Rail deregulation: A boost for Carter with big business?

Democrat Jimmy Carter's attempt to outflank the pro-business conservatism of Republican opponent Ronald Reagan could get some aid from a US Congress about to hand a silver spike over to the nation's railroads.

A bill which significantly loosens the federal leash on the rail industry -- after 93 years of regulation -- will likely be signed by President Carter in a well-orchestrated Rose Garden ceremony before the November presidential election.

White House aides, who are pressuring US lawmakers to move on rail deregulation quickly, also want an opportunity to point up the administration's other achievements in deregulating the airline and trucking industries.

Keeping the rail measure on track has not been easy for Carter lobbyists on Capitol Hill. Even though it is one of the President's top legislative goals this year, the bill was derailed in June by coal and electric utility interests who fear they will have higher rail rates with little or no transportation alternatives.

"That was the big sticking point," says James Miller, director of the Center for the Study of Government Regulation at the American Enterprise Institute.

But a compromise worked out in the House, where the measure has been stuck after Senate passage, allows the Interstate Commerce Commission (ICC) to continue regulating railroads where there is little competition.

One particular political hurdle involved San Antonio, Texas, where leaders recently switched the municipal power source to Wyoming coal only to find rail costs going up. Charges of price gouging helped stall the deregulation drive in Congress for a while. The new bill provides the city with specific protection until 1987.

Whether rail deregulation will lower prices to consumers has not been proved. Some studies show there will be no noticeable difference at the food market or in other areas. But deregulation advocates say the goal of the measure is to help the ailing railroads avoid bankruptcy or government takeovers by allowing competitive forces to make the rail system more efficient and flexible.

Last year, the railroad industry received a 2.6 percent return on capital investment, compared to 15 and 25 percent returns for truckers, barges, and Pipelines, says Tom White, spokesman for the Association of American Railroads.

"To get the money we need for the 1980s, railroads must get at least an 11 percent return on investment," he adds.

In 1979, the industry spent some $5 billion to improve worn tracks and other equipment. An estimated $20 billion shortfall in investments is expected in this decade unless deregulation is passed.