Staggers Rail Act

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The Staggers Rail Act of 1980 is a United States federal law that deregulated the American railroad industry to a significant extent, and replaced the regulatory structure that existed since the 1887 Interstate Commerce Act.[1]

Contents

Context

The Staggers Act followed the Railroad Revitalization and Regulatory Reform Act of 1976 (often called the "4R Act"), which established the basic outlines of regulatory reform in the railroad industry. There 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 these guidelines, the Interstate Commerce Commission (ICC) 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 ICC 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 ICC 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.[citation needed]

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