Railroad Revitalization and Regulatory Reform

Railroad Revitalization and Regulatory Reform

Railroad Revitalization and Regulatory Reform

Railroad Revitalization and Regulatory Reform

Excerpt

Railroads were the first industry in the United States to be brought under federal price controls. This occurred with the passage in 1887 of the Act to Regulate Commerce and the establishment of the Interstate Commerce Commission (ICC). Although this legislation has been amended many times, the public-utility-type regulation of the rail industry that was established at the turn of the century has extended to this day. The ICC has far-reaching jurisdiction over pricing, mergers, abandonments, and service in the industry.

Over the last fifteen years, there has been a great deal of criticism of the commission's regulation of the rail industry. Much of this criticism has come from the academic community. Many analysts of the industry have urged a relaxation of ICC controls, arguing that regulation was seriously eroding the basic economic health and performance of the industry.

In January 1974 the Department of Transportation submitted to the Congress a proposal, the Transportation Improvement Act (TIA), which sought to reform ICC regulation of the railroads. Although the bill received considerable attention in the Congress, it was not passed into law. In May 1975 the Ford administration transmitted to Congress its reform proposal, the Railroad Revitalization Act (RRA), which was designed to give railroads greater pricing freedom and more flexibility to adjust their plants to demand condition. The proposal also provided for financial assistance through loan guarantees to assist the railroads in making improvements in their facilities and to encourage rationalization of excess capacity in the industry. The regulatory reform provisions of the RRA drew heavily upon the concepts in the TIA, and much of the basic analysis undertaken in connection with the TIA was relied upon in developing the Ford administration's . . .

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