLIAM V. ROTH, JR., Delaware (11) COMMITTEE ON INTERSTATE AND FOREIGN COMMERCE HARLEY 0. STAGGERS, West Virginia, Chairman JOHN D. DINGELL, Michigan JAMES T. BROYHILL, North Carolina LIONEL VAN DEERLIN, California SAMUEL L. DEVINE, Ohio JOHN M. MURPHY, New York TIM LEE CARTER, Kentucky DAVID E. SATTERFIELD 111, Virginia CLARENCE J. BROWN, Ohio BOB ECKHARDT, Texas JAMES M. COLLINS, Texas RICHARDSON PREYER, North Carolina NORMAN F. LENT, New York JAMES H. SCHEUER, New York EDWARD R. MADIGAN, Illinois RICHARD L. OTTINGER, New York CARLOS J. MOORHEAD, California HENRY A. WAXMAN, California MATTHEW J. RINALDO, New Jersey TIMOTHY E. WIRTH, Colorado DAVE STOCKMAN, Michigan PHILIP R. SHARP, Indiana MARC L. MARKS, Pennsylvania JAMES J. FLORIO, New Jersey TOM CORCORAN, Illinois ANTHONY TOBY MOFFETT, Connecticut GARY A. LEE, New York JIM SANTINI, Nevada TOM LOEFFLER, Texas ANDREW MAGUIRE, New Jersey WILLIAM E. DANNEMEYER. California MARTY RUSSO, Illinois EDWARD J. MARKEY, Massachusetts THOMAS A. LUKEN, Ohio DOUG WALGREN, Pennsylvania ALBERT GORE, JR., Tennessee BARBARA A. MIKULSKI, Maryland RONALD M. MOTTL, Ohio PHIL GRAMM, Texas AL SWIFT, Washington MICKEY LELAND, Texas RICHARD C. SHELBY, Alabama KENNETH J. PAINTER, Acting Chief Clerk and Staff Director ELEANOR A. DINKINS, First Assistant Clerk THOMAS M. RYAN, Professional Staff J. PAUL MOLLOY, Minority Professional Staff SUBCOMMITTEE ON TRANSPORTATION AND COMMERCE JAMES J. FLORIO, New Jersey, Chairman JIM SANTINI, Nevada EDWARD R. MADIGAN, Illinois BARBARA A. MIKULSKI, Maryland GARY A. LEE, New York JOHN M. MURPHY, New York JAMES T. BROYHILL, North Carolina MARTY RUSSO, Illinois (Ex Officio) HARLEY 0. STAGGERS, West Virginia (Ex Officio) CLIFFORD ELKINS, Staff Director (III) CONTENTS Page Text of H.R. 4570 .............................................. 5 Statement of- Levin, Michael, vice president for transportation, Western Growers Associ- ation.91atio ................................................................ .. .. ... Massey, E. Morgan, president, A. T. Massey Coal Co., also on behalf of the board of directors, National Coal Association ............................................................ 91, 165 Norton, John, director of transportation and distribution, DuPont Co ..... 91, 156 O'Hara, Hanford, Legislative Counsel, Interstate Commerce Commission.. 91 O'Neal, Hon. A. Daniel, Chairman, Interstate Commerce Commission ....... 91 Springrose, James V., vice president for transportation, Cargil Co ............ 91, 136 Stern, Laurence J., manager of transportation, Sunkist Growers ............... 91, 256 Additional material submitted for the record by- A. T. Massey Coal Co., Inc., attachments to Mr. Massey's prepared state- ment: Statement by Carl E. Bagge, president, National Coal Association before the Subcommittee on Surface Transportation, Committee on Commerce, Science, and Transportation, U.S. Senate, June 6, 1979 . 181 Study of captive coal shipments by rail for 1977, National Coal Association, May 1979 ........................................... 202 Staff analysis-Railroad deregulation implications and alternative for coal producers and users, National Coal Association, May 23, 1979.. 215 Interstate Commerce Commission, attachment to Chairman 0 Neal's pre- pared statement, press release dated September 6, 1979, re ICC to reopen proceeding on market dominance..................................................................... 131 National Association of Brick Distributors, statement ..................................... 305 National Coal Association. (See also A. T. Massey Coal Co., Inc.) National Farmers Union, statement .......................................................... 