Expanded regulators’ authority to exempt categories of rail traffic from regulation if regulation was not needed to protect shippers from an abuse of rail market power.Explicitly recognized railroads’ need to earn adequate revenue.Streamlined procedures for the sale of rail lines to new short line railroads.Such contracts were virtually unknown prior to Staggers because of regulatory restrictions. Allowed railroads and shippers to enter into confidential contracts.Railroads could now price according to market demand and operate over their most efficient. Allowed railroads to price competing routes and services differently.Under Staggers, regulators retained authority (which they still have today) to protect shippers and consumers against unreasonable railroad conduct and unreasonable railroad pricing. The Staggers Rail Act eliminated many of the most damaging regulations, allowing railroads to take a smart, customer-focused and market-based approach to railroading. By passing Staggers, Congress recognized that America’s privately-owned freight railroads needed a common-sense regulatory system that allowed them to manage their assets and price their services like most other businesses. Congress wisely chose balanced regulation and passed the Staggers Rail Act of 1980. The status quo was untenable, so Congress essentially had two options: nationalization, at a continuing cost of untold billions of dollars, or a move toward more reasonable, balanced regulation to replace the excessive regulation of the past. The term “standing derailment” - when stationary railcars simply fell off poorly maintained track - was often heard. Deferred maintenance - maintenance that needed to be done but railroads could not afford - was in the billions of dollars. By 1976, more than 47,000 miles of track had to be operated at reduced speeds because of unsafe conditions. Railroads lacked the funds to properly maintain their tracks.By 1978, the railroad share of intercity freight had fallen to 35%, down from 75% in the 1920s.Railroads’ average rate of return had been falling for decades: it was 4.1% in the 1940s, 3.7% in the 1950s, and 2.8% in the 1960s. Between 19, the rail industry’s return on investment never exceeded 2.9% and averaged 2% - well below what a child could earn on a savings account. More than 21% of the nation’s rail mileage was accounted for by bankrupt railroads. During the 1970s, most major railroads in the Northeast (including the giant Penn Central) and several major Midwestern railroads went bankrupt.Since Staggers was passed, average rail rates have fallen 44%, safety has dramatically improved, rail traffic volume is up 90% and railroads have poured approximately $760 billion - their own funds, not taxpayer funds - back into their networks.ĭOWNLOAD FACT SHEET The 1970s: Railroads at the Brink of Ruin Staggers ushered in a new era in which railroads could largely decide for themselves - rather than have Washington decide for them - what routes to use, what services to offer and what rates to charge. What brought about this change? 40 years ago, Congress passed the Staggers Rail Act on October 14th, which instituted a system of balanced regulation in the rail industry. businesses, huge savings for consumers, and strong support for our nation’s economy. ![]() America’s freight technology-fueled railroads are the envy of the world, providing an enormous competitive advantage for U.S. By the 1970s, decades of increasingly stringent government regulation - together with intense competition from other modes of transportation - had brought the U.S.
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