Reregulation= a new direction

Bv B. R. Garcia Transportation Consultant

B. R. Garcia Traffic Service

E OR MORE than five years. ship- I pers and carriers, both rail and truck, have adapted (some more successfully than others) to an environment of deregulation or semi-deregulation.

A proposal to completely end the economic regulation of motor carriers in interstate commerce was introduced in the United States Congress in 1986 and would probably have been enacted into law, had it not been for the higher priority given the tax revision bill. Trucking deregulation will undoubtedly be considered in the 1987 session of Congress.

In the meantime, the individual states have gone their own ways in regulating intrastate trucking within their borders. In the forefront of activity has been the Public utilities Commission of the State of California (CPUC).

In April of 1980, the CPUC abandoned their system of minimum rate regulation for motor carrier transportation of general commodities, a system which had been in effect for many years, and embarked on a trial period in which the emphasis was to be on carrier-established rates, with each carrier to publish and file with the Commission, their exact rates.

The old Minimum Rate Tariffs were re-named "Transition Tariffs, " and the rates named therein (frozen at the April 20, 1980, level) were to be the lowest legal rates, unless the carrier filing a lower rate could meet one of the following requirements for reduced rates:

(1) Tfrat the reduced rate would contribute to that carrier's profitability, as evidenced by a detailed Cost Justification to be submitted by the carrier, or

(2) That the reduced rate is filed to meet the already existing lower rate of a competing motor carrier.

An interesting feature was included, based on testimony of the Teamsters' Union that protection was needed against the possibility of non-union carriers filing rates which would be so low as to preclude competition by trucking companies who employed union labor.

To compensate for this factor, the CPUC ruled that, when a carrier files a Cost Justification for a rate reduction, he must show a labor cost based on the Prevailing Wage Scale established by the Commission, even though he may actually have lower labor costs.

In the ensuing five years, more than 1,900 rate reductions were filed with Cost Justifications, and many thousands of "Me-Too" rates were filed by competing truckers.

During this time, considerable pressure for change developed from various interested parties, ranging from establishment of a permanent system of strict regulation to complete deregulation, depending on the viewpoints of the individual proponents.

Many trucking companies were experiencing stiff competition, due to the effects of Senate Bill 860, which had made it easier for new truckers to obtain California intrastate operating authority. Meanwhile, the economic support which existing carriers formerly received from the Public Utilities Commission under the old system of minimum rates was gone. The rates in the Commission's "Transition