Signing_of_the_Staggers_Rail_Act_of_1980

The Staggers Rail Act of 1980 is a

United States federal law The law of the United States comprises many levels of codified and uncodified forms of law, of which the most important is the nation's Constitution, which prescribes the foundation of the federal government of the United States, as well as ...

that

deregulated Deregulation is the process of removing or reducing state regulations, typically in the economic sphere. It is the repeal of governmental regulation of the economy. It became common in advanced industrial economies in the 1970s and 1980s, as a ...

the American

railroad Rail transport (also known as train transport) is a means of transport that transfers passengers and goods on wheeled vehicles running on rails, which are incorporated in tracks. In contrast to road transport, where the vehicles run on a pre ...

industry to a significant extent, and it replaced the regulatory structure that had existed since the Interstate Commerce Act of 1887.

Background

In the aftermath of the

Great Depression The Great Depression (19291939) was an economic shock that impacted most countries across the world. It was a period of economic depression that became evident after a major fall in stock prices in the United States. The economic contagio ...

and

World War II World War II or the Second World War, often abbreviated as WWII or WW2, was a world war that lasted from 1939 to 1945. It involved the vast majority of the world's countries—including all of the great powers—forming two opposin ...

, many railroads were driven out of business by competition from the Interstate highways and

airline An airline is a company that provides civil aviation, air transport services for traveling passengers and freight. Airlines use aircraft to supply these services and may form partnerships or Airline alliance, alliances with other airlines for ...

s. The rise of the

automobile A car or automobile is a motor vehicle with Wheel, wheels. Most definitions of ''cars'' say that they run primarily on roads, Car seat, seat one to eight people, have four wheels, and mainly transport private transport#Personal transport, pe ...

led to the end of passenger train service on most railroads.

Trucking Road transport or road transportation is a type of transport using roads. Transport on roads can be roughly grouped into the transportation of goods and transportation of people. In many countries licensing requirements and safety regulations e ...

businesses had become major competitors by the 1930s with the advent of improved paved roads. After the war, they expanded their operations as the highway network grew and acquired increased market share of the

cargo Cargo consists of bulk goods conveyed by water, air, or land. In economics, freight is cargo that is transported at a freight rate for commercial gain. ''Cargo'' was originally a shipload but now covers all types of freight, including trans ...

business. Railroads continued to be regulated by the Interstate Commerce Commission (ICC) and a complex system for setting shipping rates. The Staggers Act followed the

Railroad Revitalization and Regulatory Reform Act The Railroad Revitalization and Regulatory Reform Act of 1976, often called the "4R Act," is a United States federal law that established the basic outlines of regulatory reform in the railroad industry and provided transitional operating funds fo ...

of 1976 (often called the "4R Act"), which reduced federal regulation of railroads and authorized implementation details for

Conrail Conrail , formally the Consolidated Rail Corporation, was the primary Class I railroad in the Northeastern United States between 1976 and 1999. The trade name Conrail is a portmanteau based on the company's legal name. It continues to do busin ...

, the new northeastern railroad system. The 4R reforms included allowance of a 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. Although the 4R Act established the guidelines, the ICC at first, did not give much effect to its legislative mandates. As regulatory change began to appear from 1976 to 1979, including the phasing in of the loss of collective ratemaking authority, most major railroads shifted away from their effort to maintain the historic regulatory system and came to support greater freedom for rail pricing, for higher and lower rail rates. Major railroad shippers also continued to believe that they would be better served by more flexibility to arrive at tailored arrangements that were mutually beneficial to a particular shipper, and to the carrier serving a particular shipper. The judgments supported a second round of legislation.

