Staggers Rail Act

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Staggers Rail Act
Great Seal of the United States (obverse).svg
Long titleA bill to reform the economic regulation of railroads, and for other purposes..
Enacted bythe 96th United States Congress
EffectiveOctober 14, 1980
Citations
Public law Pub.L.   96–448
Legislative history
  • Introduced in the Senateas "Harley O. Staggers Rail Act of 1980" (S. 1946 by Howard Cannon (D-NV) on October 29, 1979
  • Committee consideration by Senate Commerce, Science, and Transportation
  • Passed the Senate on April 1, 1980 (91-4)
  • Passed the House on September 9, 1980 (337-20)
  • Reported by the joint conference committee on September 29, 1980; agreed to by the Senate on September 30, 1980 (66-2) and by the House on September 30, 1980 
  • Signed into law by President Jimmy Carter on October 14, 1980
President Jimmy Carter signs the Staggers Rail Act into law on October 14, 1980. Representative Harley O. Staggers, sponsor of the bill, stands to the president's right. Signing of the Staggers Rail Act of 1980.jpg
President Jimmy Carter signs the Staggers Rail Act into law on October 14, 1980. Representative Harley O. Staggers, sponsor of the bill, stands to the president's right.

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

Interstate Commerce Act of 1887

The Interstate Commerce Act of 1887 is a United States federal law that was designed to regulate the railroad industry, particularly its monopolistic practices. The Act required that railroad rates be "reasonable and just," but did not empower the government to fix specific rates. It also required that railroads publicize shipping rates and prohibited short haul or long haul fare discrimination, a form of price discrimination against smaller markets, particularly farmers in Western or Southern Territory compared to the Official Eastern states. The Act created a federal regulatory agency, the Interstate Commerce Commission (ICC), which it charged with monitoring railroads to ensure that they complied with the new regulations.

Contents

Background

In the aftermath of the Great Depression and World War II, many railroads were driven out of business by competition from the Interstate highways and airlines. The rise of the automobile led to the end of passenger train service on most railroads. Trucking 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 business. [2] :219 Railroads continued to be regulated by the Interstate Commerce Commission (ICC) and a complex system for setting shipping rates.

Great Depression 20th-century worldwide economic depression

The Great Depression was a severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States. The timing of the Great Depression varied across nations; in most countries, it started in 1929 and lasted until the late 1930s. It was the longest, deepest, and most widespread depression of the 20th century. In the 21st century, the Great Depression is commonly used as an example of how intensely the world's economy can decline.

World War II 1939–1945 global war

World War II, also known as the Second World War, was a global war that lasted from 1939 to 1945. The vast majority of the world's countries—including all the great powers—eventually formed two opposing military alliances: the Allies and the Axis. A state of total war emerged, directly involving more than 100 million people from over 30 countries. The major participants threw their entire economic, industrial, and scientific capabilities behind the war effort, blurring the distinction between civilian and military resources. World War II was the deadliest conflict in human history, marked by 70 to 85 million fatalities, most of whom were civilians in the Soviet Union and China. It included massacres, the genocide of the Holocaust, strategic bombing, premeditated death from starvation and disease, and the only use of nuclear weapons in war.

Airline company that provides air transport services for traveling passengers and freight

An airline is a company that provides air transport services for traveling passengers and freight. Airlines utilize aircraft to supply these services, and may form partnerships or alliances with other airlines for codeshare agreements. Generally, airline companies are recognized with an air operating certificate or license issued by a governmental aviation body.

The Staggers Act followed the Railroad Revitalization and Regulatory Reform Act of 1976 (often called the "4R Act"), which reduced federal regulation of railroads and authorized implementation details for Conrail, the new northeastern railroad system. [3] 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.

The Railroad Revitalization and Regulatory Reform Act of 1976, Pub.L. 94–210, S. 2718, 90 Stat. 31, enacted February 5, 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 Transportation Company. The law approved the "Final System Plan" for the newly created Conrail and authorized acquisition of Northeast Corridor tracks and facilities by Amtrak.

