The Staggers Act , 30 Years Later

T hirty years ago, our paper entitled “The High Cost of Regulating U.S. Railroads” (Regulation, January/ February 1981) appeared in this journal. At the time, the Staggers Act had just been signed into law. Our paper provided an analysis of the U.S. railroad industry’s performance for the generation immediately preceding the legislation. We focused on the cost of pre-Staggers regulation and drew comparisons to the more liberalized Canadian railways. We also took the opportunity to speculate about the “deregulated” railroad industry appearing on the U.S. horizon. Since that time, the railroad industry has had a generation to respond to regulatory incentives under the Staggers Act. We now have the opportunity to review the observations we made in our earlier paper and offer some additional comments based on what has transpired. In 2007–08, we were part of the project team that conducted a study of competition in the U.S. freight railroad industry over the period 1987–2008. This experience has given us a current view of the industry and an understanding of how it has gotten here. Our Christensen Associates colleagues on that team have a companion article (see p. 32) that documents key aspects of the dramatic turnaround and stabilization that has occurred since the enactment of the Staggers Act. Observations From 30 Years Ago Some of our comments from three decades ago were prescient; others were overly cautious and pessimistic. Here is a quick look back at our analysis: