October 14, 2020 marked the 40th anniversary of the Staggers Rail Act — a visionary and balanced approach to regulation that sparked freight rail’s renaissance from a once failing industry into a safe, efficient, high-tech and sustainable network. From saving taxpayers billions of dollars each year to providing customers an edge in the global economy, this landmark legislation from 40 years ago helps power the myriad benefits of today’s modern freight railroads. Explore how the storied legacy of the Staggers Act reverberates through history and why it remains the cornerstone for a prosperous future.
The bipartisan coalition — including eight former USDOT Secretaries, crucial industry partners like ports, policy analysts on the left and right, and scores of state and local officials — commemorated the Staggers anniversary while urging regulators and policymakers to consider the industry-saving history of Staggers when approaching economic rail regulation in the future.
Freight Rail: Always moving for all of us.
American freight rail is one of the safest, most efficient and cost-effective transportation networks in the world. And it’s only getting better. Thanks to billions of dollars in annual investments — and technologies once only found in 80s’ sci-fi movies — freight railroads are transforming to increase safety, meet evolving customer needs and further protect the environment. All of these advancements have happened while average rail rates (measured by inflation-adjusted revenue per ton-mile) are 44% lower today than in 1981, meaning the average rail shipper can move much more freight for around the same price it paid nearly 40 years ago.
It’s hard to imagine railroads on the brink of ruin, but that was the reality in 1970.
In 1887 Congress passed the Interstate Commerce Act, which established the Interstate Commerce Commission (ICC) to regulate the booming rail industry and the monopolies that had been controlling the rails. By the 1970s, those archaic regulations — combined with intense competition from other modes of transportation — left many major railroads bankrupt and lacking funds to maintain their national networks. The industry was rolling to the brink of ruin, with infrastructure so deficient rail cars simply fell off the tracks.
The Staggers Rail Act of 1980 changed everything.
By passing the Staggers Rail Act of 1980, Congress recognized that America’s freight railroads needed a common-sense regulatory system that let them manage their assets and price their services like most other businesses. The Staggers Rail Act eliminated many of the most damaging regulations and allowed railroads to take a smart, customer-focused and market-based approach to railroading — while preserving government intervention for those situations where it was needed most.
Balanced regulations will keep railroads delivering prosperity today…and tomorrow.
The world is rapidly evolving. Marketplaces are becoming more competitive, demand for freight is rising, safeguarding the environment is a top priority, and America is undergoing unprecedented changes at warp speed. Thanks to the Staggers Rail Act, freight railroads are meeting these challenges head-on through strategic investments that account for changing customer needs, provide our economy a competitive global edge, protect our environment and deliver for American businesses and consumers.
But the legacy of the Staggers Rail Act is not guaranteed. To keep our nation moving forward, it’s imperative that federal policymakers and regulators — now and in the future — protect the smart regulatory framework borne of the Staggers Act more than 40 years ago.
Rail industry and policy experts commemorated Staggers’ anniversary by sharing their perspectives on how important this historic bipartisan legislation has been for not only railroads and shippers but our entire nation. Hear what they have to say about the history of the legislation and why it is foundational to the future success of our country.
George S. Ford, Phoenix Center Chief Economist and Timothy Strafford, AAR Associate General Counsel & Corporate Secretary recently joined The Federalist Society to examine the history of Staggers and why its core tenets are especially relevant for ratemaking and due process under the Fifth Amendment.
“Over time, the regulation of railroads didn’t necessarily reflect the changing dynamics, the changing economy, the changing technologies,” says Strafford. “In the Staggers Act, you see a wisdom in recognizing that markets are efficient and lead to good outcomes. We’ve seen tremendous results [since Staggers]; productivity has soared, rates measured in the aggregate over time have declined, railroads have been free to invest in their networks and have done so in big numbers and there have been huge increases in safety.”
Washington Examiner reporter Jeremy Lott wrote that railroads continue to thrive as a direct result of the Staggers Rail Act. “Among policy scholars who study rail, the Staggers Act is broadly seen as a success. [Brookings Institution Economist Clifford Winston] said that it made a future for private freight rail possible. [Marc Scribner, transportation policy analyst for the libertarian Reason Foundation], called it a success that should be extended further.”
For years, many economists have held the Staggers Rail Act up as a shining example of how an economic regulatory framework based on sound economics and market-based competition can allow industry — and in return, our American economy — to thrive. In a two-part recorded panel session, the GW Regulatory Studies Center offered a unique opportunity to hear firsthand accounts from individuals involved in the regulatory reforms that transformed freight rail as well as analysis from the scholars who studied the impacts of those reforms. Speakers included:
In a Logistics Management podcast, AAR President and CEO Ian Jefferies reflected on the Staggers Act, noting that it “remains one of the most successful, bipartisan pieces of legislation enacted by Congress,” helping to transform the freight rail in the past 40 years. “You have a much healthier rail industry that is not relying on federal intervention, not relying on federal investment. It’s doing on its own, and it’s doing it well, and it’s serving its customers.”
The birth of the Internet, ubiquitous two-day shipping, and the rise of smart technologies have fundamentally changed the transportation sector in ways that 1980s politicians could never have predicted. The sound economic, market-based regulatory structure that galvanized the myriad benefits railroads deliver today are just as important — and relevant —moving into tomorrow. To understand the power of today’s modern freight rail network — and the long-term impacts of transportation regulation into the future — we need a bit of history. Over the coming weeks, we’ll commemorate the 40th anniversary of the Staggers Rail Act through a “retro-predictive” series below to explore key provisions of the legislation and show why it matters today — and most importantly, what it means for tomorrow.
1980 may seem like eons ago, when CNN first launched and new wave pop played over the airwaves. But what happened that year for the freight rail industry left an indelible mark in history and is still surprisingly relevant today: Congress passed the Staggers Rail Act, which laid the foundation for our country’s modern freight rail network.
When Congressman Harley Staggers and his colleagues helped save the freight rail industry by passing the Staggers Rail Act of 1980, they had no idea the changes America would see over the next 40 years and just how important their legislation would become. Learn more about the impact of the Staggers Act and how the Surface Transportation Board — freight rail’s economic regulators — can help bring to life the bright vision railroads have for the future.
The Staggers Rail Act of 1980 was not only monumental legislation for railroads, it was transformational for rail shippers. From local logistics companies to agricultural producers and national auto manufacturers, rail customers are the lifeblood of the American economy. Take a moment to put yourself in their shoes to see the success they’ve seen in their own businesses thanks to Staggers.
Staggers was a fundamental moment in freight rail’s legacy, setting railroads on track to become one of the safest, most efficient and cost-effective transportation networks in the world. To keep our nation moving forward, it’s imperative that federal policymakers and regulators — now and in the future — protect the smart regulatory framework borne of this groundbreaking bipartisan legislation.