Railroad Regulation:

Competitive Access and Its Effects on Selected Railroads and Shippers

RCED-87-109: Published: Jun 18, 1987. Publicly Released: Jul 22, 1987.

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In response to a congressional request, GAO reviewed the Interstate Commerce Commission's (ICC) implementation of Staggers Rail Act provisions relating to joint rate and reciprocal switching cancellations, focusing on: (1) ICC criteria for the suspension or investigation of cancellations; (2) the effects of cancellations on selected railroads and shippers; and (3) the ability of railroads and shippers to use antitrust laws to protest cancellations.

GAO noted that: (1) under a reciprocal switching agreement, two railroads interchange cars originating or terminating on their track for an agreed-upon charge; and (2) joint rates simplify dealings between railroads and shippers, since one rate applies to goods that move over more than one railroad. GAO found that: (1) in considering cancellation suspensions, ICC requires a protester to show that it has a substantial likelihood of winning its case, it would suffer substantial injury without the suspension, and the act's refund provision would not protect it; (2) most railroads indicated that retaliation for another railroad's cancellations was an important reason for cancellations; (3) most protesting railroads lost revenue as a result of cancellations; (4) shippers indicated that cancellations resulted in higher costs and poorer rail services; and (5) regulations limit the availability of current antitrust laws to provide shippers and railroads with relief from cancellations.

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