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Transportation Management, Policy and Technology PRO CEE J IN S- Twenty-fourth Annual Meeting Theme: "Transportation Management, Policy and Technology" November 2-5, 1983 Marriott Crystal City Hotel Marriott Crystal Gateway Hotel Arlington, VA Volume XXIV • Number 1 1983 gc <rR TRANSPORTATION RESEARCH FORUM 399 The Role of Research in Transportation Policy: The Case of Motor Carrier Regulatory Reform by Karen Borlaug Phillips* CONSIDERABLE emphasis is often and ultimately, in resolving some of placed on the need for substantive these issues is highlighted in Section research in connection with major legis- IV. Issues of continued concern are out- lative initiatives as such Research, it lined in Section V, and conclusions about .1-ias been asserted, can play a crucial role the role of research in policy-making are in determining the success or failure of presented in Section VI. a particular piece of legislation. While this undoubtedly is the case in some in- II stances, it can also be argued that the general philosophical persuasions and Federal regulation of the motor car- the overall political concerns—whether rier industry was introduced in 1935 in directly related to the issue at hand or the midst of the Great Depression not pot—of the Senators and Congressmen only to protect the trucking companies involved tend to determine the outcome. already in operation by limiting entry, This interrelationship between re- but also to protect the industry's chief search results and political concerns was competitor—the railroads—from this notably evident during the debates over rapidly growing new industry. In the motor carrier regulatory reform—both case of buses, a federal regulatory sys- truck and bus. It is clear that research tem was also instituted to bring carriers Played a critical role during Congres- engaged in interstate transportation sional consideration of these reform under some system of Federal control, bills. In fact, the large body of research as a 1925 Supreme Court decision had on the motor carrier industry developed largely removed these operations from during the 1970's was reflected in vari- the jurisdiction of State regulatory au- ous reform proposals. During the reform thorities.1 debates, this research was relied on In the Motor Carrier Act of 1935, heavily, as was research performed in Congress sought to introduce a greater response to specific Congressional in- degree of order and stability in the mo- quiries. However, the research on which tor carrier industry. The law gave the the views of the Administration as well Interstate Commerce Commission (ICC) as Congressional proponents of reform considerable power over the operations was based presented a sound rationale of interstate motor carriers in three for total deregulation. What emerged. areas: entry; rates; and all consolida- in 1980 and 1982, however, were two re- tions, mergers, and forms of control of form bills which, while making signifi- motor carriers under its jurisdiction. cant strides towards easing economic The Motor Carrier Act of 1935 was regulation, were far from deregulation. supplemented five years later with the This paper will examine the role of passage of the Transportation Act of research in determining Administration 1940. Perhaps the most important com- and Congressional transportation regu- ponent of this Act was its declaration latory reform policy, as well as its im- of national policy for all carriers subject Portance in determining the outcome of to the jurisdiction of the ICC. Among the motor carrier regulatory reform de- other things, this policy called for the bates. The following section of this pa- preservation of the inherent advantages Per presents a brief chronology of the of each type of transportation regulated Inotor carrier reform efforts while the by the Commission. issues of major importance during the The Commission, as a result of the debates are identified in Section III. The original Motor Carrier Act, had the pow- role of numerous research efforts in pre- er to fix minimum and maximum rates senting both sides of the reform debates, for common carriers and exercised some control over contract carrier rates. A major development, however, occurred *Professional Staff Member for the passage of the Reed-Bul- Commit- in 1948, with Majority, United States Senate winkle Act, which granted motor com- tee on Commerce, Science, and Transpor- mon carriers antitrust immunity to col- tation. lectively set their rates. The views expressed in this paper are the In the ensuing years, the ICC exer- huthor's own and should not be construed as cised its authority over licensure of en- r_ePresenting the official position of the Senate k-ornmerce Committee. try and regulation of rates charged, in 400 TRANSPORTATION RESEARCH FORUM interstate