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Regulation and Deregulation

28 Feb 2017Other Essays

Abstract

Transportation services like trucking, mass transit, and pipeline services are necessities in serving public good. For several years, the government has been controlling these services. Deregulation statutes were also enacted in order to provide efficiency in the industry. However, the issue as to whether these services should completely be freed from government control is still a debate. This paper will present regulation as well as deregulation of these services.

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REGULATION AND DEREGULATION OF TRUCKING, MASS TRANSIT, AND PIPELINE TRANSPORTATION SERVICES

In the article of Thomas Gale Moore, he presented the present status of the government’s regulation of the transport system including trucking, pipeline and mass transit. In deregulating the trucking service, federal government are limited in controlling the service. But then, through the existence of the Department of Transportation (DOT) and the Interstate Commerce Commission (ICC), the freedom in engaging to transportation services is limited.

Besides, the paper works that these departments are tasked to do are redundant and are merely wasting the taxpayer’s money.
The Motor Carrier Act of 1980 successfully opened opportunity for private carriers in the industry of trucking as it welcomed new competitors (Moore). The tremendous effect was seen in 1990 where nearly 20,000 carriers engaged in the business and even given freedom to move at any of the 48 states then (Moore). In addition, the act has created an annual revenue of $10 billion as reported by DOT. Another deregulatory statute is the Staggers Act in 1994 which helped lessen the cost of inventories and made shipments even speedier and creating almost $100 billion annually (Moore).

However, these benefits were curtailed through the passage of Negotiated Rate Act in 1993 (Moore). This act has caused troubles among the carriers in setting rates. Moreover, in order to bring back the freedom in the trucking service and competition in the market, all obstacles should be abolished by the Congress. One of which is the ICC which is limiting the entrance of carriers and another is the Carmack Amendment to the Interstate Commerce Act which puts much liability to the carrier.

With regard to mass transit, the present statute in control is the Urban Mass Transit Act of 1964 or presently known as Federal Transit Administration (Moore). This act has created shift in commuting patterns and provided incentive of up to 75% of construction funds (Moore). On the other hand, pipeline industry is still being regulated by the ICC. This, however, does not include pipelines carrying products such as natural gas and petroleum.
The regulation of the transportation services like trucking, pipelines, and mass transit is entrusted to the Interstate Commerce Commission or the ICC and to the Department of Transportation. By virtue of the Interstate Commission Act, the Interstate Commerce Commission was created with a regulatory function. In trucking the ICC is in charge of licensing the carriers. It is also demands for that classified goods be listed. In addition, the ICC is in charge of setting rates, route control, and restrictions on the entry of new carriers (Armentano, 1986, p. 63). Still by virtue of the Act, the rates were required to be published. In addition, as part of regulation, secret rebates were outlawed (Travel and History, 2008). Moreover, the Commission is also granted with investigatory power to deal with abuses and may summon witnesses for such purpose. The duty of certifying air carriers, on the other hand, is entrusted to the DOT.

On the other hand, deregulation was made possible by the Motor Carrier Act of 1980 which opened the industry for interested private carriers. Another is the Negotiated Rate Act in 1993 which “required the truckers to seek certificate of public convenience and necessity” (Moore). Nevertheless, this has been a barrier for most of the carriers. Certificates were only made available when the trucker would present proof of previous services.
As to mass transit, the funding was dependent upon the construction fund afforded by the government. Prerequisite of the funding is the showing of proof by the local transit authorities that through the proposal for the construction, no worker would be adversely affected. Absence thereof would be the denial of fund.

With regard to pipelines, the Natural Gas Pipeline Safety Act of 1968 is controlling (Rabinowitz and American Bar Association Occupational Safety and Health Law Committee, 2002, p.799). Through the act, the DOT has been given power to “prescribe minimum safety requirements for pipeline facilities and the transportation of natural gas” (Rabinowitz and American Bar Association Occupational Safety and Health Law Committee , 2002, p.799). The regulation encompasses material to be used, designs of the pipes, installation standard, maintenance guidelines and testing requirements for pipelines (Rabinowitz and American Bar Association Occupational Safety and Health Law Committee, 2002, p.799). In order to ensure that pipeline industries are complying with the requirements set by the Act, the Secretary is mandated to make inspections on pipeline facilities.The regulation applied as to trucking is licensing and obtaining certificate in order to be a part of the industry. It also requires listing of the classification of goods as mandated by the law. Generally, the regulation that has been involved is those that are normally done by the ICC and DOT and its agencies as mandated by law.

Primarily, the article is criticizing on the government regulation of the transportation services like trucking, mass transit, and pipelines. In addition, it laid down the disadvantages of the regulatory laws for it curtailed the economic progress that can be derived through deregulation. In trucking, the rate regulation has affected competitiveness of pricing. Through the Negotiated Rate Act in 1993, the competition was concentrated on lowering the shipping rates. Many cases were even filed because of the discrepancies in the rates filed and the rates negotiated as a result of failure of some in filing rates with the ICC. In summing the regulation of trucking, the government or the regulation laws merely served as stumbling block for the progress of the industry and tax that may be saved if the industry were only deregulated. Scenario is the same with mass transit.

On the other hand, the regulation of pipeline restricted the free market for the industry. Accordingly, there was case of 1986 where Chevron Corporation built pipeline connecting its mine in Vernal, Utah and in Wyoming (Moore). The pipeline however had excess in capacity and so the company used it for the moving of its phosphate but other companies complained because the former failed to file transportation of phosphate rate. The ICC ruled against Chevron but invited criticisms for being unjustiable. For such, most critics appeals for the complete deregulation in order for the transportation services to be competitive and profitable.

References

  • Armentano, D. T. (1986). Antitrust Policy: The Case for Repeal. CATO Institute.
  • Moore, T. G. The Cato Review of Business and Government. (2008). Clearing the Track: The Remaining Transportation Regulations. 
  • Moore, T. G. The Library of Economics and Liberty. (2008). Trucking Deregulation.
  • Rabinowitz,, R. and American Bar Association Occupational Safety and Health Law Committee. (2002). Occupational Safety and Health Law. Washington, D.C.: The Bureau of National Affairs, Inc.
  • Travel and History. (2008). Federal Government Interstate Commerce Act.
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