Staggers Act deregulated rail industry 40 years ago

With a stroke of President Jimmy Carter’s pen, the nation’s freight railroads were partially deregulated 40 years ago last month, a move that most carriers and shippers are still applauding to this day.

According to the Association of American Railroads (AAR), many major railroads came close to bankruptcy in the 1970s, lacking the funds to maintain their national networks due to outdated regulations passed nearly a century earlier in a bid to crack down on rail monopolies. But the Staggers Rail Act of 1980 eased those restrictions and helped the industry recover by “unwinding a strangling web of overburdensome regulations and replacing it with the market-based system that remains in place today,” in the AAR’s words.

The new regulatory structure allowed freight railroads to attract billions of dollars in private investment and adopt new technologies, helping them boost safety, meet evolving customer needs, and protect the environment, the industry group also said.

“Today’s nimble, resilient rail network is built upon the rock-solid foundation laid 40 years ago with the signing of the Staggers Act,” AAR President and CEO Ian Jefferies said in a statement. “In the face of a dynamic competitive landscape, the smart regulatory framework, which predominantly relies on market forces to govern rail rates, still empowers railroads to invest, innovate, and deliver for customers and communities every day.”

The Staggers Act has turned out to be a boon for shippers as well, since rail carriers have passed on some of their cost savings in the form of lower rates and significantly improved service times and reliability, according to bipartisan think tank the Brookings Institution.