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.

Background

In the aftermath of the Great Depression

Great Depression

The Great Depression was a severe worldwide economic depression in the decade preceding World War II. The timing of the Great Depression varied across nations, but in most countries it started in about 1929 and lasted until the late 1930s or early 1940s...

 and World War II

World War II

World War II, or the Second World War , was a global conflict lasting from 1939 to 1945, involving most of the world's nations—including all of the great powers—eventually forming two opposing military alliances: the Allies and the Axis...

, many railroads were driven out of business due to competition from the new interstate highway system and airline

Airline

An airline provides air transport services for traveling passengers and freight. Airlines lease or own their aircraft with which to supply these services and may form partnerships or alliances with other airlines for mutual benefit...

s. The rise of the automobile

Automobile

An automobile, autocar, motor car or car is a wheeled motor vehicle used for transporting passengers, which also carries its own engine or motor...

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

Trucking industry in the United States

The trucking industry involves the transport and distribution of commercial and industrial goods using commercial motor vehicles . In this case, CMVs are most often trucks; usually semi trucks, box trucks, or dump trucks...

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

Cargo

Cargo is goods or produce transported, generally for commercial gain, by ship, aircraft, train, van or truck. In modern times, containers are used in most intermodal long-haul cargo transport.-Marine:...

 business. During this time, however, the railroads continued to be regulated by the Interstate Commerce Commission

Interstate Commerce Commission

The Interstate Commerce Commission was a regulatory body in the United States created by the Interstate Commerce Act of 1887. The agency's original purpose was to regulate railroads to ensure fair rates, to eliminate rate discrimination, and to regulate other aspects of common carriers, including...

 (ICC) and a complex system for setting shipping rates.

The Staggers Act followed the Railroad Revitalization and Regulatory Reform Act

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 following the 1970 bankruptcy of Penn Central...

 of 1976 (often called the "4R Act"), which reduced federal regulation of railroads and authorized implementation details for Conrail, the newly-created 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 these guidelines, the 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 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. 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" (handling of railroad cars between long-haul rail carriers and local customers) and trackage rights. However, these provisions did not have as much effect as those described above.

Sponsor

The act was named for Congressman Harley Staggers (D-WV), who chaired the House Interstate and Foreign Commerce Committee

United States 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 200 years...

. 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.

Impact of the law

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. In 2007 the Government Accountability Office

Government Accountability Office

The Government Accountability Office is the audit, evaluation, and investigative arm of the United States Congress. It is located in the legislative branch of the United States government.-History:...

 reported to Congress

United States Congress

The United States Congress is the bicameral legislature of the federal government of the United States, consisting of the Senate and the House of Representatives. The Congress meets in the United States Capitol in Washington, D.C....

 that "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."

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 Richard Nixon

Richard Nixon

Richard Milhous Nixon was the 37th President of the United States, serving from 1969 to 1974. The only president to resign the office, Nixon had previously served as a US representative and senator from California and as the 36th Vice President of the United States from 1953 to 1961 under...

 Administration. The other two laws were the Airline Deregulation Act

Airline Deregulation Act

The Airline Deregulation Act is a United States federal law signed into law on October 24, 1978. The main purpose of the act was to remove government control over fares, routes and market entry from commercial aviation...

 of 1978 and the Motor Carrier Act of 1980

Motor Carrier Act of 1980

The Motor Carrier Regulatory Reform and Modernization Act, more commonly known as the Motor Carrier Act of 1980 is a United States federal law which deregulated the trucking industry.-Background:...

. 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

Interstate Commerce Commission Termination Act

The Interstate Commerce Commission Termination Act is a United States federal law enacted in 1995 that abolished the Interstate Commerce Commission and simultaneously created its successor agency, the Surface Transportation Board.-External links:...

 of 1995 abolished the ICC, and created its successor agency, the Surface Transportation Board

Surface Transportation Board

The Surface Transportation Board of the United States is a bipartisan, decisionally-independent adjudicatory body organizationally housed within the U.S. Department of Transportation. The STB was established in 1996 to assume some of the regulatory functions that had been administered by the...

, an administrative affiliate of the United States Department of Transportation

United States Department of Transportation

The United States Department of Transportation is a federal Cabinet department of the United States government concerned with transportation. It was established by an act of Congress on October 15, 1966, and began operation on April 1, 1967...

.