What Is the Staggers Act?

The Staggers Rail Act of 1980 is a federal law that significantly deregulated the railroad industry in the United States. The act encouraged greater reliance on competition to set rates and allowed railroads to set their own rates based on market forces. The Act was passed to replace the highly-regulated structure of the U.S. rail shipping system which had existed since the adoption of the Interstate Commerce Act of 1887, which regulated almost all of the rates that railroads could charge shippers.

The Act was named after Congressman Harley O. Staggers, who was the chair of the House Interstate and Foreign Commerce Committee.

Key Takeaways

  • The Staggers Rail Act of 1980 deregulated railroad rates in the U.S.
  • The Act encouraged the setting of rates based on market competition. Up until then, rates were set by the Interstate Commerce Commission.
  • Studies suggest that deregulation led to lower rail transportation costs.

Understanding the Staggers Act

The Staggers Act replaced a regulatory infrastructure for railroads that had been in place since adoption of the Interstate Commerce Act in 1887. This Act placed railroads under the Interstate Commerce Commission (ICC), which established a system for setting shipping rates that couldn't compete with advances in technology in post-World War II America.

The rise of the personal automobile, bus travel, and trucking businesses—beginning in the 1930s and extending through the post-war era—led most railroads to end passenger service and many to go out of business entirely.

The Railroad Revitalization and Regulatory Reform Act

The Staggers Act followed the Railroad Revitalization and Regulatory Reform (4R) Act of 1976, which sought to loosen regulatory restrictions on railroads in order to allow them greater independence in setting rates for contracts and services, and greater freedom to enter or exit various rail markets. As railroads moved away from collective rate-making, they required legislation that would support more flexibility for rail carriers to bargain with shippers.

Changes to the Rail System under the Staggers Act

The Staggers Act provided for the following primary changes to the rail industry in the U.S.:

  • It allowed rail carriers to charge any given rate they chose for services unless the ICC determined no competition for such services existed
  • It removed industry-wide rate adjustments
  • It dictated that access must be given by one railroad to another's rails in the case where a single railroad had bottleneck control of the rail traffic
  • It allowed rail carriers to establish contracts free of ICC review unless the ICC determined that said contract would interfere with the carrier's ability to provide common service
  • It affirmed the dismantling of collective rate-making infrastructure among railroads

Following the Act, the studies found that the industry had both lowered costs and prices for services, favoring the future prospects of both the rail industry and its customers.