operations by common and affecting all sectors of the trucking in- contract carriers. Common carriers were dustry. These reforms were weakened as required to obtain certificates of "public the reform legislation went through convenience and necessity" and provide Congress, but the final Motor Carrier service to the public at large while con- Act of 1980, which was signed by Presi- tract carriers . were required to obtain dent Carter in July 1980 (P.L. 96-296), operating p ermit s—under conditions did, nonetheless, represent a significant less stringent than those applied to ap- regulatory reform achievement. plications for common carrier certifi- The Administration's early reform cates—in order to serve specific ship- initiatives included buses as well as pers. In its licensing, the ICC was re- trucks. As the legislation evolved, cul- quired by the 1935 Act to place the bur- minating with the introduction of the den of proof on applicants for motor Carter Administration bill in both carrier operating authority to show that Houses in 1979, it focused increasingly their services were required. If such on trucks. While the final 1980 Act did services competed with those offered by contain some provisions that affected the an existing carrier, the latter could en- intercity bus industry, most notably in ter a protest, thus either blocking the the area of entry, further reforms were new entry entirely or causing extreme needed to address issues unique to the delays in the entry process. bus industry. Many of the inefficiencies of the reg-u- This effort began in earnest in 1981, latory system were recognized in later with House passage of bus regulatory years by the ICC itself. With the ap- reform legislation in November, fol- pointment of A. Daniel O'Neal as ICC lowed by Senate passage of similar, but Chairman, the ICC instituted some pro- more liberal, legislation in June 1982. competitive reforms in the late 1970's, The House/Senate conference reached among them: streamlining some entry agreement on a compromise bill in Au- procedures; relaxing some criteria for gust, and the measure, the Bus Regula- obtaining new operating authority; and tory Reform Act of 1982, was signed rejecting a rate bureau request for a into law by President Reagan in Sep- 6.2% general rate increase on the tember 1982 (P.L. 97-361). grounds that trucking industry profits were inflated and should be reduced to jj a level comparable to that of all manu- facturing industries. A number of issues were raised dur- Such actions, however, only consti- ing the course of the debates over truck- tuted a small beginning towards reform. ing and intercity bus regulatory reform. Legislation was still needed to bring Those that proved the most crucial are about more extensive reforms, to codify discussed briefly below. the ICC's administrative actions, and to foreclose the possibility that a future TRUCKING REGULATORY ICC would undo the pro-reform work of REFORM ISSUES the O'Neal era. An intergency task force,2 comprised Five areas can be considered the most of representatives of many of the Ex- important in the context of the trucking ecutive Branch agencies, the Federal reform debate. Trade Commission, and the ICC, recom- December 1978 three mended in basic 1. options for regulatory reform of the Entry trucking industry: The Carter Administration asserted that the regulatory system controlled 1. total deregulation, phased in over by the years; ICC effectively precluded new en- roughly five try into the trucking industry, both 2. selective deregulation, immediately through entry policies per se, and due to deregulating truckload traffic, with the extremely narrow authority reflected substantial reform for less-than- in restrictions found on the operating truckload traffic; and certificates of many ICC-regulated car" 3. administrative changes, accompa- riers. nied by legislation that consoli- In the late 1970's, the ICC had liber- dates the reforms undertaken by alized entry into the motor carrier in- the ICC. dustry, granting in whole or in part nearly 97% of applications for new corn- What emerged in the Administration's mon carrier authority in fiscal 1978.3 A final motor carrier reform proposal— Department of Transportation (DOT) the Trucking Competition and Safety study showed, however, that the vast Act of 1979 (S. 1400/H.R. 4586)—was majority of these new operating certifi- legislation that fell short of total dereg- cates contained extremely narrow au- ulation but contained significant reforms thority. ROLE OF RESEARCH IN TRANSPORTATION POLICY 401 For example: of improving trucking service to small towns. Small communities, it was as- e A trucker might be permitted to serted, received adequate service but, in haul heavy machinery if uncrated, many cases, not from ICC-regulated
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