What is the Staggers Act
The Staggers Rail Act of 1980 is a federal law that greatly deregulated the American railroad industry. The Staggers Rail Act was passed in 1980 and was intended to replace the highly-regulated structure of the American rail shipping system which had existed since the passing of the Interstate Commerce Act of 1887. The Act was named after its sponsor, Congressman Harley Staggers, who was the chair of the House Interstate and Foreign Commerce Committee.
BREAKING DOWN Staggers Act
The Staggers Act replaced a regulatory infrastructure for the railroads that had been in place since 1887, with the Interstate Commerce Act, but had become outdated. The Interstate Commerce Act placed railroad under the Interstate Commerce Commission, which established a system for setting shipping rates that couldn’t compete with advances in technology in post-war America. The rise of the personal automobile, bus travel, and trucking businesses, beginning in the 1930s and extending through the post-war era, led many railroads to go out of business, and ended passenger train service on most.
The Railroad Revitalization and Regulatory Reform Act
The Staggers Act followed on the heels of the Railroad Revitalization and Regulatory Reform Act (4Rs Act), 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 ratemaking, 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 United States:
- 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, a finding that has rarely been made; and
- 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.