October 14, 2020, marks the 40th anniversary of the enactment of the Staggers Rail Act signed by former President Jimmy Carter. The bipartisan legislation primarily deregulated the freight rail sector, which was on the brink of collapse in the 1970s.
The rail industry’s success after 40 years of rail deregulation provides “an important case study on matters related to competition, markets, rate regulation and capitalism writ large,” the Association of American Railroads argues.
The Staggers Rail Act eliminated many of the regulations still in place since 1887, when Congress passed the Interstate Commerce Act. The act established the Interstate Commerce Commission (ICC) to regulate monopolies controlling the railroads.
By the 1970s, the regulations had not changed. Combined with competition from other transportation sectors, major railroads were facing bankruptcy, the industry was facing ruin and rail infrastructure was so deficient that cars were falling off the tracks.
Deregulation enabled the rail industry to take a customer-focused and market-based approach. Since then, freight railroads have invested more than $710 billion of their own dollars back into the national rail network.
Since 1980, rail traffic has doubled but, because of deregulation, rail rates are down by more than 40 percent when adjusted for inflation. Customers can ship double the amount of goods for roughly the same price they could 40 years ago. And because of technological advancement, increased volume of heavy freight has been carried on rail lines instead of on congested or failing public roads making transportation safer.
“The freight rail industry is one of the most cost-effective and efficient transportation networks in the world,” the Association of American Railroads (AAR) argues. “Fueled by billions of dollars in annual private investment – $25 billion on average – railroads maintain and modernize the nation’s nearly