The economy is in the midst of a crippling recession; people are rushing to theaters to see The Empire Strikes Back (or if they are a little older, The Shining); Ronald Reagan — still better known by some as an actor than a politician — has just won the Republican nomination for president; and America’s freight railroads are on the brink of collapse.
For most people today, the deteriorating state of American freight rail leading up to and through the 1970s is unimaginable. Nearly 100 years of overzealous and outdated regulations had left the industry struggling to earn enough revenue to operate let alone compete.
Railroads were going out of business left and right, including many major Class I railroads like Penn Central, which was, at the time, the biggest corporate bankruptcy in U.S. history. The dire situation wasn’t just economic: railroads did not have the money to invest in infrastructure, meaning safety suffered. Standing derailments — cars at rest simply falling off the tracks — happened often.
The Staggers Act Transforms Railroads & America
Then came the Staggers Rail Act of 1980, which breathed new life into America’s freight railroad industry.
By instituting a balanced, market-based framework for the freight rail industry — instead of regulating it to the point of near collapse — Staggers had the foresight to allow railroads to make sound business decisions, which prepared them for the challenges of today’s complex world.
In the more than four decades since Staggers was enacted, America’s railroads have transformed into one of the safest, most efficient transportation networks in the world. The Staggers Rail Act allowed railroads to operate more like other private businesses and effectively compete in a fierce, constantly evolving marketplace by basing rates on the demand for service and competitive market forces.
This meant railroads could earn the revenue necessary to invest in their networks, which has dramatically improved safety, increased efficiency and expanded capacity to meet customers’ changing needs. Today, freight railroads are safe, a train can move one ton of freight nearly 500 miles on a single gallon of fuel and rail customers pay rail rates (measured by inflation-adjusted revenue per ton-mile) that are on average 40% lower today than in 1980.
Built for Today, Preparing for Tomorrow
The freight rail industry’s revitalization doesn’t rest upon Staggers alone. The Surface Transportation Board (STB) plays a vital role in the success of today’s modern freight rail network and will help determine what the freight rail of tomorrow will look like.
Formed in 1996, Congress tasked the STB with implementing and maintaining regulations that allow railroads to earn revenues to meet the present and future demand for rail service. As the Board considers new regulations and looks at retiring others, it shouldn’t stray from the success of the Staggers Rail Act, which created market-based policies that have helped railroads, shippers, and the nation thrive.
To this day, the Staggers Rail Act is one of the best examples of bipartisan legislation on deregulation, establishing an effective economic framework that created the nation’s safe and efficient, nearly 140,000-mile freight rail network.
Being nearly six times more capital intensive than the average U.S. manufacturer, America’s freight railroads — the vast majority of which are privately owned — have spent on average well over $23 billion each year over the past five years to maintain the health of their infrastructure, improve the safety and capacity of their equipment and deploy technologies that enhance all facets of performance.
This could not have been done without the Staggers Rail Act.
Hindsight is 20/20
Congressman Staggers envisioned a flourishing rail network that delivered economic prosperity, and his legislation laid the tracks for that reality. Today, however, a small group of large shippers is trying to drag railroads into the past, calling for a return to outdated practices and disregarding the lessons of history’s past overregulation.
By maintaining the smart regulatory framework that has stood the test of time, the STB can fulfill its duty to ensure railroads can continue to transform to meet customer needs and adapt to a future that seems more uncertain than ever. In the years to come, the freight rail industry hopes the STB can reflect on this moment and know they made the right decision to maintain the vision, spirit and power of the Staggers Rail Act of 1980.