Date: September 23, 2020
In 1980, when Congressman Harley Staggers and his colleagues passed legislation to introduce a new economic regulatory structure to save the freight rail industry from near ruin, they could have scarcely predicted the changes to come in the United States over the following 40 years.
The fall of the Soviet Union, the birth of the internet and Y2K panic, a financial crisis and now a global pandemic have all tested the strength of our nation. Thanks to the regulatory system that Congressman Staggers envisioned (aptly named the Staggers Rail Act of 1980) freight railroads have steadfastly moved whatever America needed despite these disruptions. By instituting a balanced, market-based framework for the freight rail industry — instead of regulating it to the point of near collapse — the Staggers Rail Act (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 years that followed the passage of the legislation, this new approach positioned freight rail to weather crises of all kinds, adapt to evolving market forces and provide safe, affordable service its customers.
A Total Transformation
In the 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, the train accident rate is down 35% from 2000, a train can move one ton of freight more than 480 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 44% lower today than in 1981.
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. In 2015, the STB Reauthorization Act made the STB a fully independent agency and increased its composition from three to five members. This year, the STB should have its full five-member board for the first time ever once Congress confirm two new nominees. 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 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 — spend on average $26 billion each year 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 be done without the Staggers Rail Act.
Thanks in large part to these private investments and the foresight behind the Staggers Rail Act, freight railroads snapped into action at the onset of the COVID-19 pandemic, delivering essential goods across the country while safeguarding their frontline workers. In extraordinary times, a reliable freight rail network that rises to the challenge is crucial.
Hindsight is 20/20
Congressman Staggers envisioned a flourishing rail network that delivered economic prosperity, and his legislation laid the tracks to that reality. Today, however, a small group of large shippers are 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 for 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.