The Staggers Rail Act of 1980

1. The Staggers Rail Act of 1980 Was It an Effective Policy? Will Freeman

2. What was the Purpose of the Act? • Prior to 1980, the railroad industry was failing. • Railroad industry was regulated in 1887’s Act to Regulate Commerce. • Purpose of the act was to de-regulate the industry, return it to a state of profitability.

3. What was the History Behind the Act? • National Passenger Service Act of 1970. • Allowed railroads to terminate passenger service. • Emergency Rail Services Act of 1970. • Provided Loans to Railroads. • Renewed in 1973, renamed Regional Rail Reorganization Act. • Provided more loans, created the U.S. Railway Association. • Railroad Revitalization and Reform Act of 1976. • Started the process of deregulation.

4. Why Was All This Necessary? • June 22, 1970, Penn Central Railroad Files for Bankruptcy Protection. • Largest U.S. Bankruptcy at the time with liabilities of $3.3 Billion. • One Quarter of the Nation’s Railroad Track in such disrepair that trains cannot run at full speeds. • By 1980, One Quarter of the Nation’s railroads operating under bankruptcy protection or had been brought into recievership.

5. Actors Behind Staggers • Written by Representatives Jim Florio & Edward Madigan along with Senator Howard Cannon. • All Three on House & Senate Commerce Committees. • Outside Actors were the American Association of Railroads, industries that shipped by rail and the trucking industry. • Policy was to be implemented by the Interstate Commerce Committee, later the Surface Transportation Board.

6. So What did Staggers Do? • Partially Deregulated Railroads. • Shippers can still contest rates with STB. • Allowed easier merger process for railroads. • Allowed railroads to set their own rates. • Allowed railroads to discontinue service, abandon lines easier. • Discontinued the “Commitment to Serve” clause established in 1887.

7. Is/Was Staggers Effective? • 5 “Class One” Railroads in the U.S. Today. • 2 in the East, 1 in the Midwest, 2 in the West. • No major bankruptcies since the passage of the act. • No railroad track under continual reduced speed classification, except for temporary maintenance work. • Adjusted for inflation, rates have dropped to what they were in 1970.

8. Side Effect of Staggers • Rise in Short-Line Railroads • Fastest growing segment of the railroad industry • Utilized retired Class One equipment, abandoned and sold lines. • Continue to serve customers in regions that Class One Railroads could not serve profitably.

9. House Resolution 2125 • Currently in front of the House of Representatives • Seeks to ease “Captive Shippers” of what they consider to be excessive rates. • Would require railroads to compete against each other in all markets. • Shippers could request another railroad to serve a single location. • Would require STB to re-establish rates for railroads.

10. House Resolution 2125 • Opponents claim this would re-establish the “Commitment to Serve” clause, re-regulate the railroads. • Would make it harder to abandon lines, maintain a state of profitability.

11. Summary • Staggers allowed railroads to return to profitability. • No Class One Bankruptcies since the act was passed. • Railroads have condensed into streamlined companies. • Market Share of traffic increasing for railroads. • Railroad infrastructure being expanded to accommodate increased shipping demands. • Shipping rates have decreased since the act was passed. • Passed almost 30 years ago with no major effort to change the act.