Conrail defunct American Class I railroad

Conrail 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, and while it no longer operates trains it continues to do business as an asset management and network services provider in three Shared Assets Areas that were excluded from the division of its operations during its acquisition by CSX Corporation and the Norfolk Southern Railway.

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. [4]

Summary

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

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 real world.

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

The act was named for Harley Staggers (D-WV), who chaired the House Committee on Energy and Commerce.

Impact

Percent change in freight rail fares since Staggers Act deregulation. Freight rail fares.jpg
Percent change in freight rail fares since Staggers Act deregulation.

Studies of the rail industry showed dramatic benefits for both railroads and their users from the alteration to the regulatory system. [2] :253–4 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. [5] In 2007 the Government Accountability Office reported to Congress, "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." [6]

The Association of American Railroads, 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. [5]

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. The other two laws 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 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. [7]

See also

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A common carrier in common law countries is a person or company that transports goods or people for any person or company and is responsible for any possible loss of the goods during transport. A common carrier offers its services to the general public under license or authority provided by a regulatory body, which has usually been granted "ministerial authority" by the legislation that created it. The regulatory body may create, interpret, and enforce its regulations upon the common carrier with independence and finality as long as it acts within the bounds of the enabling legislation.

Interstate Commerce Commission A regulatory agency in the United States created by the Interstate Commerce Act of 1887

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The Elkins Act is a 1903 United States federal law that amended the Interstate Commerce Act of 1887. The Act authorized the Interstate Commerce Commission (ICC) to impose heavy fines on railroads that offered rebates, and upon the shippers that accepted these rebates. The railroad companies were not permitted to offer rebates. Railroad corporations, their officers, and their employees, were all made liable for discriminatory practices.

Hepburn Act

The Hepburn Act is a 1906 United States federal law that gave the Interstate Commerce Commission (ICC) the power to set maximum railroad rates and extend its jurisdiction. This led to the discontinuation of free passes to loyal shippers. In addition, the ICC could view the railroads' financial records, a task simplified by standardized bookkeeping systems. For any railroad that resisted, the ICC's conditions would remain in effect until the outcome of legislation said otherwise. By the Hepburn Act, the ICC's authority was extended to cover bridges, terminals, ferries, railroad sleeping cars, express companies and oil pipelines.

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Harley Orrin Staggers American politician

Harley Orrin Staggers Sr. was an American politician who served sixteen terms in the United States House of Representatives from 1949 to 1981, representing West Virginia's 2nd Congressional District as a Democrat. From 1966 until his retirement in 1981, Congressman Staggers chaired the powerful House Committee on Interstate and Foreign Commerce. A longtime supporter of the American railroad industry and its workers, Congressman Staggers' landmark legislative achievement was the Staggers Rail Act, passed in 1980.

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References

  1. Staggers Rail Act of 1980, Pub.L.   96–448 , S. 1946 , 94  Stat.   1895 , enacted October 14, 1980
  2. 1 2 Stover, John F. (1997). American Railroads (2nd ed.). Chicago: University of Chicago Press. ISBN   978-0-226-77658-3.
  3. Railroad Revitalization and Regulatory Reform Act, Pub.L.   94–210, 90  Stat.   31, 45 U.S.C.   § 801. Approved February 5, 1976.
  4. Derthick, Martha; Quirk, Paul J. (1985). The Politics of Deregulation. Washington, DC: Brookings Institution Press. pp. 14–16. ISBN   978-0-8157-1817-8.
  5. 1 2 Association of American Railroads, Washington, D.C. (2011). "The Impact of the Staggers Rail Act of 1980."
  6. Hecker, JayEtta Z. (September 25, 2007). Freight Railroads: Updated Information on Rates and Competition Issues. Washington, DC: U.S. Government Accountability Office. p. 6. Testimony Before the Committee on Transportation and Infrastructure, House of Representatives. Report No. GAO-07-1245T.
  7. U.S. Surface Transportation Board. Washington, D.C. "Overview of the STB." Accessed November 4, 2010.

Further reading