Craig Keats participated in our Delivering the Goods event to commemorate the 40th anniversary of the Staggers Rail Act and Motor Carrier Act.
Let me share a few concluding remarks about the Staggers Rail and Motor Carrier Acts of 1980. It would be hard to deny the benefits produced by each of those laws. To be sure, there were bumps along the way, and today many shippers have concerns about how they are treated by the railroad industry. But overall, both laws achieved much of their intended purpose: trucking became competitive and unregulated, and railroads generally became financially healthy.
Since the Surface Transportation Board (STB) is still regulating railroads under the 1980 Staggers Act, and trying to deal with those shipper concerns, I’ll limit my more detailed comments to the Motor Carrier Act, from which I see two lessons that can be learned. First I’ll talk about the “undercharge crisis” that resulted when motor carrier services were deregulated but pricing was not. Because carriers could compete for traffic only by charging spot market rates that were constantly changing, the Interstate Commerce Commission (ICC) found that it would have been unreasonable to enforce the “filed rate doctrine,” which required rate changes to be filed in tariffs on 30 days’ notice. When the Supreme Court reversed and found all of those competitively-set rates to be unlawful, the trucking world was hit with $32 million in undercharges, and Congress had to pass another law to fix the problem. None of that would have happened had the filed rate doctrine been taken care of in the Motor Carrier Act itself.
Second, motor carrier rate bureaus proved to be a cat with 9 lives. The negatives of collective ratemaking were widely known long before the Motor Carrier Act, and yet the rate bureaus escaped the Motor Carrier Act largely unscathed. In the 1990s the rate bureaus were the poster child for abolishing the ICC, and yet in the ICC Termination Act of 1995 they again escaped unscathed. The ICC went after them in 1998, and the House told the agency to back off. It wasn’t until 2006 that the STB was finally able to revoke the rate bureaus’ collective rate-setting authority. The lesson seems to be that it pays to have friends in high places.