Staggers Rail and Motor Carrier Acts of 1980

• Author: Phyllis Bunn, Laurie Barfitt
• Pages: 687-688

Page 687

In enacting the Staggers Rail Act of 1980, the U.S. Congress "recognized that railroads faced intense competition from trucks and other modes for most freight traffic" and that "prevailing regulation prevented railroads from earning adequate revenues and competing effectively" (Association of American Railroads, 2003). Survival of the railroad industry required a new regulatory scheme "that allowed railroads to establish their own routes, tailor their rates to market conditions, and differentiate rates on the basis of demand" (Association of American Railroads, 2003). In the early twenty-first century, Congress was debating the effectiveness and impact the act.

Prior to the Staggers Rail Act and the Motor Carrier Act of 1980, the railroad industry was suffering. Many railroads had financial problems, and the conditions of rail facilities had deteriorated. Public demand for a better rail system caused Congress to take action and pass the Staggers Rail Act, which has resulted in rail profits and improved service. The act marked the most significant change in rail policy since the Interstate Commerce Act of 1887.

"The basic principle of the Staggers Rail Act was simple: Railroads should be permitted to act much as other businesses in managing their assets and pricing their services" (Association of American Railroads, 2003). It eliminated most common-carrier obligations, granted railroads greatly increased commercial freedom, and generally reversed previous policy. The act deregulated the nation's railroads. In deregulating the nation's railroads, Congress intended (1) to return the nation's railroads to financial health, (2) to replace government regulation wherever possible with the powers of competition, and (3) to continue to provide captive shippers with protection from "unreasonable" rates.

The system of economic regulation of railroads in the United States that was put in place by the Staggers Rail Act has provided a balance between allowing railroads the freedom to compete effectively in the marketplace and protecting shippers from abuse of railroad market power. In 2005 W. C. Vantuono reported that twenty-five years after it was passed, the Staggers Rail Act was doing exactly what it was supposed to do: help move the railroads toward revenue adequacy.

Railroads have been able to increase their profitability since passage of Staggers in the face of strong competition from trucks and declining rates only...