POLITICS : Demise of the ICC: Is It Really ‘Much Ado About Nothing’? : U.S. agency with power over railroads, trucking is dead. But some of its functions live on.

WASHINGTON —  The abolition of the Interstate Commerce Commission, which ceased to exist last weekend after 108 years of overseeing the nation’s railroads and truck and barge lines, was a paradox: Viewed in one way, it was a nonevent, an empty bit of political theater. Viewed more broadly, it closed the curtain on one of the most important eras in American history.

In terms of the Republican revolution--the conservative crusade to reduce government regulation, cut spending and prune back the federal bureaucracy--eliminating the nation’s first independent federal regulatory agency was rich in symbolism. The agency’s mandate, following the time-honored laws of Washington, had grown to encompass virtually all forms of interstate surface transportation. So vast did its jurisdiction become at the zenith of its power and so tight was its grip, for example, that ICC trucking licenses were bought and sold privately for great sums.

Yet the agency at the time of its official death was a pale shadow of its once-proud self. Fully 15 years earlier, during the presidency of Democrat Jimmy Carter, Congress had stripped away the bulk of the commission’s power with the passage of sweeping deregulation laws for both the railroads and interstate trucking. The ICC staff, which numbered more than 2,000 during the 1970s, had shriveled to about 200 by the end of 1995.

Indeed, by last year, most of the ICC’s surviving functions were considered so beneficial to a variety of business interests that they successfully lobbied the Republican Congress to reject a Clinton administration plan for more extreme deregulation. Instead of being eliminated, all but a handful of the ICC’s remaining functions--and all but about 100 of its jobs--are being preserved in other parts of the government.

“It’s much ado about nothing,” said one government official involved in the issue. “They just changed the name. They gave it an alias,” he said, referring to the fact that the three sitting commissioners of the ICC will now serve as heads of the newly created Surface Transportation Board--a quasi-independent entity attached to the Department of Transportation.

As for savings, they will amount to a few tens of millions of dollars in a federal budget of more than $1 trillion.

“Closing the ICC was part of the trophy hunt of the new Republican majority, and they’ve succeeded,” said Rep. James L. Oberstar (D-Minn.), the ranking minority member on the House Transportation Committee, “But it’s a pretty small trophy.”

Even Republicans involved in closing the ICC described their actions in restrained terms, taking care to emphasize that their ideological commitment to shrink the government had not overridden their concern for protecting consumers.

Sen. Larry Pressler (R-S.D.), chairman of the Senate Commerce Committee, called the bill that closed the agency but transferred most of its remaining duties to the Transportation Department and the Federal Highway Administration “a reasoned approach designed to ensure continued protection for shippers against industry abuses . . . while at the same time [to] assure continued economic efficiencies in our nation’s surface transportation system.”

And a House staffer involved in the issue dismissed the idea of complete abolition as “absolutely preposterous.”

“There is a need for some residual body” to monitor railroads and trucking,” Jeff Nelligan, a spokesman for the House Transportation Committee, said Tuesday. “No one wanted to say, “Just forget it.’ ”

Concluded University of Wisconsin policy analyst Donald Kettl: “Government agencies are hard to kill, because even agencies that have lost their usefulness still do some things people want. And you can kill symbols, but you don’t save much money doing it.”

Viewed from the longer perspective of history, however, the demise of the ICC speaks volumes about how much the country has changed in 100 years--physically, economically and politically.

It requires a leap of imagination to grasp the place that railroads occupied in the United States during the late 19th and early 20th centuries.

Homesteaders were still breaking the sod struggling against nature and economic turbulence to settle the great middle of the country. To the east, industrialization was moving forward at a pace previous generations could scarcely have dreamed of.

Rail tycoons such as Jay Gould, Cornelius “Commodore” Vanderbilt and E. H. Harriman created a continent-spanning network of railroads with little interference from government but with enormous financial aid in the form of grants conveying to them millions of acres of public land. And they exercised their power with Olympian detachment.

To farmers the railroads--with their vast land holdings and unfettered power to charge any rates they wished to for farm products and shipments--seemed like a giant octopus. To workers, the railroads seemed virtually to own the government.

The drive to impose government regulation succeeded first at the state level, especially in the Midwest. When the courts banned state regulation of railroads across state lines, reformers turned to Congress and the Interstate Commerce Act of 1887 created the ICC.

Popular pressure for controls kept rising and in 1906, under the leadership of President Theodore Roosevelt, Congress took the first of a series of steps that gave the ICC real authority.

Three decades later, with motorized trucks beginning to become a serious factor in surface transportation and another Roosevelt in the White House, Congress extended the ICC’s authority to trucks and interstate bus lines.

Over time, as regulation grew more intricate and the pace of regulators’ action more snail-like, the government that once seemed to serve the national interest came to seem an impediment to growth.

By the 1970s, the nation’s railroads were a shambles. Though the sources of their troubles were many, deregulation is credited with playing a major role in reviving their fortunes. Opening up competition throughout the transportation industry is also credited with saving consumers millions of dollars a year in lower prices for the products they buy.

“The reason that the ICC was created 100 years ago is that the private sector was viewed as evil and monopolistic and the government was viewed as the savior, able to hold back the excesses of business,” said the University of Wisconsin’s Kettl. “Now, the private sector is viewed as the counterweight to the excesses of government.”

Times staff writer Stanley Meisler contributed to this story.

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At One Time, It Roared

Born in the era of the robber barrons, the Interstate Commerce Commission once protected farmers from railroad price-gouging. But as transportation options grew, the agency was increasingly seen as an obstacle to business. Eventually, its powers were greatly diminished. Key moments in its rise and fall:

THE RISE . . .

1870s: Midwestern states begin imposing regulation on railroads, which have a monopoly on transporting farm goods.

1887: Congress creates the ICC, giving it vague and somewhat weak supervisory powers.

1880s: Federal courts wittle back the ICC’s power.

1905: Beginning in 1905, Theodore Roosevelt supports a series of bills that steadily strengthen ICC’s powers.

1935: Franklin Rossevelt places trucks and buses under ICC. Now railroads, trucking companies and bus lines have to obtain its approval for nearly everything they want to do, from adding new routes to expanding services.

1963: ICC continues to grow; staffing surpasses 2,400 workers

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. . . AND FALL

1980: An era of major deregulation is marked by new laws that severly scale back ICC’s power over trucking and rail roads. Two years later, the bus industry sees the same sort of rollback.

1993: ICC’s staffing is down to 613 people, with a budget of $43.5 million

1995: President Clinton signs measure to close the agency, which has a staff of less than 200 and a budget of $12 million.