“The Staggers Act”
As noted by the Federal Railroad Administration (2007), the regulation of the rail system meant that railroads were deprived of flexibility in pricing and organizational structure; as the FRA points out, carriers could neither eliminate redundant lines nor deal effectively with inflation, and consequently “the industry had low return on investments and . . faced a steady decline in market share” (FRA 2007). Had it not been for the changes introduced by the Staggers Act of 1980, it is reasonable to assume that this trend would have continued, and the industry would have become less and less economically viable. The FRA states in the three decades prior to Staggers, railroad market share had declined by 33%; without the Act, the industry‟s position would have declined further. The Act curtailed the Interstate Commerce Commission‟s ability to regulate rates; the Surface Transportation Board which succeeded the ICC estimated that fifteen years after the Act was passed, only 16% of traffic was still regulated, these being cases where competition was not sufficient to keep rates below the statutory threshold. There are also specific exemptions, such as that for “traffic moving in boxcars or trailers or containers on flatcars” (FRA 2007). The Act therefore allowed rail carriers to set their own rates for service, unless it could be shown that there was no competition for that service. It also addressed the issue of privately contracted agreements between shippers and railroads; such contracts improved asset utilization by the railroads and reduced rates for shippers. Contracts were not subject to review by the ICC, unless it transpired that common c