Interstate Commerce Commission (ICC)

What Was the Interstate Commerce Commission (ICC)?

The Interstate Commerce Commission (ICC) formerly regulated the economics and services of specified carriers engaged in transportation between states from 1887 to 1995. The ICC was the first regulatory commission established in the U.S., where it oversaw common carriers. However, the agency was terminated at the end of 1995, with its functions either having been transferred to other bodies or in some cases rendered obsolete by deregulation. 

Understanding the Interstate Commerce Commission (ICC)

The ICC was established under the 1887 Interstate Commerce Act originally to regulate railroads, but its powers were later expanded to cover other commercial transportation as well. Before the Act and the ICC, railroads were able to wield monopoly power due to the natural economies of scale and network effects involved with their design, construction, and operation.

Most economists consider regulation to limit the pricing and profits of such natural monopolies a legitimate function of government intervention in the economy in order to protect the interests of other businesses and consumers. The ICC was the first federal industrial regulatory body of its kind and was used as a model for later, similar federal commissions and agencies.

History of the ICC 

The ICC was established in 1887, following increasing public indignation in the 1880s over abuses and malpractices by the railroad companies. Originally established to regulate the railroads, the ICC had jurisdiction over all common carriers—excluding airplanes—by 1940.  

By 1910, the ICC had been granted the authority by Congress and the Supreme Court to set rates and profit levels of railroads, as well as to organize mergers. Its jurisdiction was also extended to cover areas such as sleeping car companies, oil pipelines, ferries, terminals, and bridges. This came about due to an overwhelming amount of complaints regarding the rates charged by railroads on routes within which there was no source of competition. Regulatory control over telephone, telegraph, wireless, and cable was also given to the ICC in 1910, and it exercised authority over these until the establishment of the Federal Communications Commission (FCC) in 1934.

The ICC’s enforcement powers to set rates were extended in the 1940s, as were the investigative powers by which it could fairly determine what fair rates were. The ICC was also assigned the task of consolidating railroad systems, as well as managing any and all labor disputes that occurred within the scope of interstate transport. The ICC also played a vital role in enforcing Supreme Court decisions on the desegregation of the railroads in the 1950s and 1960s.

In 1966, the ICC's safety functions were transferred to the Department of Transportation (which was established in that year), but the ICC retained its rate-setting and regulatory functions. A general move toward deregulation subsequently saw the ICC's authority over rates and routes in both rail and trucking ended as a result of the implementation of the Staggers Rail Act and Motor Carriers Act in 1980. Both of these acts played a major role in the deregulation of these industries, which took a major toll on the powers of the ICC. 

Most ICC control over interstate trucking was abandoned in 1994, with its powers having been transferred to the Federal Highway Administration and the newly created Surface Transportation Board (both under the auspices of the Department of Transportation). The Commission was subsequently shut down in 1995.

The primary organization that took over the duties of the now-defunct ICC is the National Surface Transportation Board. Other services were transferred to the Federal Motor Carrier Safety Administration or to the Bureau of Transportation Statistics within DOT.