318 Sunkist Growers, Inc., attachments to Mr. Stern's prepared statement: Exhibit 1-Sunkist Growers, Inc. interstate shipments of fresh citrus by truck and rail (in standard cartons) .................................................... 275 Exhibit 2-Sunkist Growers, Inc., 10 largest rail markets for interstate shipments of fresh citrus, November 1973-July 1979 ........................... 276 Exhibit 3-Comparison of transportation costs for shipments of fresh citrus to New York under deregulation (in dollars per carton) ........... 277 Exhibit 4-Sunkist Growers, Inc., interstate shipments of fresh citrus by rail (in standard cartons) .................... 278 Exhibit 5-Number of Sunkist fresh citrus rail shipments since dereg- ulation and origin carrier share of market ............................................. 279 (V) RAIL DEREGULATION: MARKET DOMINANCE, CONTRACT RATES, AND EXEMPTIONS THURSDAY, SEPTEMBER 27, 1979 CONGRESS OF THE UNITED STATES, SUBCOMMITTEE ON Eco- NOMIC GROWTH AND STABILIZATION, JOINT ECONOMIC COMMITTEE, AND SUBCOMMITTEE ON TRANSPORTATION AND COMMERCE, HOUSE INTERSTATE AND FOREIGN COM- MERCE COMMITTEE, Washington, D.C. The subcommittees met jointly, at 9:30 a.m., pursuant to notice, in room 357, Russell Senate Office Building, Hon. George McGov- ern, member of the Subcommittee on Economic Growth and Stabi- lization, and Hon. James J. Florio, chairman, Subcommittee on Transportation and Commerce, cochairmen, presiding.' Senator McGOVERN. If the committee will please come to order, we will begin our proceedings. We are meeting this morning at a time when the United States faces the most serious railroad crisis in its history. The situation is now manifested most strongly in South Dakota and other upper plains and Western States where grain producers and many other shippers are threatened with ultimate loss of all rail service. Even as this hearing is getting under way, the Senate is preparing to debate this morning possible emergency action involving the Mil- waukee Railroad. Yesterday, the bankruptcy court which is deciding the fate of the Milwaukee Road approved an embargo of all Milwaukee service on some 6,400 miles of its system, a situation which I think is unprec- edented in its dimensions. In effect, this means that all mainline service by the Milwaukee from eastern Montana all the way to the west coast, some mainline service in the Midwest, and all branch line service on some 1,000 miles of track in South Dakota where the Milwaukee is the only mainline railroad, will end as of Novem- ber 1. The ICC is preparing to issue a directed service order which would require that essential service be provided on the embargoed sections of the Milwaukee. The directed service order amounts to a temporary respite from the loss of all rail service on some embar- goed sections of the Milwaukee system. Many farmers and other shippers on those parts of the Milwau- kee not covered by the directed service order may lose all rail service as of November 1. At best, partial service under the direct- ed order of the ICC can last no longer than 8 months. During this ' NoE.-See also hearings before the Subcommittee on Transportation and Commerce, House Committee on Interstate and Foreign Commerce, on H.R. 4570 held on Apr. 24, May 31, July 2, Oct. 16, 23, 25, 30, and Nov. 1, 1979. (1) 2 time, efforts will continue to persuade other railroads to take over embargoed sections of the Milwaukee, but the outcome at this point is far from certain. Communities throughout South Dakota and other Western States are now confronted with a transportation disaster. Without a rail- road, they have no other viable alternative to move grin, a princi- pal element in their economies, to distant domestic and export market points. The future of these communities wiil be largely determined by the success or failure of efforts made
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