The ICC Jurisdiction Over Railroad Holding Companies and Evaluation of Proposed Rail Mergers

GAO discussed the Interstate Commerce Commission's (ICC) jurisdiction over railroad holding companies and its evaluation of proposed rail mergers. Under the Interstate Commerce Act, ICC does not have jurisdiction over the acquisition of a single rail carrier by a noncarrier, such as a holding company. The ICC jurisdiction applies only when a holding company is acquiring control of at least two carriers, or where a holding company already controls one carrier and seeks to acquire another. ICC has ruled that a rail system comprised of a number of rail carriers, but operated and managed as a single system, would be considered a single carrier. This ruling has become known as the Single System Doctrine. In a 1977 report to Congress, ICC stated that the opportunity exists for holding companies controlling railroads systems operations to make use of the railroads' income, property, and other assets for nonrail purposes to the possible detriment of the railroads. ICC decided that, when conducting audits of rail carriers' records, it would identify any transactions which might have a significant adverse impact upon the railroad and compel the companies to report to ICC pertinent information regarding railroad-related operations. GAO stated that the ICC monitoring activities appear limited, and its current efforts toward this end provide limited assurance that it is alert to all railroad-related transactions by a holding company. GAO believes that ICC needs to monitor all holding companies' rail-related operations because the opportunity for abuse does exist. Finally, although the ICC staff has been decreased by about 25 percent since 1979, officials believe that sufficient staff exists to adequately review proposed mergers, because recent changes in legislation governing rail regulation reduced or eliminated a number of the office's other duties.