Summary

The major regulatory changes of the Staggers Act were as follows: * A rail carrier could establish any rate for a rail service unless the ICC were to determine that there was no

effective competition Effective competition is a concept first proposed by John Maurice Clark, then under the name of "workable competition," as a "workable" alternative to the economic theory of perfect competition, as perfect competition is seldom observed in the rea ...

for rail services. * Rail shippers and rail carriers would be allowed to establish contracts subject to no effective ICC review unless the Commission determined that the contract service would interfere with the rail carrier's ability to provide common carrier service (a finding rarely made that is 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 to rates they 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 if one railroad had effective "bottleneck" control of traffic. The provisions dealt with "reciprocal switching" (handling of railroad cars between long-haul rail carriers and local customers) and

trackage rights Railway companies can interact with and control others in many ways. These relationships can be complicated by bankruptcies. Operating Often, when a railroad first opens, it is only a short spur of a main line. The owner of the spur line may ...

. However, the provisions did not have as much effect as the others mentioned.

Sponsor

The act was named for

Harley Staggers Harley Orrin Staggers Sr. (August 3, 1907 – August 20, 1991) was an American politician who served 16 terms in the United States House of Representatives from 1949 to 1981, representing West Virginia's 2nd Congressional District as a Democrat ...

(D-WV), who chaired the

House Committee on Energy and Commerce The Committee on Energy and Commerce is one of the oldest standing committees of the United States House of Representatives. Established in 1795, it has operated continuously—with various name changes and jurisdictional changes—for more than ...

Impact

Studies of the rail industry showed dramatic benefits for both railroads and their users from the alteration to the regulatory system. According to studies by the Department of Transportation's Freight Management and Operations, 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.Association of American Railroads, Washington, D.C. (2011)
"The Impact of the Staggers Rail Act of 1980."
/ref> In 2007 the

Government Accountability Office The U.S. Government Accountability Office (GAO) is a legislative branch government agency that provides auditing, evaluative, and investigative services for the United States Congress. It is the supreme audit institution of the federal govern ...

reported to

Congress A congress is a formal meeting of the representatives of different countries, constituent states, organizations, trade unions, political parties, or other groups. The term originated in Late Middle English to denote an encounter (meeting of ...

, "The railroad industry is increasingly healthy and rail rates have generally declined since 1985, despite recent rate increases.... There is widespread consensus that the freight rail industry has benefited from the Staggers Rail Act." The

Association of American Railroads The Association of American Railroads (AAR) is an industry trade group representing primarily the major freight Rail transport, railroads of North America (Canada, Mexico and the United States). Amtrak and some regional Commuter rail in North Am ...

, the principal railroad industry trade association, stated that the Staggers Act has led to a 51 percent reduction in average shipping rates, and $480 billion has been reinvested by the industry into their rail systems.

Related deregulatory legislation

The Staggers Act was one of three major deregulation laws passed by Congress in a two-year period, as the cumulative result of efforts to reform transport regulation begun in 1971, during the

Nixon administration Richard Nixon's tenure as the 37th president of the United States began with his first inauguration on January 20, 1969, and ended when he resigned on August 9, 1974, in the face of almost certain impeachment because of the Watergate Scanda ...

. The other two laws were the

Airline Deregulation Act The Airline Deregulation Act is a 1978 United States federal law that deregulated the airline industry in the United States, removing federal control over such areas as fares, routes, and market entry of new airlines. The Civil Aeronautics Boa ...

of 1978 and the

Motor Carrier Act of 1980 The Motor Carrier Regulatory Reform and Modernization Act, more commonly known as the Motor Carrier Act of 1980 (MCA) is a United States federal law which deregulated the trucking industry. Background Motor carrier deregulation was a part of a s ...

. This legislation in effect superseded almost a century of detailed regulation begun with the establishment of the ICC in 1887. The Interstate Commerce Commission Termination Act of 1995 abolished the ICC, and created its successor agency, the Surface Transportation Board, an administrative affiliate of the

United States Department of Transportation The United States Department of Transportation (USDOT or DOT) is one of the executive departments of the U.S. federal government. It is headed by the secretary of transportation, who reports directly to the President of the United States a ...

.U.S. Surface Transportation Board. Washington, D.C
"Overview of the STB."
Accessed November 4, 2010.

Background

Summary

Sponsor

Impact

Related deregulatory legislation

See also

References

Further reading