Staggers Rail Act

President Harry S. Truman at the mic, left Harley O. Staggers and Alben W. Barkley. 1948 in Keyser, WV on Whistle Stop Train

The Staggers Rail Act of 1980 (See Public Law 96-448), signed into law by President Jimmy Carter on October 14, deregulated the American railroad industry (to a significant extent) and replaced the regulatory structure that existed since the 1887 Interstate Commerce Act.

Context

This Act followed the Railroad Revitalization and Regulatory Reform Act of 1976, which established the basic outlines of regulatory reform in the railroad industry -- greater range for railroad pricing without close regulatory restraint, greater independence from collective rate making procedures in rail pricing and service offers, contract rates, and, to a lesser extent, greater freedom for entry into and exit from rail markets.

Though the '4R' Act established these guidelines, the Interstate Commerce Commission at first did not give much effect to its legislative mandates. However, as regulatory change began to appear in the 1976-79 period, including the phasing in of the loss of collective ratemaking authority, most of the major railroads shifted away from their effort to maintain the historic regulatory system, and came to support greater freedom for rail pricing, both as to higher and lower rail rates. Major railroad shippers also continued to be of the view that they would be better served by more flexibility to arrive at tailored arrangements mutually beneficial to a particular shipper and to the carrier serving a particular shipper. These judgments supported a second round of legislation.

Provisions of the Act

The major regulatory changes of the Staggers Act were as follows:

• A rail carrier could establish any rate for a rail service unless the Commission were to determine that there was no effective competition for rail services.
• Rail shippers and rail carriers would be allowed to establish contracts subject to no effective Commission review, unless the Commission were to determine that the contract service would interfere with the rail carrier's ability to provide common carrier service (a finding rarely if ever made, and not apparent in the history of the rail industry thereafter).
• The scope of authority to control rates to prevent 'discrimination' among shippers was substantially curtailed.
• Across-the-board industry wide rate increases were phased out.
• The dismantling of the collective rate making machinery among railroads begun in 1976 was reaffirmed, with railroads not allowed to agree as to rates they, respectively, could perform on their own systems, and were not allowed to participate in the determination of the rates on traffic in which they did not effectively participate.

The Act also had provisions allowing the Commission to require access by one railroad to another railroad's facilities where one railroad had in effect 'bottleneck' control of traffic. These provisions dealt with 'reciprocal switching' and 'trackage rights'. However, these provisions did not have as much effect as those described above.

Studies of the rail industry showed dramatic benefits for both railroads and their users from this alteration in the regulatory system. According to the Department of Transportation's Freight Management and Operations section's studies, railroad industry costs and prices were halved over a ten year period, the railroads reversed their historic loss of traffic (as measured by ton-miles) to the trucking industry, and railroad industry profits began to recover after decades of low profits and widespread railroad insolvencies.

The Staggers Act was one of three major Acts passed in a two year period, as the cumulative result of efforts to reform transport regulation begun in 1971, in the Richard Nixon Administration. The other two acts were the Airline Deregulation Act of 1978 and the Motor Carrier Act of 1980. This legislation in effect superseded almost a century of detailed regulation begun with the establishment of the Interstate Commerce Commission in 1887. The ICC was itself subsequently abolished.

Sponsor

The act was named for Congressman Harley Staggers (D-WV), who chaired the House Interstate and Foreign Commerce Committee. Although it is traditional for laws to be known by the names of their sponsors, this is believed to be the first (but not last) case in which the sponsor's name was officially incorporated into the text of a Federal statute.

See also

• Railroad Revitalization and Regulatory Reform Act
• Trains
• deregulation

• Derthick and Quirk, The Politics of Deregulation, Brookings Institution, 1985.
• Moore, Thomas Gale. "Rail and Truck Reform: The Record So Far." Regulation. November/December 1988.
• Robyn, Dorothy, Braking the Special Interests, University of Chicago Press, 1987.
• Rose, Seely and Barrett, 'The Best Transportation System in the World,'University of Ohio State Press, a part of an Historical Series on Business Enterprise, edited by Blackford and Kerr

• From Economic Deregulation to Safety Regulation Department of Transportation comprehensive study detailing effects of rail deregulation on railroads, and indicating transport deregulation over all transport modes reduced distribution costs in the United States from about 14% of gross domestic product to under 11%